I put together a piece for change.org this weekend on dealing with rejection. I’ve been meaning to write on the topic for a few months - I think you can tell a lot about someone based on how he/she handles rejection.
Remember: if everyone wanted to drink your kool-aid, it would be water.
In my Web 3.0 class last spring I heard the story of Six Degrees. Six Degrees was a social network that started in 1997 and shut down in 2001. It was one of the first online social networking sites and according to this screenshot (thanks Way Back Machine) they had over 2 million users in 1999:
We spent a lot of time in class analyzing why Six Degrees didn’t survive the dotcom bust. Social networks were going to be huge! The power of the network effect would crush new competitors!
…and yet they didn’t make it.
I think the demise of Six Degrees shows the importance of timing. How many pre-youtube youtubes tried and failed because most people didn’t have broadband and couldn’t support streaming video? There are tons of theories out there that speculate on which products are widely adopted, but more and more I am realizing that timing is one of the most compelling factors.
Even though I REALLY am not that into the book Eat, Pray, Love, I keep coming back to Elizabeth Gilbert’s TED talk from earlier this year on creativity. She spend a good few minutes talking about a poet who used to run in from the fields to take down her poems.
Capturing ideas is really important - absolutely - but I am finding that one of the most valuable steps in the idea to reality process is the feedback you get from people across the spectrum - people you deeply respect and people you think are total idiots. Often the most obstinate haters are the people that can help your idea evolve most drastically.
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.
Thanks to Flybridge Capital, I was able to attend the AlwaysOn Venture Summit East today at the Mandarin Oriental in Boston.
I am not exactly a veteran of VC get-togethers, so I am subtitling this post “confessions of a VC conference newbie.”
Highlights:
1. Widespread and unabashed optimism. I watched probably 5-6 panels and despite the pervasive and hard-charging recession going on for everyone else, many panelists said they believe it’s a “great time to start a company.” I’ve heard that phrase now so many times at so many different events and conferences that I wonder why my friends haven’t quit their steady jobs to become cloud experts (see next topic!).
2. Love of the cloud. I had not heard the phrase “pay-by-the-drink” before (shame on me) to describe cloud computing - though apparently Bezos has been throwing it around since at least 2006 and probably way before. It makes sense and is catchy, so I am excited to welcome the phrase into my lexicon of buzzwords. For those of you not hip to cloud computing catch-phrases, “pay-by-the-drink” refers to one of the most compelling parts of the cloud business model: dynamic/horizontal scalability and the customer’s ability to pay for only what they use.
Example - server space. You could buy an entire server for your startup and use some of it or all of it. When you get that spike in traffic that you were hoping for (viral social media marketing success!) your server might crash, negating any benefit that might have come as a result of the traffic spike. OR, you could sign up with a nifty “cloud” service like Amazon Web Services (AWS), Rackspace or Mosso. They charge based on how much server space you use. When you need a lot, the capacity is there and they just charge your credit card - see the “SmugMug” case study for more info.
There’s a lot of momentum surrounding cloud computing and “software as a service” and additionally, these businesses generally fit the capital-efficient + huge upside potential model that VCs look for, so it’s not surprising that talk of “the cloud” was so pervasive.
3. Quality of deal-flow is better. One quote I wrote down: “There are a lot of people who want to start companies, but they’re not necessarily entrepreneurs.” When VC money was more free-flowing (ahem, 2000) many of these wantrepreneurs got funded and the “noise” level became unmanageable. Now, the combination of tighter VC wallets, folding funds and newly unemployed former entrepreneurs has resulted in an increased number of serial entrepreneurs getting back in the game and putting together quality early-stage companies.
4. The importance of angel networks. My favorite panel of the conference was about the state of Angel and Early-Stage investing moderated by Michael Greely from Flybridge. The panelists were John Landry (Lead Dog Ventures), Elon Bloms (LaunchCapital), Bijan Sabet (Spark Capital) and Paul Maeder (Highland Capital). A surprising amount of VC deal-flow comes from Angel networks. This shouldn’t be too shocking - how many people are there in any one city with piles of cash (their own or others’) to invest in startups? My point: it seems like many startups seek VC funding too early - take advantage of the Angel groups in your city first and if you’ve got a winner that will likely lead to VC anyway.
5. Changing the VC model. There was also much chatter around the idea that huge mega-funds are on the decline and the VC model will move toward smaller funds and continue to favor capital-efficient business models (ie it doesn’t cost you $1m a month to stay in business). YouTube-type exits simply are not the norm; average VC exits are around $70 million. One of the panelists on an afternoon panel suggested reading a memo about the formation of Valhalla Partners. I found it on the Valhalla website and although it’s dated May 2002 it’s surprisingly relevant to the current pains in the venture industry and definitely worth a read.
Overall - good energy at AlwaysOn. Now if you’ll excuse me, I’m going to get back to writing my world-changing cloud-computing business plan.
I have been to several presentations in the last few months given by lawyers that work with startups. Last night, the firm was Goodwin Proctor and the topic was “8 ‘Great’ Mistakes Entrepreneurs Make”. To me there’s one HUGE common thread that comes up over and over again at these presentations: PROTECT YOUR IP (or as they phrased it last night “Mistake #8: Failing to Adequately Protect Your Intellectual Property Assets”).
If these lawyers push and belabor the IP issue in presentation after presentation, I’m guessing it’s because they see tons of startups that have had IP issues of some sort - and this is their attempt to head them off at the beginning.
Here’s the problem: founder equity debates (who gets what percentage of the company) are awkward enough, but trying to break down IP ownership is EVEN MORE awkward. I sometimes think of it as trying to divide up a check at a large group dinner when it’s someone’s birthday. You don’t want to pay more than what you believe you owe, but you don’t want to be the one to speak up either.
Yet the stories of IP disasters keep coming. The guys from Goodwin pointed out that it’s not just the co-founders that could have a claim to your IP - you also need to think about former employers, 3rd party developers, and consultants.
The lesson here - take some steps early on to protect your IP. Don’t be sheepish about discussing IP ownership and know that you might need to ask your employees to sign NDAs (though don’t try to ask a VC to sign an NDA, it will just show them how naive you are). Be vigilant about your IP - your lawyers will thank you.
I have been thinking a lot about bit.ly’s funding round that was announced a few weeks ago. There has been a lot of attention lately on URL shortening, especially with the explosion of Twitter (Twitter on Oprah!) and the introduction of the Digg bar.
Why did bit.ly get money? There are a ton of URL shorteners out there - and my initial thought was that if Twitter ever introduced the ability to hyperlink I would stop using services like bit.ly completely.
But bit.ly’s appeal to investors rests not in its URL shortening, but rather its tracking system and analytics. By using a bit.ly link one can tell how many clicks his/her links are getting and where the clicks are coming from - even inside of social networks like Twitter and Facebook. Bit.ly can get where Google Analytics cannot, which is great for bloggers/content creators.
If the original Google search algorithm was constructed based on a system of hyperlinks/pagerank, there is potential in the data collected by bit.ly to create a collection of “live hyperlinks” where you can track how a link is passed among people/websites. This would dovetail nicely with the [somewhat] burgeoning “semantic web” (ok, burgeoning since 2001, but still) in that it would provide more human, dynamic, and real-time input on hyperlinking.
That type of data, if presented right, has huge potential for online advertising.
OK, I’m convinced.
