School starts up again in ten days.
Despite the fact that this is more than likely my last “first day of school” EVER (scary thought) I am still dreading the “OMG how was your summer?!” bombarding that one gets at the beginning of the school year. Here’s my summary for your consumption. I’ll try to include more than the required sound byte: “I was in NYC working here, and it was great.” Cause I was, and it was.
So what did I get out of a summer working in VC?
Three main take-aways:
1. A summer is just long enough to figure out that you’ve got a lot to learn
Ten weeks go by, and right at the moment when you feel like you’re starting to “get it” it’s over. I am pumped for the class “Early Stage Capital” this fall where I’ll continue to chip away at the intricacies of term sheet math and excel models. For someone whose finance experience before school was exactly zero, this sort of thing excites me. Perhaps I should not admit to such things in a public forum.
2. New York Startup Forecast: Rosy
If the launch of the First Growth Venture Network wasn’t a huge give-away that there’s a lot of excitement around the NYC startup scene let me say it again: THERE IS.
After starting off the summer at Internet Week, I went to one packed-house event after another all summer until it was beat into my nay-saying little head that yes, people DO want to start companies in one of the most expensive cities in the whole world.
While New York lacks the informal advising/hacking culture of the Valley, it makes up for this through the fact that every other industry has solid representation in NYC. A clothing startup that wants to do deals with designers? You can just trot down to their studios. An art website that wants to feature gallery work? The subway to Chelsea will get you there.
Ultimately, startups need something that will provide momentum. I think - contrary to the popular Valley-centric belief that it’s “here or nowhere” - there are a lot of different ways to create momentum and one is having access to the best + biggest players in many, many different industries. No place better than NYC for that.
3. Early-Stage Investing is about People
What I found so heinously unattractive about finance jobs (for the 2.5 seconds that I was considering working at a bank) is that I saw it as high-class paper pushing. You don’t get to really know people. It’s about excel and ratios and presentations and deals, but not really about people. Early-stage investing is mostly people-focused. It’s about getting to know a team and assessing not only what they’re building but how they will build a successful company.
I believe this is what separates really good VCs from the rest - the ability to not only spot a market-crushing business model or technology but the ability to pick out a winning team.
This is not something one can learn in a summer.
So that was my summer. There were some other key moments, but I need to leave some items for the first-day-of-school excitement. I even got a new haircut.
I thought “Town Holler” was organized by Foursquare. Nope.
The event, the first of its kind as far as I know, was organized by a user and fan of Foursquare and managed to draw 50+ people to come out at 4pm on a Saturday in the middle of summer.
It started at One and One in the East Village, and everyone drank beer and wore name tags with his/her name and the name of the place where he/she was the “mayor”. The event went on into the evening with people coming in and out and the crowd moving to different venues around the East village.
I met some new people - not necessarily “strangers” but definitely new faces. They were friends of friends, in a similar field, had similar interests, etc. Not friends, not strangers. Fr-rangers. Or maybe just other “foursquares”.
It reminded me of Paul Graham’s quote that I love: “Better to make a few users love you than a lot ambivalent.” Foursquare is a great example of that quote in action. People care enough about the product to self-organize and show up.
Through events like Town Holler, Foursquare is helping to solve an issue that social networks, dating websites, and location-centered local sites have been trying to solve for a while: meeting new people and finding new places. And Foursquare, so far, does it best. Why? Because it’s built for mobile devices. After all, when’s the best time to meet new people and find new places:
a. while at home surfing the internet
b. when you’re already out and about
Yeah, that’s what I thought.
And then - oh yeah - there are the HUGE potential benefits for local businesses. The biggest challenge for a lot of local businesses is foot traffic. They want bodies in their establishment spending cash money. Foursquare drove a hoard of people to a group of local bars during the dreary afternoon lull - and the establishments were more than happy to provide drink/food specials as a result. Sounds like win/win to me.
There are also all the bomb “discovery” and gaming features as well. Yesterday’s post in Mashable highlights some of the gaming features, and Charlie O’Donnell does a great job explaining the discovery angle in a post called “Why Yelp (…and Every Single Retail Establishment) Should Support Foursquare.”
If anything, yesterday’s event was Charlie’s post brought to life. I knew it before, but saw it so clearly yesterday: Foursquare will soon be the default engine for connecting people to local businesses and to new and exciting things around them.
The presentation from Exit Strategy NYC at tonight’s New York Tech Meetup made me think about alternative ways to raise seed capital. When you’re raising money for your paradigm-shifting, world-changing startup, it can take a long time to build your product and simultaneously convince people with money that your team+product+company is worth funding. You want to meet the right investor, find the right “fit” etc etc etc etc. Months go by, and chip away at the time you’d normally spend building your product and - right - changing the world.
Enter Jonathan and Ashley Wegener. They took a real pain-point (have YOU ever gotten out at the wrong end of the platform in Union Square? Vom.) spent two months riding subway cars and making sweet Adobe Illustrator files and built a very cool iphone app that I have already shelled out $1.99 to download. Is Exit Strategy venture-backable? Nope. But I figure they’ll probably make around $100-$250K from selling this app to New Yorkers and tourists alike. I bet the whole process was about 3-4 months start to finish.
Now, they could spend the cash on boats and dinners and houses, or double-down and use the cash to build their “big vision”. They’ll probably make enough money from ExitStrategy to get through that painful product-development period without starving, they have already proven that they can execute, AND they have built a product that will make a lot of people’s lives just a little bit easier.
Sounds like win/win/win to me.
Now go buy the app.
Stephen Marcus had an interesting piece on the New Atlantic Ventures blog (disclosure: I am currently a summer intern at NAV) about seed financing. After drilling down into institutional seed financing between January 2006 and June 2009 by region (New England, NYC, San Francisco, and DC - the four regions with the most VC money floating around) his data showed that while seed financing - which he defines as less than $1m - is down an insane 80.2% in Silicon Valley in the first six months of 2009 versus the same period in 2008, it’s up in both DC and NYC. See the graph for a better picture - it seems that the Valley and New England have put more capital toward larger rounds and have cut back on seed-stage deals.
Why the shift toward larger rounds? Safety. If a company is getting a $5m+ round of VC financing, chances are they are fairly established and therefore less of a risk (or rather, a different *type* of risk) for the investor. I see it as a knee-jerk reaction to the economic crisis - VCs were more inclined to put money toward more “proven” investments.
As a new admirer of the NYC startup scene, I’m happy to see New York (and DC as well) embracing seed financing - it only adds to the argument that Silicon Alley is booming once again.
[Click it!]:
(Image Credit: Stephen Marcus)
I was oh-so-innocently trying to learn about businesses that curate Twitter content, so I watched all 45 minutes of the Howard Lindzon and Fred Wilson chat on howardlindzon.com, hoping to get just a little bit of the secret-sauce behind StockTwits.
What I wasn’t expecting, though, was about 40 minutes in when Fred Wilson said: “This holiday season there will be Boxee boxes in the stores. So you can go to the store and get a Boxee box and you can take it home and connect it to your TV and you’re done.” (Though he did say later that Boxee will not be making the boxes).
This is amazingly awesome news for Boxee (and for me!).
Why? I see at least 7 reasons (this list started out with 3 FYI):
1. Differentiation from other online video platforms
Outside of YouTube and Hulu, there are a myriad of other ways to consume video online and a whole truckload more in development. By making the link between the computer and the television, Boxee is taking a huge risk (would you really want to go up against Hulu, the MSOs and a whole host of other large corporations?), but the potential upside is significant. I think true differentiation in the video space is extremely difficult right now and this could be the key for Boxee.
2. The UI gap between television and the internet has become, well, HUGE
People who spend the majority of their time on the internet get this look of disgust on their faces when talking about the state of television. It’s not that the next best UI for TV isn’t out there - from what I can tell, TV Guide did such a great job locking in the cable providers and patenting everything related to guide technology (including a “claim for generating a simple EPG grid with channels on one axis and times on the other”) that the pace of innovation has slowed significantly.
This has created, in a way, a perfect storm for a product like Boxee: alienated users, a battle between giants that doesn’t really seem to be going anywhere, and an enormous market ripening itself for widespread change.
3. Nothing says “Recession: Game Over” like a holiday rush on Best Buy for the hottest new electronic toy
What’s the competition this year? Windows 7? Please. The economy is starting to bounce, and what better symbolizes a return to consumption than the long line outside electronics stores on Black Friday? (Circuit City R.I.P.).
4. MSOs need a wake-up call
Henry Blodget’s article “Sorry, There’s No Way to Save the TV Business” in SAI last week summed up the situation quite well (so no need for me to say more here).
5. The future of television is not in widgets
I am pretty anti-widget when it comes to the future of television. I have no interest in seeing a sun in the corner of my screen when I’m watching Law and Order: SVU. I like Boxee’s app-driven model much better.
I know a lot of people are really into the Yahoo! widgets and there has been a lot of praise for the new Samsung TVs, but I’m not a huge fan.
The recent Boxee app development challenge is a great example of what can be done with the Boxee platform - photos, education, and news are just the beginning.
6. Boxee in its current state is too difficult to use with your TV and only sometimes compelling to use with your computer
Do I really use Boxee that much now? Nope. I love it, but for videos I find myself most often at Hulu, YouTube and Vimeo. The “pain point” is much sharper for television; online video is too slick and user-friendly, competition is vast and the video space in general is really crowded.
7. I am sick of paying for cable
Comcast, are you reading this? We’re breaking up. It pains me to pay $60/month so that I can scroll through those silly ads between every four listings in the guide software. I can’t stand staring at my remote and wondering what to do with all those buttons that I never seem to use. Anecdotally, it seems like the early adopter crowd is fed up and starting to unplug en masse. Here’s my guess on how the rest of the demo groups will shake out:
NOW - Early Adopters - Currently hacking together solutions that for the most part involve Mac Minis
1-3 Years - College Students - What do all dorm rooms have? Internet Access. Probably wireless. Cable TV is a pain in dorms, and colleges would love an IP solution that could just use the existing wireless
1-3 Years - Yuppies - The ones who always have to have the “latest and greatest”
4-6 Years - Moms - Once word gets out that you can look at baby photos through Flickr on your TV? Forget it.
5-7 Years - Everyone Else - Yeah, five years is a long time, but the MSOs are huge and the TV world moves slower than the internet.
Anyway, here’s hoping the Boxee set-top rumors will pan out this holiday season.
I have been intensely exploring the New York tech scene for a scant five days now (school’s out for summer!), so you can ONLY IMAGINE how intrigued I am by this week’s second-annual “Internet Week New York“.
In a genius move by the Mayor’s office, the city has crowdsourced the actual planning of the week’s events to the local technology scene. This is great for the city (less manpower required to pull off a week-long geekfest) and beneficial to curious folks trying to get a feel for the technology community in New York - analyzing the list of events gives a pretty thorough landscape of what New York can offer to digital dilettantes looking to enhance their knowledge of the internets.
Although there will be a solid group of out-of-towners around, I see this week as a by-NYC for-NYC event. That said, the paradox here is as follows: event organizers will likely put together an event that exhibits their strengths, meaning the events this week will serve to highlight and reinforce the strengths - which I see as content creation, advertising and investment - of the NYC tech community.
THE GOOD - Content Content Content.
If you believe “content is king” - and who doesn’t these days? - there will be ample opportunity to juice up your knowledge on content development and execution from the content capital of the universe. New Yorkers, old-media and new-media alike, respect the good stuff like nowhere else.
Check out content-related events here, here and here.
THE NOT-SO-GOOD - Where are the Developers?
There are few events that involve actually learning how to code and/or build stuff (exceptions here and here). From what I can tell, the best way to lock down job security if you work in print media/traditional advertising is to beef up your knowledge of the digital side. If you’re a content ninja, wouldn’t having a working knowledge of rails, php, python or even wordpress provide a huge advantage?
What I think Internet Week lacks are these “gateway” classes for the throngs of old-media types who are ready to embrace the future of digital media. If New York really wants to establish itself as a technology hub, there needs to be a REALLY low barrier to entry for people interested in actually learning to build new media.
So where are the coding parties? Please let me know - business students don’t usually get invited.
