Doubling Down

Having spent the better part of 15 years in and around startups, one thing I’ve observed is that the best entrepreneurs I’ve seen have a tendency to double down where they’re strong, and either ignore or hire around where they’re weak. Example strengths could be vision-casting, product insight, or sales. I’m sure there are others, but those tend to be what stand out.

If entrepreneurs are exceptional in an important area, their strength usually makes up for all of their obvious weaknesses.

Another interesting thing I’ve noticed is that a person’s character has very little to do with success and failure. This is not to say that “nice guys finish last”, it’s just that it doesn’t seem to matter much. The clear strength is what ends up mattering in the end.

‘Often, although not all the time, a founder’s strength is in getting people to believe completely nonsensical things. Many times, although not always, people who are good at this also have flawed characters. It doesn’t seem to matter, although sometimes founders go too far and end up as a Theranos.

Completely ignoring weaknesses is not a great strategy, not because it leads to failure, but because it can create dysfunctional cultures. Dysfunctional cultures succeed all the time, but eventually they need to repay the debt that built up over the years, and sometimes that slows a company down at an important time. It’s always better to hire around your weaknesses.

Doubling down isn’t an obvious thing to do. Most of our academic and professional lives are spent trying to skill up where we are weak. How many reviews focus on “feedback and areas for improvement”?

Perhaps ironically, being well rounded usually makes people a better manager, leadership team member and employee. Only founders, or founding teams, seem to be able to get away with this. Organizations can only handle a small number of these asymmetric contributors, and tend to manage out others who exhibit this behavior.

I think this phenomenon is true because startups require some type of force that propels them from birth into what they will ultimately become. That force tends to come from a founder who is asymmetrically skilled.

If you are a founder, find your superpower and double down.

Narrow AI Everywhere

In technology and startups, there are what I think of as micro-trends and macro-trends.

I think of micro-trends as moments when everyone starts an X for Y company. Examples might be Uber for Dogs, AirBnB for cars, etc. They pop up and everyone is wrapped up in them for 15 minutes, and then they sputter out.

Macro trends are big paradigm shifts where seemingly everything changes. In B2B there was the migration to the cloud. In consumer there was the iPhone, which shifted value creation to mobile-first companies like Instagram, Uber and Snapchat.

Investors are always looking for the next macro shifts. The key is figuring out which ones will be big, and then figuring out how value will accrue. Blockchain / Crypto is a popular shift that is getting a ton of attention right now. There’s general consensus that blockchain is a big paradigm shift. There is almost no consensus on where value will accrue, which is why we see what looks like rampant speculation.

Another big macro trend that I’m more interested in is narrow AI. In the coming years, nearly everything that we do in life and business will be replaced or updated by versions that use some type of AI to improve the experience.

The combination of humans interacting with narrow AI will produce productivity gains on par with the invention of the wheel. AI is not going to replace human workers, it’s going to make them smarter, faster and much, much more productive.

In terms of where value will accrue, the strange thing about this macro is that it’s not coming in a disruptive wave like the iPhone. It’s going to continue to show up incrementally in our day-to-day lives. It’s not clear to me that there’s an investing position outside of buying more infrastructure that enables more and better narrow AI, and investing in companies that use AI to help drive outcomes.

To give an example that we all understand, narrow AI has been showing up in social media in two ways: one is highly relevant advertising in places like Instagram (machine-learning optimizing for revenue), and the other is in rage-inducing political content and conspiracy theory videos (machine learning optimizing for engagement and retention).

It’s also going to keep showing up in little positive ways. When Google maps finds a faster route, when Tinder suggests someone new, when Spotify nudges up a song that we didn’t know we would like, or when our iPhone creates a new photo album for us to enjoy.

AI isn’t a product by itself. It’s not something we will buy independently. It’s just going to continue working it’s way into our lives. It will create a number of pretty big challenges along the way (self-driving vehicle accidents, unhinged conspiracy theorists).

Despite those setbacks, the non-newsworthy events will be the most interesting and impactful over time. The steady incremental improvements that will happen with literally everything, from air travel to farming. Those changes won’t make the front page news, but we are at the beginning of one the greatest productivity advancements in the history of the world.

Loving Products vs. Analyzing Cash Flows

Yesterday was an excellent day for reading.

First, Hunter Walk wrote a post on not worrying about market size when considering Seed Stage Investments. You should read that.

Then, you should read Aswath Damodaran burn down the house with his post on valuing young, growing companies.

I read both of these and was struck with something a mentor told me awhile ago: venture investing and equity investing are pretty much on opposite sides of the financing spectrum.

Did you know that most venture investors are admittedly bad public equity investors? It makes sense: the skills you need to be a great early stage investor have almost nothing to do with the skills you need to analyze a publicly traded stock.

At the early stage, you’re mostly interested in the team trying to solve a problem, and the problem they’re trying to solve.While that relates to a market and there are macro factors to consider, the bigger pieces are harder to incorporate into a framework for deciding if a Seed Stage investment is a good idea, mostly because there’s so much uncertainty around it — a market can completely shift between the time you make an investment and the time in which the broader dynamics of the market really matter.

Investing in equities, on the other hand, should be a disciplined practice of analyzing the present value of the discounted future cash flows of a business. There’s a lot more data to work with at the public equities (and probably a lot more noise), but the current market dynamics matter a ton. This is further compounded by the fact that companies are hitting the public market far later in their life cycles than they used to.

A lot of investors try to think about Seed Stage investing using the framework they learned as equity analysts. While that may work sometimes, those investors are likely to miss a bunch of opportunities by overlooking great teams building great products.

** This was originally published on medium.com

2017: Five New Life Hacks

With a new year upon us all, now seems as good time as any to pile on with everyone else’s reflections, predictions and life tweaks.

I’m a productivity enthusiast, which comes partly out of a passion for trying to extract the most ‘life’ out of my time here. Also, I find that I’m happiest when I’m slightly overwhelmed with goals. A few years ago I got into a phase of life where I was simultaneously in grad school, working full-time, interning for a VC fund, competing in triathlons and planning a wedding. I really enjoyed the discipline required to get all of that done. For whatever reason, operating at that pace makes me happy, and helps me enjoy downtime when I have it.*

As such, I’m always looking for new ways to make space on my calendar and in my head. These are a few things I’m doing right now to help with that:

1. Personal Quarterly Objectives

For the past five years, I’ve built out personal quarterly objectives for myself. I try to use the OKR format for these, taking a page out of business management frameworks for personal life management.

My objectives focus on career, personal relationships and health and wellness. Of everything I’ve done for productivity, this process is probably the highest leverage. Trying to figure out what you want to do for the next year, defining how the next three months can help get you there, and then reflecting on how you did, is simple and effective.

2. Reading and Listening > Browsing and Watching

I’ve been using most of my slack time to read books and listen to podcasts. given the choice between 15 minutes in a book versus 15 minutes browsing a social app, this one’s a no-brainer.

In terms of content, for books I’ve been mostly interested in narrative nonfiction (e.g. Michael Lewis), biographies (e.g. Walter Isaacson) and thought leadership pieces on politics, culture, technology and business. For podcasts, I’ve been listening to a lot of in-depth interview content that covers people’s life stories, or industry thought leadership. A few of my favorites right now are The Axe Files, FiveThirtyEight, a16z, and EconTalk.

It’s not easy to stay on this. The pull of scrollable content is strong. Here are a few tools I use to keep me on track:

  • I’ve got a book list list of about 50 books and I’d like to cover about eight every quarter. Having a goal gives me something to focus on, and having a list removes the ‘what should I read next’ friction.
  • I use Overcast to store podcasts on my phone for listening in the subway.
  • I deleted all social apps from my phone. I still occasionally load Facebook from my mobile browser, but it’s definitely helped to not have five different apps with feeds and notifications for me to check.
  • I use the Kindle App on my phone, and order paper books for home. I leave my phone in the kitchen at night so I’m not tempted to hop online.

3. Eating Less / Intermittent Fasting

This one is about a week old for me, but so far it’s been a great experience and I’m excited to share it. I read a blurb from Spring Chicken about the benefits of intermittent fasting, found some posts about how to do it and started trying it out. It’s shockingly simple — I don’t eat for 15–16 hours per day. I just stop eating around 9pm, and start again around noon or 1pm the following day.

A few observations:

  • My energy level is higher, not lower
  • I’m more focused and productive in the morning
  • I drink a lot more water
  • I find that even when I start eating, I’m not that hungry and I’m generally eating less throughout the day
  • I still get to drink black coffee in the morning (!)
  • I’m losing weight — but not a ton, and not in a way that feels unsustainable. This isn’t really a ‘diet’, or at least doesn’t feel like one to me. It feels more like a way to manage my energy.

4. Same Outfit

This one’s also easy, and removes another decision from my morning. At some point, I found an outfit that works for me and I bought five copies of it. Combined with skipping breakfast in the morning, I’ve removed the need to think through what to eat and what to wear when I wake up. While this sounds small, removing decisions from my morning allows me to focus on other things: planning my afternoon, spending time with my family, working out, etc. Easy win.

5. Paper for To-dos

I use a combination of Google docs and Evernote for taking notes, but I’m finding that running my personal to-dos on paper helps me remember them (because I have to write them), allows me full control (there’s no collaboration), and makes me feel like I’m making progress (crossing things off is amazing!)

That’s all I got. Happy optimizing and have a wonderful 2017!

(*As an aside, being a parent and running a company are exponentially more work than anything I’ve ever done, because both are endeavors in which your efforts are both high impact, and never sufficient. You’re never ‘done’ with either).

** This was originally published on medium.com

Producing vs. Supporting

I’ve been at Snaps now for seven months.

When I took the role, my primary interest in the opportunity was one of personal growth. Of course, I was excited to work with the team, and excited about the space and it was generally a great opportunity, but mostly I wanted to learn how to run a company by actually doing it.

I’ve read a variance of comments on this idea: taking a ceo role for professional growth reasons. Some of the better critiques of this idea go something like ” the best ceos don’t actually want to be ceos at all, they take the job because no one else is willing to step into it”.  It’s a romantic idea, the humble leader who quietly takes a leadership role without a hint of hubris or want of personal gain, who steps in and steadfastly inverts the org so that leadership sits on the bottom, supporting everyone on the team from below.

I aspire to do that, to be that.  I fail at it every day.

One of the hardest adjustments I’ve had to make, and I’m guessing i’m not alone in this challenge, is moving my mindset from ‘produce great work’ to ‘inspire and motivate others to produce great work”.

I think most highly productive people end up in leadership roles because they were really good at producing work, and so eventually graduated out of producing work and into a role of managing others who are producing work.  I’m not suggesting that I don’t produce anything, more that I’m finding the most effective use of my time is in supporting others to produce work, because that’s how organizations scale, how people grow and how leaders can create great results.

These two ideas: producing vs. supporting, require completely different skill sets. I am phenomenally weak in the second. I am impatient and intolerant of mistakes. I become frustrated when people don’t produce work in a way I would have done it, or as quickly as I might have.  At my worst, I can be pessimistic and dismissive, and that usually comes out when I can’t control situations, which is basically every day at my job, and I imagine every day in most leadership roles.

I am often reminded in my new role how  important is is to support others in producing great work, and I think that’s been my best lesson so far.

I’m joining the team at Snaps

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Snaps is a creative platform for brands.  The Houston Rockets are using Snaps for fan engagement.

Like many of us in the New York tech and media communities, I’ve tried to invest my time working with world class entrepreneurs, incredible visions and great businesses. To that end, I’m thrilled to share that I’m joining the team at Snaps as its CEO.

When I first met Vivian Rosenthal, she described her view of a world where social communication had shifted from text-based, desktop conversation, to mobile-first visual channels like Instagram, Vine,Tumblr, Pinterest and others. We talked at length about how this shift will continue to create new opportunities and challenges for marketers, and how software can help create better conversations between consumers and brands in this new, visual space.

Our conversation didn’t end at mobile. We also talked a about where that visual world is headed. With the emergence of new platforms like Google Glass, Oculus Rift and Magic Leap, new channels will continue to emerge that will transform the way consumers and brands communicate, and they’re only becoming increasingly visual and immersive.

I believe that Snaps is perfectly positioned to help create, capture and amplify the visual conversation on the web. The current Snaps offering is a fun, engaging, creative solution that has already empowered some of the world’s best consumer brands in social media, including SecretKraft, Kate Spade, Sony Pictures, Nestlé and The Houston Rockets.

Snaps has made incredible progress towards becoming a robust creative platform for brands, but we’re just getting started. I’m thrilled to be joining the team at this phase, and hope to share more about our product soon.

Electronic Objects and the future of the web

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Electronic Objects EO1 is a beautiful, connected frame for the home.

Sometimes the device is dumb glass, driven by the cloud. And sometime the cloud is dumb storage, driven by the device.

— Benedict Evans (@BenedictEvans) May 27, 2014

I’ve been having the ‘dumb glass or smart device’ conversation with a number of friends lately, and everyone seems to have a really strong opinion on this (I don’t, but I thought it was worth writing about since it’s come up so much).

The debate

The question most asked is if the future of the internet will be one of smart-clouds-dumb-devices, or if hardware is going to play a meaningful role in the future of the web.  To oversimplify with current companies, if you believe the former you’re probably long Google and short Apple, since you believe that all of the innovation and value will be created in the software layer. If you believe hardware really matters, you think Apple has a bright future, particularly in the short-to-mid term, because there are elements of physical products that make one better than the other, and software is a smaller piece of the equation.

My friends fall into two camps, with distinctly different views of the future:

Dumb Glass People are often software engineers, venture capitalists and technology enthusiasts. They make the argument that the cloud is increasingly where innovation is happening, and where iteration can happen quickly enough to find product-market fit faster than hardware designers and manufacturers can keep up. Therefore, software will ‘eat the world’ and reduce hardware to a commodity space of dumb glass.

There’s some strong evidence for this, notably this week Microsoft laid off 18,000 employees, mostly from Nokia, and Samsung has started bleeding.

Fred Wilson also often talks about fast replacement cycles for smartphones being a strong driver to keep larger devices (e.g. TVs) dumb, and allow them to be controlled by the smartphone.  This is a bit of a middle-ground thesis, but I’d place it in the dumb glass camp.

Smart Glass People are generally everyone who thinks about consumer products, and consumer motivations – marketers and product enthusiasts. While the hypothesis of the smart cloud makes a ton of sense form an efficiency standpoint, this camp believes that consumers want specific use cases for their glass. Electronic objects, I would argue, is in this camp, and their promotional video paints a great vision for use-case specific glass:

While it’s true that this device is generally dumb after its setup, most of the value is in the form factor, not the software. There is a specific use case for this unit, so it makes sense as a place to put artwork, and it makes sense as a piece of glass for your wall. Could we all have been doing exactly what EO offers for years with TVs and tablets? Yep. Does anyone ever do that? Nope.

The current device selection is insufficient for this use case – everything on the market is either to big, too small, too glossy, too clunky or just obviously designed for different purposes. It would look dumb on your wall and this looks beautiful. For a product like this, I think it’s probably that simple.

In the short- and mid- term I think hardware is about to explode. In the longterm we’ll probably drive towards some dumb glass standards, but until then, entrepreneurs are going to need to tell people what to do with their glass, and that’s going to open up tons of opportunity.

 

 

 

CrowdStream Is Joining RadioIO

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In 2010, Brian Bason and I started building CrowdStream to help music artists and fans connect on mobile and in social media. It’s been a phenomenal experience working with some of our favorite artists as they forge into the mobile ecosystem to create experiences that weren’t possible just a few years ago. This week, we’re thrilled that CrowdStream is joining the RadioIO platform.

Over the past three years, and thanks to the help of an amazing group of advisors and friends, CrowdStream has been used by over 150 artists, including Mötley Crüe, The Smashing Pumpkins, the Neon Trees and J. Cole. We’ve reached over 100 million fans in social media and contributed to the success of hundreds of world tours for our artists. The most rewarding part of this journey has been hacking away to create a digital ecosystem that actually works for artists, helping them drive business goals and engage with fans in ways that are meaningful and rewarding for everyone involved. We believe artists create valuable content, and we’ve worked to help them realize that value through CrowdStream.

As part of RadioIO, CrowdStream will now reach an even wider audience, and offer fans even better ways to engage with their favorite artists through RadioIO’s consumer and B2B streaming radio services . RadioIO shares our vision to create a compelling value proposition for artists in digital, and we couldn’t be more excited to continue building towards that vision with the RadioIO team.

Maybe You’re Just Not Lucky

I just finished reading Fooled By Randomness, by Nassim Taleb. I loved the book, and if you’re interested in financial markets, behavioral finance, probabilities and statistics I think you’ll really enjoy it. Check it out if you haven’t already. Nassim has a section that talks about survivor bias and it got me thinking about how it related to startups.

I was recently at a conference for startups in San Francisco, a day-long chance to learn from people who had built and run massively successful businesses. The speakers were gracious, humble and offered the best advice they could for the young operators in the crowd. But I was particularly struck by one CEO, who was the only one to attribute much of his success to luck. When asked a question about what he would have done differently, he said that you can’t ignore the massive role luck plays in the success of most startups, and he tried to keep that in mind while he was going through growing pains at the company.

I looked out over the 400 people in attendance and noticed how young everyone was, and I thought about how few of them would still be coming back to these conferences after five years.

One problem with taking to heart advice from successful startup founders is that we run the risk of mistaking correlation for causation, and we ignore survivor bias when we internalize this information. Of 100 startup founders, maybe 10-20% will be truly successful at operating their company from an idea to an M&A transaction or IPO that generates a return for everyone involved. Of the 80% plus who fail, most of them will be exceptional entrepreneurs and operators who picked the wrong market, the wrong product strategy or just had bad luck along the way.

Venture investors place very few bets in a given year, and all of them are on top notch people who are vetted and have the potential to become great leaders. Of those 100 theoretical startups, 100% of them are founded by credible people who have already proven their potential, and often have a previous track record of success – they are already winners on paper or they wouldn’t be able to raise capital.

I don’t think the community likes talking about this very much. We like to put successful startup leaders on pedestals and assume that they’re successful because of the decisions they made. Success rates in early stage, venture-backed startups are very, very low. The cemetery of failed startups is filled with entrepreneurs who did literally everything right, but were just unlucky. I was reminded to keep this in mind, not only when looking at failed startups, but also when looking at successes. Operating advice can be invaluable, but keep in mind that for every successful founder you see on a stage, there are probably 80 others who are just as talented, just as smart, and just as good at operating, who were just a little less lucky.

Good Reading – 1.20.14

– Mobile messaging app usage grew by over 200% in 2013, beating out every other app category in both usage and growth. In my view, messaging apps are a fast, simple way of creating dark social networks. 1-1 and small group communication is the new social media broadcast.  My personal behavior mirrors this, and all of the research we’ve done in-house backs it up: large social networks are good for some types of content, but most of the communication we do isn’t designed to be shared with everyone. Because of the  fragmented networks involved, messaging app users will likely stay multi-home for a few more years. Link >>

– Charter Communications made a $61+ bn. cash offer to acquire Time Warner Cable. By itself, the transaction doesn’t mean a ton, but looking at the overall telco and wireless carrier consolidation over the past years in the U.S., coupled with the recent ruling against  the FCC’s Open Internet Rule, is it safe to think the balance of power is starting to go increasingly larger players in the space? I have no certainty on how all of this will affect innovation in the startup scene for media, but I have to assume that these trends are overall bad for consumers when it comes to content delivery innovation.  Link >>

– Andreessen Horowitz is in the process of raising t’s 4th round, another $1.5bn., the majority of which will be dedicated to early stage investments. Anyone who doesn’t already, follow Marc Andreessen on Twitter. Marc’s feed is optimistic, though-provoking and is evidence why his approach to investing has been so successful of late. This 4th fund is just anther supporting data point.  Link >>

– Dropbox raised $250mm at a $10bn. valuation. As a company I pay every month for a service that completely changed my life, my view is that Dropbox still has a ton of runway ahead of it and, in my opinion, is in the unique position of being better as an independent company than as part of a larger suite of solutions like Apple, Google or Oracle.  Link >>

– if you were under a rock , Nest was acquired by google for $3.2bn. No sense in writing about this, but in three years this is going to see like a very, very cheap acquisition. Link >>