Hyperpublic Xmas Invitational 2010
If you worked here, you’d be participating in the most anticipated intraoffice pool tournament of the year today. Our shit is so fun, make our shit your shit, quit your boring job and help us grow next year’s bracket from 6 to 32. Happy Holidays!
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Newly Seed Funded? Don’t Commit to Monthly Updates
Ok, you’ve been hustling for 2 months, selling the shit out of your vision to all of these amazing investors, trying to pickup a few nickels to rub together, and finally…finally, finally, finally, you have persuaded 6 or 7 very smart folks to cough up some seed capital. Today the money hits the bank. You did it! You got Keith Rabois, Ron Conway, Eric Schmidt, FirstRound Capital, and Jeff Bezos to give you $1 Million. You go out, drink 15 shots of Tequila, puke, wake up the next day, and you say to yourself “thank god, I can finally get back to thinking about my product. 30 days or so pass, you have a few conversations with one or two of your seed investors, and then you realize “hmmm, I have all these smart people around the table, I should probably try to involve them as much as possible in what we’re doing.” It has been about a month since you closed the round, and you say “I know! I will right a MONTHLY update.”
You sit down, and the first sentence of your update reads as follows:
“All, we are so excited to have everyone on board. This is the first of our monthly updates. Every month we will write to you and tell you what’s going on with the company and how you can help”
I know this is the first sentence of your update because it was the first sentence of my first update my first month after financing my first company. I also know this is your first sentence because of the 30 companies I have invested in the last 12 months, about 50% of them are run by first time entrepreneurs, and of those 50%, it is the first sentence of almost everyone’s first update.
Guess what? Of all those founders, myself included, who wrote this first sentence, not a single founder has actually sent an update every single month. When everything is new, you think you are going to have news for investors every month, but operating a business doesn’t happen in predictable 30 day cycles. The events, occurrences, accomplishments, and missteps that emerge when executing toward your vision unfold unpredictably.
Repeat entrepreneurs must have picked up on this unpredictability. I can’t think of a single second/third/fourth time founder in our portfolio who has committed to monthly updates.
My advice: Don’t set a precedent that you will be communicating on a monthly basis, because you’re simply going to look like a loser when you promise that and don’t deliver. Still send updates, engage your investors, make sure everyone knows what’s going on with the company, but do it organically, when you feel an update is warranted. It can be 17 days after the previous update, or 60 days after the previous update. You’ll get more out your investors this way and they’ll get more out of your updates.
Read Full Post | Make a Comment ( 2 so far )The Social Challenge of Releasing Early
A decision Doug and I made at the onset of our company was to work and build in public. Doug was lucky enough to participate in Y-Combinator and many of the ideals, this included, that we embody as a team stem from that influence. The natural tendency when building consumer facing products is to keep your product under wraps until it is “ready” for prime time. We come from a school where as soon as something is functional, we push it live, and begin to collect data as we iterate and improve. From an execution standpoint, this methodology has and continues to prove effective. From a social standpoint, however, it can be challenging.
The challenge is as follows: friends and family who are engaged and interested in your progress can only see what is visible to the public. They don’t understand that your product is literally a public construction zone, and that you know your UX isn’t compelling or “finished” yet. It has been an ongoing process for me to try to explain to my dad, for example, what it means to build a data layer on top of all the objects in a local environment. Or to help my ex-girlfriend from college understand how real estate is related to hyperpublic.com. Or to tell the litany of early and supportive users why it is that we haven’t given them something more to do on the site than what’s available today.
What I’m realizing is that if you are trying to execute on a plan that calls for Minimum Viable Product pushes with ongoing iteration and progressive layering in of feature sets and enhanced UX, you need to have strong resolve not to sweat the social challenges of this style. My partner Ben Lerer recently had a great observation about his own and many of our collective experiences as founders. He said, “Listen, at the end of the day, there is not a single person on earth that is gong to fully understand the vision in your head. Your team, your investors, your family, consumers, nobody can see the future of your company and product as clearly as you. That’s okay, your job is to keep communicating and clarifying it as best you can and keep executing toward what you see in your head.” I thought these were pretty insightful words and have shared them with a number of my peers.
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Execution, Reflection, and the Friction Therein
I’m staring at a blank page of paper, trying to find my voice, searching for the window into my thoughts that allows me to write three paragraphs in 15 minutes, and wondering why it is so fucking hard to find right now. Galpert is sitting next to me, tapping away at his newsletter, 90 words a minute, and I can’t seem to hear myself. This has been a regular occurrence over the past few months. At earlier times in this blog, my thoughts and reflections flowed so freely, the commitment to post was not a commitment at all. But lately words have been slow to come.
I think it is largely because I am in a state of prolonged execution, not just professionally, but in all facets. These past few months have been about checking boxes and getting shit done, and I believe that state is at odds with deep reflection. Sometimes you are moving too fast to stop and think about your movement. This isn’t necessarily a bad thing. Execution can often be governed by intuition, a recipe which does not require nor even necessarily accommodate deep reflection, but the yield on periods of my life that are governed by one vs. the other are quite different. Right now, for example, I miss the deep analysis of myself. I miss the frequent attention to nuances of human experience, and generally floating 10,000 feet above ground level, looking at the world and population move by, not actively participating or engaging with it at ground level.
The past few months have been about to do lists, and moving, get the gas turned on, push the product, hire the people, buy a couch, get new clothes, find healthcare, etc. etc. etc. These are the things that need to get done, but when I find myself sitting in a café with a pot of tea, the music I’ve been waiting to listen to all week, and an opportunity to revisit interesting thoughts or observations that I’ve had over the past few days, I realize that I can barely recall them. It’s not because I am not having them, but more because “bookmarking” them and taking notice before they flea into the abyss that is my ADD black hole of a memory is not something that is easy for me to do when every pause in execution I have trained myself to glance back at the to do list instead of upward at the sky and the clouds, and inward at myself, my imagination, and whatever direction my mind would go if it wasn’t autofocussing on the next task ahead.
Every so often I notice friction points in my life, where a function doesn’t move as smoothly as it should. The shift between states of execution and reflection is a point of friction that I will now actively work to diminish. Like everything else with the mind, you can exercise the weak elements and build toward frictionless computation. Execution is the order of the day, but welcome back reflection. I missed you, let’s hangout again tomorrow.
Read Full Post | Make a Comment ( 5 so far )If you’re building for $1B, is “Focus” a Farce?
The word “focus” has been coming up a ton in my meetings lately. Like many product minded entrepreneurs, I have a ton of ideas about what Jumppost can become, and what we need to build to get there. As I begin to communicate those ideas to experienced folks around the table, I am getting repeated words of advice to “focus.” Today I met with one of our portfolio companies who’s product DNA was the main reason for our investment in them, and again I watched a conversation emerge around the balance between possibilities and focus on a single direction. I can think of at least 5 other examples where product minded founders are drawn toward rapid testing and iteration around a general direction as opposed to deep build around a more focused mission.
Conventional wisdom and the “smart money” seems to say that singular focus is the path to success in the startup game. When I started my first company, I eschewed conventional wisdom in the name of intuition, which was a strategy that worked occasionally, but more oft failed. I am now smart enough to know that I am not smarter than the composite operational advice of seasoned and accomplished entrepreneurs. As such, I have the word “FOCUS” written in digital permanent marker at the top of my to Google to do list.
That said, I find myself wondering if changes in the product development lifecycle are not giving birth to a new type of non-bootstrapped operation/execution that is more forgiving of experimentation at the expense of focus (think extension of the lean startup methodology). If it only takes two weeks to push a product that used to take 2 months to develop, does that not change the risk/reward around more loosely focused experimentation (especially in consumer applications where you are so heavily rewarded for tapping an unlikely/semi-predictable viral vein)?
I think it largely depends on what type of outcome you are shooting for. Is there an operator out there who is focused on highly experimental signal detection over linear progress that will discover the next viral consumer app? David Karp at Tumblr was building 4 other things when he decided to “focus” on just one. Facebook launched 3-4 distinct applications in the course of 4 months before running with the now behemoth. Twitter was a side project, etc. etc. etc.
If you are really shooting for the high risk, huge numbers, consumer app, how much resource/data is required to know if what your building is it or not? And if the answer to that is discoverable in short amounts of time through a team with low burn and efficient development cycles, is a deliberate “unfocussed approach” a more likely road to outsized numbers and a mega-viral product? (I don’t know the answer to this, but some of the smartest young founders I meet are intuitively drawn toward an approach that is inconsistent with the experience of previous generations of entrepreneurs. So either young founders always make this mistake and you can’t actively execute with an eye toward step function signals and virality, or a new style of early stage execution is emerging within consumer focused startups).
Read Full Post | Make a Comment ( 7 so far )NYT says Tech is Changing our Brains, but What About our Language?
Our language is changing. Words like “OMG,” “LOL” and “TTYL” that were spawned within a digital environment out of constraints translating verbal thoughts into online communication (the primary constraint being effort of typing), have somehow managed to cross the chasm from internet vernacular into physical world verbal communication. They have taken on a meaning that is distinct from the longer string of words which they were created to represent, and we have recognized them as enhancements in our person-to-person communication. They describe a concept, or feeling, or action that is more applicable to a given use case than any combination of letters and sounds that existed prior to their creation, and thus they have penetrated our lexicon.
The words “Text” and “cloud” have existed for centuries, but have taken alternate meanings in light of our relationship and engagement with technologies like SMS and Data. The phrase “text me” (or the use of text as a verb) alone, occurs in a frequency that I’m guessing has supplanted any other definition as the primary use of the word if we are measuring by volume utterance across contexts. “Cloud” on the other hand, as a reference to hosted data storage has penetrated small circles of tech-savvy consumers, but it may be 3, 5, or 10 years before general population’s concept of “the cloud” grows to the point where this usage will truly enhance our day to day experience in a way that is competitive with the value derived from describing a puffy white object that holds rain in the sky.
What I find fascinating, is that while our relationship with the internet and technology more broadly is redefining how we communicate with each other in it’s absence (changing our offline language structures), I do not see the same language change in our non-verbal communication patterns. Where did the “thumbs up” come from and how did it grow to represent approval or “good job.” How did a forefinger and a thumb come to signal “ok?” Was that a crossover from sign language which developed an application that was worthy of general population usage (like OMG, or LOL)? That would be an instance of a language created through a set of constraints (hearing impairment) penetrating a non-constrained environment. What about a wink or a smile, or any of the other physical gestures that countless online companies have tried to recreate on the web (Facebook poke, digital gifting, etc…)? We spend an increasing volume of our time with head tilted downward, eyes on screen, two thumbs on mobile device. Is there really not a set of non-verbal gestures that recognizes or applies to the fact that at any given moment 20-30% of the people we are surrounded by are engaged in this physical position and action? What about prompts for people to take this position when they are not in it?
The reason I ask how these physical gestures came into prominence, is because I see a new set of constraints in our communication for which adaptation of our physical non-verbal communication would strongly enhance our experience. Specifically, there is a set of use cases around real time mobile communications with people in physical proximity that requires multi-person synchronous or asynchronous engagement with an application or technology. The best way I can think of to open up that use case is to graft these applications to physical world non-verbal gestures (either existent or new). And what I don’t know is whether this type of communication is so slow to adapt that we shouldn’t even bother exploring it?? Anyone studied this? Isn’t linguistics a major in college? I’ll take you to good dinner if you can educate me here. And if you happen to be Product/UX minded, we can even splurge on dessert.
Read Full Post | Make a Comment ( 3 so far )How Many People Are You Consuming in a Day?
When thinking about product, I often find myself going down the path of trying to replicate/enhance offline behavior through software. Lately, I have been absolutely obsessed with the concept of productizing or at least enhancing offline, non-verbal communication. I’ve been thinking a lot about what people consume on a local level. It’s a question that is very important to our future at Jumppost and a question that is becoming increasingly interesting to investors and entrepreneurs as location based technologies change our capacity to segment users and build user experience by specific geographic parameters.
It is not surprising to me that much of the innovation we’ve seen in the last 12-24 months in the local space has been focused around the interaction between consumers and local merchants (restaurants, dry cleaners, etc.). If we map local consumption patterns, I would say that local goods and services are the second most frequent object of consumption in a consumer’s local experience. What I buy when I walk out my door definitely defines my local experience, and the things I consume in the largest volume have a great impact on my perception of my neighborhood, and as an extension, my perception of myself as a member of the community in which I live.
The only object(s) I see myself consuming that has a greater influence on my local experience, and as a derivative, my local identity, is the population that surrounds me. Although a very lightweight form of consumption, I have been trying to quantify the volume of people that I consume in a given day. I will call consumption any visual intake, and then value the volume of consumption by my level of engagement or interaction with each person I consume. I’ve been asking folks lately how many people they think they pass by or see in a given day in New York, and the answers are all over the place. Some people say 50, or 100, some say 500, and I personally would posit that the number is closer to 10,000. Of those 10,000, I think I probably consciously register 1000-2000, maybe I make eye contact with 500, and have some richer form of communication whether verbal or non-verbal (i.e. hold a door, smile, etc.) with 100-200.
What would a product look like that attempted to replicate or enhance the experience of human consumption at the 10,000 person level? I see elements of the answer in concepts like Chatroulette and Hot or Not, which take seemingly random consumption of other human beings, and then in both cases, push that lightweight (10,000 person) consumption down the funnel toward more active communication. But then I wonder if the product that will capture/reflect/enhance my consumption of local inhabitants needs to push our extremely lightweight relationship down the funnel into some more meaningful communication, or perhaps it is enough to simply overlay that consumption with some richer dataset. What if every person you consumed at the local level had a sign on their chest with a nametag? What would change? Would people say hi and push themselves down the communication funnel? Not sure. Maybe it’s not a nametag that people want. Maybe I’d prefer to see an image of everyone’s spouse/partner on their shirt? Or a floating sign with their occupation above their head? Would that enrich my local experience and consumption of the people that surround me in a way that would improve the quality of my local experience? Probably. I don’t have a ton of answers here yet, but super interested in wrapping with anyone who wants to think about this with me.
P.S. If you have a second to drop your estimate of the number of people you think you 1) consume, 2) communicate with, and 3) make eye contact with in a given day, please drop your answers and the name of your city in the comments.
Read Full Post | Make a Comment ( 8 so far )Offloading Human Memory to the Cloud
When I was young, my parents had two large brown photo albums that sat on our coffee table. We used to sit together and page through them, and they would point to washed out photos of my great aunts and uncles, and grandparents, and tell me who they were, what they were like, etc…we’d look at images of my 5 year old birthday parties and they’d ask “do you remember Hella? She was your Au Pair from Denmark?” Needless to say, the depth of perspective I was able to glean around my own early life and the past lives of my relatives was limited. The legacy of my grandpa, who I never met, is locked in paper documents now gone, my parents’ memories (now going), and scattered photographs and letters that have been stored through the years.
I think about what my grandkids are going to be able to see into my life and in many ways they will know me on a level that is impossible for me to know my own. The emergence of “life-logging” that has occurred over the last 10 years, across mediums, has begun to create a pretty comprehensive window into my existence. If you were to chronologically map my Facebook status updates, twitter updates, digital photos, blog posts, foursquare checkins, text messages, emails, venmo transactions, credit card statements, and then very importantly, do the same thing for everyone in my social graph and find the points of intersection between my footprint and those in my 1st degree social graph (which will happen, btw), you could write a pretty cohesive textual narrative of my existence. Almost an automated biography of who I was, what I did, what I cared about, who I liked, who I loved, where we went, what we did together, how I looked, what clothes I wore, who influenced me, who I influenced, my major accomplishments, my major failures, what made me special, how other people felt about me, what they loved about me, what they hated about me, and pretty much any other question one would ask when trying to get to know someone.
The interesting thing to me is that this shared digital backbone that runs across the human population, currently being enhanced and rapidly populated by the growth of mobile information capture, is not just enhancing the transference of knowledge and learning across geographies and socioeconomies in the present, but also across generations and time. In many ways, by participating in these forms of life-logging we are enhancing both our individual and collective memories. This freaks me out a little bit, primarily because of it’s implications around the importance of a physical body/presence [decreasingly fundamental to human experience], but I am absolutely fascinated by it.
Read Full Post | Make a Comment ( 3 so far )A Parable for 3rd Party App Developers
It used to be that a startups were islands. At the onset of a venture an island consisted of a sandy beach, a jungle, 2 founders, and 2 computers. At first the founders, and then all those who came to work on the island (employees, management, investors, etc..) were focused on building the island into a city the size of Manhattan. Everything that was built on the island was 100% owned and operated by the island. Everything they learned, and everything they did stayed within the island. The reason: in order for any new island to become Manhattan, it had to compete to attract millions of people to its population (users/customers). In order to maintain an edge over the competition, islands did not open up their learnings (data) to new and competitive islands.
The islands that most quickly developed (built out indoor plumbing, public transportation systems, etc)…became the most desirable islands to live on, and their populations began to grow. The first island with a public transportation system began growing fast. As its population grew, the demands of inhabitants began to outpace the rate at which those working to build the island could develop solutions. Inhabitants demanded a hospital, but the founders and employees of the island were still building roads. The smart founders realized that they could not build a hospital fast enough on their own, so they sent a ship to Manhattan, found the guys who built Mount Sanai Hospital (3rd party application developers), and brought them back to the island to build one (3rd party applications) that would be owned by the hospital builders and not the island. The founders and the island supported the hospital builders with local knowledge (open API and dev support), the hospital opened, and the inhabitants were happy. Because they were so happy, inhabitants began to call their extended friends and families on other islands with invitations to come join the island with a new hospital. The island’s population doubled in 2 months, the public transportation system generated 2x the revenue it did pre-hospital, and the island flourished.
A neighboring island, who had not yet built a public transportation system, but that had the best local fruit of any island in the sea, saw the success of this new hospital, and inquired as to whether these magic hospital builders would come build a hospital for them. The hospital builders visited the island, saw that there were 1/10 the inhabitants on fruit island, and explained that they were concerned about their ability to operate a profitable hospital on an island with so few potential patients. The fruit island founders explained that the fruit on their island was going to attract 10 times the inhabitants of public transportation island. The hospital builders, lacking a competitive project at the time agreed to take on the new project, built the hospital, and fruit island’s population grew on a similar trajectory to public transportation island. They island sold 2x the local fruit, and they flourished.
All new islands began to perceive the value of having a hospital (3rd party application), and the hospital builders all of the sudden had more islands calling then they did time and bandwidth to complete the projects. The builders decided to prioritize the projects by which islands had the most inhabitants (user/customers) that would become patients the day the hospital opened its doors. These islands would be the ones where they could recoup their development costs the most quickly. As such, it became harder and harder for new islands to build hospitals, and thus harder for new islands to attract inhabitants.
Public Transportation Island saw a symbiosis in its relationship with the hospital builders, and decided to invite school builders, power utilities, and pretty much any builder from Manhattan to come and build out businesses and infrastructure. All visiting builders could own and operate their projects on top of the island. This time, every other island saw Public Transportation Island’s move, and now understanding the benefits of this concept, immediately extended the same invitation. Public Transportation Island had the largest population, and so had no problem attracting these 3rd party builders, and the question became: how do less scaled islands compete to create the necessary infrastructure to attract inhabitants despite the scale of Public Transportation Island.
Promises of future growth, like that of Fruit Island’s to the hospital builders, became a dime a dozen, and then a group of visionary islands had a break through. They said, “why do we ask these builders to come build our island, create the infrastructure that will help us scale our population, but still consider them visitors and not a part of our island? We believe in cementing our relationship with those that help us grow. From this day forward, those builders who build our hospitals and schools will become owners of our island, a part of our island, and enjoy not just the benefits of their own project’s growth, but the benefits of our entire island’s growth.
Public transportation was not prepared to match this offer because they were already so large, and builders started to leave Public Transportation Island, to build for islands that recognized them as true members of the community…The visionary island chain was able to attract builders who gave up near term revenue opportunities on Public Transportation and other scaled islands, for a piece of the visionary island’s growth (stock options), and this is how a small island was able to grow faster than a scaled island.
Lesson: It’s time for platforms to think of 3rd party developers as team members. Carve out a piece of the rock, reward those who create the most value in your ecosystem with equity in your platform…we understand that Twitter and Apple need to make money, but let the companies on who’s back you built enjoy some of the upside as your platform scales. If you don’t, they’re going to start scaling other environments to supplant you.
Read Full Post | Make a Comment ( 3 so far )Apple hit’s “RESET” on the LBS market
By now you have probably read Dave Mcclure’s post positing that Foursquare will lose to Facebook in the Location Based Services race. He argues that applications like Foursquare and Gowalla are not capable of scaling fast and cost effectively enough to beat out larger platforms like Facebook and Google, and delivers a sobering message to some of the more hyped early stage companies in the venture/startup community. I agree with Dave’s assertion that Foursquare is going to have a hard time winning here, but for a completely different reason than any he suggests.
I’ll start with the assertion that the location space will not be won or lost at the consumer application level. I was talking with my partners at Lerer Ventures a few weeks ago about whether or not I’d invest in Foursquare at the meteoric valuations being thrown around in the press, and my answer was yes…but not because I thought it was such an amazing consumer experience that it would grow to 400 million users and become the next Facebook. My thesis was that the first company in the “check in” space to build a critical mass of users and check ins would expose it’s API to 3rd party developers and become the default platform on which all future applications wishing to leverage the all-valuable location data point would build. Location is such a clean and highly monetizable dataset that I believe many applications will wish to use it as input in their services, and I thought Foursquare stood a decent chance of being the provider of this data, very similar to how Facebook has become the default API on which every developer wishing to leverage the “social graph” will build. Fred Wilson recently wrote a post which in my opinion correctly stated that in order for a platform to truly dominate, it must be successful in attracting 3rd party application developers to build out the surrounding ecosystem. Foursquare had the potential to do this.
I use the past tense in light of a recent announcement made by Apple, which I believe was largely overlooked by Mcclure, and to be honest I haven’t really seen anyone talking about what I perceive to be an overnight and massive disruption to the entire “check in” market. Foursquare and other “check-in” based applications were working toward the most interesting location dataset I know of, but even it is still quite incomplete. In the absence of “persistent tracking”, which would be a continuous line of a given users movement through the physical world, “check in” companies began to collect multiple location data points per user. If you mapped those data points, it would look more like a constellation than a smooth and continuous line. Apple just announced that with their new operating system, applications will be able to engage in “persistent location tracking.” Basically, they opened the door for any application that successfully acquires a database of “smooth lines” to supplant Foursquare as the default API on which other application developers will build. If I am a 3rd party developer, I would much rather build atop the “smooth line” database than a few spotty check-ins per user, and the “check in” is not a mechanism that was designed to capture “smooth line” data. If the LBS market were a game of Contra, Apple basically just hit the “RESET” button when Foursquare was on Level 7, and now Foursquare, like Facebook and every other platform chasing this attractive dataset, is back to “up up, down down, left, right, left, right, B, A, B, A, Select, Start.” Game On.
P.S. If I have misunderstood the implications of Apple’s announcement, please feel free to bombard me with insults.
P.P.S. Now that I think about it, if I’m Foursquare, this development would be an awfully good reason to take the early exit offer from Microsoft…
Read Full Post | Make a Comment ( 14 so far )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 )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 )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 )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 )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:
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