Archive for February, 2011
Fred Wilson Nails Early Stage Distribution Playbook
Fred Wilson just wrote a post on marketing/distribution for early stage companies that is an absolute must read (to the point that I feel a need to reblog it). His main point is that spending money to grow before your product is awesome enough to grow organically, is a waste of time and resource. I’ve been thinking about this a ton vis a vis hyperpublic and also in preparation for a talk a gave on Wedneday at Jon Steinberg’s Viral Meetup at General Assembly. I just wrote a response to Fred’s post which I’ll reproduce below because I think his lesson goes beyond just how to think about paid growth, but also to how to think about spread in general, and when the right time is to optimize for spread:
My response to Fred:
“wow…weird…almost identical to my talk at Viral meetup on Wednesday…but I went even further. forget about paying for traffic in early days, but I also said forget about trying to induce virality in early days. your last point about making the product not suck was my entire point. I talked about the idea of “gift virality” which I’ll define as “users perpetuating your product out of affection to the recipient.” If I think about why I share Groupme, it’s not because I’m unlocking a new feature by hitting Fbook like, or even saying something about myself, by displaying my usage. I pass groupme along because it’s a gift i can give to friends that doesn’t cost me anything. Too many viral mechanics focus on rewarding or incentivizing spread before the product has become awesome enough that it is a “gift.” That type of inducement is non-replicable and short term. Rather than chasing the techcrunch company that got 1 million users in 48 hours, especially for early stage companies that are resource constrained, I would argue that early teams should spend all their attention turning their product into a gift. Once that’s achieved, all of the mechanics which you very clearly and helpfully outline are known science. Too many consumer internet apps chase growth before their product is awesome. It’s important to have users and data to make a product better, but optimizing for spread before your product is a “gift” (especially for utility based products) is a distraction and inefficient use of internal bandwidth. Paying for growth is an amplification of that mistake. Both induced viral mechanics and early paid acquisition are band-aids that artificially inflate but do not solve the problem of distribution. Great post Fred, one of my favorites you’ve ever written”
Read Full Post | Make a Comment ( 8 so far )My “Golden Syndicate” & 4 Free Passes to Medieval Times for Your Great Employee #5
Lately I’ve had a few people ask me who are the most valuable investors in our syndicate at Hyperpublic. My first answer, before I get into specifics tends to be as follows:
“Entrepreneurs tend to overestimate the impact that their early investors will have on day to day operations of their startups. Especially relative to the impact of their early hires.”
Here’s the secret truth of a seed round syndicate: once you close your round, you get a big pile of money and then it is almost 100% on you to make a success of your startup. That’s a bit of hyperbole, but you get the point.
Even as we grow at Hyperpublic from our initial two (Doug and I) to hopefully 5.5 (if we get there on someone we’ve been getting to know for the last month), the impact of this 5th team member will be 500% more important to the ultimate trajectory of our company than any single investor has been or will be to the ultimate outcome of HP. The reason: because investors are there to enhance your team’s internal efforts, but they can only amplify the momentum, good decisions, and execution that you are generating from within your core team.
This may sound strange for me to say, as I myself am an active seed investor at Lerer Ventures, but I thought it worth debunking the myth that a “golden syndicate” is capable of getting an early stage startup to the promised land. I think of our investors at Hyperpublic, at least at this point in our development, as extensions of our core team. My job as CEO is to channel their domain expertise and experience into actionable efforts within our core team, but without an amazing group of people putting their blood and sweat behind our investors’ domain expertise and guidance, our amazing syndicate would be valueless.
So this is all to say, nobody is going to build value for your startup like your team. Bring in the best investors as you can, but understand that 99% of the work is going to get done by full time employees. Success rests not on the shoulders of your syndicate, but squarely on the shoulders of your team.
P.S. I’ll write tomorrow about all the amazing things our investors have done to help grow Hyperpublic, and also maybe I’ll cover the value we’ve added to our portfolio companies at LV, but I don’t think there’s an experienced investor on earth who will place their own impact in the same stratosphere as that of the early teams that they’ve backed.
Read Full Post | Make a Comment ( 1 so far )As the web distributes, will human beings follow?
I read in the Economist this week that an estimated 5,000,000 people move away from rural environments into cities every month. That means that almost 1% of the human population will move to urban environments in 2011. Pretty staggering to think what this means for the physical distribution of people in even 100 years. On the surface, it looks like urbanization is the future and we will all live in cities one day. I have written previously about the fallacy of assuming trends like this are linear, as opposed to cyclical, and lately I’ve been thinking about urbanization through this lens. The impetus: parallels between our 7 Billion person system and the system of the web.
The concept of urbanization is a very 1.0 idea. The web used to be dominated by destination sites that demanded that every node on the web travel to a central destination to extract whatever value they sought. So if you were in the market for a new car or a piece of news or a date, you would travel to Cars.com, Newyorktimes.com, and craigslist respectively. Everyone had to go to the central location because that’s where everyone else was, and that’s where information or value was most easily transferred. Similarly, in our physical system, nodes (people) are flocking to the destination (cities) in order to extract greater value than is achievable in the country. Urbanization is an optimization effort on the part of our system, increasing productivity, yield, and ultimately health of the system.
But wait a minute….destination sites are the past, not the future. Now the web is distributed. Nodes no longer have to travel to a destination in order to extract information or value, the information value flows away from the destination to the node. This is a more efficient and more optimized architecture than the 1.0 destination, and in theory, could be predictive of our physical system’s evolution.
So maybe this trend toward urbanization will, in fact, reverse over a long enough time horizon. As resources/land becomes scarce and expensive in urban environments it makes sense that the population would redistribute, sending value away from the destination to the less populated areas where people could exist in a more distributed fashion. The internet itself, has actually lowered the requirements of city dwelling insofar as we don’t need to share physical proximity to other nodes in our system in order to move information between us.
I see the main constraint of a distributed human system being our inability to move physical matter as effortlessly as we do digital matter. Innovations in transportation have helped to ease this constraint. As we have moved from the invention of the wheel, to the bicycle, to the car, ship, and now the plane, our system is able to push physical matter between hubs with an ease that alleviates the need for a “destination” architecture to some degree, but the constraint is still very real.
I look to innovation in transportation as the gating factor on weather our physical system could ever achieve a perfectly distributed architecture. Perhaps teleportation will be the catalyst that will drive nodes away from cities back out to the rural environments from whence they came 🙂
Read Full Post | Make a Comment ( 6 so far )Palo Alto to NYC…No Pit Stops
So it’s 70 degrees and sunny in Palo Alto right now. I am sitting in a cavernous and empty loft in new york city, listening to a rainy sleet drip against the air conditioner outside my window. You are riding your bike down University Avenue right now, waving to all your friends who work at Facebook and in 2 weeks your life is going to change forever. In 2 weeks you are going to quit your job at Google or Quora, throw all your shit in a suitcase, throw that suitcase in the back of your Prius, and you’re going to drive that little Prius 3000 miles from Palo Alto to the NYC. You’re going to crash on your awesome friend’s couch for a few weeks while you take in NYC and learn what makes each neighborhood so fucking awesome and different and unique and stimulating and your going to taste the energy here. You’re going to discover all of the amazing things in this city, you’re going to snap photos of the places you discover and want to remember, and you’re going to use Hyperpublic to capture and organize this experience of discovery. You’re going to leave the sun and the valley, and the echo chamber and the quiet and your going to venture out on this Odyssey because your are the next person we are going to hire at Hyperpublic. You are going to propel yourself into the depths of a New York winter because you have the opportunity to not only join but define what is going to become the first multi-billion dollar public true technology company to be built in New York City. You are going to introduce a piece of the valley’s DNA into a market that desperately needs it.
As a city, we are long on design/UX innovation and weak on deeper technical DNA. New York has always had a creative class, but only recently have they been empowered to productize that creativity on the web. Always lacking deeper technical DNA, in a world where building robust applications was actually difficult, this creative class was not capable of harnessing it’s vision and talent into products. As the cost and difficulty of building an application has reduced, talented but not deeply technical New Yorkers have become capable of supporting and productizing the vision locked within our creative class. This change, in conjunction with an influx of capital from Boston/Sillicon Valley, and the mass dissemination of tactical startup advice through social media channels, has set the stage for an explosion of activity and innovation that our city has not seen…ever.
Hyperpublic has begun to build the infrastructure that will support the swelling tidal wave of lightweight social and mobile applications that leverage the location datapoint and that interact with the physical/local environment. These are applications only conceivable within the parameters of an urban landscape, and there are going to be tens of thousands of them…
When you move here, you will be in the top 2% of engineers in New York City. We welcome you with open arms.
The details:
This is our app: http://hyperpublic.com/
This is what’s underneath the hood: http://techcrunch.com/2011/02/01/hyperpublic/
This is how you make it happen: Jordan@hyperpublic.com
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