The startup instruction booklet, powered by my life (and other things I think about).
Wednesday, May 28, 2008
Facebook - Show me the Money?
There has been plenty written about Facebook - both good and bad. But since I touched on it briefly in my last post, I wanted to follow-up. Sure, Facebook is a great app. It's brought me back in touch with countless people I'd probably never have spoken to again. It's also great for sharing your life with others, if those people care. It's a great place to waste time too. My roommate, for one, spends hours hanging out on it. I'm not sure what he does, but he's on there.
There are lots of great apps online, but there's a big difference between a great app and a great company. In fact, just last week, a friend had recounted a story of a guy who came in to pitch his firm. My friend loved the app, but the problem was, there wasn't much of a company to be built. He recommended the guy just focus on making some money with it, but to rethink his strategy in terms of building a company.
If you look at Facebook, where are they going to make money? Sure, you can see they can make money advertising, like everyone does, but there's one big difference between a search engine (like Google) and a social network. You don't visit a social network to make purchases. And that's a HUGE point. You do go to Google looking to make purchases. And that's where the relevance and the success of their ads come in. I've clicked on lots of ads on Google but I've gotta say, I've never even intended to click an ad on Facebook. It's just not the normal interaction or consumer experience. Can that change? Sure. Can their targeting get better? Sure. But its going to be a long steep road, one that I'm not so sure they can climb.
How about that Beacon debacle? I mean seriously... did FB really think I wanted anyone seeing what I bought on Blockbuster. If you don't care about a movie, how about some embarrassing things you've bought in the past? How about jock itch cream, herpes medication, hemorrhoids, porn, women's underwear (that your girlfriend never received)? FYI - these are just examples... not actual purchases, so don't get excited.
There's no instance where I'd be comfortable knowing my purchases were being used to provide recommendations to others WITHOUT my express consent EACH and EVERY time. One way they could get around this is by showing friends some ads based on things I've bought, but not using my name. Still - I don't think that's going to bring in the cash.
Facebook is also going to have to deal with the inevitable. There are going to be other social networks that come and go, other new technologies, and fickle users. There's no allegiance in the online world. I've already seen a huge decline in the use of FB just between my friends. Facebook fatigue its called. I personally use the site less and less. And I've been receiving friend requests from people I know that aren't even my friends... so the utility of this service may not last forever. The apps? I'm so damn sick of people throwing sheep at me. And Sexy Friends? If that's not spam, I don't know what the hell is. Just add that app if you want to see what I'm talking about.
Google works so well because it's simple and effective. Facebook is a complex beast. I'm not saying Google can't be replaced either, but if I were a betting man, I'd stick with Google.
15B? That's such a ridiculous valuation that I don't even know where to begin. And the fact that Microsoft invested in them at that valuation just reaffirms my belief that Microsoft doesn't know what the hell it's doing anymore.
I never thought I'd say this as a PC guy... but I'm slowly appreciating all things Apple. I may even get an iPhone when the new one comes out next month.
Sunday, May 18, 2008
Working at Google - Can They Keep It Up?
I'm going to preface this by saying that my time at Google was awesome. It was definitely the one place I've worked where I knew that everyone just "got it". You were respected no matter who you were talking to, your VP, the founders, old employees, new employees, it didn't matter. You were given the ability to be creative, to impact decisions and direction. I'd never before experienced that.
Fast forward a few years. I keep in touch with quite a few of my ex-co-workers at Google and know quite a few new ones. I venture down there about once a week to grab lunch. And though it's usually to catch-up, it's also to take advantage of the free lunch. I mean, it's almost as good as going home to mom and having her cook me a meal. That's how good it is.
Anyway, I've noticed quite a few things that have changed over the years. It's inevitable that it happens. Some are small but some have had a big impact. To start small - the snack rooms have been scaled back. When I was there, they were chock full of everything you could imagine. Tons of drink choices, tons of snacks (chips, candy, fruits, nuts), and a sweet coffee/hot chocolate bar. It was seriously like Charlie and the Chocolate Factory. A total dream. Sure there are still snacks... but just a shadow of what it once was. The drinks? Yea, they've been cut back too.
How about thosee scooters I used to race around campus on? Gone. Or at least mostly gone. Sure there are still a few around, but they're not maintained.
But one piece that's really changed where it actually impacts the work environment are the sheer number of employees. I think Google worldwide is around 19,000 employees. When I left it was about 7,000 maybe. December that year (2006) it was like 11,000.
What do the numbers of employees mean? It means a few things. It means Google isn't a tiny shop anymore which leads to this:
1) People are leaving for the next big thing (here). And some people think that next big thing is Facebook (I don't - and I'm happy to write a post about it later).
2) There has been a need to bureaucratize somewhat. Google has always been known as a flat organization (not many managers, VP's and stuff to micro-manage you). That's changing and that's putting into place more red tape.
3) It's now easy to get lost in the shuffle. It's hearsay, but from the whisperings I've heard, there are some employees that just don't have enough to do - and that can make for frustrated employees. I remember right before I left the Gap, I was often sitting around twiddling my thumbs. I'd complain - because I was wasting my time and the Gap's time. But nothing was done. And it became mind-bogglingly frustrating.
4) There are still employees that are as busy as ever, but there's less payoff these days. Your good deeds are now getting less noticed than they used to. And now managers are spending more time managing people as opposed to innovating. This too has begun to frustrate employees.
I don't know if there's any way around this as your company grows large. I think Google did a great job of holding it off for a while. But there's probably some point where a company begins to lose control over their growth. And maybe Google has reached or is nearing that point. I'm sure they're going to be fine... they hire unbelievably well. But things definitely don't seem like they used to.
Thursday, May 15, 2008
A Conversation with Rick Marini, Founder of MyRockstar
I had the pleasure of meeting Rick Marini this morning for some coffee at Tully's in San Francisco. Rick was the co-founder of Tickle, an online personality test company that was purchased by Monster for a hefty sum in 2004 (here). After sticking around with the company a bit working as their chief strategist, he took some time off for a round the world adventure last year and is now back doing his next startup, My Rockstar. I'm not sure how quiet they're keeping, so I won't divulge too many details. They're providing a destination for information on music artists - like MySpace Music, but more focused on social interaction.
I approached Rick because he has experience using personality tests to capture data - something we're working on doing. He started Tickle after a very similar experience to the one that got me thinking about Vyoo - a first year business school test we'd both taken. He's also been through the process of building a company and growing a social community/website (to over 1M page views/day). You may remember the "What kind of dog are you like" test that really started his success? He had some great insight on our approach, how to develop a succinct and informative description of our technology, and how to develop viral campaigns. He's a very bright guy and very down to earth who is very well connected in the online world. As we were chatting, Shawn Fanning walked by, a friend of his and the founder of Napster, who just sold his own social network (here). He then went on to tell me that in the 3 square block radius of his office, practically the whole world of social networking exists - Rupture, Imeem, Friendster, MySpace, Facebook, Hi5, among many others. The Bay Area is certainly the hotspot in internet technologies. It's a fun place to be and really the only place I'd consider starting this company. The resources are really unbelievable.
Rick introduced me to a former co-worker of his at Tickle who will hopefully be able to provide her expertise on how to make our technology engaging. After all, we need to be attractive to users...they're the most important component. I'll definitely be following up with Rick - he's a great contact and an all around great guy. I'll also be keeping him at the top of my list when we're looking for additional advisers.
Wednesday, May 14, 2008
Wait...you did say conception to proof of concept, didn't you?
I could have sworn that's what you said. In fact, right here, right on your website, "Inspiration focuses on non-capital intensive companies that need proof of concept capital".
Needless to say, I was a bit surprised that you thought we were too early for you? You want users - and lots of them? Well, how are we supposed to have users when we're building our proof of concept? You want non capital intensive? You can't get any less capital intensive than we. 8 people involved...all taking equity. Oh, you want to be involved in our operations and strategy too... yea, no other VC does that.
The conversation started off normally. The partner spoke about how they're a different VC. How they provide seed capital, invest early, and get out even earlier. They take part of their investment off the table when series A comes along (they cash in part of their stake for some of the new round). I'm not sure I like that piece. That just gets them their investment back, with commission, in a very short amount of time - I think he said they only invest if they think you'll get a series A in 2-6 months. Since they process takes 3 months or more, I guess you already have to be shopping around for a series A. They're bridge lenders or middlemen. Who needs middlemen? I also don't think series A VC's will really like that component all that much. Why would they want to give you money that's only going to go out to pay other investors, immediately.
He continued to explain how he and his partners were in my shoes once before, so they know what it's like. He also added, for posterity, that he didn't like to string along entrepreneurs. That he hated when VC's did that to him.
Then came my pitch. I'll admit, it wasn't a "blow you away" pitch - I'm still working on that. But it wasn't bad. After I got through it, the pause, the "that's an interesting idea" and then he began working his "strategy" into the idea. Well, what if you release a Facebook app? What if you get users now through some sort of widget on Facebook, and then you see if there's any interest in what you're doing? To which I politely responded that a) Facebook has a prohibitive user agreement - which means, in essence, that they can pretty much control any app. Shut it down, copy it, steal it, whatever. While they haven't done anything to date, I don't like giving FB that option. And b) if we release a widget on Facebook without any sort of value add to the user, just as a way to gauge interest in what we're doing (which was his recommendation), we're bound to lose those same users when we're really ready to launch our product. They'll be "one and done" because we couldn't give them anything of value when they signed up. You got one chance to make it or maybe a few more than that. But I'm not using one up on a FB widget.
So we chatted a bit more and then he proceeds to tell me we're too early. That we need to have users and prove that people were going to be on the site. And then we should call him. Unfortunately, my rebuttal came to me, as it often does, just after I hung up the phone. Wait...too early? I thought you were early stage investors? And you want me to call you and keep you up to date on where we are? I thought you didn't like to string along entrepreneurs...but isn't that what you just did to me? Anyway, sure, I understand he wants a sure thing. Who doesn't? If this was a sure thing, I wouldn't be asking someone I didn't know for money - I'd ask my parents so they could get paid back for all the cash they've invested in me over the years.
While we're still talking to investors, we've all but rules out VC's. Friends/family and angels only at this point.
Friday, May 9, 2008
Man This Guy is Savvy! Poker Savvy!
I ventured off the Peninsula today and made my way into San Francisco to meet up with a good friend of mine, Matt Crystal. I want to start by giving him some overall props. He's a smart dude. He's the CEO of Poker Savvy, an online poker loyalty program. It's not gambling or anything suspect like that, but if you do play poker online, it would be a disservice not to sign up. In addition, Matt's fairly well spoken, which was why I was going to see him in the first place. I thought he'd be a great person to help hone our pitch. Ya know, get it to that place where someone really understands what the hell we're all about - quickly and easily.
Well, we ended up shooting the crap for a while, about more fundamental issues, like growing your business, scaling your development team, off-shoring, hiring practices, etc. The two points he really hammered home were these:
1) Hire good people early
As we moved further into discussion, the point of focusing really began to settle in. As the CEO of your company, you feel the need to be involved in every aspect of product development, operations, and anything else you can get your hands on. This all leads back to his first point. Hire good people - because that allows you to trust them to accomplish their tasks, leaving you freed up to focus on what's really important for you as the CEO.
At the end of our discussion Matt offered to put me in touch with some people who could really give us some perspective about what we're doing. One of them actually started a company that uses a very similar technology to ours, albeit for a different purpose. You really never know who you're going to end up meeting when you get out a bit and network. I swore up and down in business school that networking was BS. Boy was I wrong.
Thursday, May 8, 2008
Myanmar: Cyclone Nargis
UPDATE: Death toll may be 500,000, more than double the '04 Tsunami! (here)
This isn't a political stance. I'll leave that up to the rest of the blogosphere. I just want to be sure we are all aware of the catastrophe that just took place in Myanmar (here). A cyclone hit that has resulted in an estimated 100,000 deaths that left more than a million displaced and homeless. It's important to be conscious of world events and of the value of human life. It's times like these that allow us to pause and reflect on our own situations and think about how fortunate we are. Myanmar often gets less attention in the world press and I'm feeling that this catastrophe has had far less attention in the media than Katrina or the Tsunami of '04.
I spent a few weeks in Myanmar several years ago. Out of the 40 some countries I've been too, I had one of the most memorable trips of my life there. It's an incredibly rich culture, with caring and generous people, that hasn't yet been overwhelmed by tourism, like some of the other countries in the region (see Cambodia). One of the best parts of my trip was the invitation I received to dinner in Bagan. My host family was a poor farming family that wanted to learn a little more about why someone was coming to visit their little corner of the world. They sent a horse to pick me up and lit the way back to their home with a flashlight. It was a remarkable experience and one that I'll never forget. It instilled in me the idea that no matter how much or how little money someone has, there can be incredible good in people.
Bagan - The Land of a Thousand Pagodas. A countryside \literally awash with temples, all of which are open to explore on your own. And they are empty and lacking the crowds you'd expect to see. It's a serene setting - a place where you literally step back in time and interact with a community that hasn't changed much in years. But they've certainly been affected now and could all use a little helping hand!
International Relief Committee
Monday, May 5, 2008
Inspiration Ventures - A New Kind of VC? Or Maybe Just One We Don't See Anymore
I have a phone call this week with Inspiration Ventures. I was referred by someone I met with last week who thought they'd be a good fit for the stage we're in. After doing some minor research, which really means I just read their website, I was impressed with them. They've differentiated themselves from other VC's because they're interested in seed stage companies - a dying breed these days! They've differentiated themselves from angels/"friends and family" because they play an active role in your company, which can be a good thing (or a bad thing) - depending on lots of variables. For them though, it seems mostly positive, since their management team has had extensive experience starting and managing startups and they seem to relate well to entrepreneurs. In other words, there's a higher likelihood they'll understand what we're doing and going through as opposed to traditional, later stage VC's - who just want success and their money back - at all costs! Inspiration's other investments also lead me to believe they understand the market we're playing in.
According to Inspiration's website:
* Entrepreneur to entrepreneur guidance leverages past experience and enhances traditional VC funding success
* A seed investment allows the time and market feedback necessary to help make intelligent decisions on whether or not to bet the company on the traditional VC funding scenario
Their seed investments average ~400K and they are interested in helping you get through the first 6-9 months. Seems like a good deal and seems appropriate for us.
FYI - we've just started to think about pursuing financing for a variety of reasons. For example, I thought I'd be able to be more involved in developing the website, but because there are so many other things going on, I haven't had as much time. This means I'd love to get our developers some help...and that takes money at this stage. While we're fine without it, it'd be a huge help and something we'd certainly consider.
Thursday, May 1, 2008
My Latest (Disappointing) Book Reviews - Blink and The Tipping Point
Yea, I don't know why I continue to torture myself and read business books even though they tend to provide me with very little value. I was a bit pressured into reading these next two - which I guess I'll use as my excuse. One of our contractors kept referring me to The Tipping Point, and I finally caved... (which is probably a good argument for a "tipping point" as referred to in the book). The other, I actually read first, but it was a similar story - I kept hearing people talk about it and it sat on my shelf for months. It kept staring at me, asking to be read. So I finally obliged. It was Blink.
These two books were written by Malcom Gladwell. He's obviously a bright dude and his story telling is pretty good. But I think he needs a muzzle or a filter to prevent him from having to describe 40 different situations to get his point across. Or maybe that's his editor's job.
I'll start with Blink, because I actually thought it was decent, and it was my first read of the two. The main idea in Blink is the idea of "thin slicing" or making snap decisions without really thinking too hard or too long about the situation. Actually, it's a decision made within seconds, on the little (thin) pieces of information you have. I'm sure you've all experienced this. Maybe you made a decision and didn't really know why you came to that conclusion? Even think about taking a test - you have a hunch on a question that you don't really know or think you know. And it's more often correct than if you tried to actually reason through the solution? Gladwell dissects this notion and explains how it comes to be, how our mind can interpret patterns relatively quickly from these "thin slices" of information. The examples he uses are entertaining and interesting. Which is what kept me reading the book. For example, there was an art curator who just knew this statue was fake, but he couldn't tell you why he knew. Most of the other people who went through rigorous research in painstaking detail actually thought it was real and spent millions purchasing it. It turned out to be a fake.
In the end though, Gladwell didn't have a conclusion or any method for improving the way we do this in real life. It came off more as a "sometimes this works, sometimes this doesn't" - and here are some curious stories. So go into this knowing what you're getting.
As for The Tipping Point, I won't be so kind. This book started off promising. And from what people had said, it was the better book of the two. I can't disagree more - but that probably has something to do with the order in which I read them. While the opening story was good - about Bernie Goetz and his subway vigilante story, that's where my interest peaked. It was a succession of stories, each one less interesting than the last, trying to explain The Tipping Point. What is the tipping point? Glad you asked - it's really the thought that as momentum builds there becomes a point where something peaks, and then crashes. Think of a wave. The tipping point is the moment in time when the crest of the wave begins crashing onto the shore. He relates this effect to different situations - crime gets so bad that finally it starts getting better. A business builds slowly and then it finally takes off. Shit, isn't that obvious? And guess what? Sometimes it doesn't happen. In the spirit of Blink, I "thin sliced", and realized from the first few chapters what the rest of the book was about. A combination of stories that didn't tell you anything more than the obvious and didn't have a worthwhile conclusion. I tried on 3 different occasions to pick this book back up to finish it just so I could write something about it. I couldn't do it. Don't waste your time.
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