8 steps to building an A+ engineering team
One of my favorite new founders in the Lerer Ventures family just sent me a note asking for tips as he starts to build out his engineering team. As I’m sitting in an airport w time on my hands, I went long form. Thought I’d open source an early playbook. This advice is most applicable to recently funded seed stage founders:
1) only hire 9s and 10s. Dont just fill the seat, keep bar really high
2) make fast decisions. When you find a guy you like culturally, put him through half day interview process, test both technical aptitude and ambitions/ability to give everything they have to your co
3) if they pass both, offer next day, overpay on cash by 10k what you were going to offer, overpay on equity by 50% of what you were going to offer
4) give them no more than 3 days before offer expires and be ready to move on to new candidates if they don’t commit. Worst thing you can do is convince someone who doesn’t really want it to join.
5) with every hire ask yourself “is this someone who I can recruit against? Will every candidate going forward WANT to work with them? Do they demonstrate that we are a culture of excellence?”
6) create a culture of recruiting within your engineering team. Make sure everyone knows that “we are always recruiting A level engineers, independent of need, roadmap, or operational context.”
7) invest in teaching your entire engineering team how to be effective recruiters. It is a huge part of everyone’s job, not just founders…
8) contribute to the Enginnering community. Give talks, free advice, help neubs build their first rails app, open up your office to anyone that wants to come hack on whatever they are working on. The community is not some stocked pond that you can go fishing in when you need something built. Give to it before you try to take from it. Instill this ethos in your company’s culture.
Read Full Post | Make a Comment ( 4 so far )East Village Experiment
Note: This isn’t really a blogpost, but I couldn’t fit this in a status update or 140 characters and needed the real estate on my blog to explain why I am attempting to extract a local segmentation from my social/professional graph.
I want to make a list of all the people I know who live in the East Village. I want to be able to push to this list whenever I find myself doing something local that I’d prefer to do with company than alone. I want this list to know that they are all welcome to join me when I am grabbing dinner at 10PM on a Tuesday, or when I’m working at a café on Sunday at 5PM, or even when I’m sitting in my apartment thinking to myself “I’m bored, I wish someone would come by and entertain me.” I also want this list to know that I don’t expect replies. Not interested/can’t make it? No problem, I wasn’t expecting you to be available, that’s why I’m pushing the same invite to 25 other people. Really I want to fill my unplanned flex time with people who will enhance my experience. I want this list to be my, “are you around, I’m doing this in 10 minutes if you want to join” list, which I believe is only relevant to people who live in my neighborhood and can act immediately because of our physical proximity. I think they are the only ones who would view these “immediate invites” as truly actionable and relevant a high enough % of the time that they would not mind the interruption via SMS/Push Notification.
I tried to build this list with a Groupme, and then realized that Groupme is not the right application for this need because everyone on my list knows me, but not each other. This list doesn’t want to communicate as a group. I guess I want to push immediate invitations to a “local subset of my social and professional graphs” Is there a product out there that I can use to help manage this?
Also, if you are my friend/colleague/or just someone interesting who lives in the East Village and you want to be on my “immediate invitations in the East Village” list, send me a note, drop a comment here, or whatever and I’ll add you.
Read Full Post | Make a Comment ( 19 so far )5 tips for your first day at a new startup
First days at work can be weird. I remember my first day at General Catalyst. I got there super early because nobody told me what time to arrive, sat at my desk attempting to look busy and re-reading every page of the company website which I had already read 5 times, and sort of waited for someone to give me something to do. I remember thinking to myself, “my job for the next few weeks is just to build relationships with all these new people.” As much as I wanted to have an impact on day 1, find the next Google right our of the gate, and come up the curve faster than anyone before me, the reality is there is a period of acclimation and integration that precedes any truly meaningful contributions you can make to a new company.
Here’s a list of the top 5 things to do when you are starting someplace new.
1) Listen: Listen intently to everything anyone shares with you. You’ll have plenty of time to speak and show your talents, but the beginning is all about absorption of the culture, knowledge, and people that have to date defined the environment that you are entering into.
2) ASK QUESTIONS: Keep a note pad, write down every single question that comes up over the course of your days, and then corner somebody when they have a minute and get all your questions answered. No question is too stupid, admit everything you don’t know (even if you feel like you should know it already). Don’t waste time pretending to understand things you don’t. Nobody cares what you know the day you arrive, only how fast you pick up what you need to know.
3) Your work can wait: If anybody asks you to hang out and grab a beer or see a movie, even if you have a ton of work to get done, always say yes. Your work can wait, it’s super important to build relationships and get to know the people you’ll be working with every day.
4) Be yourself: It’s hard to let your guard down and be yourself on day one, but the sooner you can feel comfortable in your own skin, the better off your going to be. You have an opportunity and a responsibility to impact the culture of your company in a positive way. Allow the great aspects of your personality to shine, even if they are not represented or visible in the people around you.
5) TRY: The only thing you need to worry about in the first few months of a new job is putting everything you possibly can into it. This is a time to make sacrifices in all other realms of life until you have come up the curve and are contributing at a level that you are proud of. By definition, you are going to be inefficient at the onset of a new job. The best way to combat inefficiency is through effort and hard work. Long term, tunnel vision and an imbalanced work/life situation will catch up with you, but short term I think it makes sense to let your family and friends know that you are going to be MIA for a few months while you’re finding your groove.
I guess this is on my mind because we have two new team members starting today at hyperpublic. Welcome Eric and Jonathan. Can’t tell you how excited we are to have you both on board.
Read Full Post | Make a Comment ( 1 so far )Living in a State of “Anonymity PLUS”
As I sit here on this train, bound for the Meadowlands where I will undoubtedly watch the Jets destroy Randy Moss and the Vikings, it occurs to me that although unnamed, I am not anonymous in this crowd. Miriam Webster offers the following 3 definitions of anonymous, none of which (save the most literal “not named”) describe my state on this train.
Anonymity would imply that I am unidentifiable, when that is not, in fact, the case. The people who surround me here actually have access to enough data that they are able to categorize and classify me. Despite the stigma around that concept, I am not concerned in the slightest. Why? Because I control the data I am sharing with the people on this train. In fact, because I control the inputs that define their impression or perception of me, I am actually excited for them to consume this “metadata on top of my physical presence.”
I wear a long sleeve green Rugby shirt in support of the Jets, which when paired with a time stamp (1 hour before game time) and location (on a train headed westward from Manhattan), identifies me as a Jets fan. I am proud of this facet of my identity and wish to communicate it to all who will observe. Why?
1) I guess I seek the camaraderie. Other Jets fans in my presence will recognize me as one of their own
2) I want to display that I welcome conversation and interaction with those who share my affiliation or interest
3) I want to further the facet of my identity that I am showing, spread it if you will. If I am able to convert others or strengthen/support the interest which I make visible, there is a reflective property where I actually strengthen my own identity (basic missionary theory)
4) I see myself publicly tagged as “Jets” and it affirms my concept of myself and my level of commitment to what it represents. The fact I make it visible to all reminds me that it is core to my identity
Clothes are but one example of a tool people use to communicate and control their public identity. The woman to my left smiles upon eye contact, publicly sharing a “tag” of friendly (the most frequent tag on hyperpublic.com to date, btw), while the drunk to my right sits face cringed, communicating “misery” or “inapproachable.” We were given the capacity to publicly display emotions through facial and body gestures, a sort of biological tagging system which non-verbally influences the level and type of engagement we have with our surrounding population. These signals are completely public, the fact that we share them with everyone is an almost biological recognition that there is, indeed, potential value waiting to be extracted from those with who we share a physical, but not yet social relationship.
Our everyday, real world lives, do not exist within the bounds of true anonymity, yet the majority of internet products that attempt to digitally replicate or enhance real world life, feel an obligation to preserve the veneer of this false ideal for their users. I believe we move through physical space in a state of “Anonymity PLUS.” This is a state where we are aware that we are visible to an unfiltered public eye, and thus control and define the data which it is to our advantage and pleasure to broadcast widely.
Hyperpublic is an experiment in recreating that state of “Anonymity PLUS”. There are no names unless you chose to tag yourself by one. There is no such thing as private data here, but there is also no data here that you have not actively decided to push to the public. There is undoubtedly value to be had by sharing that data which you want to be seen by all (think about the value of appearing at the top of Google results for example, how would you wish to define yourself to all who Google you). Our goal is simply to maximize that value by giving your public tags as broad a reach as we possible can. You choose your green Rugby shirt when you get dressed in the morning, why not choose to display all the data you wish to communicate publicly?
Read Full Post | Make a Comment ( None so far )Where to focus when “dating” investors
One of the most important factors in the success or failure of a venture capital firm is their ability to attract and partner with entrepreneurs whose financings are competitive. These “top tier” entrepreneurs have either built an asset which is visibly valuable to the market (all investors) or achieved something in a previous endeavor which differentiates them from the average early stage startup. In this scenario VC’s are actually competing for the opportunity to invest in a company.
Last night I stumbled into a conversation between one of General Catalyst’s Limited Partners (LP) and a group of young entrepreneurs that broadly fit the bill of “top tier” founders. This LP is responsible for investing the endowment of a major university, and his job is to measure the efficacy and trajectory of the funds in which his endowment is invested. There are concrete metrics of success and failure in VC (namely returns and exits), but because those metrics don’t materialize for 3-10 years from the time a new fund is closed, LP’s must use softer metrics to measure the health of a fund. This particular LP, recognizing the importance of a firm’s brand in winning competitive deals, asked these 3 young founders the following question: “When you meet investors and are deciding who you want to work with, what factors influence your decision?”
In listening to their responses, many of which echoed the value propositions a fund would use to market themselves into a deal (i.e. team building, relationships, introductions, etc..), I realized that my view of what makes an interesting investor may be abnormal. To me, there are 3 things worth paying attention to:
1) Incremental data: as a founder, you are constantly making decisions based on incomplete data sets. An investor sits above your market, and through investments and involvement in companies adjacent to your product or market, or through past experience building analogous products or companies to yours, they represent access to a more complete dataset. With more complete data comes better decision making, so an investor’s ability to ethically and frequently improve your datasets is of real importance. If you’re building a company that is dependant or interfacing with the twitter ecosystem, there is an obvious advantage to having Fred Wilson or Jack Dorsey as investors.
2) Incremental thinking: When speaking with investors, my goal would be to communicate all of the important data I have as clearly and quickly as possible. More often than not, as a founder, you will have spent way more time studying and understanding your market than an investor, but I think the goal of getting to know an investor should be to learn how they think. Get them up to speed as quickly as possible, and then see if, based on a common dataset (or even better, with a common dataset, plus their incremental dataset), the investor identifies the 3-4 most important levers that impact your strategy and vision. Ideally, you will see eye to eye, but then you hope they will push you with new thinking and ideas that you would not have arrived at without their help. This incremental thinking and analysis will be something you can look for from an investor over the life of your startup. The more data you collect as you continue to execute, and as your market evolves, the more important it becomes to have an investor who will be capable and excited to help your interpret it when making directional decisions. (NOTE: I hear many founders talk about wanting their investors to give them money and then “get out of the way.” This is arrogant and an underutilization of a relationship that should be a major boon to your company)
3) Trust: I can’t stress enough the importance of trust in a relationship with investors. There are different levels of trust. First and foremost, you need to be able to look the guy or girl in the eye from whom you are raising capital and see that they are a good person. Ask yourself, “is this guy ethical? Do we share common values? Can I predict how he will react under stressful situations and do I trust that he won’t compromise our common values no matter what the circumstance?” If you can answer yes to that level of trust, the next layer of trust is trust that you can expose all the data you have without fear. Many founders feel like they have to “manage” their investors, share the good data, and deemphasize or mask the bad data. This feeling largely comes from a lack of predictability around an investor’s response to bad data. Personally, I would look for an investor who you feel comfortable exposing your weaknesses to. Trust them with the whole dataset and you can maximize the “incremental thinking” piece of the equation. Trust them with only a partial dataset and you reduce the likelihood of success. I guess I’m saying find someone you trust not to freak out when bad data emerges, because I can guarantee you…it will.
So to recap, look for data-driven thinkers with experience executing around dynamic and changing datasets in a fashion and cadence that is consistent with your personality and ideals.
Read Full Post | Make a Comment ( 7 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 )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 )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.
Read Full Post | Make a Comment ( None so far )Progression of Thoughts in an Entrepreneur’s Day
(Wake up) whoa weird dreams, what does it mean when I am pitching my value proposition to faceless people in my dreams, fuck it, time to work…I’ve got to stop working in my dreams…wait, I wonder if I make progress in my dreams…probably not, or at least I can’t remember any specific insights that I arrived at in there that are applicable out here…whatever…(scanning emails on my iPhone while still lying in bed)…junk, junk, junk…fuck this is a weird angle that I need to hold my iphone at to read while still keeping my head on the pillow, interface keeps switching between landscape and profile…I really need to stop subscribing to all these daily newsletters, I never open them anyway…but my friend runs this company, he gets paid $300 for every 1000 people who open this fucking thing…300 divided by 1000 is 30 cents…i want to keep contributing to his success, $.30 at a time…(continue scanning emails) where’s the good news? Where’s the good news?…oh shit, that guy actually wrote back to me…come on baby,,, come on baby….yes, he’s willing to meet me….junk…junk…email from friend….oh yea, I should probably stop working and go hang out with my friends one of these nights…switch to calendar…this calendar on my iphone sucks compared to my old blackberry…one more reason to switch back…fucking AT&T…but I do love my iphone…tonight? No…tomorrow night? No….one week from Tuesday? Yes…return to inbox…hey dude, sorry I’ve been super busy…want to get dinner next Tuesday? Switch back to calendar…Tuesday, December 26th, “Hold for dinner with Alex”….back to inbox…junk…junk..junk…shower time.
(go turn the shower on)…brush my teeth, run back to iPhone to see if anyone has emailed in the last 30 seconds…(get in shower)…what are the 3 most important things that absolutely must get done today? 1, 2, 3…start thinking through one…
(out of shower), dry off, check iPhone again….(getting dressed) what do I need to wear today…no meetings…ah that’s nice…jeans, hooded sweatshirt…(eating breakfast at the new café on my block)…god this place is empty…I really hope they stay open…food is so good…tough when you aren’t on the main drag of 5th avenue…I wonder how I can help this guy? Customer acquisition in a physical landscape…new product…must deliver free value…highest margin product is coffee…cost of goods for cup of coffee = $.40, average ticket price of customer is $5.00….lifetime value of customer = hundreds of dollars…1 in 10 customers who redeem free coffee will convert into $5.00 customer, 10 customers x $.40 = $4 out for $5.00 in near term revenue and some percentage of leads convert into life time customer…wait but $4 is rev, not profit…ahhh…feels like the math should work…”hey dude, I’ve got an idea for you to get some new customers in the door….
(sit down at computer) okay…time to clear inbox…”mark as unread” “mark as unread” “mark as unread” no…you procrastinator…respond now…reply, reply, reply…(one hour later) at last…i can get to what I want to accomplish today…[insert first random fire drill here] fuck…this is not good…(wait 2 minutes)…actually this is doable…not a big deal…[insert solution here]…attack number 1 from the shower (i.e. “how do I seed the community with inventory pre-alpha release so that UX and design is pretty and alpha users will have best possible experience even though they are my closest friends and colleagues and they will tolerate a shitty experience”)…
god I’m getting hungry…where’d the last 3 hours ago…if I could just quickly respond to a few emails…(an hour later)…well, it’s 2:00…I’m barely hungry any more…better go for a run…unwind…(put on ridiculous long underwear with shorts on top)…I look like a complete idiot…but I don’t care…probably won’t run into my soul mate in Prospect Park at 2:00PM on a Thursday…what am I going to think about on this run…I love getting work done while I’m running….takes my mind off the physical pain, and feels like killing two birds with one stone…gotta think about a new blog post…okay…what’s happened over the last few days? Met with this guy…learned something cool here…this is such a high yielding hour that I am spending…staying in shape…building energy…and thinking about a new blog post…hmmm…that’s interesting…I wonder if other people measure their hours in terms of yield? I could write about that…yea…and talk about hours in my week that are surprisingly high yield…like the hour I spend on exercise…or the hour I spend on writing a blog post…both are higher yield than an average hour I spend in front of the computer…okay….blog post done…still another 2 miles to go…what else can I accomplish…eh…it’s actually really beautiful in the park right now…I think I’ll just zone out…(2 minutes later)…that girl is trying to run faster then me…eh, who cares…run at your own pace….(2 minutes later) she thinks she’s beating me up this hill…I don’t think so (start ridiculous spring up the hill and leave girl who was probably not trying to run faster than me in the dust)…well, that was a nice run…
(arrive back at computer) Okay…lots of energy now…time to bang through this to do list…task…complete…remove…task…complete…remove…task…complete…remove…breath…breath…breath…read a bunch of blog headlines in my Google reader…pick the 10 things that look the most interesting…read…read…read…need a change of scene…pick a new café…okay…to do list under control…time to write post…god this was a busy day…what did I want to write about again…fuck it…I’ll just write about today
Sound familiar?
Read Full Post | Make a Comment ( 11 so far )The 3 Most Important Words in a Founder’s Vocabulary
I have always been amazed by people’s unwillingness to utter the words “I don’t know.” These three words have been, by far, the most important words in the course of my professional development. I remember working for a Hedge Fund when I was a sophomore in College, and being tasked with maintenance of a model that one of my bosses had developed to track financial performance of distressed public companies. I had “sold” my way into this internship leaning heavily on my previous “experience” interning at a Broker/Dealer in high school, but the truth of the matter was, I had no fucking idea what the numbers in this model meant. My high school internship had consisted of running tickets on a trading floor and picking up breakfast for a bunch of Boiler Room brokers. While I did get a taste for the “excitement of the markets,” I received absolutely no background in accounting, could not read a financial statement, and was ill equipped to be updating and “analyzing” the data in this model.
I spent about 2 weeks faking my way through this task (while working hard to add value in other places where I was more confident), and then I realized how inefficient it was for me to be performing it with my limited knowledge. I remember coming clean with my then boss, and saying, “I don’t know what any of these numbers mean.” I expected him to be extremely disappointed, but instead he sat down with me, spent a few hours explaining the basics, and I became infinitely more dangerous and valuable to the Company. I internalized that lesson early, and now I apply it on a regular basis.
Admitting that you don’t know something is by far the fastest way to learn it. When I got to General Catalyst Partners, I literally did not know the difference between an application and an operating system. I had to learn a whole new language, and the way I did it was by writing down every single word and concept I didn’t know, most of which were extremely basic and revealed my complete lack of experience, and then I would corner people in their offices and ask them to explain the items on my list. For about three months I was the kid who didn’t know anything, and then for the next two years I was able to speak intelligently across just about every industry and market to which we paid attention. I remember watching the learning curve of one of the guys who joined our team after me, and it was so much slower than it should have been. I realized the reason was because he never asked for anyone’s help. Never admitted when he didn’t know something, but instead sort of nodded his way through conversations about subjects he hadn’t learned. Had he sucked it up and admitted what he didn’t know up front, his learning curve would have been much steeper.
Especially as a non-tech founder (and as a tech investor) I am constantly dealing in realms where my domain expertise is a fraction of the folks’ with whom I work. SEO is a great example of an area where I lack the necessary domain expertise to be dangerous. I could either keep on referencing SEO as a strategy we are going to implement at JumpPost, without understanding how it works, or admit that I get conceptually why Search Engine Optimization is important, but to be honest, I have an extremely cursory understanding of how it works. As soon as I admit that, while potentially unimpressive to the investor with whom I am speaking, or the potential hire with whom I am recruiting, I am now able to sit back and listen as they explain the three pieces of “low hanging fruit” we can achieve while knowing nothing about SEO, as well as the three more complex concepts around the relationship between SEO and Product architecture that I can now implement during the build of our product. The alternative, of course, being that I could gloss over this “blind spot,” notice in 6 months that we are stinking it up on organic search traffic, and then admit that we don’t really understand SEO, at which point I’ll have to explain to said investor why I just wasted $XX of his investment building a non-SEO friendly product that now needs to be rebuilt/augmented at an additional expense to the Company.
When you expose a “blind spot” in your skill set/knowledge base, those who are in a position to teach don’t feel any need to impress you with their knowledge. Rather they speak to you like they would a first grader, which is exactly where you need to start when you are learning a new language. Imagine trying to learn Italian by sitting in an a 3rd year Italian course. It would be nearly impossible and you would immediately raise your hand and say “I think I’m in the wrong class, where’s Italian 1?” If you’re a non-tech founder, for example, not raising your hand when designing a product with your lead developer and saying “Where’s PHP 101?” is simply stupid. Your job may not be to write the code, but if you don’t understand the basics behind every layer of your product, how can you recruit intelligently, weight the effort of your design against internal resources, and contribute ideas to the development process in a method that is easily digestible to the rest of the team. Even in areas where you don’t need to become an expert in your Company, taking the time to learn the basic principles behind everyone’s efforts is essential for effective communication both within your Company and with parties outside of it.
Beyond product, this practice applies to marketing, fundraising, business development, and every other effort that you are pushing forward in your Company. I remember negotiating a business development agreement with Citigroup in my last company. I identified a natural partner for our business, got in front of the right people to pitch it, and got their verbal commitment to move forward with a deal. We sort of lingered in that realm of “ok, so we want to work together” for a couple of weeks, and then I realized that I didn’t know how to turn that sentiment into action. I remember calling Brad Handler, who is the founder of Exclusive Resorts (and at the time a very important potential investor and business development prospect himself) and telling him “listen, I have this deal with Citigroup that is within reach, but I don’t know what to do now.” He taught me how to write and deliver an LOI (Letter of Intent), described the process of turning that LOI into an Agreement, and coached me on how to get the deal across the finish line. Now, in the course of acquiring this knowledge, I exposed our inexperience to one of the most valuable companies for the future of our business, but I only had to do that once, and every business development effort I encountered from that point forward I came at from a position of strength.
So the moral of the story is, don’t fake it. When you don’t know something, admit it confidently, learn it, and move forward.
Read Full Post | Make a Comment ( 2 so far )“Drop In” to the Zone
When people ask me how I’m doing these days, my regular response is “awesome. I’m in the zone.” I’ve been in the zone many times before, but typically this state only lasts for a few days or maybe weeks at a
time, before it diminishes and reverts back to what I’ll call my baseline mental productivity. The strange thing is, this “zone” has lasted for about 2 months, and it’s going strong. What I’m learning, is that it is possible to actively perpetuate a certain mental state through conscious effort and replication of context.
First, let’s explore for a second, the concept of “the zone.” It’s pretty hard to define, but for me it’s an energy and state of mind in which you are able to move through all facets of life without friction. Imagine, driving through Manhattan, guided largely by your intuition, where every light you approach turns green at just the right second. Athletes might talk about being in a state where no movement is conscious, but rather there is a perfect alignment between your instinct and the context in which you’re acting.
I’ve written before about positive feedback loops. The zone, in many ways, is a constant positive feedback loop. In times like this, productivity is extremely high, thought is particularly sharp, social interaction is particularly rich, and energy is extremely high.
Slipping into the zone is not easy, but it is possible to practice entrance into this state. If you have ever attempted to surf, the experience is very similar. You spend a ton of energy paddling as hard as you can to get into the wave’s path, and then as the swell forms behind you, you must pop up at exactly the right moment. A second too late and the wave passes you by. A second to early and the front of your board plows into the sea. But, if you are able to drop in just right, you immediately switch from a state of frenetic exertion, to extreme calm, and yet you move at 10x the speed of when you’re paddling to high hell.
Much like surfing, I have found that there are certain practices you can develop to “drop in” to the zone more frequently and for longer periods of time. A lot of it is maintaining a state of mind and attitude that is conducive to allowing the calm of the wave to carry you. Simply remembering what the zone feels like is enough to open your mind to this calm. To that end, replication of context that exists when you are in this state can be an effective way to “remind” yourself what you are trying to achieve. Music is one of the most effective triggers for me to replicate a context. If I am listening to a band during a period of particularly high functioning, I will continue to listen to that band and that band alone until I burn it out. Similarly, if I wake up at a certain time of day, I will keep waking up at the same time of day, replicate the same routine, eat the same breakfast, etc…This may sound a little crazy, but constantly drawing analogies between the day you are in, and yesterday where you were unstoppable, makes it much easier to believe and function as though you are unstoppable today.
I know not everybody functions in this manner, but for those who know what I am talking about, and I think many entrepreneurs are similar in this way, I have a theory that 80% of what you accomplish in a year is likely achieved in “zone like” periods. Being conscious enough of this state, to know when you are in it, and working extraordinarily hard during these periods to maximize output and take advantage is key. When you’re not in the zone, looking at the friction in your life, and figuring out why you keep missing the wave is essential (although difficult).
P.S. I just asked my friend George Bell to describe his zone, and he talked about things slowing down to a point where you can move through an environment (professional, athletic, or otherwise) seamlessly. I’d be interested to hear everyone else’s descriptions of their own “zones.”
Read Full Post | Make a Comment ( 8 so far )Seed Investor’s Guide to Finding the Next Twitter
I had breakfast this morning with my friend Ben Lerer. He, and his dad Ken Lerer, have recently put together a seed fund to make angel investments in early stage consumer companies. He asked me a question, which two years ago, I would have been able to answer in a heartbeat, but today caused me a moment of pause. He asked me what companies are on Twitteresque growth trajectories that would be worth investing in regardless of price. The reason I paused was because working at a venture capital firm for a few years, you get to a point where your thinking is probably 6-12 months ahead of the curve. But lacking thousands of data points on blazing markets and the companies within them, I have probably lost that 6-12 month advantage. I still read a ton, and spend time with smart folks from the entrepreneurial and VC communities, but the fire hose of information isn’t quite as fat.
Part of the job of an Associate at a venture capital firm is to identify new and emerging spaces that are worth investing ahead of, and exposing those opportunities to the partnership. Microblogging in 2007 was one of those spaces. To this day, Joel Cutler (who happens to be absolutely brilliant) at General Catalyst will tell you he owes me “a good drink of wine” for passing when I insisted we should fight to bet on Twitter, despite what seemed like a hefty price tag in the first venture round that Union Square Ventures ended up leading (the round got done at a $20M valuation, and two years later Twitter was just valued at $1 Billion).
That’s sort of the nature of being a junior guy at a venture firm. Because you have less responsibility with the existing portfolio, you are able to spend more time than the old guys taking in new data and expanding the firm’s thinking into untouched markets. You develop theses around that data, and when you find something you truly believe in, you need to pound the table so that the Partners who have not spent the last 3 months learning this new space with you will listen and understand the opportunity. Even still, there is a very good chance that nobody will be willing to use one of their bullets on your idea. Each partner at a venture firm gets to make 3 or 4 bets a year (might vary a bit from firm to firm depending on size of fund and number of partners), and a firm probably looks at 2,000-5,000 deals a year. Passing on winners is part of the business. Bessemer actually has a great page on their site where they display the firm’s Antiportfolio. The Antiportfolio is a list of all the massively successful companies they could have invested in, but didn’t. A star studded list of billion dollar logos is accompanied by hubristic quotes from the “passing partners,” explaining why they would never invest in the likes of Ebay, Apple, Google, Intel, Paypal, etc…
So in the absence of an immediate answer to Ben’s question, I can perhaps supply a recipe for any early stage investor who is trying to get ahead of the curve. This is my process for finding the next Twitter:
1) Read: Macro (i.e. Economist) and micro (vertical blogs) content ingestion (30%)
2) Try: Personally experience as many products and services as possible in markets of interest, identify game changers (15%)
3) Experts: Develop and test theses with thought leaders from industry and academia (15%)
4) Entrepreneurs: Speak/meet with every entrepreneur attacking a given market, identify current state of the market and who is best positioned to capitalize on sea changes and future direction (40%)
5) Repeat steps 1-3 over time and across markets
Oh, and if you’re the next Twitter, and investors haven’t found you…you can email me, I’ll try to put you in touch with the right folks…
Read Full Post | Make a Comment ( 3 so far )“Open Sourced” Job Spec
On November 5th, almost exactly 3 weeks ago, 253 people read my first blog post. On November 25, 2 days ago, 4,730 people showed up. While I am excited by the growth, I am still searching for better ways to harness the collective knowledge within this new community. Despite more than 5,000 people reading the last post, only 8 decided to comment and continue the line of thinking. Less than 2/10 of a percent participation is not very good.
Today, I want to experiment with a new concept. I’d like to take a page from the open source software movement, and apply that spirit to the creation of a VP of Marketing Job Spec. For those not familiar, the theory behind open source software development is that much of the coding effort required to carry out development of a project overlaps with the effort required to build other similar (or not so similar) products. By openly sharing a body of code with everyone in a given community, all members within it are able to leverage what has already been accomplished/created, instead of reinventing the wheel from scratch. So if I’m building an e-commerce site and I want to include a shopping cart function, I could spend hours developing my own from scratch, or I could just plug in an open source module that another developer wrote, knowing that his code will do the trick. With the time I saved, maybe I will figure out how to build a feature on top of his code that reduces drop off, and then, if I’m cool, I’ll publish the code behind my enhancement back to the community (open source developers, if I butchered this, please chime in).
So now that I have all of you smart people reading this blog, I figured we could draw on some of your collective knowledge in an effort to create the ideal Job Spec. Whatever we create here, will hopefully be the result of years of experience and lessons learned by those who have hired well (and not so well). My hope is that the document we create will enhance our hiring at JumpPost, but also that it will serve as a template from which any startup recruiting a VP of Marketing can build.
I will start with a brief description of what JumpPost is, and then work into what I think we need:
JumpPost is somewhere between an online classifieds site and a low cost online real estate broker. So, if Craigslist and Redfin had a baby, it might look something like JumpPost. From a customer acquisition perspective, we are focused on general population consumers who are psyched about saving/making money during a change of residence. We’re not interested in reaching home owners (at least for now), and folks who live in cities are more exciting than suburbanites and rural dwellers. It’s a pretty wide net we can cast, and some of our value propositions are unique (read: won’t be competitive to acquire certain types of users), while others are highly competitive. In a VP of Marketing, we are looking for someone who has a play book for building a liquid online community through a series of paid and non-paid customer acquisition strategies.
I’d like to collect contributions to three lenses through which we can identify a star VP of Marketing:
1) General Personality traits: What type of person makes a great online/consumer marketer? ideas that might be right or wrong include:
– data driven thinker
– addiction to analytics
– detail oriented
– quantitative bent
– understanding of relationship between product development and marketing efforts
– what else? What personality traits do the best marketers you know exhibit? Any surprising ones? Any huge red flags that your bad marketing hires displayed?
2) Specific marketing skills and experience requirements:
A) What unique skills should this person possess? ideas include:
– fluency in Google Analytics
– proficiency with SEM keyword tools/models (i.e. Clickable)
– what else? (I actually don’t know what are best in class skills here)
B) What experiences and backgrounds best prepare someone for this type of gig? Ideas include:
– comes from an analogous market acquiring similar demo of user (in our case: online travel, online classifieds, online real estate, online jobs, marketplaces, etc…)
– managed SEM campaign of $XX million budget with XX level of success (what are the metrics to judge success here? What’s a good baseline to measure outperformance vs. underperformance?)
– designed and executed successful referral program alla Gilt.com, Jetsetter.com, etc…(again, what’s a good baseline for measuring outperformance vs. underperformance?)
– fluency acquiring customers from within larger platforms like Facebook, Twitter, etc…
– took an online consumer facing site from xx users to yy users in xx months (what’s best in class here, and how do we separate out the candidate’s contribution to that growth from all other efforts that played a hand?)
3) General traits and skills necessary for an early stage startup team member: What are the must haves and red flags when determining if a hire for any early role will be able to hack it in the beginning stages of a company’s development? Ideas include:
– previous experience growing a company from alpha product to exit
– effusive and clear communicator
– “roll up your sleeves” attitude, no job is too small (not going to try to hire service providers to do all the work)
– comfort with a lack of structure and ability to create and execute own initiatives
– what else? what are the best predictors that an early hire will be a star team member?
So, my suggestions are in no way exhaustive. Please, those who have successfully and unsuccessfully hired an online VP of Marketing, rip this apart and share your experience in the comments of this post. Where am I right on? What is way off? Let’s try to fill these three buckets and I’ll publish a composite spec for all to build off of going forward.
Read Full Post | Make a Comment ( 4 so far )Founders Need Rock Hard Abs
There are two primary reasons why a founder needs rock hard abs:
1) working out of cafes and apartments, hunched over 12″ screens in shitty chairs with improper lumbar
support is NOT good for your posture. A strong core will help…
2) in the early stages of building a company, it is absolutely essential that you learn how to take a punch to the gut.
I have two close friends from Dartmouth who got flown out to the Valley this past weekend for final round interviews with Y Combinator. Y Combinator is basically a hybrid venture capital firm/startup boot camp. A couple of times a year, they “admit” a class of very early stage startups, give them small dollars and a ton of advice and resources, and essentially groom them into venture-financable companies. It is a spectacular head start for first time entrepreneurs, who give up less than 10% of their companies, and graduate with an embedded network and a sharper set of skills to go make it happen.
I just got the news that said friends didn’t make it in. I thought for a few minutes about the implications of this data on the trajectory of their company, and realized that the actual value lost in that opportunity is minimal (a near commodity), but only if they replace that opportunity with something comparable, or even more valuable. Is Y Combinator a great head start? Sure. But so is the participation of some professional angels, or an early stage seed fund, or one of the 6 other clones of Y Combinator that have popped up in the last two years (Techstars, Dreamit, etc..).
BUT, it is not this value lost that poses the greatest threat to their business. The real danger lies in the impact that bad news has on a company’s culture, founders’ state of mind, rate of progress, and general confidence. After two months of product development, business planning, and strong forward momentum, my friends just got their first real “punch to the stomach.” And that, by the way, is exactly what bad news feels like when you are starting out. So much of your effort. time, and identity is wrapped up in this creation, that bad news can actually have a physical impact on founders. Much like getting dumped by a woman you love, entrepreneurs will speak of a pain in their stomach or chest that they just can’t shake.
So much of early success comes from founders evangelizing their efforts, and sharing their company with anyone who will listen. Momentum plays a huge role in a founder’s ability to do so, insofar as it is a lot easier to sell a vision that you passionately believe is going to come true, than it is to sell that same vision in a time of personal doubt. Customers, partners, investors, friends, and family can smell that doubt in a founder’s mind. This reality provides a positive feedback loop which furthers the doubt, and so on and so forth.
The same is 100% true for positive data…and therein lies one of the most important lessons I have learned about starting a company: No matter how bad the news, it is essential that you absorb that blow, deal with the immediate implications, and then do anything you can to generate some good news. The faster you can cut off that positive feedback loop, and shift the momentum of your company back in the right direction, the better chance you have of replacing that “lost value” with something of comparable or greater value. It is your responsibility as a founder, to turn this corner faster than everyone else in your company, and let them draft off of your forward momentum.
None of this is an argument for denial of the facts, and believe me, hindsight is 20/20 (there were days in Untitled Partners where I was not able to do this fast enough), but I think this skill, of taking a punch, and getting back up fast, is one of the most important to develop in a founder’s tool kit. And there is no “faking it.” You can’t just throw a smile on top of negative energy and sell everyone on “the positives.” It is about actually addressing bad news, developing methods to accelerate your personal recovery time, and then quickly taking steps to right the ship.
Think about how many times Rocky gets pummeled in that fight with the giant Russian dude who killed Apollo. Every time he gets knocked down to the mat, he gets back up faster…and at some point…the dude that’s throwing all the blows get’s tired, a window of opportunity emerges, and that’s when Rocky is able to start landing his jabs. Momentum shifts, the crowd rises to their feet, the right kind of positive feedback loop commences, and he achieves the impossible. Next time you watch that movie, take a look at Sly’s abs…rock hard, baby. Team Data Owl…start doing crunches. how fast can you flip this switch?
Read Full Post | Make a Comment ( 12 so far )Consumer Liquidity, Fingerhut, and Good vs. Evil
I remember the first time I truly understood the power of credit. I was 22 years old, working in leveraged finance, and I came across a company called Fingerhut (backed by Bain Capital Ventures and Battery Ventures). Fingerhut may be one of the most elegant and evil business models I have ever seen. Essentially, they are a catalog retailer, much like LL Bean or The Sharper Image, selling consumer electronics, jewlery and other semi-luxurious indulgences. Based on that description, who would you think is their target customer? Probably middle to upper middle class professionals with large amounts of disposable income, right? Wrong. Just the opposite. Fingerhut’s mission is to get their catalog into the hands of sub-prime (low income) consumers, under the tagline “Now You Can.” Basically, they have an embedded sub-prime credit vehicle which extends loans to their customers, who otherwise can’t afford the items in their catalog, so that these luxuries become attainable. That practice, in and of itself is not so offensive, but here is where it gets fucked up. The same Sharp 37″ Aquos LCD HDTV selling on Fingerhut right now for $999, is widely available on Google for $859 or less if I actually felt like sifting through all the results. So Fingerhut charges sub-prime consumers a 15% plus premium for goods they shouldn’t really be buying, and their customers don’t blink. Why? Because Fingerhut extends a semi-usury line of credit to their shoppers who don’t have the cash (or credit) to buy the cheaper good elsewhere. Now, insert all the nightmares you have already heard about sub-prime lending into the model, and you have a pretty good sense of how these consumers are getting raked.
So, here’s what’s interesting. When a sub-prime consumer is going to default on some outstanding debt, they typically have more than one creditor chasing them for money. So how do they choose who to pay and who not to pay? With company debt, there is a very clear capital structure where senior lenders (low interest rate lenders) have a liquidation preference (right to collect 1st) over junior lenders (higher interest rate lenders), and both types of lenders get their money before equity holders (owners) ever see a dime. But consumer debt doesn’t work like that. If I have $100 in the bank to pay my creditors, but I owe $75 to HSBC, $75 to my landlord, $75 to AT&T, and $75 to American Express, it is up to me to decided who I pay and who I don’t. Now, a rational consumer will pay the debt that carries the highest interest first, but it’s almost a coin flip if they are going to completely default on HSBC or Amex. In fact, they will probably pay AT&T before they pay either credit card company, because the immediate impact of losing their cell phone is more “real” than the thousands of dollars they are going to rack up in debt by not paying HSBC (even though if you said, turn your phone off for a month and I’ll pay you thousands of dollars, they probably would do it). Anyway, the point is: where do you think Fingerhut’s debt fits into this decision making process of who to pay? Let’s just say the landlords of Fingerhut customers are not happy campers. And there is where I first understood what it meant to make a consumer more liquid. There will always be demand for a credit product that makes a consumer more liquid, especially if that liquidity is not available anywhere else.
Now obviously, whenever a lender is able to create a credit product that no other lender is offering, they are exposing themselves to a higher default risk, but in Fingerhut’s case, they have subsidized this higher risk of default (or rather they can tolerate a higher default rate) through the increased margins they are able to realize on the retail catalog sales.
When the economy tanked, and before I started to work on JumpPost, I spent about 2 months (with the help of a west coast venture capital firm), trying to figure out how I could make a now cash-strapped American population more liquid. My energy turned to consumer finance and credit products, as that seemed to be the best way to put a little extra cash in people’s pockets, but amongst other very serious business risks, I learned that businesses in this space tend to dip their toes in murky waters. I think most people, at one point or another in their career, are faced with an inflection point where they need to decide “Am I on the side of good, or the side of evil?” It’s not necessarily quite so binary, and everybody’s definition of good and evil is different, but I think you need to be able to wake up in the morning and like the guy who you see in the mirror. So, I found another way to put cash in consumers pockets: JumpPost. We’re heads down getting an alpha product up and running, but as early as January, we’re going to start helping consumers earn a little extra spending money…And that feels pretty good. Dudes at Fingerhut, probably not feeling quite so good.
Read Full Post | Make a Comment ( 5 so far )NYC Venture Capital War
I took a trip out to Larchmont, NY a few weeks ago to catch up with my friend and former board member, Rob Stavis. Rob is one of the most thoughtful, down to earth VC’s I know, and extremely direct in his communication style. After spending an hour fumbling through an unformed description of what I’ve been working on (developing a pitch is iterative…you need to cut your teeth and learn with the people who already think you’re smart, before perfecting it and exposing it to new ears), the conversation turned to recent developments in the New York startup community. I argued that there is a fierce turf battle emerging amongst investors in this market, and that it is largely being won in the blogosphere/twittersphere. Pioneered by Fred Wilson at Union Square Ventures, there is an emerging class of blogging investors who have realized that a blog is more than just a forum to express your thoughts and ideas, but rather it is a “must have” enterprise tool. Fred recently posted some of the metrics around value USV has extracted from his commitment to blogging, and the points on the scoreboard are indisputable.
Stavis, much like my friend Neil Sequeira at General Catalyst, said that his firm has recognized the opportunity that a real social media presence presents, but still neither firm has really committed to it. My guess is whether now, or two years from now, you will see most already established top-tier VC’s like Bessemer and GC come around to this new requirement. In the meantime, newer firms like Spark Capital, Union Square Ventures, and First Round Capital are winning the war by capturing entrepreneurs’ mind share through the creation of insightful online content (both short form through vehicles like twitter, and long form through blogging platforms like wordpress, blogger, tumblr, etc…).
Venture Capital firms live and die by the quality of their deal flow. In the last 18 months, Spark Capital, General Catalyst Partners, Polaris Venture Partners, First Round Capital, Matrix Partners, Flybridge Capital Partners, Venrock and a handful of other out of town VC’s have stepped up their commitment to NYC. Some of these firms have put a “man on the ground” here in New York, as a means of sourcing the best deals, while others have joined together to sponsor Y-Combinator style collectives like First Growth Venture Network (architected by mover and shaker lawyer Ed Zimmerman). The physical presence that many of these firms have recently established is significant, but one body on the ground is not nearly as scalable as one voice in the blogosphere/microblogosphere.
The most basic play book that I see blogging investors execute is dissemination of practical fundraising tips. Basically, investors share their domain expertise around term sheets, pitching, and preparing for VC funding as way to deliver value to aspiring entrepreneurs. Although this is a real service to entrepreneurs, and a great way to build an “entrepreneur friendly” brand, it just the first step in what can be achieved through this medium. The more creative and insightful investors are using blogs as a way to communicate to the entrepreneurial community that they are smarter than their competitors. That they “get it,” no matter what “it” might be. They take stances on markets and trends and share opinions which distinguish them as capable of adding real value and expertise to a young company.
The most successful VC blogs, like Fred Wilson’s AVC, have gone even one step further than creation of insightful content. They have actually created an online community around their blog, where ideas and insights are not just flowing from the author of the blog to his/her readers, but also from readers to the author, and most impressively from one reader to another. The dialog that occurs in the comments surrounding Fred’s posts is what makes his blog special. 10 years ago, an entrepreneur would have had to attend a conference in some physical location, and potentially buy a $400 plane ticket, in order to enjoy the type of collective learning and discussion that occurs on Fred’s blog every day. My hope is that this blog will turn into a forum for readers to communicate with each other as well. I love reading everyone’s comments and responses to my posts, but I’m even more excited to see when readers comment on each other’s ideas. So please do establish a voice in this community. No idea is too small or stupid. Just throw out your thoughts and questions and hopefully we can make some progress together.
Read Full Post | Make a Comment ( 4 so far )Minimizing “Freak out” execution
People frequently refer to my first entrepreneurial endeavor as a learning experience. They say “well you must have learned a ton,” or ask “what did you learn from that failure that you can apply to this new company?” For the first 4 months after we shut down Untitled Partners, I would try to generate sweeping “lessons learned” and identify mistakes that I made that I will never make again. I wrote a post mortem on the Company very soon after and it was largely in that vein.
It was not, however, until I started working on my second company that I was able to identify the true efficiencies of having gone through my last experience. Caterina Fake wrote an interesting blog post a few months ago, where she described her experience building Hunch relative to her previous experience building Flickr. Reflecting on Flickr, she said:
a lot of what we then considered “working hard” was actually “freaking out”. Freaking out included panicking, working on things just to be working on something, not knowing what we were doing, fearing failure, worrying about things we needn’t have worried about, thinking about fund raising rather than product building, building too many features, getting distracted by competitors, being at the office since just being there seemed productive even if it wasn’t — and other time-consuming activities. This time around we have eliminated a lot of freaking out time.
As I build my new company, JumpPost (we’re hiring), I find myself experiencing a similar level of reduction in “freaking out time.” The best analogy I can draw is to a post-game interview after a lost 6th grade basketball game. The announcer (investors, colleagues, family) asks a 6th grader (first time entrepreneur) on the losing team “what went wrong, what are you going to do differently next game?” The player, responds, “Well, we shouldn’t have played a zone defense in the second half, they were killing us from 3 point land.” I would equate his response to the “sweeping lessons learned” analysis I referenced earlier. While true, this strategic error was not necessarily the biggest lesson of the game. It turns out, during the 3rd quarter of the game, said 6th grader learned how to comfortably dribble with his left hand. 6 months later, the teams meet again, and said 6th grader scores 10 left handed layups without thinking twice. They win, and the announcer asks him “what went differently, how did you guys plan for this game?” The truth is, the team played the exact same zone defense as the first game, but said 6th grader had developed a proficiency and comfort that allowed him to stop thinking about dribbling, and start focusing on the hoop.
This time around, I am not thinking about dribbling. Decisions that I agonized over for a week, I make in 5 seconds, and then move forward. A good example is our name, JumpPost. With Untitled Partners, we spent weeks trying to think of the right name for our Company, because our brand was “extremely important.” We even ended up hiring a “brand consultancy and design firm,” who charged us $25K to come up with a name, logo, and “brand” for our company. We wasted a ton of time and money ($25,000 is a lot of money when you only raised $560,000) at a time when we should have been focusing those resources on more core issues like “what does our customer want?” So the efficiency gained from that lesson, while impossible to zoom in on and identify when asked “what did I learn from the last company,” I was able to realize when naming JumpPost. I needed a name to incorporate, I spent 10 minutes on GoDaddy brainstorming URLs, and then I picked it. If it stinks, or becomes more important down the line, I’ll change it. No need to “freak out” or get distracted. Similarly, I’ll probably use CrowdSpring to develop a logo. Again, 5 minutes replaces thousands of dollars and wasted management bandwidth.
The first time around, everything is unknown, so you don’t know what’s worth digging into, and what is completely irrelevant. Did I really need to spend a day dilligencing my lawyer’s recommendation for a C-Corp vs. an S-Corp? Absolutely not, but I how could I know that the first time around?
This brings me to a more fundamental practice that I implemented well during our first company, but that I am doing even better on now: listening. Right now, I have achieved what would have taken 6 months and a round of capital my first time around, in 3 months with no capital. This efficiency is largely due to a non-“freak out” style of execution. But every entrepreneur’s expertise and play book has gaps. It is why we hire others with complimentary play books and knowledge to streamline the execution toward a goal. But in the absence of financial resources to fill in these gaps, actively seeking out advice from those who have accomplished what you set out to achieve AND being an excellent listener, are critical to pushing the ball forward. Some people think that “running a company” is about being the leader with all the answers. In reality, I am learning that running a company is about being a “student,” recognizing the experience and genius in yourself (where it exists), but more importantly finding it within your team and extended network. Listening to that collective body of knowledge and understanding how to incorporate the learnings into a play book in real time is where it’s at.
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