“Percentage wise, it is 100% easier not to do things than to do them, and so much fun not to do them — especially when you were supposed to do them. In terms of instant relief, canceling plans is like heroin.”—
Whatsup with Whatsapp? The Social Messaging Sphere Today and in the Future
We all heard the $19B news, and there are a lot of articles out there trying to justify why, how, if, Facebook should have made the acquisition. I am more interested in figuring out why messaging apps have proliferated in a world where we have more than enough channels to communicate: Instagram, Twitter, Facebook, and iMessage just to name a few. Unfortunately, there is little data to prove why exactly messaging in all its forms is important to us. All we have is a number of qualitative assessments that can lead us closer to the answer.
I will frame these assessments through a number of sub-categories/talking points:
An Insecure Facebook: Facebook has always championed the cause of a more open and connected world. However, this larger-than-life cause has a blatant caveat; Facebook wants to control this open and connected social sphere. Facebook has long been the fundamental social mantel: it contains the story of our lives from the date we were born, to the high school and college we attended, all the way to those we choose to love. That is some serious data that leads to significant inertia. But it wasn’t enough. Younger generations cared less about content and more about pictures. [CUT TO INSTAGRAM ACQUISITION.]
The Leaky Social Funnel: Over the years, Whatsapp quietly amassed 450 million people on all major platforms and it continues to do so with more than 1 million sign ups every day. The numbers don’t come close to the total number of Facebook MAUs (reportedly 1.3 Billion), but Facebook was struggling with messaging, or what I like to call, the leaky social funnel. One-off posts and links dominated Facebook messaging while the core back-and-forth of a text message persisted on applications like Whatsapp and in hybrid forms like Snapchat.
Whatsapp has never been fancy but they have a utilitarian approach to crisp design, minimal latency and reduced cost. Zuckerberg wanted to control bring this functionality to Facebook, despite the existence of Facebook messenger. I do not know Facebook messenger’s internal numbers but I do know Whatsapp will plug the leaky funnel of core messaging data leaking out of Facebook Messenger. Perhaps the two applications will continue to exist side by side, and perhaps they will not.
Snappy Snapchat: To this day I struggle with why Snapchat became as widely used as it did. I was first introduced to the app by my teenage sister, who liked it but didn’t really know why. Not only has she grown accustomed to this new social era, she expects nothing different; Privacy was and will never be essential to her. So while Snapchat has attracted the media for privacy reasons, I don’t think its core demographic really cares if friends see each other’s pictures for more than 10 seconds. The Snapchat value proposition comes down to simple, habitual design. Snapchat made it really easy to send pictures with a click of a button and a simple caption. When there are so many other apps competing for attention, speed and usability is crucial. Snapchat was also the newer and cooler kid on the block, as Facebook became inundated with aunts, uncles, and cousins. With Snapchat’s lead, there are other forms of ‘disappearing content’ emerging with a focus on text rather than content. These include: Confide, Leo, and TigerText.
But isn’t it all a secret anyway? There is a new breed of messaging that has entered the social sphere today: anonymous content. I was first exposed to this through PostSecret: what is today a very successful nonprofit. PostSecret began by posting postcards that came in from around the US every Sunday. These cards revealed a dark secret from a stranger. I remember refreshing my browser at 11:59 pm every Saturday night to catch the newly updated content before all my friends; There was an indefinable pleasure in peering through this little window into the lives of strangers. Whisper, an app based out of Santa Monica, formalized this window peering pleasure and amassed a large group of addicted users with 2.5 billion page views/month and 40% of users creating content on the app. Secret, a new anonymous app, has taken a different approach. Secret believes we shouldn’t care about what strangers think. Likes and comments on our deepest secrets may seem comforting, but what we really seek is anonymous advice from our friends - i.e. people like us who might just have the same secrets. Secret has patented the concept ‘anonymity within context’ and they’ve done with it with a great design foundation.
So where does this leave social innovation?
I don’t envy entrepreneurs that are innovating in the social messaging space today. On one hand, you have apps like Secret proving that we want an anonymous vertical where we can ‘speak freely.’ On the other hand, you have large companies like Twitter and Instagram that prove we need labeled validation from others with our true selves in the center. We thrive on likes and retweets and want the world to know about our successes; but concurrently, we also enjoy anonymous social therapy. It comes down to the human being as a multi-dimensional user, sometimes sporadic, sometimes habitual, with no clear pain point or need like an enterprise customer. Will applications adapt to fit our changing needs or will the bigger, better social sphere prevail and tell us how to behave in the future?
I have spent a lot of time in 2013 thinking about the lack of women in tech and especially the lack of strong communities that help push women to the forefront of their fields. There are true exceptions to this rule, namely Joanne Wilson and Rachel Sklar. Both women answered a cold e-mail from me within hours after I had just moved to New York City to begin my career at Bessemer. I wish there were more Joanne’s and Rachel’s in our community, but I am confident they are pushing us in the right direction and mentoring future generations to do the same.
I am a huge proponent of practicing what I preach, and while I look up to many strong female executives and leaders like Joanne and Rachel, or Marissa and Sheryl, I believe strength is first derived from those communities closest to you - with people you interact with on a day to day basis. Today, I wanted to spend time highlighting six specific women for their impact on our community and the reasons why I look up to them.
Anjali Vaidya: I worked with Anjali on the executive team of a student undergraduate organization that is near and dear to my heart, Stanford Women in Business. Anjali was the antithesis of a typical Stanford engineering student. She had all the smarts (really, all of them) and none of the quirks (read: male). Anjali won the Terman Engineering Award, one of Stanford’s most elite engineering awards and was in several prestigious academic societies. It was a true honor to have her lead a woman’s organization as an engineer, in a sea of other student-run organizations that were led by male engineering students. Anjali has never been intentionally vocal about her achievements, which makes her success all the more impressive. After Stanford, she went on to HBS and joined Google’s agile mobile advertising team as a manager. Anjali’s team was behind the very successful Admob acquistion and Anjali helped grow the mobile ad business 200% YoY to a $2.5B run rate. She recently left to join Yahoo as Senior Manager of Mobile Products. I’m sure she will shake things up there in a big way. Anjali has started writing for the Huffington Post on issues she faced in the workplace and words of advice for other women in tech. Read her articles here and here.
Caitlin Strandberg: I met Caitlin at the first NYVC Women dinner I put together with Eugenia Koo (another awesome female investor at RRE Ventures) and was blown away by her diverse experience in such a short period of time at two successful startups: Behance and Learnvest. Caitlin had recently joined Flybridge Capital as one of the few (not even enough to count on one hand) early stage female investors in the city. Caitlin was genuine, unassuming and brutally honest about what is wrong with tech and the NYC community and blazed her way through righting those wrongs in her own laid-back/Brooklyn way (she’s going to kill me for saying that but its true.) Caitlin has quickly become the go-to young investor in the city and is often seen at the center of engendering a true venture community. Recently, she has spear-headed an initiative with Edlyn Yuen and Ed Zimmerman to help bring more female investors to the forefront of the community. Caitlin spends her down time kite surfing in remote islands all over the world (not joking).
Christina Wallace: I met Christina for the first time at Pershing Square after she founded Quincy Apparel, a customized fashion startup for women. If I could describe Christina in three words they would be: bold, midwestern, and wicked smart (okay I cheated on the adjective there.) There was an honesty to Christina that is difficult to find in the city. She was incredibly upfront about the uphill battle of building a company from scratch despite her glowing resume: HBS, BCG, Opera Singer (how amazing is that!) Christina is one of the few people I know who is more open about her failures than her successes. Like most startups, Quincy failed but Christina got right back up to use the time to reflect and think about her tech career moving forward. Today, she is the Director of the Startup Institute (the winners of Take the Helm!Hell Yeah!), founded a kick-ass a cappella group, and ran 13 races in 2013. Amazing, I know.
Kelly Peller: I meet Kelly through the National Women in Business (NWIB) summit as a junior in college. The NWIB summit was the first time the presidents of female undergraduate business organizations came together from multiple schools to discuss their successes and failures. Kelly had the foresight to realize a meeting of the minds would make our jobs much easier and would build a necessary community between female leaders for future networking. NWIB has been a very big part of my life in New York today by introducing me to women who are now facing the same trials and tribulations in the working world. Kelly didn’t stop there. She started the first ever business plan competition in Iraq and is at the center of the startup community at the American University of Iraq. She also recently founded NextGenVest out of her Kauffman Fellowship. Kelly is incredibly passionate about teaching young students about financial management and I am convinced she will start a financial education revolution!
Lauren Maillian Bias: Lauren is the only true Renaissance woman I know. She is a mother of two beautiful children, a successful wine entrepreneur, marketing executive, investor and soon to be book author! Every time I meet Lauren, I feel I should be doing more. She has a magnetic and inspiring personality that makes you want to be better and has made a name for herself in the community as the best angel/seed investor for a female-led startup. Lauren proves that you don’t have to eat, sleep, and breathe tech to be a smart investor. In fact, Lauren’s experience in the marketing and lifestyle world as well as making and selling wine make her a 360-degree thinker and an incredible asset to the teams she helps coach. I don’t know anyone who juggles all their responsibilities so well and loves every minute of it. Incredible.
Tracy Chou: You won’t believe Tracy’s resume when you read it. In a perfect world, Tracy would be advising the board of every tech company on how to better integrate female engineers in the workplace. The articles that we read about women in tech, Tracy experiences. An honors graduate from Stanford,Tracy has worked as a software engineer at Quora, Facebook, and Google. Better yet, she is now happily pinning away at Pinterest. A true resource for young women who want to be engineers and investors who want to understand the lack of female-founded companies, Tracy "turns coffee into code" seamlessly and is a force to be reckoned with. She is also a frequent Quora poster and I’ve highlighted some of her best articles herehere and here. You also have to check out a recent hilarious tweet.
So there you have it, my fabulous six. Thanks to all of you for spearheading the push forward. You are all incredible.
"Why can't I re-instagram?": The Influence of Design, An Instagram Case Study
I have a confession to make.
I recently joined instagram after much harassment from friends. I had used instagram privately to filter and store my personal photos, but never engaged in the community by following other users on a regular basis (allegedly, the core driver of growth.)
For the last week or so, I have started to understand why this community element was and remains so critical to instagram’s success. In particular, I noticed a few design and user interface decisions that contribute to building this creative community.
1) Focus on creation: I was shocked to find that the only way one can share content on instagram is by copying the photo URL and sharing on other websites or tweeting the photo link directly. There is no ‘retweet’ (or re-instagram) functionality. I remember when I first joined Twitter, I felt more comfortable retweeting other people’s content before I became comfortable creating my own. Instagram pushes users to create on day one to feel truly engaged. You can like, comment, and follow to show appreciation but it doesn’t influence your own content stream the way it does on Twitter.
Figure 1: Sharing options on instagram
Figure 2: Sharing options on Twitter (Retweet functionality is second to left.)
2) Photo size: When I go through my instagram feed, each photo is guaranteed a few seconds of my attention. Instagram’s design interface leverages the mobile form factor to highlight each individual photo (if the photo size was any different, this leverage may have been compromised.) Instagram wanted each photo to speak for itself before the user was inundated with the comments that followed (almost forcing a user to be influenced by the photo itself before being influenced by the comments that followed.) The font size and comment collapsing features augment this focus on the photo. Facebook took a similar approach in their most recent design, understanding that users wanted to see, create and be influenced by more photos.
Figure 3: A photo on instagram takes up most of the iPhone screen.
Figure 4: Facebook has mimicked this focus on photos.
3) Devaluing the tag: While users can tag other users in their instagram photos, these tagged photos do not appear on the tagged user’s personal feed. On Facebook, many passive users augment their feeds via active users who tag them. On instagram, your personal feed depends on individual creation.
Figure 5: I was tagged in this photo, but could not view it until I went to my “news” section. On Facebook, this would show up on my home feed.
We take design at face value and miss some of the subtle features that are so core to a company’s success. A lot of these features iterate over time and depend on user feedback, but a core few dictate the way users act, ultimately shaping the reputation and community of a company.
Agree/disagree/share your own case studies! Happy to jump down the rabbit hole of design…
Silicon Valley's Banksy: Can we create products without personality?
A few days ago, I was browsing Twitter in transit and stumbled upon an article about Banksy’s NYC art spree. I had heard Banksy’s name many times before but had never really studied his art or his background. I quickly realized that Banksy was purposefully elusive, and had kept his identity shrouded in mystery for years.
Banksy’s art is fairly homogeneous in its underlying message even though the homogeneity is expressed in a multitude of forms. The main premise is a fight against “the man” (broken down in many forms such as big government, ruthless capitalism, or religious fundamentalism.) Banksy is the hybrid of a marxist-nihilist, who chooses art as a peaceful but flippant channel of communication.
However, Banksy’s choice to remain anonymous seems deeper than just a fear of the law. If we knew who Banksy was, would that affect our opinion of his art? Would its ability to influence us be tainted? Say tomorrow we find out he belongs to a British aristocratic family - would his art lose validity?
Banksy’s active decision to remain anonymous made me think about founders of start-ups today. Do they have the luxury of remaining anonymous and allowing their product to speak for itself?
A perfect, and perhaps overused example is Facebook. Facebook seeks to make the world more open and connected, but it has been consistently criticized for being intrusive and showing disrespect for privacy. How much of this perception has to do with Zuckerberg’s personality? Through a variety of media channels, Facebook was painted as Zuckerberg’s solution to his own social awkwardness. If Zuckerberg had been a charismatic and suave college student with a robust dating history, would our opinion of Facebook’s larger message be any different? Would Facebook’s subtle privacy changes be as offensive?
Frankly I don’t know, but it begs a larger question about whether identity guides output and product and whether it should or should not.
Can we imagine a world where famous start-ups have anonymous founders? Free from societal framing, could that start-up have unprecedented impact?
Can e-commerce survive in a world where Amazon exists?
If you believe customers want two primary things from a retailer, fast delivery and the cheapest price, Amazon will always win. Amazon has built a supply chain and logistics machine that gives third party items critical distribution channels. Therefore, if you sell third party items, Amazon will (if it hasn’t already) take over your market.
Many tech writers have outlined “curation” as a possible defense against the Amazon threat. I believe heavily curated marketplaces with inventory risk will not remain unscathed. While Amazon does not offer heavy-handed curation today, their recommendation engine will soon serve that purpose. Additionally, curated marketplaces may actually help increase Amazon sales. Let’s use Fab as an example. I trust Fab to have a creative eye for a fun, house decor item that I need. Fab will recommend the item via an email newsletter based on my past searches. The minute I choose an item I like, I will search the product on Amazon and have it delivered overnight via my Amazon prime membership. I am optimizing for the cheapest price and the fastest delivery with Amazon, but leveraging Fab’s creative curation. Fab gains nothing from this transaction.
While curation serves as a weak defense against Amazon, the exclusivity and adherence of brand may serve as the last resort for retails in an Amazon dominant world.When I think of “brand”, I think of luxury brands such as Gucci, Chanel, and Balenciaga. These companies have spent years building up their consumer base through a high standard of style and quality. As consumers, we have made sacrifices to obtain these brands - regardless of price or wait time. Luxury brands are a validation of self, not a validation of convenience; as a result, Amazon’s supply chain machine cannot compete.
Today, Amazon has been socialized as the convenient book-and-diaper delivery mechanism, but it still isn’t sexy enough for Chanel handbags. Therefore, luxury brands can keep customers walking through their brick and mortar doors…for now.
The big question, though, remains: will we morph as customers and inevitably allow convenience to trump a standard of self and style?
I never took my parents seriously when they reminisced about days without TV, or the internet. I could not imagine life without those necessities and their nostalgia was distant and removed from my world. This changed as I saw my little sister grow up. Her expectations around leisure and accessibility were shocking! The luxuries she saw as normal made me realize the power of technological shifts.
Below is a list of ten changes in my own life that have been navigated by technology. You will be surprised by how many of our habits have evolved around these changes. Please feel free to contribute if you think of more!
1. Wireless internet. Do you remember how annoying dial-up was?
2. Fax machines. I never knew how to make them work. I still don’t. PDF attachments, email, and docusign makes the world so much more efficient. What a relief.
3. Chat is everywhere. MSN messenger was my life line. I was on it the minute I got home and right before I went to sleep. Today, there are so many ways in which we can communicate with friends and colleagues at any time of day: whatsapp, gchat, email, text.
4. Libraries. I remember spending hours looking for particular books. I couldn’t rely on JSTOR or online repositories of information. In fact, my high school didn’t even have a computer database of where books were located. We searched through library card catalogs and wrote the location of the book we were looking for on little slips of paper! Often, the paper ran out and we wrote on our hands.
5. Music on demand. This one is more recent but it is surprising to see how quickly it has evolved. I used to rely on mixed tapes, then CDs, and then the iPod for music consumption. At the time, the iPod was life changing. Music on the go, with so many choices! Today, I can’t imagine being bound by what is on my iPod. Spotify defines the next generation of music on demand.
6. Slaves to TV. If you missed your favorite show, that was the end of it. DVR is probably in my list of top 5 greatest inventions of all time.
7. Plane productivity. In my senior year of high school, I used a laptop for the first time on the plane. It was a luxury. Today, we expect every flight to have internet.
8. Mobile Banking. Taking a picture of your check to deposit money in your account is incredible. I remember forgetting to go to the bank before 5 pm in college to deposit money and having to hold my purchases until the next morning. Today, you can transfer money on your cell phone from one account to the other right before a purchase!
9. Read receipts. I’ve disabled this on my phone but holy moly, if this was available when I was a teenager texting…I’d be glued to my phone.
10. Not having to ask anyone, anything. The internet is an incredible place. I remember having to write down a list of questions to ask my teachers in middle school and high school. Internet was around when I was in high school but it was not curated like it is today.
Venture capitalists get a lot of slack for breaking the hearts of entrepreneurs. Most perceive that we sit on our leather chairs every day and tell a bunch of CEO’s that their “babies are ugly” - aka, “your business will never scale.” This is far from the truth.
The difficult reality is that there is a lot of inbound interest for capital from start-ups that are just getting started and haven’t truly vetted their product in the market. There are rare exceptions to the rule: entrepreneurs that jump out at you and force you to take a leap of faith. The hardest part is figuring out whether the start-up you just passed on, is one of those.
Even more rare is a business that has all the right metrics (customer traction, revenue, stellar management team) but doesn’t want you. I call them our shooting stars; You only see them once or twice in your career and they zip past you before you can figure out what to do next.
Just like entrepreneurs have their pie-in-the-sky firm they hope to raise capital from, we have our shooting stars. We all have a list of start-ups we wish we had invested in, or entrepreneurs we courted who chose another firm. We don’t talk about it often, but its there. In the back of drawer or a sad evernote log. It’s like having your dream guy (or lady) ask someone else to the prom. It’s not fun.
So if you are an entrepreneur that has gotten the infamous VC “pass” email, take a step back and realize we’ve been in your shoes. We’ve been passed up for another firm, or having been an entrepreneur in another life, been passed up for capital. It’s part of the job, and part of this scary ecosystem.
It isn’t fun for a week, or two weeks, or several months - but you get back into the routine of things and it makes you want to work harder.
And, for the record, if Bessemer has been the source of your heartbreak, check out our anti-portfolio and send us an e-mail when your company files for an IPO. We’ll add you to the list.
A big acquisition is an exciting time for those in venture capital and technology as a whole (even if it isn’t an acquisitions that directly benefits you!)
The NYC tech landscape was in dire need of a large b2c exit like Tumblr, for all the implications around what we like to call a post-acquisition talent exodus (read: engineer exodus), future angel investor exuberance, and geographic sustenance (read: NYC legitimacy). For that, we salute you David Karp!
More specifically though, I have always wondered whether acquisitions bode well for the competitors that follow suit. Does a large acquisition in an adjacent market mean that there is room for similar acquisitions or does it mean that the ships have sailed and you were not chosen to come on board?
In the mobile advertising world, for example, Google made their bet with Admob, and Apple quickly followed with Quattro. No one expected, Millennial Media, to be the astounding success it was at the time of IPO in 2012. Other ad networks met a more undetermined fate, with no natural acquirers willing to pay upwards of several hundred million dollars and the IPO market drying up in preparation of Facebook’s $100 B affair.
Similarly, in the social media management and analytics space, Salesforce made a bet with both BuddyMedia and Radian6 in order to perfect an out-of-the-box marketing cloud solution. Most thought the market had picked its winners, but more acquisitions followed as Oracle acquired Involver and Google acquired Wildfire. Even now, several companies in the space are well-funded and growing significantly in revenue.
Is there an effective barometer to help figure out if you can continue to make bets in a space, or is a dried-up market harder to pinpoint before it is too late?
My roommate in college went through the extremely bureaucratic process of designing her own major. After much research she chose to study: “The Narrative: The Art of Storytelling.” It was a combination of history, comparative literature, and social studies. Her goal was to map the way in which historians, technologists, and artists frame their impact. The types of impact she studied varied - leadership, product, and revolution.
Spending four years of precious college time to study the ambiguous “narrative” did not make much sense back then, but it does now. More than ever. Storytelling and the framing of one’s narrative, both in one’s personal and professional life, is crucial. In venture capital, especially, an entrepreneur can have the best product in the market but without a narrative to frame his/her thinking (i.e. why he/she chose the space, how the product will transform the market in the future, and who will become the staunch competitor) — the company is stale.
Steve Jobs was my generation’s greatest storyteller, and talked us into the iPod, the iPhone, and the iPad. He gave us prologues to life-changing narratives, and then let his products do the talking. Apple products have the simplest and most compelling story lines. Short, but captivating.
Jobs and Apple continue to remind us that narratives command enormous importance in the technology landscape. The best companies start with a strong narrative, that in turn builds the foundation to a stronger product.
I went to support the project, not expecting to find parallels between Eve’s industry and my own, but was shocked at what I learned. Instead of finding glaring differences between the struggles of women in tech and women in the music business, I found similarities.
In no particular orders, a few learnings:
1) A Male-Dominated Industry: This is no shocker. For Eve, the world of rap was saturated with men. The rap precedent was a male one, and music labels were built around male rappers or producers. Eve made a name for herself among storied rappers like Dr. Dre of Aftermath Entertainment, and DMX of Ruff Ryder fame. Though grateful for their early support, Eve realized the glaring parameters of the perceived comfort. It was a luxurious prison and one that she needed to break free from. Female rappers who followed Eve’s success had similar problems; Pure rap was a boy’s club and success was more easily achieved through rap/hip-hop hybrids (think: Nicki Minaj.)
I see similar dynamics at play in the VC world. My VC idols are all men: they grace the Midas Lists, lead market-moving investments, and demand enormous respect from fast-growing startups. But where are the women? Why do we see female VCs starting funds specifically for women, instead of trying to break into large, top-tier firms where partners are mostly male? Can women make a name for themselves in the shadow of male precedent?
2) Women alienate other women: Eve said that one of the hardest things about being in the rap industry was that famous female rappers would not help young female rappers starting out their careers. Why do women view success as a zero-sum game? If some other woman wins, do we lose?
No, is the answer.
My friend, Eugenia Koo and I, brought together an informal community of women VC’s under the umbrella NYVC Women. When Eugenia put together the list of women VC’s in New York, I was shocked. I worked in the industry and didn’t know there were so many women doing exactly what I do! The premise of the group is to build community. We seek to get together to learn about each other’s career trajectories, discuss market theses we find interesting, and explore ways to collaborate between firms. The group is composed of partner level women and one’s in more junior positions. It is only just the beginning, but we think it is a step in the right direction.
For Eve, the best example, of a collaboration done right was her single with Gwen Stefani - the famous, ‘Let Me Blow Ya Mind.’ This was actually my all time favorite song as a teenager! At the time, Eve was discouraged from working with Gwen. Gwen and Eve had antithetical music visions, which was precisely why Eve pushed for it - seeing strength, not weakness in the collaboration. She was rewarded for this vision with a shiny Grammy, proving all the naysayers wrong.
3) Men Bring Validity: One of the fascinating questions brought up during the event was by another female MC. This young MC claimed that the women that ‘made it big’ in the music world got offers to open at a small concert or meet a big producer after collaborating with a male co sign. It was as if the partnership brought validity that did not exist inherently. I do not know if it was more a case of someone inexperienced being paired with someone experienced or if it was the gender variable that made the difference.
In venture capital, I rarely, if ever, see men seeking women to round out their exec team. It is, so often, the other way around. Find the killer sales guy who built up an enterprise team from scratch, or the rockstar CTO that build a robust ad engine. It is unfortunately true that there aren’t enough women in business roles within tech, but why does the male gender so disproportionately bring validity to the female gender?
4) Bouncing Back: Eve was criticized for singing about female empowerment and stripping concurrently to make ends meet early on in her career. But unlike other women that make mistakes and are too ashamed to keep at it, Eve blazed the course of rapper history. Men, haughtily wear their war scars, as they knock down new doors. Work on new projects. Found new collaborations. We should admire and seek to achieve that adaptability In the VC industry specifically, mistakes are aplenty. Technology investments have a high risk, high reward investment profile and it takes a thick skin to continue down the path of success. We just need to stay the course and look ahead.
5) Leaning Out: Eve hadn’t released an album for several years, citing her hiatus as necessary to explore what was important to her as an individual and an artist. For many, the time spent out of the limelight would be considered celebrity suicide. Eve understood the pitfalls of being away for so long, and said: “The music business has changed. It is so much more saturated now; Young people don’t know me!” I realized Eve’s hiatus was similar to the “hiatus” many women have to take for childbirth. Pregnancy brings physical and emotional difficulty in the work place and women are often blamed for being “distracted.” There are obvious downsides for taking yourself out of the running professionally, especially in venture, when all your male counterparts are racing ahead to find the next breakthrough company. However, recently, I talked to two women I deeply admire who told me having children actually helped their careers.
No, being pregnant for 9 months was no fun.
Taking meetings in your third trimester was a pain, but the mental and emotional re-calibration that children offered reminded them of what was important. It improved time management, focus, and intellectual curiosity Children forced women to want to change the world with more ferocity. For Eve, the hiatus, was the best thing that could have happened to her. Her success had come at an early age; a time when she hadn’t yet discovered who she was, how she dealt with stress, and how best to engender creativity. Time away from the limelight and travel around the world in a non-business context made all the difference to her art. Her new album is slated to be released on May 14th, a first after eleven years.
In keeping with the theme, below are my favorite Eve lyrics. Write them down, and remember them. Girl power.
I have never heard the term – leave of presence – before, but it encapsulates all that I believe when it comes to leaving an indelible mark in the world. The gut-wrenching, are-you-kidding-me reality is that he died two days later. Ebert had become a poster-child for the fight against cancer for eleven years. He lost his voice and had to drink and eat through a tube for several years. But no matter how hard he fought, in the end it is the cancer that took him.
Cancer is unforgiving. It rips you apart, even if you put up a good fight, and then tells you that you have won, only to rip you apart again. Ebert continued writing through the diagnosis, the remission, and the reemergence of this cancer, because for him, taking a break from what he loved was worse than death.
Till the end, despite infinite accolades including the only film critic to win a Pulitzer Price, Ebert was working to become better. Like the very best entrepreneur, he saw opportunity in the status quo. He was re-launching robertebert.com on April 19th with 10,000 of his reviews dating back to 1967, and was finally relieving himself of his day-to-day column quota, critiquing only the movies that inspired him most. Unfortunately, what was supposed to be an engagement call, became his farewell message – breaking the hearts of all those that admired him.
I have not studied film criticism, nor do I follow film religiously. I am what you would call the average film consumer. Pass me a bag of extra buttered popcorn, and I will sit myself down at the local AMC for any kind of movie – the best film Oscar contender or the run-of-the-mill romantic comedy. But Ebert expected more out of film. Film was a reflection of our lives: the triumphs, the darkest secrets and the journeys. To Ebert, film was one of the most sacred mediums.
One of my favorite Ebert quotes summarizes this best:
“If you pay attention to the movies they will tell you what people desire and fear. Movies are hardly ever about what they seem to be about. Look at a movie that a lot of people love, and you will find something profound, no matter how silly the film may be.”
To impress Ebert, you had to make a big difference to the small. You had to create magic through the unexpected; bring emotion to normalcy. You had to make a dent in the post-Sundance universe, not where the A-listers played, but where we, the normal folk, spent our time. And if a movie didn’t do that, Ebert was ruthless. A critic many feared.
As investors, this passion for one’s art is a characteristic we look for on a daily basis. I like to call it the fighter’s DNA – the one who will power through all roadblocks, an electric force. Ebert grew up in the world of traditional media, but realized that the world of content was expanding with the advent of the internet. He saw opportunity in the change, claiming that “because of technology, the opportunities to become bigger, better and reach more people were piling up too.” Not only did he embrace changes in how writers shared content, but also made these changes his own. Ebert Digital was to become a continuation of his work with the Chicago Sun-Times. He was also a frequent tweeter at @ebertchicago, but according to his obituary in the New York Times, “never tweeted during a movie” – a great example of embracing change but respecting craft. Ebert’s motivation for a visceral presence and his dogged resistance to absence is something we should all aspire to build into our lives: to be present, even in our absence. He was one of the greatest, a true pioneer of his craft.
You will always be in our hearts, Mr. Ebert, at the movies and beyond.
Will NYC ever compete with Silicon Valley as ‘the’ hub for technology? I get asked this question almost on a daily basis and although I think there are qualitative reasons to support NYC, the numbers provide a different story.
Dan Primack’s Term Sheet is one of my favorite morning emails. He is probably the most trusted source of daily venture capital and private equity information. Recently he published MoneyTree numbers for 2012 VC investments (sourced from the NVCA).
New York: 322 deals for $1.78 billion (186 deals were seed or early-stage, raising $580.37 million and an average of $3.12 million.)
New England: 252 deals for $1.5 billion (121 deals were seed or early stage, raising $558.64 million and an average of $4.6 million.)
Silicon Valley: 892 deals raising $7.95 billion (492 deals were seed or early-stage, raising $2.47 billion and an average of $5.01 million.)
Clearly, the Valley is miles ahead of both New England and New York in terms of number and size of investments. It sees almost 3x more deals than New York. However, all three regions were similar in that almost half of their deals were seed or early stage and the average deal size between the Valley and New York was only about $2 mm more, suggesting that the Valley will continue to have an appetite for early-stage deals despite discussions around a present Series A crunch.
A New Parallel: Similarities between the mobile ad and social media measurement space
Before venture capital, I worked in the mobile advertising space. I started when mobile ad networks were at their peak (summer of 2010: post Admob and Quattro acquisition.) Many veterans will tell you that it was both an exciting and stressful time to be a close second to the Google’s and Apple’s of the world.
Today, more than two years later, I am seeing many similarities between what were the market dynamics of the mobile ad world and what are the dynamics of the social media management/analytics world. This can easily be the subject of a thorough whitepaper but I’ll try to be as concise as possible.
1. Large acquisitions mean room for niche players with better execution: In 2010, the acquisition of Admob by Google and of Quattro by Apple made some believe the mobile ad ship had sailed. This was far from the truth. Instead, Millennial Media used the opportunity to execute feverishly while customers were scrambling due to post-acquisition inefficiencies. As a result, on its opening day, it was valued at approx. $2 B (twice the $861.7 mm that advertisers were expected to spend on mobile display ads in the US in 2012). Source: Ad Age. Similarly, after the acquisition of BuddyMedia, Wildfire, and Radian6 - most believe it will be difficult to generate a solid investment return in the space. I believe the opposite. Acquisitions show appetite and they are a good signal for small players to differentiate their product in a significant way. The learning curve for brands and agencies is not steep - it takes time for them to figure out what they need to monitor and how they want to monitor it. Large companies will take time adapting to these needs, which leaves room for small players to iterate fast.
2. Overlap in Product Offering is an Opportunity: Investors often ask fast growing startups an annoying question: Why can’t Google do this?Why can’t Salesforce do this? Our biggest fear in a saturated market is that the large behemoth will be able to copy the startup’s fast-growing product. With large engineering teams ready to hack, whose to say that theory is incorrect? Though a valid question, there are young companies that go after a market segment the big players have missed and get a head start. Timing is everything. Simply Measured, a Bessemer portfolio company, is a great example. Simply Measured realized that marketers and PR professionals were tired of rigid web dashboards and needed an easier and more accessible way to measure social media performance. Sprinklr and Spreadfast, two non-portfolio companies, realized that large brands needed better customization tools in the management space. As a result, all three companies have stolen market share from their large competitors. Something similar happened in the mobile ad space. AdMob focused on the longtail, while Apple’s iAd focused on high end brands (Nissan, etc.). This gave Millennial the opportunity to take everything in between. Millennial also honed in on a self-serve component exclusively for media buyers (a need they would otherwise have not discovered had the market been young.) Smaller players like Kiip also used the saturated market to target new opportunities. Brian Wong, CEO of Kiip, focused on real-life rewards within games - a large untapped market segment. Large, crowded markets are difficult to survive in, but they are the best source of free market research you can find. Discover what is lacking and build the best product addressing that pain point. Remember, products that offer the best utility with the most simplicity, win.
3. Agencies are becoming less relevant: In the mobile ad world, brands went through agencies to help them think through their mobile ad spend. Similarly, agencies are the primary conduit for brands when it comes to social media measurement. For both markets, agencies become a necessary buffer for brands before they become well acquainted with a market. As products become more refined and brands continue to build large teams around social media, the trend will change. Social media measurement/analytics companies will have to change their target customer, much like the players of the mobile ad world did. Economically, it makes much more sense - eliminate the middle man for a better share of the ultimate customer’s spend.
4. The biggest sales machine wins: This is the most obvious point and rings true in many markets. For a young startup, product vision is of primary importance, but a well-oiled sales machine is a very close second. I have come across exemplary products that have not worked well in the market because they have little to no branding and struggle with a good sales rhythm. In the mobile ad world, successful startups built sales machines around great product. Sales funnels were created to make it easier for investors to push the ‘pedal to the metal’. The best way to figure out if your sales and marketing investments are profitable is by measuring your Customer Acquisition Costs and the CAC Payback Period. It can be calculated by dividing the sales and marketing costs of the previous time period (typically month or quarter) by the new annualized net gross margin added during the same time period. A CAC payback period of 24-36 months is a cause for concern while a period of under 6 months means you should invest more money immediately because your customers are very profitable within the first year. We have written at length about building a revenue engine, so please feel free to reference some of these findings on our website. Another sales feature to monitor is pricing. For listening tools, charging based on volume makes sense but helping brands budget in advance is a necessary customer service element. All large brands have to budget marketing spend months before they deploy it; when pricing becomes unpredictable, they will go with the more stable pricing model even if your product is better.
As always, comments and feedback welcome. Hope a little veteran knowledge is helpful to those investing and or building in the space.
This is the worst advice I have ever received. And I’ve found that a lot of people in their mid to late 20’s feel the same way.
Since the first day of college, passion was the law of the land. We were told to “Read!”, “Learn!”, “Explore!”. We had four years to run after what we found most inspiring. It sounds easy enough, doesn’t it? A four year paradise of space and time to think. The reality, however, is much of the opposite.
I found 20% of my friends ignoring the advice all together, for a whole host of reasons which included but were not limited to: financial obligations, overbearing parents, or simply, peer pressure. These students usually majored in marketable degrees (i.e. engineering, finance, biology.)
10% of my friends took the easiest route - well aware that college would be a once in a lifetime opportunity that they did not want to squander away to pressure. These friends majored in “easy A” classes and spent most of their time traveling or getting to know fellow classmates. They had little direction but embraced the chaos and blurriness.
The bulk of my friends, the mass 70%, wandered aimlessly trying to “follow their passion.” Some days they went with the herd, and others, they spent on grassy knolls, tanning…ignoring the glaring lack of direction.
These friends are still struggling. Most hate their jobs, others have taken risks and failed, and even more are still confused.
What I wish someone had told them that sunny afternoon, on Convocation Day, was how to follow your passion. What is the difference between work and a hobby? Is there such a thing as incorporating both? Can you really love what you do and still make money? How can you ensure your family will have the choices you didn’t? Is failure a step closer to unlocking that treasure?
The reality is, most people chase a pot of gold without realizing it doesn’t exist. What we should have been told is that following your passion is really about finding it. Its about losing your predetermined track, getting frustrated, and breaking through a status quo. I studied english, technology, and political science. I worked in finance, tech, and media. I kept at it until I realized I was searching for something that didn’t exist. I loved and hated aspects of all my majors - of all my jobs - but realized one particular industry encapsulated the love and hate beautifully: venture. And still within venture, there are spaces I understand better than others.
The battle really never ends.
The advice that has resonated most with me over the years is to work on my weaknesses when I’m younger, and use my strengths as I get older. People are more forgiving when you are in your 20s, than when you are in your 30s. Skill sets also evolve with time and experience. You may have more energy when you’re young, and as a result, find more value in creativity…while experience and patience when you’re older leads to better management and operational strength.
Don’t follow…find. Iterate every day and keep in mind that what you’re looking for is not tangible or finite. It is fluid. It changes.
There are bad days and good, but after a certain amount of time (fairly variable) you will remember the moments in your journey where you felt cornered and suffocated and moments where you felt most empowered. Use those as a guiding light. Use those moments as indications of who you want to work for, who you want to help, and what you want to fix. They speak truths even you cannot admit to yourself. There is no quick fix, there is no light bulb flash. So don’t wait for it.
Finding your passion is a long and arduous journey that is all the more fun if you value it for what it is.
“Above all, watch with glittering eyes the whole world around you because the greatest secrets are always hidden in the most unlikely places. Those who don’t believe in magic will never find it.”—Roald Dahl
“Light candles with dinner. Climb back into bed on the weekends without feeling guilty. Plan a vacation. Wear high heels to brunch with friends. Spend more time outside. Be nicer to myself. Eat breakfast for dinner. Rearrange furniture. Visit more museums. Host monthly game nights. Take cooking classes. Hear more live music. Go to the movies, if not just for the popcorn/soda/candy. Buy our first piece of art. Declutter, constantly. Plan surprise date nights. Take day trips. Speak more Spanish. Less text messages, more calls.”
We have all been inundated with talk of the U.S. economic climate, especially with the impending ‘fiscal cliff’. Having had exposure to both public and private markets, I’ve been taught that an accurate picture of the economy has to come from both sides of the table – the government and the consumer. Below, I have outlined three simple factors that may help paint the current state of affairs. The article is by no means an exhaustive list - it is quite the opposite (hand-picked). Any and all feedback is welcome!
1)The Rule of No Alternatives: If we compare numbers from the Bureau of Economic Analysis, we see that GDP growth has slowed down significantly from Q2 2011 (2.5%) to Q2 2012 (1.3%).The dreaded fiscal cliff has done its part to increase uncertainty and thus influence consumer intent. But GDP growth should never be analyzed independently. Dept-to-GDP ratio has long been considered an indication of economic health.
Figure 1 below analyzes how our dept-to-GDP ratio has changed over time and how its sharp peaks are identifiable parts of our history. The simple and slightly worrisome takeaway is that our ratio is 73% (not far from our World War II number), which is dangerous in that it continues to grow further from China’s debt-to-GDP ratio (roughly 43%). We don’t want to end up in the same bucket as Japan which is in the 200%+ range, or Italy and Spain which were at 120% and 69% in 2011. In a study by Carmen M. Reinhart and Kenneth M. Rogoff, of Harvard University, a debt-to-GDP ratio of more than 90% leads to growth “over one percent lower than other periods.” We are inching closer to this number.
Figure 1: Source (The Atlantic, Congressional Budget Office).
Here’s the clincher though (and I promise to stop being negative) – due in part to the rise in debt, treasuries are at a ridiculously low price. In our current climate, one would expect foreign investors to flee from US government debt; but, according to the Treasury Department in September 2012, international purchases of Treasuries rose to $50 B in July 2012 from $32.4 B in June 2012. As the European market continues to show instability, America is still one of the safest places for sovereign wealth funds and other international investors to invest their money. Yields go down when there is demand for Treasury products and the 10-year treasury note is at 1.65% today. It hit an intra-day low of 1.442% on June 1, 2012, which was its lowest level since the early 1800s. Whatever doomsday scenario the pundits are painting, America is still the most transparent economy in the world and foreign investors are putting their money where their mouth is.
2) It’s a Slope, Not a Cliff: Few people make more sense to me than Jan Hatzius, Chief Economist at Goldman Sachs and author of a recent paper titled “The US Economy in 2013-2016: Moving Over the Hump.” Central to this paper is a simple theory demonstrated in Figure 2. According to Hatzius, “Every dollar of government deficit has to be offset with private sector surpluses purely from an accounting standpoint, because one sector’s income is another sector’s spending, so it all has to add up to zero.” In simple terms, when customers spend, the government gets a source of revenue, alleviating debt. When they save and opt not to take consumer risk (leverage), government debt widens as they have lost their key source of revenue. Hatzius predicts positive growth post 2013, as a result of increased private sector spend. If the government continues to scare consumers into thinking we are heading into another recession, they will not spend and thus, not offset the government deficit.
Figure 2 - Source: Department of Commerce, Business Insider
3) Protect Innovation: Diversity begets innovation. Innovation spurs economic growth. And nowhere better has that theory proved to be true than Silicon Valley. According to Vivek Wadwha, Silicon Valley is a great example for spurring diversity in the job market. He claims that more than half of the Valley’s tech employees are foreign born. Foreign countries such as Germany and France send their best and brightest to the US to get advanced degrees. This sounds great for our economic growth until we send them straight back, US-trained, and ready to spur economic growth in a country that is not ours. Igor Sill, in a recent article, mentioned: "Early stage entrepreneurs in the US made up 7.6%, compared to China’s 14% and Brazil’s 17% of newly formed businesses." Silicon Valley is our secret weapon, and we are falling behind.
The STEM Jobs Act, the first foot forward in remedying our past policies, was rejected by the White House after being passed in the House by an overwhelming majority of Republicans. If it hadn’t been reduced to a partisan tug of war, it would grant 55,000 visas to non-citizens who acquired an advanced degree in science, technology, engineering or math at U.S. universities. We will lose our high ground as chief innovators of the world if we don’t retain diverse talent.
To summarize, there are economic indicators that are indeed scary and hard to wrap our heads around. But barring a fiscal cliff fiasco, 2013 actually looks positive. Private sector spend should increase, alleviating government debt; instability in alternative markets should continue to spur foreign investment, and innovation should continue to be our no. 1 strength.
Disclaimer: These views are my own and not those of my employer.
There are many songs about New York and I’ve heard a lot of them. Yet, every time I hear Joe Purdy’s ‘The City’, it seems to encapsulate New York perfectly (the bad, the good, the ambiguous). The lyrics are below but you really have to listen to it to understand.
The city keeps on going…on.
Float down the river with my Iddy and Jay Get off the boat and board a plan to JKF and I, ain’t slept a week But it don’t seem to matter to the subway squeakers, squeak (and squeak)
The city keeps on going We just keep on rolling The city keeps on going We just keep on rolling…on.
Grand Central Station and got wind they’re coming on Independence yesterday No one round oh and I still recognize her after all these years and she still looks the same Ah, she still looks the same.
Oh and we end up in Brooklyn It was rainin’ so hard Come up all day And the rain to clear it off, Oh we’re just people watching on 3rd and St. Mormons And when the girl’s kissing my face, my face She was just kissing my face
And again, again…
Just when I was sick and lonely, There was a shaking on the ground We were hiding from the rain We were riding on the train Just when I was sick and lonely, There was a shaking on the ground Were were hiding from the rain Were were riding on the train.
She was dancing on the midway Just kissing my face She was dancing on the midway Just kissing my face Dancing on the midway Kissing my face Dancing on the midway Just waving goodbye.