Time to move on; job changes and a move. . .
March 31, 2007
Last month I mentioned that I was talking to Heidrick & Struggles regarding a job opportunity. Well, those early conversations turned serious this weekend and I have agreed to join a yet-to-be-named venture backed startup as CEO. The position is in San Francisco and as a result we will be moving next month. More on the company and the move later. Texas, we will miss you!
[UPDATE: THIS WAS AN APRIL FOOLS JOKE...]
Learning from Failure in Two Acts
March 30, 2007
Fred Wilson blogged about the lessons he learned from his (Flatiron Partners) investment in The Industry Standard (the Web 1.0 bible).
ACT I: Only build in costs that can be paid for by sustainable revenues.
This may seem obvious, but I assure you it is very difficult to get it right. When John Battelle was building The Industry Standard from $9MM in revenue the first year to $25MM in the second year; had he assumed $25MM was his sustainable revenue and built costs in line with that number he would haver never hit $200MM a year later.
In the case of The Industry Standard the sustainable revenues were between $25MM and $50MM, but John and his team had built in $120MM in fixed costs per year. Fred explains, "the gap between costs and revenues was too large."
We have the very same problem in our own startups. I will admit we are far too conservative. The Architel business could easily reach $10MM in revenue next year, but based on the amount of money we are not reinvesting in the business will will only reach $7MM. Why? The answer is simple, with almost no risk (i.e. without increasing our cost basis) we can grow the business $2MM over the next twelves months. To grow the business by $5MM over that same period of time would require a cost basis closer to $7MM (i.e. if it turned out that $7MM was the sustainable revenue level, we would not make any money until we reduced our cost structure). Again, it is hard to know the right answer...
ACT II: Never invest in a deal if you are a minority investor.
Of course, Fred wouldn’t agree with me on this point, but he is a professional investor and I am just an operator (as it turns out). Fred specified, "Don’t invest as a minority investor in a company controlled by a corporate entity." His point was that a corporate entity might have a different agenda than that of a typical investor. In the case of The Industry Standard IDG (the majority investor) didn’t want to sell the magazine to Time Warner or Hearst due to the fact that they were competitors. Even though the sale price would have been between $400MM and $500MM (a fantastic return for a financial investor). Of course, if you have lots of dry powder (i.e. available cash) being a minority investor can be a good idea (you just need to keep paying to play).
My Favorite Podcast: Two Years Later
March 29, 2007
Two years ago I discovered podcasting. I was so excited about the technology we built a web application to help people host and create their own podcast. Ironically, there are only a couple of podcasts I actually listen to these days including This American Life and The Wilshire Baptist Church podcast. My favorite? The Wilshire Baptist Church podcast. The first podcast on our podcasting application (PodServe) was the Wilshire Baptist Church podcast. Our church only has around 3,000 members, but the podcast reaches more than 8,000 people. Brad has uploaded sermons each Sunday from January 2006. If you are interested you can check it out here.
What happened? Am I indicative of podcast users? Below you will see my podcast subscriptions via iTunes. I was a healthly consumer of them at first, but soon my attention was lost.
Switzerland leads U.S. in technology innovation?
March 29, 2007
According to the World Economic Forum, Switzerland (and six other countries) leads the U.S. as an engine of technology innovation. Huh? The group (pictured right) claims our fall from the top is due to the "deterioration of the political and regulatory environment."
The group, based in Geneva, Switzerland is under the supervision of the Swiss Federal Government. Wonder if that had anything to do with their ranking of the U.S.?
Ironically, the group announced their list of 2007 Tech Pioneers recently and more than 80% of the pioneers were from the United States. Not a single person or company from the six countries listed ahead (see list below) of the United States were honored with an information technology related Tech Pioneer award.
- Denmark (3)
- Sweden (8)
- Singapore (2)
- Finland (5)
- Switzerland (9)
- Netherlands (12)
- US (1)
- Iceland (4)
- UK (10)
- Norway (13)
Dad’s gone native! (Alt. Title: WTF is that?)
March 29, 2007
I mentioned that my Dad was in China this week and I have been watching his Flickr stream (props to Dad for ‘getting’ the social picture deal) and I saw this:
My question? Did he eat it? Has he gone native? I mean it look like a hand from an alien. Hmmm… Anyway, he is now in Xiamen City.
Social software locks you in. . .
March 28, 2007
Dare Obasanjo makes a great point that open source ‘denies vendor lock-in‘ in contrast to the social software movement that depends on network effects. He explains,
The more users you have, the more valuable the site is to each user. Having access to Slashcode didn’t cause the social lock-in that Slashdot had on geek news sites. That site was only overtaken when a new service that harnessed network effects better than they did showed up on the scene (i.e. Digg). Similarly, how much value do you think there is to be had from a snapshot of the source code for eBay or Facebook being made available? This is one area where Open Source offers no solution to the problem of vendor lock-in.
Ruby on Rails®?
March 28, 2007
Earlier this month David Heinemeier Hansson filed a trademark for Ruby on Rails™. Get ready to start using the ® when you write about the framework. It will take a year or more for the trademark to go through unless there is opposition. Check it out:
Of course, we must not forget the legal language now: "Rails™", "Ruby on Rails™", and the Rails logo are trademarks of David Heinemeier Hansson. All rights reserved.
One number to rule the world!
March 27, 2007
I signed up as beta user of GrandCentral last year when Lance from Yahoo! suggested it to me. Neat idea, but it seemed like too much of a commitment to start giving out my new ‘GrandCentral’ number instead of my office or cell phone number. I trust AT&T and Sprint to be my phone company, but I was unconvinced that Craig, Vincent and Don were ready to be my new phone company. Anyway, when was the last time you bought voice services from a company who clearly indicated their product was BETA?
When David Pogue wrote about the service in the New York Times last week, he suggested, "It’s a rather brilliant melding of cellphone and the Internet." Lots of people signed up and more than a few told their contacts to start using the new number. Almost everyone Mike Arrington knows who switched back, and EVERYONE I know who switched has since switched back. Mike explains,
One person, who uses his desk and cell phone “constantly” to do business, said that it only worked properly about half the time. When you whitelist phone numbers, they are supposed to ring right through without having to record their name or wait. Even with their caller ID turned off, callers on his white list said they were still being put in the queue. Important clients, who were supposed to bypass the review, were getting pissed off. “I just couldn’t afford the risk” he said. “When I kept hearing the recorded name of my most important client and realize he’s waiting on hold while I stumble for the “1″ button to put him through, I knew I couldn’t keep using it.” he also said that clients were complaining that calls weren’t picked up at all and they were being put through to voicemail. “These guys don’t do voicemail” he said. “They simply call my competitor.”
Turns out phones are very important to most people. Unlike web services, we are not willing to receive a message like ‘Your Phone is Getting a Massage‘ like we are from our favorite photo sharing service. I think the idea of a centralized number to help you manage your various phones is awesome, but I have a few suggestions:
- Allow users to pick a primary number (i.e. don’t give them a new number, instead let them use a number they own)
- Make the aassigned number portable (i.e. users can port it to another provider quickly and easily)
Finally, if you run an Asterisk PBX you can easily create your own master number. It took a few hours, but the Big in Japan team turned my office phone number in a master number. How does it work? If you dial my office line it rings the office line, car phone and Blackjack PDA simultaneously. When I pick up my office line I wanted to be able to talk to the caller immediately. When I pick up my car phone or Blackjack I am given the caller ID and may press 1 if I want to take the call. If I do not press 1 my office voicemail system takes a message. Those messages are then routed to my email address. We could add other features, but this seems to work fairly well.
FaceBook = Class Action Suit?
March 27, 2007
What do you get when you are smart, technical, twenty-two and run a startup? If you are Mark Zuckerberg it is likely you are going to get sued. Why? Some call it ‘foot-in-mouth disease’ while others call it inexperience. More than a couple of lawyers are lining up to find clients willing to sign up to class action lawsuits against Mark and his wildly successful startup, Facebook.
This week entrepreneurs from across the country attended Startup School and heard Mark Zuckerberg suggest that founders should violate the 1967 Age Discrimination in Employment Act (ADEA). For some reason Mark felt comfortable giving this advice. Mark Coker at VentureBeat suggested, "Judging from whispers among the audience, while people love the service and admire his accomplishments, many find Zuckerberg arrogant. A Google search on “mark zuckerberg” and “arrogant” yields about 675 results, but surely, there must be other Mark Zuckerbergs in the world. Or maybe not."
Standing on the stage wearing Adidas sandals Master Zuckerberg implored the audience to, “I want to stress the importance of being young and technical,” he stated. "If you want to found a successful company, you should only hire young people with technical expertise."
Several jaws dropped as he continued his advice, “Young people are just smarter,” he said with a straight face. “Why are most chess masters under 30?” he asked. “I don’t know,” he answered. “Young people just have simpler lives. We may not own a car. We may not have family.” In the absence of those distractions, he says, you can focus on big ideologies. He added, “I only own a mattress.” Later: “Simplicity in life allows you to focus on what’s important.”
Obviously, following Mark’s sage advice would cause you to run afoul of the ADEA, which makes it unlawful to discriminate against a person because of his/her age with respect to any term, condition, or privilege of employment, including hiring, firing, promotion, layoff, compensation, benefits, job assignments, and training. I wonder if David Sze would agree with Mark? (Oh, and I was even dumberer when I was 22)
Buying a house. . .
March 26, 2007
Michele and I are in the process of buying a new house. Our old one is for sale, but we couldn’t wait any longer to get another one. We just put the property under contract today and had the inspector, appraiser and flooring contractor out. It is so hard to find good people to work with I like to pass along the names of people I have enjoyed working with:
Home Inspector: Philo Ramos, BS Civil Engineering (TREC 4319)
972.517.8757 or philo.ramos@verizon.net
Home Appraisals: Bret Gardner, Appraiser, TX Certified
817.460.9495 or bart@appraisingDFW.com
Hardwood Flooring: Mark Furney, Signature Floors & Interiors
972.248.4242 www.signaturefloorstx.com
Muse on Mao
March 26, 2007
Dad is doing a quick, two week, swing through Asia starting in China (Beijing, Xiamen, and Shenzhen), then to India (Delhi, and Dehradun), and finally to Dubai to visit customers. Globalization isn’t just about traditional American jobs being exported overseas, it is now about being able to sell to anyone anywhere. Dad’s two biggest customers are not in the United States or Europe, instead they are in China and India. Follow along on his trip in pictures here or read about it here.
The smart money is selling, are you going to buy?
March 25, 2007
Buyout firms have to be good a knowing when to buy a company. They have to be even better knowing when to sell it. The Blackstone Group, THE most successful buyout firm in history, filed for $4 billion IPO. These guys have been able to consistantly bail out of companies at their peaks. Maybe it is not so smart to buy when they are selling?
Social Media Starts Offline
March 25, 2007
The Big in Japan team is constantly working with brands looking to take advantage of social media. More and more are looking to build a so called ’social network’ around their service or product. Is anyone else sick of social networks? I enjoy Flickr, but the social aspect of it is only half of my enjoyment. I love idea of Upcoming.org, but I don’t live in SFO so it only works during SXSW. LinkedIn? It broke for me when I realized I was ‘linkedin’ to more than 500 people I hardly know. MySpace? Tom is my only contact and we don’t see each other much. Figuring out your higher calling is only half of the battle.
If you are considering launching a social network around your brand I would suggest networking with your customers in the real world first. Tell them what you plan is. Tell them why you think a social network would help them. Ask them for their feedback. Ask them for their help. Don’t bother doing a focus group, just pick up the phone and call them. Talk to 100 people or 1% of your current customer base (whichever is higher). Arrange to meet small groups (5-10 people) for lunch or drinks and get to know the people you think would be perfect for your social network. Sounds crazy, right? Sounds like a lot of work? Don’t create a single wireframe or website mockup if you can’t name the first 25 people who will join your social network.
Need some help building an offline social media program? I am sure Jake would be glad to work with you.
Why is most b2c communication negative?
March 23, 2007
The answer is fairly simple: in most cases the company and the consumer are adversaries. Jake and I were in Florida yesterday talking about social networks with a client and I thought a concept he brought up was worthy of a short blog post this morning (before I catch up with the numerous emails and phone calls I need to address).
The oldest form of company-to-consumer communication took the form of a company telling a consumer something through advertising. More recently companies created channels for their consumers to talk back. This two way communication results in conversations that at times can be somewhat adversarial ~ i.e. us vs. them. Imagine a communication channel that wasn’t about ‘us or them’, instead what if you could both talk about something else, something you both inherently cared about ~ i.e. a higher calling?
If you can determine what your company’s higher calling is you can direct your communication with your clients through this new channel. By working with consumers to answer this ‘higher calling’ the communication is no longer adversarial, but cooperative. Building a community around a higher calling can be very effective and fruitful for both the consumer and the company. You are no longer ‘company’ or ‘consumer’ but partners working toward a positive goal you both care about. What do you think?
On Twitter. . .
March 19, 2007
David Ewalt had a funny message to Twitter users; I will repost here:
Dear self-obsessed nerds,
I’m not interested in what you had for breakfast. I don’t need to know when you leave for work. Got stuck in bad traffic? Keep it to yourself. Your work habits aren’t even important to your coworkers. Your lunch choices matter to no one. Now you’re reading your favorite blogs? Color me uninterested. When you leave work, I don’t want to hear it. If you go out for drinks, keep it between you and the bartender. And when you get home, don’t share your TV viewing habits. They’re about as interesting as watching paint dry. What are you doing? I really don’t care.
Yours truly, Dave
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