Today is Ash Wed. It’s not a very well known religious day, but it’s one I personally find particularly meaningful.
For those of you who are curious, here is a primer on Ash Wed. In a nutshell, it marks the beginning of Lent, which is the 46 day period in anticipation of Easter.
What I love about this day is its emphasis on humility. I think with the busy pace of life, it’s unfortunately easy for me to get caught up in my own self importance without even noticing it. So I really appreciate hearing the words that usually accompany the application of the ashes: “”Remember O man that you are dust, and to dust you shall return”
The interesting thing I didn’t know until a few years ago is that the ashes used on Ash Wed are from the palms from the previous year’s Palm Sunday.
I once heard a minister explain the reason for this. Palm Sunday was the day that Jesus of Nazareth was said to have entered Jerusalem amidst the cheers and adoration of the crowd.
The irony is that only a few days later, that same crowd would later make up the angry mob that called for his death. According to this minister, the use of the palms for the ashes symbolizes the frailty of human faith and goodness. It’s a reminder for me to be humble, because I can remember many times when I was self-righteous about something, only to later realize that I was guilty of a far worse offense.
I know my readers come from many different religious backgrounds, so this post may not be that interesting to a lot of you. But I like the thought of a day dedicated to humility. I was talking to David Cancel last week and he lamented the sense to entitlement he encounters from people from time to time. He said that he is a big believer in “servant leadership”, that you should just think about how to solve problems for people, or make life easier for your customers or those you work with. I thought that was a pretty darn good thing to focus on on Ash Wed this year.
For the first time since November 2008, I’m getting a paycheck today. It’s not much ($930.46) and 1/5th of what I used to be paid, but I’ll take it. Needless to say, I have no money left and credit card bills to pay, so it’s coming at a good time.
Being an entrepreneur means sacrifice. I gave up my $3000/month beautiful Brooklyn loft for splitting a 2 bedroom with 3 people in Bayonne, NJ for $300/month. I was without health insurance for 15 months. And I can’t tell you just how much I appreciate J for putting up with living in Bayonne when I know she misses NYC and hates the commute.
Being an entrepreneur means being comfortable living on the edge. Last March, when I was still in Brooklyn, I had a $3000 rent check due in 2 weeks, and I didn’t have the money to pay it. And yet, you find a way. I was able to secure an investor and pay my rent on time.
Being an entrepreneur means riding a rollercoaster. One day in December, we’re celebrating because an angel investor told us he wanted to put in $200,000. Over the following weeks, we agree to a price and terms, and then he pulls out. From what Chris Dixon writes, this is more common than it should be. In the end, though, I think it was the best thing that could have happened to us.
Being an entrepreneur means compromise. Having no money means you can’t buy what you want, go out to eat whenever you want, travel wherever you want. But in return, you get to create something meaningful, be your own boss, and love what you do.
I wouldn’t have it any other way.
I was very pleased to read about the acquisition of Aardvark by Google. I’m a huge fan of the service and the team at Aardvark. A part of me wishes that they had stayed independent and swung for the fences, but I also think that this is a great outcome and the team can make a lot of great things happen as part of Google.
The acquisition made me think about what I love about Aardvark. I started out writing a post with a list of attributes, but I realized that I only really have one point to make:
The Magic of Aardvark is that it changed my online behavior.
Aardvark is a pretty unique service, but there are others out there that try to do “human powered search”. But what blows me away about Aardvark is that it drives users to do something unique. I’m not the kind of guy who goes to Yahoo answers, but for some reason, when Aardvark asks me a question, 80% of the time I’ll at least think about whether I’m able to provide a good answer, and often, I will respond. If you look at Aardvark’s user metrics, they show that I am not alone. Power users to drive most of the answers on Aardvark, but unlike sites like Yelp or Tripadvisor, it’s not 1% creating 99% of the content. It’s much more balanced, which I think yields much more balanced results.
There are a lot of startups out there that have a unique feature or two… at least until they are copied. But once in a while, startups emerge that get you to say “wow, I can’t believe that people are actually doing x, y, or z”. Those companies usually end up being worth a lot. Recent ones that have come on the scene are Mint (“I can’t believe people are giving their banking passwords to a startup”), Foursquare (“I can’t believe that people actually check in to places”), and Blippy (“I can’t believe people are publishing their puchases”).
Now, I’m not advocating that companies try to make users do something unnatural to them. But what these startups all do is remove the barriers to inherently natural behavior. I already like to help out friends or friends of friends who need advice, and Aardvark allows me to do that in a natural way.
I previously wrote a To-Do list for new entrepreneurs arriving in Boston. It included a bunch of folks to follow on twitter and on their blogs, events to go to, and companies to get familiar with.
I’d like to add a new to-do on the list, especially if you are a younger entrepreneur. Check out Dart Boston - a community of entrepreneurs 30 and under helping one another start their businesses. These guys have sprung up out of nowhere in recent months, and I’ve been really impressed by their level of activity and creativity. For example:
Pokin’ Holes: A weekly meetup and video show where one local entrepreneur presents their company and gets grilled by their peers. The show moves around Boston in an effort to engage the entrepreneur community in different areas. Tonight’s event is at Tufts.
Capitalize: A monthly show where one company pitches to a VC or angel investor. You get to see the pitch and feedback streamed live. This month, it was at Kepha Partners with Eric Hjerpe. In May, I’ll be on the show at Spark Capital.
Rule 53: A podcast that features a series of interviews about startup life, business, and tech.
I don’t know how these guys and gals have time for all this, but I’ve been very impressed and think it’s an excellent addition to the local tech scene.
I’ve seen a number of consumer startups trying to reach massive scale by doing deals with carriers or device manufacturers (cell phone manufacturers)
Some worked out nicely for the startups but most don’t.
I like consumer startups that are taking charge of their own destiny. They are not white labeling their product or brand. They are not licensing intellectual property. They are not comprimising the user experience to make the big “partner” happy. They are not indifferent to those decisions.
Instead they are 100% focused on the user (and developers) and establishing their brand and purpose.
Awhile back I wrote about a problem I encountered when I ported my phone number. I asked for a better way to communicate this info to my friends, family and business associates. I received about a dozen emails from startups going after this problem. Unfortunately most of them built a product and approach that assumed that a deal with carriers was better if not essential.
I’d like to think that the open web and open mobile platforms allow us to finally go direct to our users and figure this stuff out together.
Now there are times where partnership and distribution deals make sense. I like them if they add value to the network and don’t hide the consumer brand or force the startup to make unnatural choices.
But in the absence of those things, I say damn the torpedoes and take control over your destiny. Don’t outsource it.
(clarification: this post is about consumer applications. i’m not talking about infrastructure or technology licensing companies, etc).
What do Admob, CafePress, Aardvark, Polyvore, and Xoopit have in common? If you said that they were all backed by great VC’s like Sequoia, August, Benchmark, and Accel, you would be correct. But did you know that they are also all backed by the same seed stage investor as well?
What these companies all have in common is that they are all portfolio companies of Harrison Metal Capital. With 3 exits in 2009 (Admob, Xoopit, and GeoAPI) Harrison Metal is one of the hottest of an emerging category of investors that some call “Micro VC’s”. Harrison Metal isn’t alone in their success - there is Maples Investments (SolarWinds, ngmoco, Chegg), Founder Collective (Hunch, 20x200, Milo), and probably another dozen or so firms like these that have emerged over the past 5 years.
What these firms all have in common is a fund strategy and size that is both different from and complimentary to traditional VC’s. Their investment strategy and sub $50M funds are well suited for the increased capital efficiency of certain sectors and the fact that larger VC’s have difficulty deploying capital in $1M chunks. It’s also a very attractive option for entrepreneurs in that it preserves option value. Mike Maples puts is best:
“Smaller up-front investments create a greater range of exit strategies where everyone wins. For example, if a business raises a small amount of initial capital, then exceeds its early milestones and decides to swing for the fences, it can then raise a larger sum at a higher price, while preserving ownership. If the business is not ready for rapid growth, it preserves the option for an exit at around $50 million, while still delivering a high return for investors. This dual-track model is less available to companies that raise large amounts of money early.”
It should be noted that most of these fund aren’t shooting for mid-sized wins. But their size allows them to do quite well with mid-sized wins, and it is well suited for consumer internet investments where it’s often very difficult to predict whether a company has the chance to be big enough to produce “venture returns”.
I think these firms are excellent investments (looking from an LP perspective). Their strategies fit the times and inefficiencies in the market. They also do wonders for their local entrepreneurial ecosystems by allowing more companies to get shots on goal and providing the help that sophisticated investors can bring. They are continuing the work that great angel investment pioneers like Ron Conway who helped (and continues to help) great companies emerge.
As an investor at Spark, which currently invests out of a $360M fund, I am very excited about these guys. Even though we also do seed stage investments, it’s great to be able to call on sophisticated seed investors that can partner with us and add serious value to companies on hiring, product marketing, and strategy. These funds also bring a lot of excellent deal flow, and give companies great counsel on how to approach VC’ and how to hit the milestones that matter earlier. This increases the pool of great companies that we have a chance to invest in and gives us greater leverage on the seed investments that we pursue.
UPDATE: Notch up one more exit for Harrison Metal - Google acquired Aardvark for $50M.
Larry Cheng at Volition Capital has put together some excellent lists of top VC bloggers and top VC websites by traffic.
Obviously, these measurement methods aren’t perfect (he uses a rolling 3 month average of unique visitors from Compete), but they are directionally correct. What I found interesting is the correlation (or lack of correlation) between website traffic and aggregate blog traffic from all firm bloggers. I took Larry’s two more recent lists and did this comparison. The results are below ordered by website traffic:
Fund Name – (Website Traffic / Total Blog Traffic)
1. First Round Capital – (31,632 / 28,039)
2. Sequoia Capital – (22,441 / 0)
3. Bessemer Venture Partners – (14,825 / 8,262)
4. Highland Capital Partners – (12,704 / 0)
5. Garage Technology Ventures - (12,375 / 82,838)
6. Draper Fisher Jurvetson – (11,823 / 12,010)
7. New Enterprise Associates – (11,762 / 0)
8. Kleiner Perkins Caufield Byers – (10,924 / 0)
9. Polaris Venture Partners - (10,217 / 16,991)
10. Benchmark Capital – (10,162 / 23,084)
11. Battery Ventures - (10,034 / 1,744)
12. Founders Fund - (9,654 / 21,462)
13. Accel Partners - (9,604 / 0)
14. Greylock Partners - (9,445 , 0)
15. Centennial Ventures – (9,224 / 0)
16. General Catalyst Partners - (9,086 / 0)
17. Summit Partners - (8,270 / 0)
18. Norwest Venture Partners - (8,198 / 0)
19. Founder Collective - (8,189 / 42,937)
20. Spark Capital – (7,834 / 15,487)
21. Foundry Group – (7,787 / 71,547)
22. Technology Crossover Ventures - (7,503 / 0)
23. Matrix Partners - (7,309 / 0)
24. Lightspeed Venture Partners - (6,475 / 15,199)
25. Union Square Ventures - (6,333 / 132,936)
Some interesting observations:
1. There are a lot of zeros. It was surprising to me to see how many top firms don’t appear to be blogging at any scale. Again, Compete may fail to report the traffic of some of these folks, but that probably means that scale is minimal. That said, most of the excellent firms like Sequoia, Accel, Kleiner, etc have good reach with their websites regardless of whether or not their partners blog. I also know that at least one zero will go away with the next version of the list since David Skok started what looks like will be an excellent blog.
2. Blogging puts firms on the radar. It’s interesting to see some relatively new firms come on the scene in recent years and build very broad awareness. For better or worse, brands do matter somewhat in venture, and it’s always a tricky thing for a new fund to figure out how to create awareness. I think expressing your thinking openly and engaging the tech community in a dialog is a great way to do that. It’s impressive to see Founders Fund and Founder Collective gain mind share very quickly. And part of it has to do with one or two very vocal individuals who put their thoughts out there. As a side note, for those of you who do not read Chris Dixon’s blog or Dave Mcclure’s blog you are totally missing out.
3. Social media creates unprecedented reach. Event the best known firms only get 10-30K hits on their website. It should be no mystery why that is - the content is rarely refreshed, and it serves mostly as information and marketing pages to entrepreneurs who are researching a particular firm. But blogging (and social media in general) expands the voice of VC’s way beyond a bio and list of companies. It’s content that’s actually helpful and appeals to a much broader audience. Union Square Ventures for example has over 100K uniques, 20x the uniques on their website. And the richness of their content justifies it (for example, see Fred Wilson’s new series on MBA Mondays).
This last point makes me think more broadly about the reach of VC’s on the internet. Stay tuned as I pull some additional data together.
I will be holding my next “Open Office Hours” on Friday, Feb 12, 2010 from 9AM – 11AM. This is my third Open Office Hours session - I’m having fund and hopefully folks find it helpful.
The purpose of these meetings is to provide the Boston entrepreneur community greater access to investors for their perspective, feedback, and help. I will schedule six 20-minute time slots, so please respond quickly if you are interested. The format is informal, but time is short, so please be very clear about how you want to utilize this time.
The location this time will be the Andala Cafe in Central Square.
Please see below for details and how to reserve a spot.
Location: Andala Cafe, Central Square (286 Franklin Street)
Date & Time: Feb 12, 2010. 9:00AM – 11:00AM
How to reserve time: Send an email to julie@sparkcapital.com with your name and preferred time. Also include a brief (< 3 sentence) summary of a) what you are working on and b) what you hope to get out of the meeting.
See you there!
Charlie O’Donnel and Jon Steinberg recently wrote two excellent posts about the value of business school and advice to graduates looking to join a startup. Their feedback is quite challenging and a little negative on MBA programs. I’ve said myself that most MBA’s are unable to really build something or sell something, which are basically the only two jobs that matter at an early stage company.
I do fear that the sentiment around MBA’s is swinging a little too negative these days. I’d like to offer a slightly more positive view, and some suggestions to MBA programs to better prepare their candidates.
Unlike some graduate programs, an MBA is not a trade. You don’t walk away with the ability to do something unique like you would coming out of dental school or law school. In fact, most people who go into business school are actively leaving their “trade”, whether that’s banking, consulting, product management, sales, or something else.
So what’s the point of Business School? In my view, the point of an MBA at a top tier B school is to provide students with the perspectives and pattern recognition to be a really great C-level executive. It allows a person to feel like they have “seen this movie before” in more situations and respond more decisively. There is a TON of value in this, but the further you are from making meaningful decisions in an organization, the less useful this learning becomes.
In my view, MBA entrepreneurs shouldn’t be looking to join great startups. They should be looking to start great companies. If they feel poorly equipped to do that, that’s a signal that they went to Business School too early. I love the example of guys like Brian Shin and Dharmesh Shah who had started companies in the past, went to B-school relatively late, and used the resources there to cultivate their next company.
Unfortunately, I can’t change the way Business Schools operate overall. The talent market is such that students are applying to Business School earlier and top tier schools are trying to admit younger students as well.
So here is what I would do differently at business schools to make students more effective in the startup ecosytem.
1. I’d make sure there is a class on early stage product creation. This would include the nuts and bolts of forming a founding team, best practices in early stage product marketing and product management, and best practices in early stage customer acquisition. I think this class should also require students to produce something and find users. It could even be as simple as starting a blog and attracting readers - it doesn’t matter.
2. I’d push more students to take classes in sales. I would make most of this learning occur outside of the classroom. Imagine if you could create a program where a bunch of top tier MBA’s are working for different companies and actually helping them sell product. That would be tough to coordinate, but make a big difference.
3. I’d rethink the case method. The case method is great at creating a lively, analytical discussion. You can generally guarantee that a class of 50-90 students will pick apart the main issues of a decision, and discuss all the costs and benefits of all the options. The problem is that business isn’t about analysis. It’s about decisions. And decisions are as much about the gut and conviction to trust your judgement as it is about analysis. During my two years in Business School, I don’t think I ever felt the the discomfort in my stomach that comes with making an important decision with incomplete information. But that’s what has to happen all day long at a startup (or in any management role).
4. I’d push students to get out of the campus. B-schools are great a bringing in great speakers and executives. It’s easy to get complacent. But entrepreneurship tends to be a local endeavor in the early days. You have to recruit locally, fund-raise locally (usually), find your first customers and partners locally (usually), etc. Cities like Boston, New York, and SF have a lot of resources for early stage entrepreneurs and have thriving startup-ecosystems. But I rarely see a B-school student at WebInno, OpenCoffee, PopSignal, or other local events. Maybe the situation is better with the NY Tech Meetup, but I’m not sure.
Those are my thoughts - and I’d love to to whatever I can to help MBA programs better equip students for roles at early stage companies.
Like millions of others, I was watching intently as Steve Jobs unveiled the new IPad.
I’m definitely getting one. I honestly don’t think I know exactly how I will use it, but I know I will… a lot.
It’s always hard to predict exactly what impact a device like this will have, especially before it’s been in the hands of users. But one thing I do know is that at least one old, tired industry has finally woken up to a new day.
I’ve blogged about how baffled I am with the textbook industry before. It’s amazing to me that 10 years after Half.com (and 10 years since the end of encyclopedias), the best that we have is Chegg and its imitators. And 10, 50, 75 years before that, our grandparents and great grand parents were educated by the same old textbook product used in college campuses today.
But the events of the day made it obvious that those days are finally over. First was a conversation with my old colleague Bill Rieders, who runs the Digital Business for Cengage Learning. He really gets the evolving media ecosystem, and even if big companies aren’t always the most nimble, I feel confident that the educational publishers know that the days of expensive paper books are over. More than ever, I think they are trying hard to be part of a better solution, rather than defending an old one.
Then the iPad announcement confirmed what has already been obvious since the Kindle and iPhone. Our consumption of content is changing dramatically as the medium through which we consume it changes. It doesn’t actually matter if the iPad wins, or the Nook wins, or something from a startup wins. Something different from a laptop will be in the backpacks of millions of kids soon that will be infinitely better suited for delivering an educational experience to students. And that experience will be incredibly deep and broad, social, interactive, and dynamic.
It’s fun watching an old industry get reborn. And it’s even more fun when that industry is in the business of enriching the minds and lives of students everywhere. Talk about change you can believe in!