Archive for March, 2010
Why am I trying to build a “pre-market” for home rentals?
Think about any market where inventory isn’t priced perfectly. The early bird (in this case anyone using JumpPost) who gets to choose before the broader market sees the goods will capture the best deals. The chump who buys a used car that’s been sitting on the lot for 6 months (the market has seen and passed on it) is obviously not getting the best deal in the market. In contrast, the used car dealer’s cousin (who gets to see the new stuff coming into the garage before it ever get’s out to the lot) is probably going to do all right. In a perfectly priced market, there is no such thing as a deal, in which case it does not matter when you gain access to the inventory, but luckily for JumpPost, home rentals exist in an imperfect market.
In home rentals, if you have 10 apartments coming into the market, each unique and priced individually, 1 of those apartments will be an extraordinary deal (the value vastly exceeds the price paid), 3 of those apartments will be good deals (the value exceeds the price paid), 3 of those apartments will be market deals (the value is commensurate with the price paid), and 3 will be bad deals (the value is lower than the price paid). The numbers in each bucket, are a bit arbitrary, but you get the point.
Currently, if you search on Craigslist or really anywhere else for that matter, 95% of the rental inventory advertised is available to move in immediately or within 30 days. What this means, is that everyone in the market is competing for the same inventory at the same time. You’re ability to find an “extraordinary” or even “good” deal is mitigated by the volume of people who are also picking over the same opportunities. All the good stuff goes immediately, you only have time to view 5 or 6 places before you’re on the street with a suitcase, and invariably you become the asshole who is paying $500 a month more than your best friend who is living in a nicer place than you. Read: the people getting the “bad” deals are accepting them when they are under pressure from a) competitive renters in the market and b) time pressure due to their own expiring lease.
Now, imagine if you were able to get a sneak preview of everything that was coming onto the market, and there was a magic company that could get you in to view that inventory 30-90 days before the masses of Craigslist started picking through it. That would be worth something, no?
You bet. Jumppost strives to be that magic company. Admittedly, we aren’t magic until we have a TON of apartments for you to browse and discover in our “pre-market.” We are working on that, but Rome wasn’t built in a day. If you believe in the mission (and unless you’re a rental broker you should), you are in a perfect position to help us build this “pre-market.” By creating a post in JumpPost, you are giving your fellow consumers a “heads up” that the place you’re leaving is going to be coming onto the market soon. You could do this because you’re nice and believe in helping your friends and friends of friends, or you could do this because JumpPost helps you to earn serious money for giving consumers the “heads up.” Either way…do it. And if you aren’t in a position to do it, get you’re personal referral code here, post it in twitter/facebook/your blog/email/whatever, and help us move this market for the better.
Read Full Post | Make a Comment ( 1 so far )So You Signed a Term Sheet? You’re Not Out of the Woods Yet
The first time I raised capital, I remember negotiating my term sheet with Rob Stavis at Bessemer Venture Partners (who, btw is as straight shooter and transparent a VC as I know). The deal they gave me was completely clean and standard, but as a first time entrepreneur I scrutinized over every word of that term sheet, to make sure I understood exactly what I was signing and agreeing to. Once I got comfortable with every sentence in the term sheet, I signed it, and waited anxiously to receive their signature back. When it came, I breathed a massive sigh of relief, turned it over to our lawyers, and thought that I had successfully completed the negotiations around our raise.
What I didn’t realize, and what I think most first time founders don’t know, is that a term sheet is simply a guide that lawyers work off of when creating the final documentation around a financing. When you blow a 2 page term sheet up into 50 pages of documentation, it turns out there are a ton of specifics which are not addressed when a founder and investor first agree on a deal. These specifics, when addressed in the docs, can fall in the interests of an investor or a founder, and thus the negotiation you thought you were done with opens up for a “round 2.” This “round 2” can be awkward, because emotionally, you have already agreed to a deal and “partnered” with your investors. Everyone is happy and excited, and then you are once again put back on opposite sides of the table.
What I learned from Rob, was that negotiating a financing isn’t about winning and perfectly optimizing for your interests. It is an exercise in reasonability. Sharp elbows and hard lines on small (albeit important) points are a waste of time and good will between you and your future partner. Once you agree to partner, your collective goal should be to complete the deal in a way that is even, not self interested. My advice: don’t sign a term sheet with someone who you don’t think is capable of going through this exercise in reasonability with you.
P.S. JumpPost is looking for a legit UX/UI designer/developer for a small project. holler
Read Full Post | Make a Comment ( 1 so far )“Pull” Your Ideas from the Ether
Sort of the nature of being an entrepreneur is that you see opportunity all around you. The question “what if?” comes into your head 10 times a day, and most of those what ifs exist for a moment and then dissipate back into the ether. What I’ve learned over thousands of what ifs is that if you don’t grab those ideas, almost right at the point of conception, and forcefully pull them from the ether into reality, most of them will never return to your consciousness. A lot of building companies is about making concepts and ideas real…bit by bit. You write an idea down on a napkin: slightly closer to reality. You test it on a friend: slightly more real. You test it on 100 friends: slightly more real. You incorporate: slightly more real. You build a product: MUCH more real. You get a customer: really real., etc…
The mechanisms of making an idea real are learned with practice. I remember quitting my first banking job out of school, thinking “I am an entrepreneur. I have a ton of ideas. I quit. I am going to start a company.” That quitting part was easy. And then, at 23 years old with not a shred of experience executing…I found myself paralyzed in the effort. I literally had no idea how to put one foot in front of the other to make these ideas I had been cultivating into real things. The chasm between the stage I was at and operation appeared infinite.
I was not as resourceful then as I am now, and I more or less resolved that I needed to learn how to put one foot in front of the other from people who had achieved what I wanted to accomplish. My route was to join General Catalyst, where I would work with a bunch of successful entrepreneurs that I could literally study. This was the right move for me, although in hindsight, it turns out I could have used this magic machine called “Google” to figure out the first 10 steps to making my ideas real.
Different entrepreneurs have different styles of thinking. Some go deep in a vertical, understand everything about a market, and then figure out what it needs. I am much more of a horizontal thinker. Ideas tend to come when I see similarities between markets, and the opportunity to apply successful models or concepts from one market to another with analogous characteristics. One easy practice I have developed for capturing these ideas and pushing them slightly closer to reality is simple: I keep a spreadsheet with everything I think is interesting, and force myself to power rank my conviction around each one. My best ideas earn a 1 and sit at the top of the sheet. My worst ideas earn a 4 and are waaaaaay below the fold.
Once the ideas are captured, making them more real than that becomes a bit of a bandwidth issue. With only 19 working hours in a day, I find myself constantly pulled between JumpPost (85-90% of my bandwidth), and the myriad of other concepts that deserve to become real. Taking on an investing role with Lerer Ventures has allowed me to use that remaining (10-15%) of my energy to make a whole lot of great ideas a little more real. Now instead of building all the 1’s on my spreadsheet (which I could never do), I let those ideas influence where I spend time investing the fund, and more often than not, I am able to find people smarter than me who have recognized similar opportunities.
My advice to those who are thinking creatively: start tracking and ranking even the faintest of dreams.
Read Full Post | Make a Comment ( 10 so far )The Blurring Line between Commerce and Ad Models
A lot of different ideas are converging in my head right now, largely as the result of two discrete conversations. The first, is more of a broad thesis I am developing about alternative revenue streams for publishers, and how niche publications are thinking about monetizing their audience and assets beyond “ad models.” The second is a thesis I’ve been kicking around in the realm of Charlie O’Donnels NextNY conversation last night on “Disruptive Commerce Models” or “E-Commerce 2.0.”
Until last night, I largely viewed realms to be separate, but a conversation this morning with a very bright guy named David Cho made me realize that one of the fundamental drivers influencing my thinking in both realms is related to a broader phenomenon:
Phenomenon: The line between commerce and advertising is blurring. Think of the relationship between the below monetization mechanisms as a spectrum, where both ends of the spectrum are losing $ volume to the middle:
The Commerce/Ad Spectrum
Commerce 1.0 (buying inventory, taking risk, reselling at a premium to consumer)
“Commerce light” (no inventory, really brokerage between suppliers and consumers)
CPA (performance)
CPC (performance)
Brand Advertising
I see tons and tons of niche publishers looking to “transform” their model away from “ad models” toward “commerce models” (largely chasing what they perceive to be the strategy that made Gilt grow like a weed). David Cho was the first niche publisher I have met since I started investing who said “fuck that, the ad-model isn’t broken, I just need better units to monetize my base.” I actually think he may be right…but those better performing units are going to start to look more and more like commerce functions. Kayak.com is a perfect example of an ad based model that really operates and feels like a transaction/commerce model to consumers…now, think about a world where widgets being distributed onto publishers sites, are capable of performing transactions and transaction like events within the ad unit…and you start to see where I’m going with this. So that’s advertising bleeding up the spectrum into commerce…
Now let’s look at commerce bleeding down spectrum to advertising. Last night’s conversation at NextNY was theoretically about Commerce startups, but in reality, I didn’t know how to define “Commerce” or an “e-retailer” any more…the reason is because so many of the folks in the room pursuing flash sales, group buying, etc…aren’t really retailers at all. They are more like brokers, bringing together suppliers and consumers. Is a broker a retailer? Because these brokers are similar to retailers, but brokers also look an awful lot like ad units…bringing together suppliers and consumers for a fee (without taking inventory risk).
All of this is to say I don’t think there is a hell of a lot of difference between Ad models and “commerce light” models when applied to an audience aggregated through some sort of editorial voice…so I’m interested in talking with people who are pursuing the nexus point of these two worlds, especially if you are packaging that together into a “turnkey” monetization mechanism and selling into publishers. If you are…and you’re smart…I’m interested in learning from you and maybe even investing in you.
Read Full Post | Make a Comment ( 8 so far )Stress = |Expectation – Actuality|
It’s 1:14 AM on the morning of my company’s launch. I am sitting at my desk, in a giant empty office…more or less waiting…everyone has gone home for the night, there is no panicking, no last minute hiccups…a couple loose ends to tie up with our lawyers, but oddly enough…we are ready. This is what’s boring about working with Doug Petkanics… he is painfully reliable. 30 days ago we designed a product development roadmap that predicted we would launch our company today, and sure enough…we are launching our company…today. Not 1 day late, not 1 hour late…right on freaking schedule.
I often write about the ups and downs, the unpredictability of startup execution, and stupid Doug Petkanics is screwing up my whole shtick. Prior to bringing Doug on, an early member of JumpPost, Mike Weaver, defined stress to me as “the result of any disconnect between expectation and actuality.” He said it is in these moments where an event occurs contrary to expectation, that stress is born. Finally, Mike argued that in order to live a stress free life, we must shed all expectation, and simply live in the moment. I thought about this for a minute, and then rejected his argument in favor of another that also seemed consistent with his definition of stress. I said “in order to live a stress free life, you just need to be accurate when defining your expectations. ”
Doug seems to have mastered the alternate theory I put forth, and it is reflected in his consistently cool demeanor under pressure. I’m not sure I’ve ever worked with someone with such a firm grasp of their own capabilities, but day in and day out, he perfectly calibrates our collective expectations.
Our value proposition is going to hit ~250,000 in boxes in the next 24 hours…should be an interesting first day live for JumpPost.com 🙂
Update: well, not quite 250K…about a 1000 people clicked through to a shared listing we had in NYC’s Thrillist…it’s a start 🙂
Read Full Post | Make a Comment ( 5 so far )Seeding a Community…JumpPost’s Playbook
Seeding a community or marketplace is a challenge that many consumer internet companies face at the onset of a launch. You build a product, design an experience, but without a bit of liquidity in the platform, early users don’t get the utility they deserve. As such, this may seem like a very simple concept, but founders need to rely on their close friends and friends of friends to be the earliest users and evangelists of any product.
Even though we expect our friends to be our earliest advocates, you can’t just rely on them to “spread the word.” It’s not that they don’t want to help, but more that people are busy, and they don’t realize how important and valuable their early participation is to your success. Further, without a bit of structure, or a clear ask and guide to help them promulgate your product, your friends won’t know exactly what they’re supposed to be doing.
Late last night, we “pre-launched” my new company, JumpPost. I say “pre-launch” because we are only collecting inventory, and not exposing the “demand/browse” side of our platform for a couple weeks. I sent the following note to a small handful of people who I know would do just about anything I asked of them. In less than 12 hours, it’s amazing to see the level of response and activity that they have engaged in on JumpPost’s behalf. I will report back with more data on the success of this “seed strategy,” but feel free to take this playbook and implement it should you be building an early stage consumer internet product.
Email to close friends reproduced below:
Subject: the time has come…JumpPost.com
Imagine spending 6 months preparing to open a restaurant, building out the space, hiring the people, designing the menu, and on the day you open your doors, you have no food to offer your customers.
JumpPost.com has built out the space, hired the people, designed the menu, and now I need your help to make sure we have enough food when it comes time to properly open our doors.
Today, if you visit JumpPost.com, you will see we have revealed a portion of our site (yes, plenty of bugs…be patient w us). The purpose of this early site is to empower you, our closest friends, to create our first listings. I have one simple ask: if you are a renter moving out in the next six months, create a listing right this second.
I will now share with you the reasons why you should create a listing
1) I am calling in a favor. Create a listing on JumpPost for no other reason than because I am asking you to. It means everything to me and will take you 2 minutes.
2) If you demand a second reason, fine. Doing so will likely earn you $500 for almost zero effort.
3) If you demand a third reason, fine. When we open up our full site, your listing will be featured ahead of everyone else’s.
My second (i know i said “one simple ask”…i lied), and more important ask is that you become a voice for our product. I challenge and beg that each one of you personally recruit 10 of your friends to create a listing. You are not asking them to spend a dime, simply giving them the gift of a $500 payday.
The time has come for me to rely on my closest friends. As you all know, JumpPost is building a business to empower consumers and kill brokers. Please, become our early users and evangelists. Join us. Let’s [explicative removed] do this.
Oh, and as a special thank you for your efforts, anyone who can send me a list of 8 or more people they signed up to the site is welcome to join us at our “Peter Luger’s Launch Dinner.” Date and time TBD, but we’d love your help in celebrating once we open up JumpPost to the world.
Note to blog readers: The Peter Luger’s dinner is a simple calculation which estimates the value of an early listing based on assumptions around conversion of listings into revenue. Basically, I’m saying I am willing to spend ~$100/8 to acquire a supply side listing pre-launch.
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