Archive for December, 2009
Entrepreneurial DNA Transcends Context
I got a text on at 10:05PM on Christmas night from a number I did not recognize. The body of the text simply stated, “Merry Christmas.” In typical fashion when I don’t know the sender of the message (but obviously I should), I wrote back “thanks. I got a new phone, who is this?” Which is a nice way of saying, “I obviously didn’t take the time to transfer your number from my last phone to this one, you must not be that important to me.” I waited a few minutes, and then the following reply came through “Anthony the guy who sold u the chocolate when we was playing soccer.”
I racked my brain for who this guy could be. I do play soccer frequently, but I hate chocolate, would never by it for myself, and certainly did not remember buying chocolate from anyone with whom I play soccer. I started thinking back as to whether or not I had bought a present for anyone, or given anyone chocolate recently, but I thought I would have remembered wrapping up a game of soccer and then transacting with one of the players in my game. Still, I couldn’t place him, so I wrote back “wrong number bro” assuming that would be the end of it. A minute later I get back “no its not u live in park slope. U don’t remember?”
When he indicated that I lived in Park Slope, I immediately realized who it was. About 4 months ago, I was walking back from Prospect Park after a soccer game, dribbling my ball down the street in my neighborhood. A young African guy wheeling a black suitcase approached me, unzipped the suitcase, and revealed a hodge podge of trinkets, batteries, and candy. He asked me to buy something, to which I gave my standard response in these situations “no thanks man.” I kept walking for a few steps, and I heard “hey wait, man…hold up for a minute” I typically do not like to be “sold” by anyone, but I turned around as he ran toward me. He looked down at my soccer ball and said, “are you any good?” He left his suitcase on the street and gestured for the ball. I kicked it to him and he immediately transitioned from a salesman into a soccer player, much like the guys in my pick up game in Prospect Park. Despite his brightly shined dress shoes, he moved the ball with an ease which would have placed him in the top 10% of my regular game, and we spent about 15 minutes kicking the ball around, talking about soccer, and finally I asked him why he didn’t come by and play with us in the park. He sort of looked back at the suitcase he had abandoned and I watched as he visibly returned to a different reality. Quickly our game was over…he explained that he would like to, but didn’t have the time to play (despite his talent). I learned that he was a student by day, but that every day after school he walks around with this suitcase and tries to sell the contents in an effort to help support his family. He then asked for my number, and said, “but I’ll call you, and we’ll go play sometime.”
As we prepared to part ways, he said, “so, are you going to buy some chocolate or what?” Hating chocolate, but wanting to support this hard working young guy, I said, “fine, we’ll have a contest. If you can juggle this ball more times than me, I’ll buy your chocolate.” Sure enough, dress clothes and all, he crushed me, and I bought a couple Snickers bars, which I promptly though away.
I remember how impressed I was with him, that he was able to move past the challenges of a guerilla sales effort, find a common ground on which to establish a relationship, and then without sacrificing his integrity, convert that relationship into a sale. I thought to myself, that this is a bright and resourceful young man, who I would bet will transcend the cards he has been dealt in life. I told him if he ever wanted to talk about work or his career, he should give me a call, and then we parted ways.
His text on Christmas night confirmed my suspicion that he was, in fact, a special kid. After recognizing where we had met, I asked why he never called me to go play, and again he explained that he has been busy with work. He ended by texting “But amma come save my number and my name is Anthony ok” His maintenance of our relationship (without the aid of a CRM tool, none the less) and his direct call to action, almost “demanding” that I save his contact info and remember who he is (especially when coupled with the work ethic he has shown in his after school job), is demonstrative of an ambition and relentlessness that breeds success.
I should be so lucky as to hire a team at JumpPost that is naturally wired with the character traits that Anthony possesses. Happy Holidays to all.
Read Full Post | Make a Comment ( 8 so far )Progression of Thoughts in an Entrepreneur’s Day
(Wake up) whoa weird dreams, what does it mean when I am pitching my value proposition to faceless people in my dreams, fuck it, time to work…I’ve got to stop working in my dreams…wait, I wonder if I make progress in my dreams…probably not, or at least I can’t remember any specific insights that I arrived at in there that are applicable out here…whatever…(scanning emails on my iPhone while still lying in bed)…junk, junk, junk…fuck this is a weird angle that I need to hold my iphone at to read while still keeping my head on the pillow, interface keeps switching between landscape and profile…I really need to stop subscribing to all these daily newsletters, I never open them anyway…but my friend runs this company, he gets paid $300 for every 1000 people who open this fucking thing…300 divided by 1000 is 30 cents…i want to keep contributing to his success, $.30 at a time…(continue scanning emails) where’s the good news? Where’s the good news?…oh shit, that guy actually wrote back to me…come on baby,,, come on baby….yes, he’s willing to meet me….junk…junk…email from friend….oh yea, I should probably stop working and go hang out with my friends one of these nights…switch to calendar…this calendar on my iphone sucks compared to my old blackberry…one more reason to switch back…fucking AT&T…but I do love my iphone…tonight? No…tomorrow night? No….one week from Tuesday? Yes…return to inbox…hey dude, sorry I’ve been super busy…want to get dinner next Tuesday? Switch back to calendar…Tuesday, December 26th, “Hold for dinner with Alex”….back to inbox…junk…junk..junk…shower time.
(go turn the shower on)…brush my teeth, run back to iPhone to see if anyone has emailed in the last 30 seconds…(get in shower)…what are the 3 most important things that absolutely must get done today? 1, 2, 3…start thinking through one…
(out of shower), dry off, check iPhone again….(getting dressed) what do I need to wear today…no meetings…ah that’s nice…jeans, hooded sweatshirt…(eating breakfast at the new café on my block)…god this place is empty…I really hope they stay open…food is so good…tough when you aren’t on the main drag of 5th avenue…I wonder how I can help this guy? Customer acquisition in a physical landscape…new product…must deliver free value…highest margin product is coffee…cost of goods for cup of coffee = $.40, average ticket price of customer is $5.00….lifetime value of customer = hundreds of dollars…1 in 10 customers who redeem free coffee will convert into $5.00 customer, 10 customers x $.40 = $4 out for $5.00 in near term revenue and some percentage of leads convert into life time customer…wait but $4 is rev, not profit…ahhh…feels like the math should work…”hey dude, I’ve got an idea for you to get some new customers in the door….
(sit down at computer) okay…time to clear inbox…”mark as unread” “mark as unread” “mark as unread” no…you procrastinator…respond now…reply, reply, reply…(one hour later) at last…i can get to what I want to accomplish today…[insert first random fire drill here] fuck…this is not good…(wait 2 minutes)…actually this is doable…not a big deal…[insert solution here]…attack number 1 from the shower (i.e. “how do I seed the community with inventory pre-alpha release so that UX and design is pretty and alpha users will have best possible experience even though they are my closest friends and colleagues and they will tolerate a shitty experience”)…
god I’m getting hungry…where’d the last 3 hours ago…if I could just quickly respond to a few emails…(an hour later)…well, it’s 2:00…I’m barely hungry any more…better go for a run…unwind…(put on ridiculous long underwear with shorts on top)…I look like a complete idiot…but I don’t care…probably won’t run into my soul mate in Prospect Park at 2:00PM on a Thursday…what am I going to think about on this run…I love getting work done while I’m running….takes my mind off the physical pain, and feels like killing two birds with one stone…gotta think about a new blog post…okay…what’s happened over the last few days? Met with this guy…learned something cool here…this is such a high yielding hour that I am spending…staying in shape…building energy…and thinking about a new blog post…hmmm…that’s interesting…I wonder if other people measure their hours in terms of yield? I could write about that…yea…and talk about hours in my week that are surprisingly high yield…like the hour I spend on exercise…or the hour I spend on writing a blog post…both are higher yield than an average hour I spend in front of the computer…okay….blog post done…still another 2 miles to go…what else can I accomplish…eh…it’s actually really beautiful in the park right now…I think I’ll just zone out…(2 minutes later)…that girl is trying to run faster then me…eh, who cares…run at your own pace….(2 minutes later) she thinks she’s beating me up this hill…I don’t think so (start ridiculous spring up the hill and leave girl who was probably not trying to run faster than me in the dust)…well, that was a nice run…
(arrive back at computer) Okay…lots of energy now…time to bang through this to do list…task…complete…remove…task…complete…remove…task…complete…remove…breath…breath…breath…read a bunch of blog headlines in my Google reader…pick the 10 things that look the most interesting…read…read…read…need a change of scene…pick a new café…okay…to do list under control…time to write post…god this was a busy day…what did I want to write about again…fuck it…I’ll just write about today
Sound familiar?
Read Full Post | Make a Comment ( 11 so far )The 3 Most Important Words in a Founder’s Vocabulary
I have always been amazed by people’s unwillingness to utter the words “I don’t know.” These three words have been, by far, the most important words in the course of my professional development. I remember working for a Hedge Fund when I was a sophomore in College, and being tasked with maintenance of a model that one of my bosses had developed to track financial performance of distressed public companies. I had “sold” my way into this internship leaning heavily on my previous “experience” interning at a Broker/Dealer in high school, but the truth of the matter was, I had no fucking idea what the numbers in this model meant. My high school internship had consisted of running tickets on a trading floor and picking up breakfast for a bunch of Boiler Room brokers. While I did get a taste for the “excitement of the markets,” I received absolutely no background in accounting, could not read a financial statement, and was ill equipped to be updating and “analyzing” the data in this model.
I spent about 2 weeks faking my way through this task (while working hard to add value in other places where I was more confident), and then I realized how inefficient it was for me to be performing it with my limited knowledge. I remember coming clean with my then boss, and saying, “I don’t know what any of these numbers mean.” I expected him to be extremely disappointed, but instead he sat down with me, spent a few hours explaining the basics, and I became infinitely more dangerous and valuable to the Company. I internalized that lesson early, and now I apply it on a regular basis.
Admitting that you don’t know something is by far the fastest way to learn it. When I got to General Catalyst Partners, I literally did not know the difference between an application and an operating system. I had to learn a whole new language, and the way I did it was by writing down every single word and concept I didn’t know, most of which were extremely basic and revealed my complete lack of experience, and then I would corner people in their offices and ask them to explain the items on my list. For about three months I was the kid who didn’t know anything, and then for the next two years I was able to speak intelligently across just about every industry and market to which we paid attention. I remember watching the learning curve of one of the guys who joined our team after me, and it was so much slower than it should have been. I realized the reason was because he never asked for anyone’s help. Never admitted when he didn’t know something, but instead sort of nodded his way through conversations about subjects he hadn’t learned. Had he sucked it up and admitted what he didn’t know up front, his learning curve would have been much steeper.
Especially as a non-tech founder (and as a tech investor) I am constantly dealing in realms where my domain expertise is a fraction of the folks’ with whom I work. SEO is a great example of an area where I lack the necessary domain expertise to be dangerous. I could either keep on referencing SEO as a strategy we are going to implement at JumpPost, without understanding how it works, or admit that I get conceptually why Search Engine Optimization is important, but to be honest, I have an extremely cursory understanding of how it works. As soon as I admit that, while potentially unimpressive to the investor with whom I am speaking, or the potential hire with whom I am recruiting, I am now able to sit back and listen as they explain the three pieces of “low hanging fruit” we can achieve while knowing nothing about SEO, as well as the three more complex concepts around the relationship between SEO and Product architecture that I can now implement during the build of our product. The alternative, of course, being that I could gloss over this “blind spot,” notice in 6 months that we are stinking it up on organic search traffic, and then admit that we don’t really understand SEO, at which point I’ll have to explain to said investor why I just wasted $XX of his investment building a non-SEO friendly product that now needs to be rebuilt/augmented at an additional expense to the Company.
When you expose a “blind spot” in your skill set/knowledge base, those who are in a position to teach don’t feel any need to impress you with their knowledge. Rather they speak to you like they would a first grader, which is exactly where you need to start when you are learning a new language. Imagine trying to learn Italian by sitting in an a 3rd year Italian course. It would be nearly impossible and you would immediately raise your hand and say “I think I’m in the wrong class, where’s Italian 1?” If you’re a non-tech founder, for example, not raising your hand when designing a product with your lead developer and saying “Where’s PHP 101?” is simply stupid. Your job may not be to write the code, but if you don’t understand the basics behind every layer of your product, how can you recruit intelligently, weight the effort of your design against internal resources, and contribute ideas to the development process in a method that is easily digestible to the rest of the team. Even in areas where you don’t need to become an expert in your Company, taking the time to learn the basic principles behind everyone’s efforts is essential for effective communication both within your Company and with parties outside of it.
Beyond product, this practice applies to marketing, fundraising, business development, and every other effort that you are pushing forward in your Company. I remember negotiating a business development agreement with Citigroup in my last company. I identified a natural partner for our business, got in front of the right people to pitch it, and got their verbal commitment to move forward with a deal. We sort of lingered in that realm of “ok, so we want to work together” for a couple of weeks, and then I realized that I didn’t know how to turn that sentiment into action. I remember calling Brad Handler, who is the founder of Exclusive Resorts (and at the time a very important potential investor and business development prospect himself) and telling him “listen, I have this deal with Citigroup that is within reach, but I don’t know what to do now.” He taught me how to write and deliver an LOI (Letter of Intent), described the process of turning that LOI into an Agreement, and coached me on how to get the deal across the finish line. Now, in the course of acquiring this knowledge, I exposed our inexperience to one of the most valuable companies for the future of our business, but I only had to do that once, and every business development effort I encountered from that point forward I came at from a position of strength.
So the moral of the story is, don’t fake it. When you don’t know something, admit it confidently, learn it, and move forward.
Read Full Post | Make a Comment ( 2 so far )“Drop In” to the Zone
When people ask me how I’m doing these days, my regular response is “awesome. I’m in the zone.” I’ve been in the zone many times before, but typically this state only lasts for a few days or maybe weeks at a
time, before it diminishes and reverts back to what I’ll call my baseline mental productivity. The strange thing is, this “zone” has lasted for about 2 months, and it’s going strong. What I’m learning, is that it is possible to actively perpetuate a certain mental state through conscious effort and replication of context.
First, let’s explore for a second, the concept of “the zone.” It’s pretty hard to define, but for me it’s an energy and state of mind in which you are able to move through all facets of life without friction. Imagine, driving through Manhattan, guided largely by your intuition, where every light you approach turns green at just the right second. Athletes might talk about being in a state where no movement is conscious, but rather there is a perfect alignment between your instinct and the context in which you’re acting.
I’ve written before about positive feedback loops. The zone, in many ways, is a constant positive feedback loop. In times like this, productivity is extremely high, thought is particularly sharp, social interaction is particularly rich, and energy is extremely high.
Slipping into the zone is not easy, but it is possible to practice entrance into this state. If you have ever attempted to surf, the experience is very similar. You spend a ton of energy paddling as hard as you can to get into the wave’s path, and then as the swell forms behind you, you must pop up at exactly the right moment. A second too late and the wave passes you by. A second to early and the front of your board plows into the sea. But, if you are able to drop in just right, you immediately switch from a state of frenetic exertion, to extreme calm, and yet you move at 10x the speed of when you’re paddling to high hell.
Much like surfing, I have found that there are certain practices you can develop to “drop in” to the zone more frequently and for longer periods of time. A lot of it is maintaining a state of mind and attitude that is conducive to allowing the calm of the wave to carry you. Simply remembering what the zone feels like is enough to open your mind to this calm. To that end, replication of context that exists when you are in this state can be an effective way to “remind” yourself what you are trying to achieve. Music is one of the most effective triggers for me to replicate a context. If I am listening to a band during a period of particularly high functioning, I will continue to listen to that band and that band alone until I burn it out. Similarly, if I wake up at a certain time of day, I will keep waking up at the same time of day, replicate the same routine, eat the same breakfast, etc…This may sound a little crazy, but constantly drawing analogies between the day you are in, and yesterday where you were unstoppable, makes it much easier to believe and function as though you are unstoppable today.
I know not everybody functions in this manner, but for those who know what I am talking about, and I think many entrepreneurs are similar in this way, I have a theory that 80% of what you accomplish in a year is likely achieved in “zone like” periods. Being conscious enough of this state, to know when you are in it, and working extraordinarily hard during these periods to maximize output and take advantage is key. When you’re not in the zone, looking at the friction in your life, and figuring out why you keep missing the wave is essential (although difficult).
P.S. I just asked my friend George Bell to describe his zone, and he talked about things slowing down to a point where you can move through an environment (professional, athletic, or otherwise) seamlessly. I’d be interested to hear everyone else’s descriptions of their own “zones.”
Read Full Post | Make a Comment ( 8 so far )Gilt, Groupon, One Kings Lane, Oh My
When I shut down Untitled Partners, before returning half the money to our investors, I went through the
analysis of potential pivots we could make in light of the change in macro environment post meltdown. As prices in the art market plummeted and volume of transactions evaporated, what the art market really needed was an effective liquidation model to help suppliers free up cash by delivering deep discounts to buyers who would not buy on any other terms.
At this time (early 2009), Gilt.com was about two years into their business, showing meteoric growth, largely because luxury clothing retailers (suppliers) were experiencing the same inventory management and liquidity issues that were luxury suppliers in our market. For those not familiar with Gilt.com, they are basically an online T.J. Maxx (or “sample sale” if you want to get cute about it) for high end fashion apparel. Consumers are able to purchase luxury goods online at 50-70% discounts during short window sales. Retailers sacrifice margin (through discounting) in exchange for volume (through online marketing) while still protecting their brand and price point due to the one-time, short windowed nature of the sales. Gilt, although they couldn’t have known it from the start, timed the market perfectly.
In a boom market, the effort of convincing these luxury retailers to give up this kind of margin, and to potentially dilute their brand, would have been a heavy sales effort. But when people stopped buying $2000 handbags in Bloomingdales, manufacturers of said handbags were much more willing to take risks in order to keep their cash flows above water. Like any marketplace, with supply, demand will follow, and in a market where even the wealthiest consumers are cost conscious and scared to spend, the value proposition of absurd discounts resounded greatly. The result: Gilt did $25M in revenue in 2008, claims to be on track for $125M this year, and was just valued at $400M in a $40M venture round led by General Atlantic and Matrix Partners.
The logical startup move for our company, given the success of this liquidation model in an analogous market, would have been to pivot toward a Gilt model in the high end art market…but an illogical supply chain and status-conscious consumer in our market ruled this move out.
So we weren’t able to leverage the beauty of a liquidation model in a down market, but many others were. Multiple “me too” Gilt competitors experienced similar growth trajectories. Gilt’s market crowded with the presence of Rue La La, Ideeli, and others, but to date, there has been enough volume to go around. I hear a lot of new startup ideas, and I can’t tell you how many aspire to be “the Gilt for this” or “the Gilt for that.” Gilt, itself, even funded an extension of their model in the travel market (now called Jetsetter.com). Kleiner Perkins and First Round Capital just backed a similar model called One Kings Lane in the home furnishings market…and modifications of this liquidation model have even been implemented with great success in the local SMB market (i.e. Groupon, which just took $30M bucks from Accel).
So here’s my question…all of these models experienced their growth when they were able to provide fledgling businesses with an avenue to move inventory in illiquid markets. But what happens when the economy fully recovers, retailers are able to move their supply without deep discounting, and the already saturating market full of liquidation companies begin running into stiffer competition for inventory? The consumer side of their model shouldn’t change. Consumers will always want deals and be happy to by at discounts, but the breadth and quality of inventory that these companies can offer will decline. Perhaps stupidly (I have only the most superficial data to support this thesis), I am guessing that most of these models will shift onto a trajectory of more linear growth in the next 18-24 months…
This is not an argument that all the venture investment that has gone into the space was poorly spent. The growth that has already occurred will sustain these early winners for years to come, and the macroeconomic picture isn’t going to 180 tomorrow. My caution, is more for entrepreneurs and very early stage startups that are contemplating this type of model now and going forward. Seems like the perfect storm for liquidation models is close to or already behind us.
Read Full Post | Make a Comment ( 2 so far )The “Real” Behind Online Analytics (Entrepreneur’s Therapy Session)
Being an entrepreneur or an investor in consumer internet land, it is very easy to become jaded by 
big numbers. The metrics we use to track engagement with an online product or content are dehumanizing. People who interact with an online site are immediately transformed into statistics like “active users,” “clicks” and “page views,” and somehow they become less real. Mark Zuckerberg announces that Facebook has surpassed 350 Million “Users” and I am conditioned not to internalize just how many people are engaging in the action of Facebooking. I guess when I hear a number like that, I try to benchmark it against big numbers I am already familiar with, to get a sense of scale. I’ll say, “350 million people is 5% of the World’s population,” that is amazing market penetration. But still, that number may as well be written in cotton candy, hanging from a tree in The Cat and the Hat, puffing out plumes of saffron colored smoke into a balloon shaped like the letter R. That’s how far my perception of “350 million users” is from the reality of 350 million people performing one single and common action.
This only really dawned on me yesterday, when I stumbled into Madison Square Garden, sat down in the 8th row, and looked up into an endless sea of Knicks fans. I thought to myself, “there are a ton of fucking people, packed into this arena, all concentrating their attention on the same thing.” I leaned over to my friend, Phin (who has been kind enough to bring me to these games for the last 15 years), and for the first time I asked him “How many people does MSG hold?” Phin answered 19,763, and I was paralyzed. I thought to myself, “on any given day, I can write a blog post that reaches half of this arena, and it would be equivalent to calling a time out, handing out a piece of paper to the entire left side of the Garden, and having them read it in silence for 30 seconds, before the game resumes.”
Something is lost in the translation from a physical crowd to an online crowd. As I try to identify what it is about that arena that I find so impressive, despite the relative size of its audience compared to online crowds, I am drawn toward a few concepts: 1) concurrency, 2) time, and 3) friction.
1) Concurrency: I guess I have a newfound respect for a product that captures a high volume of concurrent users. The trend toward On Demand information consumption has removed a key constraint in attaining a volume of consumers. Live (in person) entertainment is one of the last frontiers where the concept of On Demand consumption is impossible. An event is only consumable in person during a specific window. Therefore, 19,763 represents a much larger market share (of attention) than does the same number in the online sphere. The potential volume of attention during the hours of 12:00-2:30PM is 1/12 the addressable attention of a piece of online/on demand content. Think about how asynchronous consumption has expanded the addressable audience of a television show. Between DVR, DVD, Hulu, and Cable On Demand, an episode of television has a near infinite number of opportunities to reach a consumer, as opposed to 10 years ago when an episode of Seinfeld could only reach the number of people sitting in their living room from the hours of 8:00-10:00 on Thursday nights. Madison Square Garden is still living within the constraints of concurrent consumption.
2) Time: this is a metric that actually translates well between the physical and online realms. A minute of someone’s time is a minute of someone’s time independent of whether it is spent consuming a product in the physical or online realms. The product of a live basketball game is significantly better than the product of a blog post, which is why the Knicks are able to capture a full 2.5 hours of 19,763 people’s time. I would have a very hard time convincing a reader to spend 2.5 hours reading this blog. Time on site is actually a great metric to bridge the disconnect between the online and physical worlds.
3) Friction: by far the most amazing thing about filling an arena with 19,763 people is the amount of friction the Knicks are able to overcome in order to reach their audience. Getting a consumer to move his physical location is probably 10,000 times harder than getting a consumer to move his online location (from one site to the next). Consumers drop off from any product when they encounter friction of experience. The amount of value on the other end of that friction determines how much friction a consumer is willing to endure before giving up and reallocating their attention/effort to an alternative. When you load a webpage and it doesn’t render properly, you will hit refresh. If you try again, and it fails, you might hit refresh. Try a third time and almost everyone will give up on that piece of content. If it was raining yesterday, I still would have gone to the game. If the subways weren’t running, I would have taken a cab. If there was a riot outside MSG, I probably would have passed. The fact that the Knicks are able to mobilize this volume of people to stand, clothe, travel, and congregate is a testament to the quality of their product relative to alternatives (Sunday afternoon football on TV, shopping at the Apple Store, etc..)
All that being said, Facebook destroys the Knicks with the time lever alone. It is a far superior product. The aggregate volume of human time that their 350 million people devote to a single experience is breathtaking (with or without the crutches of a low-friction environment and asynchronous product consumption). To all the web entrepreneurs out there, living in the analytics behind your product (especially if you haven’t broken out from 50,000 users to 350 Million): start visualizing your audience in the physical world. Size up a crowd in the most densely populated area in which you find yourself, and then remember that it is likely a fraction of the number of people you reach on a daily basis. It will make you feel good.
Read Full Post | Make a Comment ( None so far )
Jordan Cooper's Blog: startups, venture capital, etc... 