startups
Founder / Life Balance
This is the first day in about 3 months that I have had trouble concentrating on work. I have been more or less laser focused on building JumpPost and our new seed fund, to the point where I sit down at my computer at 9:00AM, blink, and it is 11:00PM. There is a benefit to this level of focus, which is that you get a shitload done in a given week, create value for your shareholders, etc…but there is also a hazard. The hazard is that when you allocate so much focus toward pushing your professional ambitions forward, you don’t realize how badly you’ve been neglecting everything else that’s worth living for…
Now, I am all for sacrifice in the name of building and creating, and there isn’t a day that goes by that I question the decisions I’m making and how I’m prioritizing the various aspects of my life…but even within the bounds of what I know is important to me at this stage in life, I realize there are times when life can become imbalanced. Today, it is 4:04 PM, I’m sitting in my office with all the windows open, the sun is shining through and there is a warm breeze blowing all the papers on my desk ever so gently. It is good Friday, half the world isn’t working because of holiday, and the other half (at least in New York where this is the first Spring day we’ve had in weeks) is checked out and catching some rays, and I am sitting here, staring at a double monitor, a to do list a mile long, and if this were any other day, I’d be cranking for another 4-8 hours…
But, today is a day where I am not focused. Refreshingly unfocussed for that matter. Today is a day that I have decided to remind myself that there is work and there is life, and it’s okay for work to be life, but it’s ALSO OKAY FOR LIFE TO BE LIFE. I think I’ll go buy an ice cream, walk to union square, talk to a few strangers, go out for a nice dinner, find a bar with an outdoor area, meet some interesting people, not check my email all night, and believe it or not…neither my company, nor our fund, nor any other ambition that I have been focused on will fall apart between now and tomorrow morning.
Too often in startup world, especially when the message of relentless sacrifice is drilled into us by fellow founders, investors, and the community at large, we suffer for the sake of suffering…it is easy to get into the mindset of not allowing ourselves any leisure or break from the mission…but as much as you’d like to think you are a machine, and as much as you’d like your investors and peers to think you are a machine, the reality is you’re human, and the sun on your face and a breeze in your hair is an important part of life that is worth grabbing when it presents itself. Computer off, leisure on. If you need to get in touch with me and it’s urgent…DON’T.
Read Full Post | Make a Comment ( 4 so far )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 )“Minimum Viable Lawyering”
So today I was talking to a new lawyer at my law firm, Cooley Godward, about a terms of use for JumpPost and things started to go down the road of a custom contract. I said to him “Eric, are you familiar with the concept of a minimum viable product?” He said yes, to which I replied “That is what I am releasing on Monday. I want the ‘Minimum Viable Terms of Use’ that will support my minimum viable product. When we get to the point where it makes sense to have something more elegant, we’ll refine it.”
For founders, working with lawyers can be extremely challenging…if done properly, there is a tremendous amount of value in the time you spend with your lawyers…if done improperly there is a tremendous cost.
When I first started to engage with counsel (in my last company), I was constantly worried about the ticking clock (“this guy is $600 an hour, we’ve been on the phone for 30 minutes…I just spent 1% of my monthly burn in the blink of an eye”). Unfortunately this mindset causes founders to try to speed through calls, avoid asking important questions, and generally fosters a dynamic that is “watchful” as opposed to “collaborative.” Although the legal line item can often be the largest expense in an early stage startup’s budget, I have found that getting comfortable with this expense and being conscious of it, as opposed to fearful, will maximize value and minimize waste.
Before we get into how to manage cost, let me start by saying that one of the most important things you can do when working with a law firm is invest in building a real relationship with your lawyer. Don’t worry about the clock, just worry about getting to a point of real trust and mutual respect. It will pay for itself 10x.
Then, once you have gotten to know your lawyer, don’t incur costs until they are absolutely necessary. You may have a “legal roadmap” that requires an incorporation, option pool creation, terms of use, privacy policy, proprietary contractual agreement with a vendor, etc…and the cost of all of those efforts may total $50K. Most founders just want to check every box on their plan, so they dump all the work on their lawyers desk and say “go.” A month later they get a $50K check and then have to explain to their investors why their first months burn is so high. What I’ve learned is that you can line up these expenses with your operating plan, and only ask your lawyer to begin working on them when they become a stop gap to further execution. So, day 1 you need them to incorporate (free to $1K depending on the firm), but hold off on that option pool until you have a better sense of your hiring timeline. Why spend a $1 today, when you could wait until tomorrow. When building my first company, I said “go” to a $20K customized legal contract in the first two months of operation. I knew we wouldn’t need that contract until our product was live 6 months later, but I wanted it “in place.” That contract never got used once.
So the lesson is, don’t invest in a whole lot of legal infrastructure ahead of need, but rather approach your legal strategy the same way as you would your product strategy. Only spend what you have to when you have to. Get something out the door, acquire new data, and then iterate on what you have in place.
Note: There is an element of “protecting against future occurrence” when it comes to the law that sometimes commands more of an up front investment than is consistent with lean product development philosophy, but this is where having a lawyer you categorically trust is extremely important. Pat Mitchell at Cooley understands my lean startup philosophy and only advises me to spend when it is critical. Make sure your lawyer is giving you the advice that’s best for your company, not his/her near term cash flows.
Read Full Post | Make a Comment ( 10 so far )The Emergence of VC/Angel Syndicates
So I’ve been spending a bit more time than usual talking to entrepreneurs raising capital and venture capital firms investing in early stage companies, and there is a trend that I am trying to wrap my head around.
The trend: large venture capital firms are issuing term sheets committing to invest between $500K and $1.5M in early stage companies, and then offloading anywhere from $100K-$500K of the round to professional angels and seed funds.
So the question is, why are they doing all the work to find/negotiate/invest/and then shepherd these investments, only to let smaller guys piggy back on their deals?
I’ve got a couple potential answers:
1) They want to reduce their exposure to the investment by syndicating the deal, but as capital requirements come down for building companies, there isn’t really room for the syndicate of yesteryear. It used to be that a Series A round would frequently be split between two large venture firms, each invest half the capital with the confidence that future funding requirements would be high enough that they’d both be able to put real money to work behind their bet. But now that the $2M A round is being replaced by $500K seed rounds, and the $10M B round looks more like a $2-5M A round…VC’s are choosing to syndicate with partners who can afford to invest in the first round, but whose coffers aren’t deep enough to go heads up in the second. What that means is that the VC leading the deal, should this deal be a winner, doesn’t have to fight with another deep pocketed investor for an outsized portion of the next round (read: they’ll have an early option to increase their ownership).
2) They see the level of activity occurring in seed stage financing, but haven’t found a great way to participate in it. A VC with a $600M fund and 5 partners has a very hard time making small bets, getting small bets through their process, and putting proper internal resources (partner bandwidth) against those bets…so now, if they are no longer the first investors to not only see promising new companies, but also see the data on which promising new companies are “breaking out,” it is becoming increasingly important for them to “make friends” with the investors who are seeing those companies and data. The notion that angels and seed investors are a source of VC deal flow is not new, but the change in funding landscape and emergence of seed/feeder funds and super angels is cutting into VC’s deal flow. So when they do find a deal they want to put real money behind, they invite some smaller guys in as a sort of barter chip which says “I give you a piece of my deal, and you give me an early heads up on which of your deals are breaking out.”
3) They perceive some unique value, domain expertise, or relationships unique to the angels/seed guys they let in that will increase the value of the asset they have just invested in. Example: Big VC commits $2M to a mobile payment company, the former CEO of Paypal is an angel investor, it’s worth giving up a piece of my deal to have his expertise and relationships behind my new investment.
4) 5 networks are better than one. No matter how good a VC is, no fund’s network is complete. Expanding the number of networks a founder can tap, assuming the angels or seed investors will be active, can only help.
5) The founder/entrepreneur sees the value in #’s 3 and 4 and requests/demands the carve out.
My guess is that it’s probably a combination of all of these, but regardless of the reason, I think it’s a positive trend in the fundraising landscape for all parties involved…always nice to see a market evolve the way it should.
Anyone see downsides to this trend or other potential causes?
Read Full Post | Make a Comment ( 9 so far )5 Reasons Founders Hate the Question “So What Do You Do?”
I was at dinner last night with my family, my cousin (who is a PhD biologist), and a friend who is building a very cool tech startup here in New York. My cousin asked my friend what he did, and the response was as follows: “I have a startup in the advertising market.” Obviously this response told my cousin absolutely nothing, and so my cousin began to “pry” a bit… “can you tell me what the model is, how does it work?” Again, said entrepreneur sort of deflected the question: “I help take an offline process in the advertising market online.”
Watching that interaction, I realized something that I have found to be true in my entrepreneurial endeavors: founders don’t like talking about their companies with what Chris Dixon would call “normals” (non-startup/tech types). If I think about why this is, a few possibilities come to mind:
1) We assume that an audience of non-startup types (in this case a biologist, a psychologist, a real estate guy, and a fashion guy) doesn’t have the context around our market to appreciate the “coolness” of what we’re doing.
2) Because of 1, we’re faced with this choice of the elevator pitch which tends to draw a bunch of shoulder shrugs and “sounds cool(s).” Or a half an hour explanation of the supply chain in our market and where we fit into it. We assume nobody wants to hear about our work for 30 minutes (there are more interesting conversations to be had).
- The problem with this assumption, is that “normals” are actually fascinated by the idea of a startup and entrepreneurship (it’s a dream that many, many people have), so when a founder chooses not to engage in this conversation, it can come across as rude or aloof
3) Especially with early stage startups, there is no brand equity attached to our companies. When meeting for the first time, people typically want to come across as being successful or impressive (basic human need)…this is easy to do when you have a brand like Goldman Sachs behind you…all you have to say is “I work at Goldman Sachs” and you have satisfied this human desire to be perceived as successful…Even if Philip Kaplan says “I work at Blippy,” which in our community would satisfy this need, in a room full of “normals,” this statement requires some qualification.
- The level of qualification required then depends on how much shared context exists between the “normals” and the founder. Obviously a founder focused on building optical networking infrastructure is going to need more qualification than a founder building “an ebay for food,” and it is in this volume of qualification that we start to become a bit self-conscious.
4) Founders spend an inordinate amount of time every day thinking about, talking about, and really pitching our companies to investors/partners/customers/etc… Sometimes at the end of a long day, the last thing we want to do in our “socializing time” is run through another pitch.
5) Founders end up having extremely similar conversations over a period of time. People tend to respond to startup ideas in 3-4 distinct ways…and once you talk to 500 people about what you’re doing, 80% of conversations about your company fall into one of those 3-4. When focused so singularly on one subject, founders have an outsized appreciation for new conversations and stimulus…
What I have learned is that it is important not to assume a “normal’s” level of interest or context around your project. If you really don’t feel like getting into it with someone new, extend an invitation to talk about it in the future: “I run a startup in the ad space…it’s a longer conversation, but if you are really interested, we can get into it later.” Now, if someone you meet wants the 30 minute version, they’ll remind you later, and you can go from there. My advice to founders is go the extra mile to evangelize your company to anyone who is willing to listen…it makes you better at selling your product and every person you talk to has the potential to provide unique insight into what you’re doing.
Read Full Post | Make a Comment ( 13 so far )Trees, Sharks & Change
My last post on this blog was 5 days ago (my 28th birthday). My lull in activity since then stems from the discussion that ensued both on and off line surrounding the subject matter of that last post. In short, that post articulated my feeling of racing against the proverbial life clock to accomplish my dreams. Many people were concerned that measuring my progress in life against the metric of age was a potentially harmful school of thought, and the voices expressed in the comments of that post were interesting enough that I thought the discussion deserved “homepage real estate” for a few extra days.
I was talking to my friend Brett yesterday and he said something that made a lot of sense to me. He said, “you and me, we are like sharks…we like to be moving all the time, and if we stop moving we die…most people aren’t like us.” I thought about this for a while and I realized that the reason why I didn’t detect a shred of despair in my previous post (while many people read it that way), is because the state that I am happiest in is one of change. Through that lens, the reason I keep introducing what the most ardent critic, Matt Mirelis, would call “unattainable” accomplishments/timeframes as points of reference to measure my own progress in life (i.e. those who accomplish amazing things very early in life), is because with the knowledge that more is possible than what I have or am doing, comes the reminder to keep moving and never become complacent.
I think many people work towards defined goals in life (money, wife, house, kids, cars, corner office), and once they achieve them, they stop creating new goals and become complacent. I will call these people “trees” (once a tree grows to be a certain hight, very hard to move it). In this complacency, “trees” find happiness, but that is because they are not “sharks” as my friend Brett would say. Reveling in the satisfaction of what you are doing in the present or what you have done in the past is a recipe for slowing the rate of change in one’s life. This is a completely valid ambition, to reduce change, and some of my closest friends are unhappy during transitions, and extremely happy in routine…but “sharks” crave constant transition.
My dad called me up on birthday and said, “so, your mother read your post and is worried about you…she thinks you sound defeated…but I read your post and thought the exact opposite…and I told her, that’s the difference between being an optimist and a pessimist.” I didn’t get his analysis when he first said it, but now in the context of a “shark” who always wants to be in motion, I realize that by craving change from the present context, we “sharks” are inherently optimistic. We exist in a state of transition toward the future because deep down we believe that the future will be as good, if not better than the present (no matter how good that present may be).
What you have to understand about people is that we subconsciously build infrastructure around our lives that is designed to preserve a state of happiness. Those who derive happiness from complacency or lack of change seek out stable situations and build a social/professional/personal infrastructure around minimizing change, largely as a mechanism to maintain their state of happiness. We “sharks” build a social/professional/personal infrastructure around our lives that is designed to perpetuate movement, because that is the state in which we are most happy….Measuring my progress in life in the fashion I described in my last post is perhaps a piece of infrastructure that I have put in place to perpetuate a never-ending catalyst for change/movement (the derivative of which is never-ending happiness).
I think most of the people who saw the negative element in that post are probably not “sharks,” and that is completely cool. But “sharks” don’t give a shit about what they’ve already accomplished in the past, or what they’re doing in the present…we are always looking toward the future and actively moving ourselves into it. So I guess that’s why I benchmark my progress in life against my age…it’s because I am aware that the state that I crave the most (as an optimist) is movement into the future, and as time passes, we start to run out of future to move into…and the day I stop moving toward the promise of what’s next, as happens when a shark stops swimming, is the day I die…
Read Full Post | Make a Comment ( 11 so far )Full of “Potential” = Full of You Know What…
So today I am 28 years old. When I was 24 I used to look at other Associates at venture capital firms who were 27 and 28 years old and think to myself “well, I’m four years ahead of these guys.” When I was 26 and founding my first company I used to look at 30 year old founders and think “well, I’m 4 years ahead of these guys.” Now that I’m 28, I look around at my peers and I’m pretty much right smack in the middle, not really “ahead” of anyone. And what’s worse is, 2 years from now, I’m going to look around and start to say “well, I’m 2 years behind these guys.” It’s already happening. I spend time with a guy like Chris Hughes (26 I think) and leave thinking “well, I’m 2 years WAY behind that guy.”
For the first 18 years of life, and really through college, I think most young people are valued by their peers/teachers/family, etc… based on “potential”. Especially is the case with my generation (and I have heard many baby boomers…hi Joel …complain about this fact) we are constantly told that we “can do whatever we want,” and that we are “special, and going to do amazing things in life.” We are told that we have the potential to outperform the norm, to differentiate ourselves, and escape the statistics of mediocrity. Depending on a specific student’s maturation and interests in college, part of the pack begins to focus on turning that “potential” into “actual,” and the majority of us begin to struggle with this conversion in our first year of work after school.
In a world where everything is ahead of you, it is very easy to believe that you will achieve your dreams, but as years begin to pass and we are inevitably not as close to those dreams as we thought we would be, we begin to wonder why all that “potential” has not properly converted into “actual”. As an analyst in an investment bank, the masses of high potential youngsters are able to attribute the disconnect to external forces holding them back. “These ass holes have me putting together mindless powerpoint presentations. I’m not using my talent here. They’re the ones who are not letting me realize my potential, but I am still special.”
For most, the frustration of these external mitigants drives us to flee the confines of entry level positions for an environment where we will have the latitude to finally spread our wings and achieve our imminent greatness. So we jump from entry level at XX, to slightly above entry level at YY, and yet still we are not where we thought we would be when we were 18 and had ambitions of taking over the world. Conveniently, there is still a structure in place on which to place the blame. But with more responsibility in this new environment the story of “I’m not achieving my full potential because of something other than me” begins to dilute. Even though we may be doing really well in this new chapter of real life, we’re still not “breaking out” like the outliers who we read about in the newspapers, etc. “25 year old Harvard Grad returns 1000% on his own hedge fund and simultaneously saves 10,000 baby seals through an innovation in oceanic chemical treatment.” We think to ourselves, “I’m 25, I went to Harvard, how many baby seals have I saved? Zero. If only the Partner at my firm didn’t stifle my desire to experiment with oceanic chemical treatments, I would be the one in the WSJ.”
For me, one of the first things I realized when I took the plunge into entrepreneurship, was that all of the sudden, there was no external structure to account for a disparity between my “potential” and the “actual.” Now, if I’m not Chris Hughes at 26, I’m simply not Chris Hughes. I still may achieve an “actual” that I feel is on the same level as his accomplishments (unlikely J), but the reality is it might take me 10 more years than it took him. And in those 10 years, he is going to achieve more amazing things, and at the end of our lives when we look at our respective “actuals,” Chris Hughes will have objectively outperformed me. Why? Because he is simply more advanced.
So I look at 28, and I think to myself, “everything I accomplish from this day forward will be slightly less impressive than had I done it at 27.” This is not to say I am upset about turning 28. My pace is my pace, and everyday I put 100% of my effort into realizing my “potential,” but I am conscious of the fact that every year that passes signifies a declining window in which I can make it happen. Realizing our dreams is a true race against time.
Read Full Post | Make a Comment ( 33 so far )35 Gut Checks When Founding Your First Company
If you are thinking about founding your first company, standing at the edge of the entrepreneurial swimming pool, trying to decide if you should dive in, here is a checklist (sort of a Meyers Brigg for founders) to help you figure out if this life is for you. It is based on my observations of the thousands of entrepreneurs who I have gotten to know over the past 4 years. I would say, if you’re answer is “No” to more than 10 of these statements, think very carefully about making the jump. There is no science or data to support this checklist. Strictly my own observations of what is required to enjoy and excel in this experience.
1) I tend to thrive in an unstructured environment
2) I am capable of teaching myself almost anything I want to learn
3) I do not need positive reinforcement from others in order to be happy/effective
4) I am primarily competing against myself
5) I am completely self-motivated
6) More often then not I get what I want
7) Money is not the primary metric by which I measure my professional success/progress
8) I am comfortable living a life that most of my friends and family will not understand or be able to relate to
9) I am a fantastic listener
10) I seek out help at the first sign that I need it
11) Work is by far and away my greatest passion
12) I handle disappointment well
13) I have more energy than most people
14) I love to win and hate to lose.
15) The concept of “the path” revolts me
16) I am above no task or role
17) I have friends and family who will support me even if I do not give them as much attention as I should
18) I have no fear of running out of money
19) The word “can’t” is not in my vocabulary. There are things that are extremely difficult to achieve, but nothing is impossible
20) Pressure does not derail me
21) I am not intimidated by anyone
22) I enjoy solving hard problems
23) I do not frustrate easily
24) I exercise regularly
25) I fundamentally believe in myself
26) I am highly experimental
27) I am a doer, not a manager of doers
28) Laziness and complacency disgusts me
29) I am an excellent judge of character and talent
30) I am rarely tricked. It is very difficult to deceive me.
31) I have an extremely low tolerance for incompetence
32) I have an extremely accurate perception of my strengths and weaknesses
33) I am not too proud to admit what I don’t know
34) Everyday accomplishments bore me.
35) I am going to change the world
Read Full Post | Make a Comment ( 31 so far )Charles Darwin Would Have Loved the Mobile Internet
Lately I’ve been thinking a lot about the human population as a system. I’m assuming there is a large body of work and thought that has been devoted to this subject matter. I have read none of it. I tend to subscribe to the concept that our species is acting as a whole, and from an evolutionary perspective, most of the changes/advances that we are experiencing are the result of our mental (as opposed to physical) capacity. So instead of growing a longer beak to adapt to secure food in a changing environmental context, we are genetically engineering corn to secure food in a changing environmental context.
With that in mind, I can see no greater step function in the advancement of our species than the rise of an information architecture that enables seamless transference and sharing of learnings between individuals and groups within our broader 7 billion person population. I’ve been thinking a lot about how the existence of this central data infrastructure is impacting our individual experiences and contributions to the system as a whole, and at the simplest level I’m arriving at the subject of decision making.
I’ve asked a bunch of people to estimate the number of decisions that a human makes in a day, and the responses have ranged from 100 to 1 Billion. I’ve googled this question and can’t find a generally accepted answer, largely because it hinges on one’s definition of a decision. These conversations quickly arrive at the question of conscious vs. unconscious “decisions,” and for the purpose of this discussion, let’s say that a decision requires conscious thought. Even by this definition, life looks a lot like one giant decision tree, and by that thinking, the optimization of decision making is an optimization of human life (and if the species is a system made up of 7 billion human lives, the optimization of individual decision is an optimization or evolutionary advance that will sustain our species)…I think
So I would argue that the development of a central information system shared by all humans within our system has fundamentally changed the way we make decisions…It used to be that there were two fundamental inputs into the decision of an individual: 1) that individuals prior/internal past experience and knowledge, and 2) the data readily available in his/her physical environment. So a caveman is deciding where to hunt for food: he 1) references his past experience of where the animals tend to hang out, knows he needs to find a watering hole, etc… and then 2) surveys his physical environment for data to inform his decision. The data readily available in our physical environment is absorbed through our senses, and manifests itself primarily in audio/visual/olfactory inputs. So after referencing his internal experience/context he looks for animal tracks (visual data), listens for calls or rustling in the bushes (audio data), and smells for scents and their relationship to the direction of the wind (olfactory data). The combination of these physical data sources and step 1 leads him to a decision to walk North.
Now let’s take the Cave man’s experience in 2010. Same goal: find a place to hunt…what’s his process for decision making? He still engages in step 1, and references his past experience and knowledge, still engages in 2 and take in the data readily available in his physical environment…but all of the sudden there is a 3rd readily available data source on which he can rely to find the animals. The mobile device in his hand is a gateway into a shared information system in which he can reference the real time experience and learnings of the other hunters in the area. He read’s his twitter feed, and see the Caveman 2 just killed a zebra 700 yards west of him, references his internal experience to know that zebras move in packs, and now he is in a position to make a better (optimized) decision on what direction to walk. Blow this experience back up to the system level, and now our species is more efficient in securing food and sustaining itself.
So now, there are two types of data ingestion that impact the optimization of our decision making processes and our lives: 1) a “pull” scenario like the caveman and the zebra, where we are actively seeking a piece of information to influence an immediate decision (the most clear example of the information architectures impact on our decisions), and 2) the “ambient data ingestion” scenario, where in the absence of a data requirement for a specific decision at hand, we are pulling on data with our excess bandwidth at any given moment (we can process something like 126 bits per second) that while not applicable to an immediate decision, is applicable to future decision within our day/week/month…An example being, I have a minute that I am waiting for the subway, I may be consuming less data in my physical environment than I am capable of, and I decide to read my blog reader. I ingest textual data in the form of a restaurant review, and when I get home an hour later, and it is time to make the decision of where to eat, I am better equipped to do so (with that piece of data pulled from the central and shared database). So the presence of a central data source is optimizing present and future decisions.
I think subconsciously, it is the availability of this data and it’s impact on the decisions in our life that is driving the “addiction” to mobile devices, and to a lesser extent the internet at a whole. Watching for that red light on your blackberry, waiting for the next email, is not necessarily a human waiting for an answer, but maybe just a human looking for a new piece of data, and a new decision to address. Which brings me to a broader question of the effect of this central database on the volume of conscious decisions we make in a day (my guess is it has increased that number), and more broadly the effect of an increased volume of decisions in the system on the output of our species as a whole…
anyone have any good reading on this stuff (ideally articles, not books)?
Read Full Post | Make a Comment ( 3 so far )Founders Beware: True “Advisors” Don’t Ask for Free Equity
Fred Wilson wrote a post over the weekend about the importance of role models to early stage founders. The discussion around this post led to the subject of Advisors and Advisory Boards, and I thought I’d take a minute to shed some light on the bright and dark sides of startup advisors. This post came on the heels of a meeting I had on Friday with a young entrepreneur here in New York with whom I was sharing some fundraising ideas. At the end of the meeting, we agreed that I’d spend a little more time reviewing his pitch with him and maybe making some introductions to angels, to which he responded “okay, so let me know how you want to structure that and we’ll go from there?” I asked what he was talking about, and it became clear that he expected to pay me for my advice/help. I further learned that another now-well-known entrepreneur/investor here in New York (for whom I sort of had respect) had taken a piece of his equity in exchange for “formal advisory services,” and although I didn’t say anything at the time, I was thoroughly disgusted by this “advisor’s” behavior.
Here is my advice to startups trying to secure advice and mentorship from experienced entrepreneurs and executives: advice and guidance in our community is abundant and free…equity in your company is not. This is not to say that you shouldn’t use early equity as a form of compensation to get your company off the ground, but be watchful of the scenarios in which you do so:
Scenario 1 (Complete Bullshit): You meet with a guy/girl who you think could add a lot of value and/or credibility to your project. At the end of the meeting, they say “I’d love to get involved. Typically I’d look for 1-2% of a company at your stage, and that 1-2% gets you an hour of my time every week and some great introductions and relationships.”
Savvy founder’s response: Run for the hills. This “advisor” is a complete predator. The value they add will not be worth the equity they are asking for, but more importantly, they are trying to take advantage of your lack of experience in this world. General rule of thumb: anyone who directly asks you for equity in your company without investment is a scumbag. Stay away.
Scenario 2 (Better, but still not good): You meet a guy/girl who you think could add a lot of value and/or credibility to your project. At the end of the meeting, they say, “Good luck, let me know if I can be helpful.”
Savvy founder’s response: Build a relationship with this person, continue to seek whatever amount of guidance they are willing to provide out of interest and belief in your project. If you find you are asking more of them than they are able to give, perhaps offer them the opportunity to invest on favorable terms in your company. If they believe in what you’re doing, and they have made enough money to part with $25-50K, they will be honored that you are asking…don’t be afraid to. But, if they say no, don’t say “okay, can I give you some equity to be formally involved?” If they aren’t going to pony up as an angel investor, a couple fractions of a point (point=1% of equity) is not going to incentivize them to go beyond what they are already willing to give in terms of time/advice/introductions. Granted, if you make this offer and they accept, they are not a scum bag (as is the case in scenario 1, but the truly righteous and high quality mentors in our community will not accept your freebee. So there is an adverse selection process that occurs when you try to build an advisory board through free equity allocations.
Scenario 3 (Makes Sense): You are missing a key piece of DNA in your company necessary to execute on your plan (i.e. non-technical founder engages outsourced development shop and does not have the domain expertise to effectively manage the project).
Savvy founder’s response: This is actually a scenario where I would advocate parting with some equity to get a “technical advisor” to help manage the project. But this is not really an advisor at all. The person you bring on will be performing a day to day role within your company. In reality, they look more like an independent contractor who is willing to accept equity (as opposed to cash) as payment.
My argument is not that an early stage founder should be stingy with his/her early equity…in fact quite the opposite. At the onset of a venture, the financial outcome of your company is pretty much binary: either you build something and successfully exit (make a lot of money), or you fail…a couple of points allocated toward increasing the likelihood of a positive outcome are well spent…just make sure they are being spent on actual work and output, as opposed to advice and guidance.
Read Full Post | Make a Comment ( 14 so far )Twitter Slows, What Blippy Thinks It Knows
Premise: Twitter’s fundamental innovation was a lowering of the effort required to establish a public voice.
So if you looked at the universe of public content creators, imagine a series of concentric circles, each representing an expansion in the volume of published voices.
Concentric Circles of Publishers
The inner circle would represent traditional journalists and authors. It used to be the comittment and effort required to publish your voice was a dedication of your entire vocation to that effort. Blogging platforms like wordpress and blogger then came along and lowered the required commitment from a vocational dedication to simply creation of long format articles that mirrored the structure of professional content creation, but without the effort of establishing employment/partnership with a 3rd party publisher for distribution. That innovation increased the universe of content creators from XX professional writers (lets call it hundreds of thousands), to XX+YY writers+bloggers (I just read an estimate that in Feb 2006 (pre microblog explosion) there were an estimated 200M blogs in existence). The addressable market for blogging platforms like WordPress and Blogger was constrained by the effort/time required by a user desiring a voice to consistently create long format (multi paragraph) content. At some point, their penetration reached a market of consumers who fundamentally desired a public voice, but who were not willing to put in the time and energy to maintain a blog. Then along comes Twitter and other mircroblogging platforms with an innovation that reduced the comittment required to have a voice from hours per week (on blogging platforms) to minutes per week. Twitter established the next concentric circle of publishers who desired a voice and were willing to put in a few minutes a week, but not a few hours per week, in order to maintain it and reach an audience.
Which brings us once again to the limits of Twitter’s addressable market, as defined by the population of people who may still desire a public voice, but who are not even willing to allocate the amount of effort/time that twitter requires in order to establish and maintain it. So Twitter’s addressable market of users in confined to the total number of people in the world who desire a public voice and the percentage of those people willing to put in the required active effort to maintain it (leaving aside the user who is only consuming content on the site but not creating it…which is a whole other discussion). I have no idea if the graph below is indicative of the company pushing up against those limits, or if there is some other explanation for the slowing in their growth curve, but I have no doubt that there are services on Twitter’s heels that seek to reach the next concentric circle of consumers desiring a voice, but who are too lazy even to actively engage in a microblogging platform.
One such service that seeks to reduce the active effort required to publish a “voice” is Blippy.com. Amongst the venture/startup world, I would say there is a lot of anticipation around blippy, which I believe many are incorrectly viewing as the platform which could create the next concentric circle of publishers by making a feed of content that is almost passively (read: zero active effort) broadcast to a user’s “reader base.” Once you sign up to Blippy, a feed of your purchases is published to followers. So the user does not have to actively put any ongoing effort into publishing content (not even writing 140 characters), so long as they let Blippy pull transaction level data from the creditcards, online accounts, etc…While that may be interesting to a body of readers in a similar way as to how ones tweets are interesting to followers, I would argue that a stream of purchase data is not a true “voice” and does not empower users on the publisher side to “speak to an audience,” which is the value that I think sustains blog and microblog platforms. So Blippy might look like a “micr0-micro blog” that would blow out another concentric publishing circle, but I don’t think that’s gonna be the case. Now, there may well be other forces that contribute to Blippy’s growth and allow it to become an interesting consumer service, not the least of which, is people’s general desire to communicate their consumption behavior (“i bought this expensive thing, and i want everyone to see that I did because it says something about my success and ability to spend”), but that type of value proposition does not seem to have the same potential scale as a true innovation in the race to give a wider universe of consumers a public voice. If anything, I’d guess that this type of passive data capture (also at the core of the burgeoning location based services market) will end up being a feature/input incorporated into true “voice providing platforms” like WordPress, Twitter, and whatever is after Twitter, as opposed to standalone replacements to the existent publishing platforms.
Read Full Post | Make a Comment ( 8 so far )FundlessFund Hijacks My Blog Today
Since my blogpost on Friday introducing The Fundless Fund (FundlessFund@Gmail.com), a lot of folks have stepped up with interest in contributing to the Fund, and a lot of folks have been asking exactly what The Fundless Fund is….the short answer is…The Fundless Fund seeks to add as much value to the growth and development of early stage companies as a Y Combinator or seed stage investor, without any equity or payment in return…it’s an accelerant powered by fellow entrepreneurs, created in the vein of furtherance of our collective effort.
Based on the response I’ve seen so far, it seems like there are a bunch of related parties (investors, lawyers, accountants, established companies) that would like to pitch in. That will be awesome for our “fund”, we just need to figure out exactly how to incorporate these parties into the mix without diluting one of the main values of The Fundless Fund, which is a complete alignment of incentives between the Fund and our entrepreneurs. What I don’t want this to become is another “me too” organization sponsored by Sillicon Valley Bank or some law firm who’s primary purpose is simply to get a bunch of decision makers together in the same room (a room that happens to don the banners of those service providers). I also have no interest in recruiting the 5 sexiest names I can get to sit on a panel, inviting a bunch of people to listen to a dog and pony show, and then prove to the 400 people who attend that my platform is strong enough to get 5 sexy people and 400 others to attend my event. Rather, The Fundless Fund will take those 5 sexy people who are willing to donate an hour to our platform, identify the 5 most promising entrepreneurs who will benefit from an hour of their time, and we will use our “bullet” with those sexy people to get the 5 entrepreneurs into 1 on 1 meetings where progress can actually be made. There is a place for networking events, and those groups and events are undoubtedly adding value to the New York Startup Ecosystem, but that is a saturated market that we’re not interested in playing in.
What we’re interested in doing is focusing a ton of high quality resources and attention on a much smaller number of people/companies…our goal is not to generate as much deal flow as possible, or to build the biggest community of NYC startup people…it’s rather to identify the brightest stars (whether first time or experienced) in our community and give them a leg up on fundraising, recruiting, and job search (if they’re not yet with a startup), all the while focused on a general transference of knowledge across the fund. We want to help the best of the best to not get lost in the shuffle and noise of a not-fully-networked New York Startup community. Why? Because it is our belief that those people with the most potential will build the biggest, most sustainable companies in the long run (but not without help). Our city needs to birth a few multibillion public technology companies to cement an enduring infrastructure around this burgeoning startup energy, and it is our responsibility as entrepreneurs to maximize the likelihood of that occurrence. Our fund is not a flash in the pan, looking for the next deal to bank/lawyer/account/invest in. We have a long term view of this city’s ecosystem and we’re going to do our part to make it as easy as possible for resources (capital, talent, advice) to find the stars that are going to build New York’s homegrown Facebook, Google, Amazon, etc…
There’s a lot of plumbing that still needs to be worked through, but we’re off to a good start. What you can do today to participate is as follows:
If you’re a startup/pre-startup that has raised less than $500K in the New York area, there are 2 actions for you to take today:
1) Email fundlessfund@gmail.com with a short description of you’re company or future company, a link to some online public presence (site if you have one, linkedin profile, blog, etc…), and a brief description of your needs:
- People: (description of hires you’re trying to make)
- Capital: (no details needed, just are you going to need to raise money in the next 6 months)
- Advice: (general guidance and mentorship)
2) Email fundlessfund@gmail.com and request to be added to our distribution list. Even if you’re not in a position to join the fund’s portfolio today, stay connected and we’ll keep you up to date on how the fund is evolving and the best ways to get involved.
If you’re a venture/angel-backed entrepreneur or if you used to be and can still speak to the experience, and you’d like to be involved in the operations of the FundlessFund (i.e. sit on the “investment committee,” donate your time to meeting with applicants and accepted people/companies, etc…):
1) Email fundlessfund@gmail.com with a link to some public presence online and description of what type of value/resources you’d like to contribute:
- Introductions to investors
- i. Angels?
- ii. Seed/Feeder Funds?
- iii. Venture Capital Firms?:
- Strategic Advice/Guidance & general mentorship of high quality early stage entrepreneurs
- Career Placement: do you want to help high quality talent land at your own startup or another startup in your network?
2) Email fundlessfund@gmail.com and request to be added to our distribution list. As we figure out the best ways to work with established entrepreneurs and executives, we’ll keep you in the loop and you can decided if/how you’d like to be involved
3) Email fundlessfund@gmail.com if you’ve build a platform like this in the past and would like to advise on the construction and implementation of the fund
If you’re an Angel Investor, Seed Fund, or Venture Capitalist spending time in NYC:
1) Would love your input and ideas: fundlessfund@gmail.com
2) If you want to interact with us going forward, request to add your name to our distribution list
NOTE: Thanks for your patience as we play catch up to demand…we subscribe to the concept of customer development…first step is to figure out what everyone wants, next step is to productize it and begin to scale up
Read Full Post | Make a Comment ( 1 so far )Introducing the Fundless Fund…get involved
I remember talking to Chris Dixon a while back about balancing his seed investing activity with running Hunch…at the time I looked at this from an investor’s perspective and thought to myself…”I would want my founder to be spending 100% of their effort and energy on the company that I put dollars behind.” He explained that his activity as an investor is what keeps his thinking fresh, and that the stimulus of these conversations and data points made him a better CEO.
I didn’t really have a chance to understand this phenomenon in my last company because I was playing in a market with little or no overlap to most venture ideas/startups. So even though I still thought like a venture capitalist, meeting with entrepreneurs and executives to discuss their companies and ambitions didn’t really present a whole lot of value to Untitled Partners. Now that I am building a true consumer internet company at JumpPost (where other founders’ thinking enhances and is directly applicable to my own efforts), I find myself engaging in and building a body of “investor like” interactions (despite the fact that I don’t have a fund to invest). I understand exactly what Dixon was talking about, to the point where I am actively allocating cycles of my week to meeting with entrepreneurs and people thinking about becoming entrepreneurs to discuss their businesses, pitches, products, fundraising strategies, etc…I don’t stand to gain financially from meeting with the next big thing (as I would if I was making angel investments), but I really like helping other entrepreneurs achieve their goals, and I get a ton of non-financial value from these meetings.
Charlie O’donnell wrote a post recently in which he called First Round Capital a “feeder fund for larger VC firms.” Meaning First Round, although a relatively small fund, has established great relationships with larger venture capital firms that are capable of writing the big checks that their companies might need. So the idea is, you join First Round’s platform and then one of the big guys (Sequoia, Benchmark, Accel) follows. Feeder funds, or seed funds, are the flavor of the month in the Startup Funding Ecosystem (see Dave McClures breakdown of this evolution in the market). I’ll say they are largely accompanying/taking market share from professional angels who perform a similar “feeding” function into other Angels, Seed Funds, and Venture Capital firms. This is all just to say that the startup investment landscape is largely driven by the referrals of trusted relationships. Investors rely heavily on signals to determine what is and is not worth their time, so the opinion of someone who’s judgment they trust (as signaled by an early investment in a company, or even a “hey, you should take a look at this…met the founder…it’s interesting”) is how investors decide which 10 of every 100 potential investments that come through their inbox, they are going to explore.
You might say that over the past 5 months I have been building a feeder fund…minus the fund…This was not a calculated move on my part, but rather a pretty organic evolution that has increased in scope as I have watched the yield derived from building my own company on top of a “platform”. A “platform” is any vehicle that creates a center of activity around a specific person or group of people. In the case of a venture capital firm, the actual fund is the platform that serves this function…So when you have $1 Billion behind you, a gravitational force pulls entrepreneurs, executives, and opportunities toward the people operating on top of that platform (investors, EIR’s, etc.). With exposure to all these parties gravitating toward the center of the platform, a VC is in unique position not only to identify relevant business opportunities, but also to realize those opportunities swiftly through the injection of capital or resources on hand. This is why being an EIR is such a cool way to build a company…the platform of a fund provides tons of exposure to interesting data/people/ideas provides fertile ground to develop a company.
In the absence of a fund, there are other types of “platforms” that an entrepreneur can leverage to increase exposure to opportunities and people. Polaris’ DogPatch Labs (great job at Hackers & Founders last night) is an example of a platform, where if you sit in a shared space attached to a brand worth $1 Billion (even if you are not the one deploying it), you catch some fraction of the gravitational force that the Polaris itself commands. Affiliations with networks of entrepreneurs like First Growth or even Meetup (to a much lesser extent), are ways of tapping into an existing platform’s pull, and hopefully using that pull to propel your startup further than it would go independent of any platform.
I have decided to build a new platform, Fundless Fund, and I invite you to participate in it. This blog is one of the cornerstones of that platform, insofar as it has reduced the cost and effort required to market the value proposition of a young platform to a wide audience. I’ve combined that marketing channel with some embedded pieces of value that I have managed to acquire through my experiences in venture capital and entrepreneurship, and now I would like to roll them into what I will call my “fundless fund.” At some point in the future, perhaps when I make enough money to fund this “fundless fund,” (or perhaps when I establish enough credibility to have others back it), maybe this platform will be strengthened by the financial resources to accelerate growth within it, but for now, I am happy to announce the first day of The Fundless Fund. The core values and opportunity that the Fundless Fund presents are as follows:
1) integrity
2) extreme candor
3) information not readily available elsewhere
4) exposure to potentially accretive ideas
5) exposure to a body of entrepreneurs and executives who have been filtered through the perspective and rigor exemplified by my posts (I’ve basically built a map of the smartest people I like in this world…which I think I will publish in a couple of weeks)
6) jobs: if you’re a star, we’ll give you a job or introduce you to some cool people who are looking to hire stars
7) money: if you’re company is fundable, happy to introduce you to as many Angel Investors, Seed Funds, and Venture Capital Firms as we can…If not, we’ll try to tell you what you need to do to get to a point where you are fundable.
This is pretty much an experiment in adding a new layer to Dave McClure’s Startup Funding Ecosystem. I’d imagine it is a layer in which any entrepreneur or executive who would like to further the entrepreneurial movement as a whole might be able to contribute (independent of whether or not they have yet made the bucks to do so economically). If there proves to be value in fomalizing this already existent layer in the stack, I will try to bring on some great people and partners to strengthen the effort.
As this fund is fundless, we’ll be very psyched to receive anyone who wants to throw some value into the mix. If you’re great at organizing events…awesome…if you want to hack together a shitty website for the “fund”…awesome…if you want to meet young entrepreneurs and are in a position to provide the types of value I outlined above…awesome…if you have ideas on how to actually do this well…awesome. If you want to vote this up on HackerNews, post it on Digg, or do anything else to get the message out to entrepreneurs and would be entrepreneurs that help is available and 100% free…donated by people who are trying to further out collective effort…awesome…Get involved by emailing FundlessFund@gmail.com (ideally with some link to your public presence online).
Note: I still spend 90% of my cycles on JumpPost, so patience with the speed of development/action is appreciated until we “staff up” a bit.
Second Note: If you think this is a dumb effort, or have any ideas about how to make it less dumb…please comment
Read Full Post | Make a Comment ( 15 so far )Effects of Entrepreneurship of Savings (Graph)
I’d like to appologize in advance of this post to my parents, and especially my mother, who is going to freak out when she sees this graph… sorry mom.
In March of 2008 I left the posh world of venture capital to become an entrepreneur. I told myself at that moment that I didn’t care about my personal comfort or the luxuries to which I had become accustomed…in fact, in some perverse way I actually hungered to “go to $0.” I remember thinking that in order to truly understand mainstream America and the masses of our population, I needed to experience some sort of financial struggle. Turns out I was right. A huge part of JumpPost is about increasing consumer liquidity and putting a little extra cash in people’s pockets. Doubt I would have arrived at this concept while making gobs of money. Anyway, below is a graph of what entrepreneurship does to your bank account. If you’re not prepared to ski down this run, you might think twice about getting on the lift…
Sorry about resolution: image is clickable, so you can expand to see the gory details:
5 Reasons Why Lying is Stupid in Startups (and Life)
1) You spend more energy/bandwidth maintaining a lie than you do dealing with the adverse effects of telling the truth: This is the main reason why I have categorically banned mistruths from my life (I’d say, by the way that 0% mistruth is almost impossible, but I have gotten damn close over the past 6 months or so). In the near term, there are so many opportunities to “facilitate your path” through a small mistruth. I challenge you to count the number of mistruths you tell in a day (I’ll bet it is north of 5)…It may seem like these mistruths are making your life easier (getting out of meetings you don’t want, getting meetings you do want, etc…), but I would argue that even the mistruths that are intended to make life easier end up requiring more energy than their truthful counterparts. Let’s take the example of a friend who would like to work at your startup, who you don’t think is the right fit. When they email you to ask for a coffee and you have 15 other things on your plate, the near term easiest solution would be to say “I’m slammed this week…can we try to catch up next?” That clears you inbox in 10 seconds and you can move on to areas where you’d like to focus. But what happens when that person email you again next week? Now you need a new excuse, so you say “hey man, I’m traveling this week…I’ll ping you when I get back.” That’s an additional xx units of bandwidth you spent creating a more complex excuse not to meet. Then, when you do bump into this friend a month down the line, and he asks how your trip was, the entire balance of your interaction, and every interaction that follows, must exist with maintenance of your initial mistruth about being out of town. That’s a lot of mental bandwidth to expend.
Now let’s think about what the case where you had taken 2 minutes, instead of 10 seconds, to address your friend’s initial request honestly but respectfully. That’s 60 seconds of analysis as to why this person is not the right fit, 30 seconds on what you’d like to communicate to them, and 30 seconds to write, “hey man…the first 6 months of this company, we have very specific needs with regard to domain expertise. If something comes up that seems right for you, I’ll let you know, but happy to grab coffee and talk about who else I know that might be looking for someone like you.” Now, you won’t feel uncomfortable seeing this person, you don’t have to maintain any mistruth, and although you may not have given them what they really wanted, you are still being a solid friend and helping out where you can. Life is FULL of these opportunities to take an extra pause to think about what you really want to say, as opposed to what’s easiest at first glance.
2) Interesting ideas and conclusions occur at the point where you analyze a temptation to lie: Simply by training yourself to pause before delivering a mistruth, you will begin to think more deeply about the points of friction in your life that evoke such an inclination. Analysis of these points of friction can lead to proactive reduction in occurrence. Pay attention to these points instead of glossing over them with an easy lie and you can begin to consciously influence their frequency. For example, when an investor asks you “so what worries you? What keeps you up at night?” you could either give the stock answer which reveals a minor concern and represent it as your largest concern, (and then repeat this answer every time someone ask you this question)…or you can tell them the actual greatness weakness in your model…you might think that you are hurting your chances of raising capital, but in actuality revealing this weakness will force you to resolve/strengthen it (maybe even through a dialog with said investor). Once strengthened to the point where this weakness does not prohibit investment, you will no longer feel inclined toward dishonesty when faced with the question. Short term you may increase the risk of securing fundraising, but long term you are decreasing the risk of failure….
3) You set a context for interaction that results in other people telling you the truth (better data): If you make it clear that you will never lie to a party with whom you are interacting, that establishes a plane of trust that is usually reciprocated. People feel much worse about misleading someone who they know is being completely honest with them (as opposed to a dynamic of gamesmanship in which misdirection and indirect communication on both sides is understood). You would not believe how frequently professionals set this indirect tone when engaging with external parties…waste of time, energy, and generally a very myopic approach to maximizing value of relationships. By establishing an environment of honesty and direct communication in any interaction, personal or professional, you will receive a flow of more accurate data on which to base decisions and opinions. Better data equals better decisions.
4) Being direct about what you want usually gets you want you want: Ask for the order, whatever it might be. Trying to extract value through indirect communication takes longer and often fails. Example: When I began to raise my first seed round I met with a friend who is an entrepreneur and seed investor. I hadn’t really asked anyone for money yet (and I felt a little uncomfortable doing so), so I pitched him under the guise of “seeking advice.” When the meeting was over, he said “I hate it when people aren’t up front about what they want. If you are asking me for an investment, ask me directly.” He forced me to “ask for the order” and from that point forward I had no problem doing so with everyone else. After that I started asking people for investment instead of advice and guess what I got?
5) Sometimes you get caught: this one is straightforward…when you get caught in a lie you lose credibility and damage your relationship with the recipient as well as your overall credibility.
There are many more reasons (ethical, karmic..etc…) why setting a personal goal of zero lies per day is a righteous endeavor. The purpose of this post is simply to outline some of the more practical and tangible effects of eliminating mistruth from your existence. So now I have established a plane of truth with every one of you. Anything I tell you and anything you ask me (professional or personal), my response will be 100% truth. Fire away.
Read Full Post | Make a Comment ( 5 so far )The Practice of Patience (Founder’s Tip)
The past couple of days at JumpPost have been an exercise in patience. This is not a trait that comes naturally to me, nor is it one that I’d imagine most entrepreneur’s are born with. Sort of by definition, we are a group who wants change to happen faster than it would evolve without our efforts. I am reminded of one of my favorite quotes (stolen from Fabrice Grinda) by Joel Barker:
“Vision without action is merely a dream. Action without vision just passes the time. Vision with action can change the world.”
So what happens when you are long on vision, and stirring to create action, but there is some external force on which your desired action is dependant? Frequently in a startup, the most important thing in the world to you and your company, is number 15 on the to-do list of an external party (whether that party be a bus dev partner, service provider, investor, or even employee). There are two responses that a founder can engage in when waiting on external action:
1) application of pressure: you want your answer/data/deliverable and you want it now. Email/call/hound the external party until you get it. My experience has been this strategy can yield fruit as a last resort, but more often than not, it will just move you down the list form 15 to 20 (or maybe even remove you from the last all together).
2) Acceptance: the world does not revolve around you and your startup. Start pushing other balls forward while you wait for this one to unfold. Nothing wrong with staying in front of this external party, but do it in a way that respects their right to prioritize their own efforts and actions. This might mean that you let a time sensitive opportunity pass you by, or that you need to delay a number of other actions that are dependent on the outcome of this external event, but building a company is a marathon, not a sprint (note: I do like to sprint some miles when the opportunity presents itself). In the long run, preservation of important relationships and a healthy working dynamic between you and the parties with whom you interact will yield fruit…so don’t freak out when things take longer than you want them to.
It takes practice to sit down at your computer, stare at the bright red “high importance” item on your to do list, and then to compartmentalize and look beyond it so that it does not distract you from knocking out the 10 “medium importance” items that are sitting behind it. I’ve written before about the importance of momentum…and one of the biggest killers of momentum, at least personally, is waiting on something that you do not control…The practice I have developed over the past couple of years is a practice in acceptance. Very few events in the life of a startup are apocalyptic (though they may seem such in the moment)…some things fall your way, some don’t, so staring at this “high importance” item and then saying “have I done everything I can possibly do to make this item break my way? Yes? Okay, what else can I accomplish today?” is a dialog with yourself that is worth developing.
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