Archive for May, 2010

Offloading Human Memory to the Cloud

Posted on May 31, 2010. Filed under: startups, venture capital | Tags: , , |

When I was young, my parents had two large brown photo albums that sat on our coffee table.  We used to sit together and page through them, and they would point to washed out photos of my great aunts and uncles, and grandparents, and tell me who they were, what they were like, etc…we’d look at images of my 5 year old birthday parties and they’d ask “do you remember Hella? She was your Au Pair from Denmark?”  Needless to say, the depth of perspective I was able to glean around my own early life and the past lives of my relatives was limited.  The legacy of my grandpa, who I never met, is locked in paper documents now gone, my parents’ memories (now going), and scattered photographs and letters that have been stored through the years.

I think about what my grandkids are going to be able to see into my life and in many ways they will know me on a level that is impossible for me to know my own.  The emergence of “life-logging” that has occurred over the last 10 years, across mediums, has begun to create a pretty comprehensive window into my existence.  If you were to chronologically map my Facebook status updates, twitter updates, digital photos, blog posts, foursquare checkins, text messages, emails, venmo transactions, credit card statements, and then very importantly, do the same thing for everyone in my social graph and find the points of intersection between my footprint and those in my 1st degree social graph (which will happen, btw), you could write a pretty cohesive textual narrative of my existence.  Almost an automated biography of who I was, what I did, what I cared about, who I liked, who I loved, where we went, what we did together, how I looked, what clothes I wore, who influenced me, who I influenced, my major accomplishments, my major failures, what made me special, how other people felt about me, what they loved about me, what they hated about me, and pretty much any other question one would ask when trying to get to know someone.

The interesting thing to me is that this shared digital backbone that runs across the human population, currently being enhanced and rapidly populated by the growth of mobile information capture, is not just enhancing the transference of knowledge and learning across geographies and socioeconomies in the present, but also across generations and time.  In many ways, by participating in these forms of life-logging we are enhancing both our individual and collective memories.  This freaks me out a little bit, primarily because of it’s implications around the importance of a physical body/presence [decreasingly fundamental to human experience], but I am absolutely fascinated by it.

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Memorial Day in StartupLand

Posted on May 28, 2010. Filed under: startups, Uncategorized |

It’s the Friday of Memorial Day Weekend.  I was up at 6:30AM, working from my iPad in bed by 6:31, at the gym before 8, and at the office by 9:30.  As I walked from the East Village to the West Village, I passed young professional after young professional carrying tote bags donning the words JPMorgan, KKR, etc… They all had their “summer weekend” outfits on.  Sunglasses, newspaper poking out the side of their bag, boat shoes no socks, and a smile on their faces like they were going to coast through this Friday and “slip out” at 4 to catch the early train to the Hamptons.  They walked with a cadence that said they’ve been thinking about this 3 day weekend for the last 2 months, and it occurred to me that the holiday weekend meant so much more to them than it does to me.

I remember when I used to work in finance (first job out of school), the briefest glimpse of a break from the grind and routine was a very big deal, and as I now watch what this holiday weekend means to these guys, it occurs to me that they are not really living.  Every day I wake up and I am doing exactly what I want.  Yes, I work hard.  Yes, I am tired sometimes.  But at the end of the day, I am not searching for a break from my everyday life.  There is a fundamental problem with a life where a 3 day weekend puts a hop in your step that won’t return until Labor Day rolls around…

I walked by a 30 year old dude in a small BMW that said “I’ve been dreaming of this aspirational lease for the last 6 years in my cubicle,” and he had his “weekend bag” on the passenger seat, shades on, heading for the west side highway.  I could see he was “sneaking out” Friday morning when all the other suckers were working a full day.  It occurred to me that I don’t want to sneak out.  I want to get to the office, write a blog post, focus on my to do list, get better, learn more, prepare, because all the work I’m gonna do while that guy is drinking Amstels by the pool of his shitty summer share is for me and my team.  Not some 40 year old Managing Director who’s been in the Hamptons since Thursday morning at his place on the beach that this 30 year old guy would kill a 6 month old puppy to call his own.

So, I guess in some ways I pity that guy in the beamer who’s at this point probably at exit 63 on the LIE, salivating over the sign to Montauk Highway.  Because Monday night is going to come around, and he will return to a life that I almost lived, that you couldn’t pay me $5 Million a year to return to.

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Fold often before going “all in”

Posted on May 13, 2010. Filed under: startups, Uncategorized, venture capital |

Jon Steinberg wrote a post this morning exploring some of the parallels between business thinking and poker strategy.  Much of his thinking focussed around changes in probability resultant from environmental (the flop) as opposed to operational (the player’s decision making) occurrence.  His post reminded me of something I wrote nearly a year ago, in the midst of some very hairy career planning post Untitled Partners.  In the height of macro decline, I found myself parsing through opportunities to work in VC, start a new company, etc… my approach, which is fairly unconventional during times of career transition, was to exercise extreme patience. My theory then, which is consistent with the career advice I give almost everyone who asks for it now, was as follows:

By definition, in our careers, we only get to make 5 or 6 “5 year decisions” in our lives.  When faced with the prospect of unemployment, I think most people make these 5 year decisions around future direction quickly, in the midst of bias and incomplete data, in a sort of flight from uncertainty.  In reality, much like in a game of poker, I believe the correct strategy is to let a ton of hands go by, watch the game, watch the players, wait for Aces, and then push your entire stack into the middle.

Below is a fairly unstructured account from the depths of a very intense poker game I was playing in late spring of last year:

Business and Poker 7/22/09

In my life I have won and lost surprising sums of money at the poker table.  I don’t really play any more, mostly because I don’t have time, but when I did, there were 3 factors that affected my success, two of which were relatively constant and one of which was variable.  My skill was relatively constant…I suppose with volume of hands played, pattern recognition and probabilistic intuition improved, but I was generally equally capable of winning every time I sat down at a table.  Second constant was luck (or probability depending on how you want to look at it).  With a large enough sample, good hands are evenly distributed across time played, hands that should win do win, etc…but in a small sample size, or an individual session as the case may be, these odds don’t always hold true…I recently heard some professional poker players refer to this concept of occurrence against odds as variance…so I will borrow it.  The third factor, which was not constant, but in my opinion, the greatest predictor of my success or failure was my own patience…It takes tremendous discipline to sit at a table for 8 hours and not play a single hand…but commitment to playing winning hands is what allowed me to win more than I lost…sometimes I would get impatient, especially when I was younger, and played hands I shouldn’t have.  Sometimes I won them, more times I lost them, but I craved opportunity to the point where even a 20% chance of victory was an opportunity to win, not a likelihood to lose…the real money was never won on flyers, or paying to see flush draws…it was won by waiting as long as it took to see winning hands, and maximizing my bets on those winning hands…

The last 3 months of my professional career has felt a lot like one of those 8 hour sessions…the kind where I’ve been tempted by 20% hands, but certain that they aren’t the right ones to play…My friend Andy suggested that maybe I am playing this game too tight…waiting for pocket aces to push my stack in, when Jacks is a really good hand worth playing…I can’t disagree that Jacks win more than they lose…the problem is Jacks aren’t even Jacks anymore.  The rate of change in the venture capital industry, the startup ecosystem, the broader industrial landscape, and the global macro environment is so great that I don’t feel confident relying on Jacks right now…And it’s not just the rate of change, it’s the opacity of change that is commanding my absence from the action…the process of identifying opportunity for me is a combination of understanding the current state of things very well, seeing the direction of change, and determining the likely future state of things…as I try to go through this process, a major hurdle is the quality of data informing my understanding of the current state of things…traditional sources, such as media, academia, and industry thought leaders, don’t really have a clear picture of how there respective areas of focus have settled post meltdown…and the reason?  Because things haven’t settled…still moving targets.  Plenty of people are willing to admit that it’s too hard to see the future right now and how things are going to play out, but I’ve heard very few voices admitting that they don’t really see the present.  A source of this opacity, I believe, is a reaction to loss in consumer (and enterprise) confidence.  Everyone is so focused on affirming the security of their place in the future environment (both to outsiders and themselves), that they cannot stomach an objective present examination and communication of their own business, industry, country, etc…And I get that…there is an element of self-fulfilling prophecy when it comes to uncertain situations such as ours…those who claim to be the winners, gain traction and attention and support, and may become the winners for that reason, but everyone is not well positioned to emerge from this disruption to the context in which they previously existed and operated, and NOBODY has emerged because we are still mid-disruption.

Anyone who tells you they are playing 90% hands right now, likely had a 20-50% hand 18 months ago, that got a lot better when the flop came out “meltdown.”  So I have some guesses as to where we are right now, and where things are going, and who is well positioned for the future…but they are 20-50% hands at best  …and I don’t play 20-50% hands anymore…but shit…how long can someone possibly sit at the table and watch hands go by?  After a certain period of time…your neck gets stiff, your legs and butt begin to cramp…and you need to either make a move or get up and leave the table…normally, I would get up and leave, but then there are these factors that are accelerating my need to play a hand: 1) boredom: I can’t stand not having something interesting to run at, things are getting too academic, not enough action; 2) money: I’m fortunate to have saved up some scratch over the years, so I could do this for a while, but the bank account is steadily declining…3) momentum: momentum in a professional trajectory is not to be taken lightly.  Networks atrophy when not utilized.  Action abstracts into theory, and the energy required to speed up a ball that has decelerated is much greater than the energy required to maintain a ball already in motion at desired pace.

You know a great place to sit around and watch a ton of hands go by without playing any right now? Venture Capital.  Still collecting sweet management fees to eliminate factor #2 (money), no pressure to push the stack in on a hand (in fact LP’s would prefer it if you didn’t), and access to better data on the current state of things.  So what’s the problem?  Seems clear, go work in venture capital until you see a winning hand, and then leave and play it, right? Wrong..[truncated]

P.S. I ended up working with a VC for the summer, watched a bunch of hands go by, used that as a platform to find my “aces” in JumpPost, and only after did my gig with Lerer Ventures emerge…

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Where to focus when “dating” investors

Posted on May 5, 2010. Filed under: startups, Uncategorized, venture capital | Tags: , , , |

One of the most important factors in the success or failure of a venture capital firm is their ability to attract and partner with entrepreneurs whose financings are competitive.  These “top tier” entrepreneurs have either built an asset which is visibly valuable to the market (all investors) or achieved something in a previous endeavor which differentiates them from the average early stage startup.  In this scenario VC’s are actually competing for the opportunity to invest in a company.

Last night I stumbled into a conversation between one of General Catalyst’s Limited Partners (LP) and a group of young entrepreneurs that broadly fit the bill of “top tier” founders.  This LP is responsible for investing the endowment of a major university, and his job is to measure the efficacy and trajectory of the funds in which his endowment is invested.  There are concrete metrics of success and failure in VC (namely returns and exits), but because those metrics don’t materialize for 3-10 years from the time a new fund is closed, LP’s must use softer metrics to measure the health of a fund.  This particular LP, recognizing the importance of a firm’s brand in winning competitive deals, asked these 3 young founders the following question: “When you meet investors and are deciding who you want to work with, what factors influence your decision?”

In listening to their responses, many of which echoed the value propositions a fund would use to market themselves into a deal (i.e. team building, relationships, introductions, etc..), I realized that my view of what makes an interesting investor may be abnormal.  To me, there are 3 things worth paying attention to:

1)      Incremental data: as a founder, you are constantly making decisions based on incomplete data sets.  An investor sits above your market, and through investments and involvement in companies adjacent to your product or market, or through past experience building analogous products or companies to yours, they represent access to a more complete dataset.  With more complete data comes better decision making, so an investor’s ability to ethically and frequently improve your datasets is of real importance.  If you’re building a company that is dependant or interfacing with the twitter ecosystem, there is an obvious advantage to having Fred Wilson or Jack Dorsey as investors.

2) Incremental thinking: When speaking with investors, my goal would be to communicate all of the important data I have as clearly and quickly as possible.  More often than not, as a founder, you will have spent way more time studying and understanding your market than an investor, but I think the goal of getting to know an investor should be to learn how they think.  Get them up to speed as quickly as possible, and then see if, based on a common dataset (or even better, with a common dataset, plus their incremental dataset), the investor identifies the 3-4 most important levers that impact your strategy and vision.  Ideally, you will see eye to eye, but then you hope they will push you with new thinking and ideas that you would not have arrived at without their help.  This incremental thinking and analysis will be something you can look for from an investor over the life of your startup.  The more data you collect as you continue to execute, and as your market evolves, the more important it becomes to have an investor who will be capable and excited to help your interpret it when making directional decisions. (NOTE: I hear many founders talk about wanting their investors to give them money and then “get out of the way.”  This is arrogant and an underutilization of a relationship that should be a major boon to your company)

3) Trust: I can’t stress enough the importance of trust in a relationship with investors.  There are different levels of trust.  First and foremost, you need to be able to look the guy or girl in the eye from whom you are raising capital and see that they are a good person.  Ask yourself, “is this guy ethical? Do we share common values? Can I predict how he will react under stressful situations and do I trust that he won’t compromise our common values no matter what the circumstance?”  If you can answer yes to that level of trust, the next layer of trust is trust that you can expose all the data you have without fear.  Many founders feel like they have to “manage” their investors, share the good data, and deemphasize or mask the bad data.  This feeling largely comes from a lack of predictability around an investor’s response to bad data.  Personally, I would look for an investor who you feel comfortable exposing your weaknesses to.  Trust them with the whole dataset and you can maximize the “incremental thinking” piece of the equation.  Trust them with only a partial dataset and you reduce the likelihood of success.  I guess I’m saying find someone you trust not to freak out when bad data emerges, because I can guarantee you…it will.

So to recap, look for data-driven thinkers with experience executing around dynamic and changing datasets in a fashion and cadence that is consistent with your personality and ideals.    

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    I’m a NYC based investor and entrepreneur. I've started a few companies and a venture capital firm. You can email me at (p.s. i don’t use spell check…deal with it)


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