35 Gut Checks When Founding Your First Company

Posted on January 31, 2010. Filed under: startups, venture capital | Tags: , , , |

If you are thinking about founding your first company, standing at the edge of the entrepreneurial swimming pool, trying to decide if you should dive in, here is a checklist (sort of a Meyers Brigg for founders) to help you figure out if this life is for you. It is based on my observations of the thousands of entrepreneurs who I have gotten to know over the past 4 years.  I would say, if you’re answer is “No” to more than 10 of these statements, think very carefully about making the jump.  There is no science or data to support this checklist.  Strictly my own observations of what is required to enjoy and excel in this experience.

1)      I tend to thrive in an unstructured environment

2)      I am capable of teaching myself almost anything I want to learn

3)      I do not need positive reinforcement from others in order to be happy/effective

4)      I am primarily competing against myself

5)      I am completely self-motivated

6)      More often then not I get what I want

7)      Money is not the primary metric by which I measure my professional success/progress

8)      I am comfortable living a life that most of my friends and family will not understand or be able to relate to

9)      I am a fantastic listener

10)  I seek out help at the first sign that I need it

11)  Work is by far and away my greatest passion

12)  I handle disappointment well

13)  I have more energy than most people

14)  I love to win and hate to lose.

15)  The concept of “the path” revolts me

16)  I am above no task or role

17)  I have friends and family who will support me even if I do not give them as much attention as I should

18)  I have no fear of running out of money

19)  The word “can’t” is not in my vocabulary.  There are things that are extremely difficult to achieve, but nothing is impossible

20)  Pressure does not derail me

21)  I am not intimidated by anyone

22)  I enjoy solving hard problems

23)  I do not frustrate easily

24)  I exercise regularly

25)  I fundamentally believe in myself

26)  I am highly experimental

27)  I am a doer, not a manager of doers

28)  Laziness and complacency disgusts me

29)  I am an excellent judge of character and talent

30)  I am rarely tricked.  It is very difficult to deceive me.

31)  I have an extremely low tolerance for incompetence

32)  I have an extremely accurate perception of my strengths and weaknesses

33)  I am not too proud to admit what I don’t know

34)  Everyday accomplishments bore me.

35)  I am going to change the world

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The Practice of Patience (Founder’s Tip)

Posted on January 11, 2010. Filed under: JumpPost, startups | Tags: , , |

The past couple of days at JumpPost have been an exercise in patience.  This is not a trait that comes naturally to me, nor is it one that I’d imagine most entrepreneur’s are born with.  Sort of by definition, we are a group who wants change to happen faster than it would evolve without our efforts.  I am reminded of one of my favorite quotes (stolen from Fabrice Grinda) by Joel Barker:

“Vision without action is merely a dream.  Action without vision just passes the time.  Vision with action can change the world.”

So what happens when you are long on vision, and stirring to create action, but there is some external force on which your desired action is dependant?  Frequently in a startup, the most important thing in the world to you and your company, is number 15 on the to-do list of an external party (whether that party be a bus dev partner, service provider, investor, or even employee).  There are two responses that a founder can engage in when waiting on external action:

1) application of pressure: you want your answer/data/deliverable and you want it now.  Email/call/hound the external party until you get it.  My experience has been this strategy can yield fruit as a last resort, but more often than not, it will just move you down the list form 15 to 20 (or maybe even remove you from the last all together).

2) Acceptance: the world does not revolve around you and your startup.  Start pushing other balls forward while you wait for this one to unfold.  Nothing wrong with staying in front of this external party, but do it in a way that respects their right to prioritize their own efforts and actions.  This might mean that you let a time sensitive opportunity pass you by, or that you need to delay a number of other actions that are dependent on the outcome of this external event, but building a company is a marathon, not a sprint (note: I do like to sprint some miles when the opportunity presents itself).  In the long run, preservation of important relationships and a healthy working dynamic between you and the parties with whom you interact will yield fruit…so don’t freak out when things take longer than you want them to.

It takes practice to sit down at your computer, stare at the bright red “high importance” item on your to do list, and then to compartmentalize and look beyond it so that it does not distract you from knocking out the 10 “medium importance” items that are sitting behind it.  I’ve written before about the importance of momentum…and one of the biggest killers of momentum, at least personally, is waiting on something that you do not control…The practice I have developed over the past couple of years is a practice in acceptance.  Very few events in the life of a startup are apocalyptic (though they may seem such in the moment)…some things fall your way, some don’t, so staring at this “high importance” item and then saying “have I done everything I can possibly do to make this item break my way? Yes? Okay, what else can I accomplish today?” is a dialog with yourself that is worth developing.

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Newsflash: Your Startup Is Not In The Playbook

Posted on January 6, 2010. Filed under: JumpPost, startups, Uncategorized, venture capital | Tags: , , , , , |

A former investor of mine, Fabrice Grinda, recently wrote a blog post enumerating the reasons why businesses that are started with two co-founders are more likely to exit big than are those with a single founder at the helm. That line of thinking seems to be the common sentiment at least in the venture world, and one which having seen more than a thousand founder/cofounder setups while on the venture side, I think I would tend to agree with.  When I started thinking about leaving General Catalyst to start my first business, I mapped out a progression of events necessary to take the plunge and build a company.  The planned progression of events went something like: 1) idea, 2) diligence, 3) cofounder, 4) quit job, 5)raise capital, 6) build product, 7) achieve seed stage milestones, 8 ) raise more capital and scale.

This play book is sort of a standard one that I had heard many entrepreneurs and investors tout, and not having been through it before, I largely executed according to plan (minus 7 & 8 that is).  What I’ve learned, however, is that someone else’s play book is only a guide, and to execute against it without flexibility and recognition of your own context/data is a mistake.  Nothing in startup world happens exactly as you expect it to.  Sometimes a recognition that you need to write your own play book can prevent what I’ll call “inorganic progress.”

“Organic progress”, to me, is when the events in an operating plan occur as the result of successful completion of tasks/goals/learning on which that new event is dependent.  In other words, progress that occurs naturally or without force.  An example of organic progress would be when a management team builds a product, puts it out to consumers, people buy this product, and THEN they design a customer service program to support their newfound customers.

“Inorganic progress”, then, would be occurrence of an event ahead of completion of the tasks/goals/learning on which that event is dependent.  Or, forced progress.  The company builds a product, puts it out to consumers, and then designs a customer service program in anticipation of its first customers…although it may seem that management is getting ahead (or making progress) by finishing their customer service design quickly, they are doing so without the data/learning of customer feedback, and thus an event (the customer service design) occurs before it’s antecedent (inorganically).

It has been my experience that when progress is forced, although potentially forward moving from an aesthetic sense, this is progress in a wrong direction.  The customer service design, when created through inorganic progress, will not address the needs of the company’s customers, thereby creating an operational inefficiency that would not have arisen had management allowed this piece of progress to develop organically.

As it turned out in our last company, steps 1-4 were in line with the concept of organic progress.  My immediate instinct when starting JumpPost was to replicate a known play book: 1) idea, 2) diligence, 3) co-founder, 4) give up job opportunity in venture capital (replaced quit job), 5) raise capital.  What I realized when I began executing on this play book, however, was that I had a previously non-existent understanding of the difference between organic and inorganic progress.  Steps 1 & 2 were the same, but as I began to work on 3, I realized that recruiting A level talent, and especially a cofounder, could be a 6 month cycle.  A number of people I am close with expressed an interest in cofounding the company, and had I been executing to “plan,” I would have taken one of them on before moving forward to step 4, but this didn’t seem “natural.”  Why? Because I was missing two antecedents to this decision.  The antecedents, in this case, being 1) an understanding of what domain expertise would become most important to our company, and 2) an understanding of what caliber of talent I could expect to bring on board pre vs. post venture financing.

So…I sort of tabled the old play book, continued to meet with interesting people, but began executing the subsequent steps before completing step 3 (cofounder)…As soon as I moved past step 3, another deviation from the play book arose.  The play book would have said I needed to raise capital in order to develop the JumpPost product (especially without a technical cofounder), but again it didn’t seem natural…what I realized was that I wasn’t ready to commit to investors a single vision for the Company without the data of product/market fit behind us.  So I read a lot about a new play book, rooted in the philosophy of customer development, and then began recruiting a team to build something ahead of financing.  Now, we will begin to acquire the data needed to complete step 5 (fundraising) organically.

I ran into Chris Dixon on the street in our neighborhood a few weeks ago, and after chatting for a bit about this blog, he asked about JumpPost.  His first question was “how are things going? still searching for a technical cofounder?”  From an investor’s perspective (and Dixon is another example of a guy who has seen a thousand startup teams, and subscribes to the “cofounder law” for many of the reasons Fabrice articulated), acquisition of a cofounder (step 3) was a data point that would indicate where I was in the progress of a conventional startup play book.  Although my answer to his question was, “yea, I guess so,” the reality was I was well beyond this step in the play book, but only because I decided a while ago that I would design a new play book, drawing on conventional wisdom for sure, but not without a few of my own creative plays mixed in.

So all this talk of organic and inorganic progress is just to say that while I recognize Fabrice’s points about the benefits of a cofounder, I will not take on a “cofounder” until it organically presents itself.  As JumpPost progresses, I view every early hire, part time contributor, and even advisor as a founding member of our company and I rely on them all as a sort of “aggregate cofounder.”  The interesting part is we are going to hit step 6 (product) and have a real good shot of hitting step 7 (achieve seed stage milestones) of the old play book, before executing on steps 3 (cofounder) and 5 (raise seed round).  It just happens that this was the most organic and natural path of progress given all the events/goals/learning that we have experienced to date.

So, I guess my advice to entrepreneur’s considering Fabrice’s (and common wisdom’s) suggestion that “2 [founders] > 1″  would be, “yes, a cofounder does represent a huge amount of value when starting a business…BUT there are many ways to skin a cat, just make sure you don’t do it inorganically.”

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Progression of Thoughts in an Entrepreneur’s Day

Posted on December 17, 2009. Filed under: startups, venture capital | Tags: , , , |

(Wake up) whoa weird dreams, what does it mean when I am pitching my value proposition to faceless people in my dreams, fuck it, time to work…I’ve got to stop working in my dreams…wait, I wonder if I make progress in my dreams…probably not, or at least I can’t remember any specific insights that I arrived at in there that are applicable out here…whatever…(scanning emails on my iPhone while still lying in bed)…junk, junk, junk…fuck this is a weird angle that I need to hold my iphone at to read while still keeping my head on the pillow, interface keeps switching between landscape and profile…I really need to stop subscribing to all these daily newsletters, I never open  them anyway…but my friend runs this company, he gets paid $300 for every 1000 people who open this fucking thing…300 divided by 1000 is 30 cents…i want to keep contributing to his success, $.30 at a time…(continue scanning emails)  where’s the good news? Where’s the good news?…oh shit, that guy actually wrote back to me…come on baby,,, come on baby….yes, he’s willing to meet me….junk…junk…email from friend….oh yea, I should probably stop working and go hang out with my friends one of these nights…switch to calendar…this calendar on my iphone sucks compared to my old blackberry…one more reason to switch back…fucking AT&T…but I do love my iphone…tonight? No…tomorrow night? No….one week from Tuesday? Yes…return to inbox…hey dude, sorry I’ve been super busy…want to get dinner next Tuesday?  Switch back to calendar…Tuesday, December 26th, “Hold for dinner with Alex”….back to inbox…junk…junk..junk…shower time.

(go turn the shower on)…brush my teeth, run back to iPhone to see if anyone has emailed in the last 30 seconds…(get in shower)…what are the 3 most important things that absolutely must get done today?  1, 2, 3…start thinking through one…

(out of shower), dry off, check iPhone again….(getting dressed) what do I need to wear today…no meetings…ah that’s nice…jeans, hooded sweatshirt…(eating breakfast at the new café on my block)…god this place is empty…I really hope they stay open…food is so good…tough when you aren’t on the main drag of 5th avenue…I wonder how I can help this guy?  Customer acquisition in a physical landscape…new product…must deliver free value…highest margin product is coffee…cost of goods for cup of coffee = $.40, average ticket price of customer is $5.00….lifetime value of customer = hundreds of dollars…1 in 10 customers who redeem free coffee will convert into $5.00 customer, 10 customers x $.40 = $4 out for $5.00 in near term revenue and some percentage of leads convert into life time customer…wait but $4 is rev, not profit…ahhh…feels like the math should work…”hey dude, I’ve got an idea for you to get some new customers in the door….

(sit down at computer) okay…time to clear inbox…”mark as unread” “mark as unread” “mark as unread” no…you procrastinator…respond now…reply, reply, reply…(one hour later) at last…i can get to what I want to accomplish today…[insert first random fire drill here] fuck…this is not good…(wait 2 minutes)…actually this is doable…not a big deal…[insert solution here]…attack number 1 from the shower (i.e. “how do I seed the community with inventory pre-alpha release so that UX and design is pretty and alpha users will have best possible experience even though they are my closest friends and colleagues and they will tolerate a shitty experience”)…

god I’m getting hungry…where’d the last 3 hours ago…if I could just quickly respond to a few emails…(an hour later)…well, it’s 2:00…I’m barely hungry any more…better go for a run…unwind…(put on ridiculous long underwear with shorts on top)…I look like a complete idiot…but I don’t care…probably won’t run into my soul mate in Prospect Park at 2:00PM on a Thursday…what am I going to think about on this run…I love getting work done while I’m running….takes my mind off the physical pain, and feels like killing two birds with one stone…gotta think about a new blog post…okay…what’s happened over the last few days?  Met with this guy…learned something cool here…this is such a high yielding hour that I am spending…staying in shape…building energy…and thinking about a new blog post…hmmm…that’s interesting…I wonder if other people measure their hours in terms of yield?  I could write about that…yea…and talk about hours in my week that are surprisingly high yield…like the hour I spend on exercise…or the hour I spend on writing a blog post…both are higher yield than an average hour I spend in front of the computer…okay….blog post done…still another 2 miles to go…what else can I accomplish…eh…it’s actually really beautiful in the park right now…I think I’ll just zone out…(2 minutes later)…that girl is trying to run faster then me…eh, who cares…run at your own pace….(2 minutes later) she thinks she’s beating me up this hill…I don’t think so (start ridiculous spring up the hill and leave girl who was probably not trying to run faster than me in the dust)…well, that was a nice run…

(arrive back at computer) Okay…lots of energy now…time to bang through this to do list…task…complete…remove…task…complete…remove…task…complete…remove…breath…breath…breath…read a bunch of blog headlines in my Google reader…pick the 10 things that look the most interesting…read…read…read…need a change of scene…pick a new café…okay…to do list under control…time to write post…god this was a busy day…what did I want to write about again…fuck it…I’ll just write about today

Sound familiar?

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The 3 Most Important Words in a Founder’s Vocabulary

Posted on December 14, 2009. Filed under: JumpPost, startups, Uncategorized, venture capital | Tags: , , , |

I have always been amazed by people’s unwillingness to utter the words “I don’t know.”  These three words have been, by far, the most important words in the course of my professional development.  I remember working for a Hedge Fund when I was a sophomore in College, and being tasked with maintenance of a model that one of my bosses had developed to track financial performance of distressed public companies.  I had “sold” my way into this internship leaning heavily on my previous “experience” interning at a Broker/Dealer in high school, but the truth of the matter was, I had no fucking idea what the numbers in this model meant.  My high school internship had consisted of running tickets on a trading floor and picking up breakfast for a bunch of Boiler Room brokers.  While I did get a taste for the “excitement of the markets,” I received absolutely no background in accounting, could not read a financial statement, and was ill equipped to be updating and “analyzing” the data in this model.

I spent about 2 weeks faking my way through this task (while working hard to add value in other places where I was more confident), and then I realized how inefficient it was for me to be performing it with my limited knowledge.  I remember coming clean with my then boss, and saying, “I don’t know what any of these numbers mean.”  I expected him to be extremely disappointed, but instead he sat down with me, spent a few hours explaining the basics, and I became infinitely more dangerous and valuable to the Company.  I internalized that lesson early, and now I apply it on a regular basis.

Admitting that you don’t know something is by far the fastest way to learn it.  When I got to General Catalyst Partners, I literally did not know the difference between an application and an operating system.  I had to learn a whole new language, and the way I did it was by writing down every single word and concept I didn’t know, most of which were extremely basic and revealed my complete lack of experience, and then I would corner people in their offices and ask them to explain the items on my list.  For about three months I was the kid who didn’t know anything, and then for the next two years I was able to speak intelligently across just about every industry and market to which we paid attention.  I remember watching the learning curve of one of the guys who joined our team after me, and it was so much slower than it should have been.  I realized the reason was because he never asked for anyone’s help.  Never admitted when he didn’t know something, but instead sort of nodded his way through conversations about subjects he hadn’t learned.  Had he sucked it up and admitted what he didn’t know up front, his learning curve would have been much steeper.

Especially as a non-tech founder (and as a tech investor) I am constantly dealing in realms where my domain expertise is a fraction of the folks’ with whom I work.  SEO is a great example of an area where I lack the necessary domain expertise to be dangerous.  I could either keep on referencing SEO as a strategy we are going to implement at JumpPost, without understanding how it works, or admit that I get conceptually why Search Engine Optimization is important, but to be honest, I have an extremely cursory understanding of how it works.  As soon as I admit that, while potentially unimpressive to the investor with whom I am speaking, or the potential hire with whom I am recruiting, I am now able to sit back and listen as they explain the three pieces of “low hanging fruit” we can achieve while knowing nothing about SEO, as well as the three more complex concepts around the relationship between SEO and Product architecture that I can now implement during the build of our product.  The alternative, of course, being that I could gloss over this “blind spot,” notice in 6 months that we are stinking it up on organic search traffic, and then admit that we don’t really understand SEO, at which point I’ll have to explain to said investor why I just wasted $XX of his investment building a non-SEO friendly product that now needs to be rebuilt/augmented at an additional expense to the Company.

When you expose a “blind spot” in your skill set/knowledge base, those who are in a position to teach don’t feel any need to impress you with their knowledge.  Rather they speak to you like they would a first grader, which is exactly where you need to start when you are learning a new language.  Imagine trying to learn Italian by sitting in an a 3rd year Italian course.  It would be nearly impossible and you would immediately raise your hand and say “I think I’m in the wrong class, where’s Italian 1?”  If you’re a non-tech founder, for example, not raising your hand when designing a product with your lead developer and saying “Where’s PHP 101?” is simply stupid.  Your job may not be to write the code, but if you don’t understand the basics behind every layer of your product, how can you recruit intelligently, weight the effort of your design against internal resources, and contribute ideas to the development process in a method that is easily digestible to the rest of the team.  Even in areas where you don’t need to become an expert in your Company, taking the time to learn the basic principles behind everyone’s efforts is essential for effective communication both within your Company and with parties outside of it.

Beyond product, this practice applies to marketing, fundraising, business development, and every other effort that you are pushing forward in your Company.  I remember negotiating a business development agreement with Citigroup in my last company.  I identified a natural partner for our business, got in front of the right people to pitch it, and got their verbal commitment to move forward with a deal.  We sort of lingered in that realm of “ok, so we want to work together” for a couple of weeks, and then I realized that I didn’t know how to turn that sentiment into action.  I remember calling Brad Handler, who is the founder of Exclusive Resorts (and at the time a very important potential investor and business development prospect himself) and telling him “listen, I have this deal with Citigroup that is within reach, but I don’t know what to do now.”  He taught me how to write and deliver an LOI (Letter of Intent), described the process of turning that LOI into an Agreement, and coached me on how to get the deal across the finish line.  Now, in the course of acquiring this knowledge, I exposed our inexperience to one of the most valuable companies for the future of our business, but I only had to do that once, and every business development effort I encountered from that point forward I came at from a position of strength.

So the moral of the story is, don’t fake it.  When you don’t know something, admit it confidently, learn it, and move forward.

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“Drop In” to the Zone

Posted on December 11, 2009. Filed under: JumpPost, startups | Tags: , , |

When people ask me how I’m doing these days, my regular response is “awesome.  I’m in the zone.”  I’ve been in the zone many times before, but typically this state only lasts for a few days or maybe weeks at atime, before it diminishes and reverts back to what I’ll call my baseline mental productivity.  The strange thing is, this “zone” has lasted for about 2 months, and it’s going strong.  What I’m learning, is that it is possible to actively perpetuate a certain mental state through conscious effort and replication of context.

First, let’s explore for a second, the concept of “the zone.”  It’s pretty hard to define, but for me it’s an energy and state of mind in which you are able to move through all facets of life without friction.  Imagine, driving through Manhattan, guided largely by your intuition, where every light you approach turns green at just the right second.  Athletes might talk about being in a state where no movement is conscious, but rather there is a perfect alignment between your instinct and the context in which you’re acting.

I’ve written before about positive feedback loops.  The zone, in many ways, is a constant positive feedback loop.  In times like this, productivity is extremely high, thought is particularly sharp, social interaction is particularly rich, and energy is extremely high.

Slipping into the zone is not easy, but it is possible to practice entrance into this state.  If you have ever attempted to surf, the experience is very similar.  You spend a ton of energy paddling as hard as you can to get into the wave’s path, and then as the swell forms behind you, you must pop up at exactly the right moment.  A second too late and the wave passes you by.  A second to early and the front of your board plows into the sea.  But, if you are able to drop in just right, you immediately switch from a state of frenetic exertion, to extreme calm, and yet you move at 10x the speed of when you’re paddling to high hell.

Much like surfing, I have found that there are certain practices you can develop to “drop in” to the zone more frequently and for longer periods of time.  A lot of it is maintaining a state of mind and attitude that is conducive to allowing the calm of the wave to carry you.  Simply remembering what the zone feels like is enough to open your mind to this calm.  To that end, replication of context that exists when you are in this state can be an effective way to “remind” yourself what you are trying to achieve.  Music is one of the most effective triggers for me to replicate a context.  If I am listening to a band during a period of particularly high functioning, I will continue to listen to that band and that band alone until I burn it out.  Similarly, if I wake up at a certain time of day, I will keep waking up at the same time of day, replicate the same routine, eat the same breakfast, etc…This may sound a little crazy, but constantly drawing analogies between the day you are in, and yesterday where you were unstoppable, makes it much easier to believe and function as though you are unstoppable today.

I know not everybody functions in this manner, but for those who know what I am talking about, and I think many entrepreneurs are similar in this way, I have a theory that 80% of what you accomplish in a year is likely achieved in “zone like” periods.  Being conscious enough of this state, to know when you are in it, and working extraordinarily hard during these periods to maximize output and take advantage is key.  When you’re not in the zone, looking at the friction in your life, and figuring out why you keep missing the wave is essential (although difficult).

P.S. I just asked my friend George Bell to describe his zone, and he talked about things slowing down to a point where you can move through an environment (professional, athletic, or otherwise) seamlessly.  I’d be interested to hear everyone else’s descriptions of their own “zones.”

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The “Real” Behind Online Analytics (Entrepreneur’s Therapy Session)

Posted on December 7, 2009. Filed under: startups, Uncategorized, venture capital | Tags: , , , |

Being an entrepreneur or an investor in consumer internet land, it is very easy to become jaded by big numbers.  The metrics we use to track engagement with an online product or content are dehumanizing.  People who interact with an online site are immediately transformed into statistics like “active users,” “clicks” and “page views,” and somehow they become less real.  Mark Zuckerberg announces that Facebook has surpassed 350 Million “Users” and I am conditioned not to internalize just how many people are engaging in the action of Facebooking.  I guess when I hear a number like that, I try to benchmark it against big numbers I am already familiar with, to get a sense of scale.  I’ll say, “350 million people is 5% of the World’s population,” that is amazing market penetration.  But still, that number may as well be written in cotton candy, hanging from a tree in The Cat and the Hat, puffing out plumes of saffron colored smoke into a balloon shaped like the letter R.  That’s how far my perception of “350 million users” is from the reality of 350 million people performing one single and common action.

This only really dawned on me yesterday, when I stumbled into Madison Square Garden, sat down in the 8th row, and looked up into an endless sea of Knicks fans.  I thought to myself, “there are a ton of fucking people, packed into this arena, all concentrating their attention on the same thing.”  I leaned over to my friend, Phin (who has been kind enough to bring me to these games for the last 15 years), and for the first time I asked him “How many people does MSG hold?”  Phin answered 19,763, and I was paralyzed.  I thought to myself, “on any given day, I can write a blog post that reaches half of this arena, and it would be equivalent to calling a time out, handing out a piece of paper to the entire left side of the Garden, and having them read it in silence for 30 seconds, before the game resumes.”

Something is lost in the translation from a physical crowd to an online crowd.  As I try to identify what it is about that arena that I find so impressive, despite the relative size of its audience compared to online crowds, I am drawn toward a few concepts: 1) concurrency, 2) time, and 3) friction.

1) Concurrency: I guess I have a newfound respect for a product that captures a high volume of concurrent users.  The trend toward On Demand information consumption has removed a key constraint in attaining a volume of consumers.  Live (in person) entertainment is one of the last frontiers where the concept of On Demand consumption is impossible.  An event is only consumable in person during a specific window.  Therefore, 19,763 represents a much larger market share (of attention) than does the same number in the online sphere.  The potential volume of attention during the hours of 12:00-2:30PM is 1/12 the addressable attention of a piece of online/on demand content.  Think about how asynchronous consumption has expanded the addressable audience of a television show.  Between DVR, DVD, Hulu, and Cable On Demand, an episode of television has a near infinite number of opportunities to reach a consumer, as opposed to 10 years ago when an episode of Seinfeld could only reach the number of people sitting in their living room from the hours of 8:00-10:00 on Thursday nights.  Madison Square Garden is still living within the constraints of concurrent consumption.

2) Time: this is a metric that actually translates well between the physical and online realms.  A minute of someone’s time is a minute of someone’s time independent of whether it is spent consuming a product in the physical or online realms.  The product of a live basketball game is significantly better than the product of a blog post, which is why the Knicks are able to capture a full 2.5 hours of 19,763 people’s time.  I would have a very hard time convincing a reader to spend 2.5 hours reading this blog.  Time on site is actually a great metric to bridge the disconnect between the online and physical worlds.

3) Friction: by far the most amazing thing about filling an arena with 19,763 people is the amount of friction the Knicks are able to overcome in order to reach their audience.  Getting a consumer to move his physical location is probably 10,000 times harder than getting a consumer to move his online location (from one site to the next).  Consumers drop off from any product when they encounter friction of experience.  The amount of value on the other end of that friction determines how much friction a consumer is willing to endure before giving up and reallocating their attention/effort to an alternative.  When you load a webpage and it doesn’t render properly, you will hit refresh.  If you try again, and it fails, you might hit refresh.  Try a third time and almost everyone will give up on that piece of content.  If it was raining yesterday, I still would have gone to the game.  If the subways weren’t running, I would have taken a cab.  If there was a riot outside MSG, I probably would have passed.  The fact that the Knicks are able to mobilize this volume of people to stand, clothe, travel, and congregate is a testament to the quality of their product relative to alternatives (Sunday afternoon football on TV, shopping at the Apple Store, etc..)

All that being said, Facebook destroys the Knicks with the time lever alone.  It is a far superior product.  The aggregate volume of human time that their 350 million people devote to a single experience is breathtaking (with or without the crutches of a low-friction environment and asynchronous product consumption).  To all the web entrepreneurs out there, living in the analytics behind your product (especially if you haven’t broken out from 50,000 users to 350 Million): start visualizing your audience in the physical world.  Size up a crowd in the most densely populated area in which you find yourself, and then remember that it is likely a fraction of the number of people you reach on a daily basis.  It will make you feel good.

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Founders Need Rock Hard Abs

Posted on November 25, 2009. Filed under: startups, Uncategorized, venture capital | Tags: , , |

There are two primary reasons why a founder needs rock hard abs:

1) working out of cafes and apartments, hunched over 12″ screens in shitty chairs with improper lumbar support is NOT good for your posture.  A strong core will help…

2) in the early stages of building a company, it is absolutely essential that you learn how to take a punch to the gut.

I have two close friends from Dartmouth who got flown out to the Valley this past weekend for final round interviews with Y Combinator.  Y Combinator is basically a hybrid venture capital firm/startup boot camp. A couple of times a year, they “admit” a class of very early stage startups, give them small dollars and a ton of advice and resources, and essentially groom them into venture-financable companies.  It is a spectacular head start for first time entrepreneurs, who give up less than 10% of their companies, and graduate with an embedded network and a sharper set of skills to go make it happen.

I just got the news that said friends didn’t make it in.  I thought for a few minutes about the implications of this data on the trajectory of their company, and realized that the actual value lost in that opportunity is minimal (a near commodity), but only if they replace that opportunity with something comparable, or even more valuable.  Is Y Combinator a great head start? Sure.  But so is the participation of some professional angels, or an early stage seed fund, or one of the 6 other clones of Y Combinator that have popped up in the last two years (Techstars, Dreamit, etc..).

BUT, it is not this value lost that poses the greatest threat to their business.  The real danger lies in the impact that bad news has on a company’s culture, founders’ state of mind, rate of progress, and general confidence.  After two months of product development, business planning, and strong forward momentum, my friends just got their first real “punch to the stomach.”  And that, by the way, is exactly what bad news feels like when you are starting out.  So much of your effort. time, and identity is wrapped up in this creation, that bad news can actually have a physical impact on founders.  Much like getting dumped by a woman you love, entrepreneurs will speak of a pain in their stomach or chest that they just can’t shake.

So much of early success comes from founders evangelizing their efforts, and sharing their company with anyone who will listen.  Momentum plays a huge role in a founder’s ability to do so, insofar as it is a lot easier to sell a vision that you passionately believe is going to come true, than it is to sell that same vision in a time of personal doubt.  Customers, partners, investors, friends, and family can smell that doubt in a founder’s mind.  This reality provides a positive feedback loop which furthers the doubt, and so on and so forth.

The same is 100% true for positive data…and therein lies one of the most important lessons I have learned about starting a company: No matter how bad the news, it is essential that you absorb that blow, deal with the immediate implications, and then do anything you can to generate some good news.  The faster you can cut off that positive feedback loop, and shift the momentum of your company back in the right direction, the better chance you have of replacing that “lost value” with something of comparable or greater value.  It is your responsibility as a founder, to turn this corner faster than everyone else in your company, and let them draft off of your forward momentum.

None of this is an argument for denial of the facts, and believe me, hindsight is 20/20 (there were days in Untitled Partners where I was not able to do this fast enough), but I think this skill, of taking a punch, and getting back up fast, is one of the most important to develop in a founder’s tool kit.  And there is no “faking it.”  You can’t just throw a smile on top of negative energy and sell everyone on “the positives.”  It is about actually addressing bad news, developing methods to accelerate your personal recovery time, and then quickly taking steps to right the ship.

Think about how many times Rocky gets pummeled in that fight with the giant Russian dude who killed Apollo.  Every time he gets knocked down to the mat, he gets back up faster…and at some point…the dude that’s throwing all the blows get’s tired, a window of opportunity emerges, and that’s when Rocky is able to start landing his jabs.  Momentum shifts, the crowd rises to their feet, the right kind of positive feedback loop commences, and he achieves the impossible.  Next time you watch that movie, take a look at Sly’s abs…rock hard, baby.  Team Data Owl…start doing crunches.  how fast can you flip this switch?

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Idea, Execution…and Gumption

Posted on November 5, 2009. Filed under: Uncategorized | Tags: , |

It’s 10:43pm.  A former colleague of mine is sitting across the table from me in the Think Coffee on Mercer and West 4th Street.  We’ll call him Jim (for privacy’s sake).  The rings under his eyes are visible.  He hasn’t cracked a smile in two hours, and he can’t get onto the internet.  My man is beat.  To understand the gravity of his situation, perhaps it would be helpful to share a little context on the events leading up to this evening.   If I look at the economic trajectory of his 30 years on this planet, it would look something like the letter n.  He came from nothing and clawed his way to a prestigious undergraduate degree, a high paying job on wall street, a fund of funds career, and a stint at a top tier venture capital firm.  He is a worker and always has been.  By the time I met Jim at General Catalyst Partners, he had worked over 25 jobs, ranging from waiter, to beer guy for the Arizona Diamondbacks, and everything in between.   I watched this guy support himself, his older brother, and his mother, quietly and selflessly, and it was clear that he had been doing it for a long time.  So General Catalyst was the arch at the top of out letter n, but not without a fair bit of spilled sweat.

Fast forward to the sharp little point on the bottom right of our n.  Tens of thousands of dollars in debt, cancelled a first date with one of the most beautiful women I’ve ever seen because he couldn’t buy her a drink, and you might ask yourself how did he get here only 18 months.  Drug addiction? Gambling problem? Unexpected child?  Nope…entrepreneurship.  He has been financing a relatively involved software build on savings, and credit cards, and a bit of friends and family money.

So, to the present.  You might think the dark rings under his eyes are attributable to the countless hours an entrepreneur must spend creating something from nothing.  And no doubt, those hours are adding up, but these rings are dark.  Why?  Because Jim just took a full time wait job, on top of his full time Founder job, less then a month from his product launch.  He doesn’t have another choice, New York is an expensive place to live while your bootstrapping something.  Jim could break, and get a job that pays $200,000 tomorrow, instead of running himself ragged like this, but he is driven by a burning desire to fix a problem that needs fixing.  It has consumed him to the point where he has sacrificed his wealth, his health, and any sembilence of a personal life for his company, and in 3 weeks he’s going to get to see the flop.

I wrote yesterday about the qualities Michael Jackson embodies that I wish for in a VP of Product, and today I put forth Jim as an example of what I look for in a founder, or a co-founder for that matter.  With the last company I started, I picked my co-founder almost entirely on character (and of course competence and intelligence), because starting a company is fucking hard.  You need to run through wall, after wall, after wall, and keep on running, no matter how hard it gets.  People often site idea and execution as the two factors that dictate the success or failure of a startup.  Perhaps I’ll tack on gumption as a third, and say if you have the drive of my buddy Jim (and you’re the MJ of consumer internet products)…holler, I’m working on something kickass…

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    About

    I’m a NYC based entrepreneur. I think there is one metric that can be used to measure the value of a human life and that’s impact. How did you change things? How many people did you touch? How different is the world because you lived in it and how positive was the change that you affected? (p.s. i don’t use spell check…deal with it) You can email me at Jordan.Cooper@gmail.com

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