Last Build Date: Mon, 20 Feb 2017 12:25:17 +0000
Mon, 20 Feb 2017 13:05:00 +0000
There are a lot of relationships that would be a little weird if they hadn't become commonplace--the kind of thing where someone raised by wolves might not adjust to so easily. A waiter requests money from you at the end of a meal, a doctor looks into your open mouth, and demanding strangers get into your car if it's yellow and has a number on the roof.
One relationship that isn't so commonplace is having a venture capital investor--especially for the first time. There are a lot of things that a VC does that might feel intrusive--asking to be on your board, going through your financials... I mean, didn't they say yes to your pitch? Why are they doing due diligence all over again--every month??
Of course, as investors, we know why we do these things--but do we ever take the time to explain it to our founders?
Perhaps regular meetings would be less adversarial if you said that you wanted certain information on a monthly basis so you could understand what was going on with the business and how it works, and without that, you wouldn't be in much position to help. Being there to learn should be a lot less threatening than being there for oversight.
Or what if you just opened by saying, "There's just A LOT of stuff to have to worry about as a founder--and no one can reasonably expect you to see behind every corner. While your business is different, I'd like to bring what I've seen other companies experience at different points into the conversation, so that we can get ahead of them or connect you to the people who have experienced these issues before."
That's a little useful than, "Show me your financials," regardless of what the docs said you have to do.
Perhaps it might be worth asking a founder what they want the investor around for. What do they see as the investor's job description? It would be pretty hard not to establish trust if the investor just does what the founder laid out for them to do--as long as they're on the same page about what that should be.
"Why" helps build trust and it can go as deep as you want. Why are you a VC? Why do you bother being an active investor when you could just write the check and coast? So much of the success of a founder relationship stems from the basics of personal connection, yet we spend a lot more time focused on the business than on the two or three people that are signing up to spend a fair amount of time together and share responsibilities to each other.
Perhaps the due diligence process needs a human update.(image)
Mon, 13 Feb 2017 12:30:00 +0000
I asked a founder the other day the following question:
Can you describe a candidate that would be a fantastic hire somewhere else that would never thrive in your organization?
If you can't answer that, it's going to be really difficult to find the people that *will* thrive in your company. Not every candidate is a great hire for every company. Obviously, you want to hire above a certain level of competency and work ethic--but if you're going to find people who really thrive, you need to understand the unique place your company is to work at, and who succeeds there.
Moreover, you need to define it from day one, and it needs to be pervasive throughout all the decisions your company makes, especially the hiring ones.
What do you value in people and how will the presence of those people affect your culture?
Which of these values are unique to your company?
What processes, incentives and language will you use to help shape the environment they work in?
Which of these are unique to your company?
Ideally, a company should be able to announce to the world, "This is what we value in people and this is how we work" and it should attract the right people and dissuade the wrong ones.
Most seed funded companies either never get around to these definitions, or create ones that could apply anywhere, valuing "hard work" or "diversity" without really ever stating in specific terms what that means.
A company's culture and values should turn away super qualified applicants that would succeed elsewhere, but clearly wouldn't be a fit for this specific environment. Otherwise, prepare to cycle through a lot of people without a clear idea of why they didn't work out or perform up to and beyond expectations.(image)
Mon, 30 Jan 2017 12:44:12 +0000
Just realizing that I forgot to list one risk factor in my Fund II PPM--the possibility that the US turns into a fascist dictatorship. That probably won't have a positive effect on venture capital returns.
I mean, think about it--how well do you think those late 1930's German venture capital vintages did? How about Venezuela funds from 1998?
So, if you're annoyed or distracted by all your favorite tech and startup people talking about Trump--you should probably get used to it because this administration has become a real problem for our industry. It's no longer just a political issue when you're operating in an environment where the government is threatening the otherwise very stable national platform by which you've built your business on. Investors are willing to take early stage risk because they don't have other risks like nationalization of industries, martial law, dissolution of human rights, etc. It's easy to take that for granted, but that's why places like Russia have trouble getting their startup community off the ground. What investor wants to take that extra layer of government risk?
Does it get to the point where a VC has to say, "Well, I'd love to back you, but you're Muslim and the chance that you'll be deported is a founder risk I can't take."
That's the path we're headed down now if we don't stop it. Never in my lifetime have I ever seen a US government enact a law that favored one religion over another. That's a line I never thought I would see crossed--and we're barely a week into the administration.
This should be everyone's problem just because of human decency, but if that doesn't get you, now we've got a serious business risk on our hands, too. Don't think that a war with China won't put a damper on your quarterly earnings or the pre-money of your next round either.
Oh, and don't forget paying 20% more for all the goods and services not made here. Get ready to have to start paying your software engineers even more so they can afford to live.
Even if these terrible things don't come to pass, you're going to have a serious talent crisis unless your company starts speaking up. Startup workers tend to be younger, more educated, live in cities--meaning that whether you agree with them or not, these aren't the kinds of policies they can get behind. They want to live in a tolerant, global world free of discrimination--and they care a lot about the missions of the companies they get involved with, both as employees and as consumers.
So while you might be worried about pissing off half your red state customers if you sign an anti-Muslim ban petition, you might lose half your dev team if you don't, and then where are you? What are you doing as a company to show that you have core values these days? What does it say to your employees that are immigrants or children of immigrants if you stay silent?
No matter who you voted for, these issues are now on your doorstep, begging for action, because they touch all of us.(image)
Mon, 23 Jan 2017 02:20:00 +0000I just spent a weekend at a professional development retreat for venture investors. It wasn't about how to be better price negotiators or about tactics for getting dealflow. It was about investors trying to be better people. On that journey, there was honesty, and with honesty came pain, and eventually, acceptance. People cried. They asked for help and depended on each other for strength. I contrast that with our first taste of leadership from Donald Trump--sending his Press Secretary out to try and convince the public that the inauguration was better attended than it was. His dishonesty wasn't just with us, it was with himself. His insecurity was so powerful that it was painful to watch. I found myself shifting from anger to pity--pity that he has to live with himself, alone in a shell of lies that he not only tells others, but himself. Watching him lie is like watching someone stab themselves over and over again. That gut wrenching feeling isn't being inflicted on me by him--it is my empathy feeling what it must be like to be him. I can only withstand a fraction of the pain his insides must endure.Donald Trump isn't the strong leader he aspires to be--he is the weakest form of leader, because he clings to outdated masculine ideals out of place and out of touch with the modern world. We know now that he is not alone. His pain resonates in great numbers.So many men who grew up being told that their worth was in their ability to provide, to be strong, to not cry in the face of pain, and to be protectors, find themselves hopelessly, and dangerously, lost. They voted for Trump in the hope that they could turn back the clock--that emotionless physical strength, the kind that proves itself by being unyielding, by eliminating opponents in a zero sum game, could still win. If they could reestablish a real *man* at the top, they might be able to turn the world back to a place that made sense to them--and to put a lid on their innermost feelings of pain and fear threatening to escape. Hillary Clinton wasn't a threat because she was a women--she was a threat because she was feminine. She endured pain and embraced it. She turned the other cheek to a cheating husband and forgave. Both women and men held her association with Bill against her--as if those trying moments in life ever have clear and perfect answers.She might have won more votes had she taken Bill out back and shot him. She listened first--asking others for help before forming her opinions. She reconsidered her stances when new information emerged. Leaders don't change their mind or reconsider--not if they want to be strong.This is not what men do. So many men had a similarly hard time with Obama--and why they elected Trump in response. He was comfortable enough with his own sense of self to display emotion--a taboo in a world where people of color who share their feelings are derided as "angry black people". Many felt that Obama was weak, because he cried over gun violence--our symbol of American strength. A sensitive, weeping black man that cried about guns and tried to make peace with Iran versus wiping them off the map was a threat to so many layers of monolithic American masculinity standards that one could lose count. This is not what men do."What men do" is what Trump does--deny, lie, fight, bully, shout, all while dating supermodels and showing off their wealth--their hollow, empty, meaningless wealth that never seems to be enough.Watching Trump as President is like watching a movie caricature brought back from the past struggling to come to grips with the fact that the world has changed--a caveman, a knight, a cowboy. His friends are dead and he doesn't understand this new and confusing place. He acts out, making a mess and embarrassing himself in the process, and he is shunned. There has been no gr[...]
Fri, 06 Jan 2017 13:20:00 +0000Most companies don't get to do more than a handful of hires during their seed round--so the idea of a "recruiting process" might seem a little bit heavy handed. However, these early employees will not only have a lasting impact on the DNA of the company, but hopefully they'll be some of the most important hires you'll ever make. (If they turn out not to be, you probably hired poorly.)Startups that don't create a process tend to fall into the following traps:1) They never identify values and therefore fail to use them in the screening process. Are there things that you want every last employee to care about? Did you ever bother writing them down, telling interested hires about them, or using them as any kind of meaningful filter? There's a saying that goes "If you don't stand for something, you'll fall for anything." As keepers of the brand, what your employees believe in will ultimately be reflected in how people think about your company as these values make their way into your products and marketing.2) They hire a guy they know. Most venture backed startups are started by men, and one's network tends to look a lot like them--so when guys start companies (and often when women do, too, especially on the tech side), they tend to make the first few hires from their network. Every single time you add someone who looks like the person hired before, the chances that the next person will look and think differently decreases. How excited will a female engineer or a marketing professional of color be to be the first non-white male hired when the team is already ten or fifteen people? If you don't go out of your way to not only create an outbound recruiting process, but track its metrics, you'll be fishing in only half the lake, or less. 3) They run out of leads. You might know a lot of very talented people, but once you put them through your hiring funnel, you probably don't know as many as you think. Some just took a new job and others aren't quite the right fit. Even if you do know a lot, if your company is successful, you'll need to know a lot plus more tomorrow, and even more the day after that. Maybe you can hire your first five employees from your network, and maybe even ten or twenty, but then what. What happens when you start making ten new hires per month? When do you think that lead generation process should start? Answer: As early as possible. Not only are you going to need to sift through great numbers of people if you're ever going to build a company of any kind of size--but to make sure you get the *best* people, you'll want as many people in the top of the funnel as possible. Just like in sales, if you don't put in lead generation tools for talent as early as possible, and start tracking it, that well is going to run dry very quickly.4) They underhire. Startups don't have much money in their seed round, and so they tend to be very cost conscious around salaries--even though they say that talent is the most important thing in their company. They'll even tell themselves a narrative that unless you're willing to accept below market wages, then you're not the right fit for a startup. First off, how many founders are taking below market wages? If you're 25 and you're making 80k, plus, you own 75% of the company, that's a pretty sweet package compared to your peers who teach kindergarten or work in book publishing. Maybe you should raise a little more money, take a little more dilution, and get out there with fair offers to the people you've identified as the people most able to make your disproportionate ownership of the company worth millions (especially since their share isn't likely to be worth millions). The area I see the worst underhiring is in marketing--where the first hire has likely not done more than pitch for PR or worked a few years at an agency.[...]
Mon, 02 Jan 2017 04:29:31 +0000
VCs promise a lot of things.
We've got all these platforms, advisors, special partners, communities, networks...
...special economic bells and whistles, spaces, programs, partnerships, etc...
Meanwhile, they most useful thing we can give you when you're first starting out seems to be the hardest to get:
VCs see a lot of deals. We see successful companies and others that fall on their face--so getting our actual opinions about something, pass or fund, can be really useful. If nothing else, we're seeing what's out there now and so we can give you a sense of how it compares to what we're currently seeing.
Instead, what the average VC provides in terms of feedback is about as committal as the answers given at a Senate confirmation hearing. It's generally some form of "interesting"--supportive but not decisive, with some extremely vague indication of what more they'd like to see before writing a check.
The other day I told a founder that she was missing a marketing lead and that I didn't think her team was capable, as currently composed, of launching product successfully her market.
Right after that, I told some another founders that the money they were raising wasn't enough to really get them off the ground.
Last year, I told a founder who had previously sold his company for $400 million that I didn't think there was a mainstream consumer need for what they wanted to build--and even if there was, I didn't see a path to making enough money from it.
As the end of the day, all I really have to give is my honesty. If I don't give you that, then I've given you nothing.
That's why so many founders walk away from VC pitches feeling like they wasted their time--because they have no idea what the investor really thought. You can get money from elsewhere, and you'll make the hires you need to. You'll sell what you need to sell and connect to who you need to connect come hell or high water. But an honest opinion--that's a rare find in your early startup days.
What I ask in return is that you come in with honesty. Don't try to blow smoke. Be honest about what you know and what you have yet to figure out.
And be honest about whether you're the best person to start this business, or have the best team, and whether or not you've really done enough work to decide if this is worth doing.
There's nothing more a founder can do to help their cause than to be honest with themselves from day one.(image)
Sun, 18 Dec 2016 17:00:00 +0000In January of 2010, just a few months after I joined First Round Capital, I got to back my friend Rob May and his company, Backupify. Five years later, he sold that company to Datto, and I got to back him again to build Talla.Backupify would be the first of what is now a 50 deal track record across my time at both First Round Capital and my own firm, Brooklyn Bridge Ventures. Yesterday, I closed on this "golden" opportunity and so I thought I'd reflect a bit on how the 50 looked as a group. Well, most of them are still alive, so that's cool. Some of those acquisitions were awesome, like GroupMe, Singleplatform and Backupify were wins. Others, not so much. More than half the time, these companies have gotten follow-on capital--and another third haven't needed to raise yet. Only a small handful have crashed and burned on just one round of funding. A lot of the deals are in the "Business pay us directly" space, but most of them are not. Not a lot of geographic diversity, but I can bike to nearly all of these places, so that's good. At least 44% of the companies I've invested in have had at least one female, person of color or LGBTQ founder. Most often, I'm investing in pre-seed rounds, especially since I won't invest when the company has already raised $750k in a prior round. Most of the time, I'm investing in teams with ideas, not quite products. Like most VC's I'm mostly investing in software and internet technologies, but about 22% of the time, I've invested in companies that make physical things--from food to physical spaces to consumer electronics. Mixing up these different categories has not only provided great return opportunities, but it's also a really interesting experience for me. I'm looking forward to the next 50! [...]
Mon, 12 Dec 2016 06:00:40 +0000
Over the last couple of weeks, I've been to a couple of tech events that were sparsely populated by straight white men.
Yeah, can you believe it?
One was a careers panel aimed at women in tech held at Flatiron School and the other was Alterconf. The goal of Alterconf is to provide safe opportunities and spaces for marginalized people in tech and those who support them by highlighting positive initiatives of local community members.
I think there might have been more trans and gender fluid people in the room at Alterconf than there were straight white men. That's not something one experiences in tech that often.
At each event, I felt my behavior change.
Normally, when you're a VC, lots of people are coming up to you, asking your opinion on things--you cannot help but feel a sense of belonging in the room. You're supposed to be there and there's an unmistakeable power dynamic in the room. It's all too easy to get a sense of self-importance and to feel like you have a disproportionate influence on the room.
I didn't feel that way at either event. I didn't feel like I belonged--despite the best efforts of both events to make everyone feel welcome. It wasn't anything that anyone else did. It was all in my head. By being consciously different than others, I felt like maybe I shouldn't be there. Unlike other startup events, the dynamic wasn't set up for me.
It's undoubtedly a lot closer to how a big chunk of the population feels than I'm normally accustomed to feeling like.
Would I say or do the wrong thing?
VC's don't usually worry about saying the wrong things--maybe that's why we disproportionately seem to have built a reputation for saying the wrong things.
Nor do we ever feel like we don't have anything to add to a conversation.
In all honestly, that was a pretty good thing. Feeling uncomfortable because you're in unfamiliar surroundings is a great learning experience. It makes you hyper aware of everyone around you. You can't generalize people so easily and you don't have easy language and anecdotes to fall back on. You have to treat everyone as an individual, listen, and be really thoughtful about what you share and how you share it.
Just yesterday, I was speaking to a founder who told me that if they raised a seed round, they'd hire "another guy or two on the tech team."
"Engineers, not guys."
"They might not be guys...the best people for the job."
"Oh, yeah, sorry."
"Don't apologize to me. Just be conscious of it."
I probably would have let that go had I not been to these events and I'm glad I went. I'll never know exactly what it's like to be a marginalized person--but situations like this help make life more relatable to a wider group of people.
Plus, from a pure business perspective, if you're not going to stray outside the communities that hold the most power and influence, you're going to miss out on opportunities and talent from at least half the community, if not more.
The future will look less and less like me than ever before.
There's less competition in these spaces and where there is great talent, it's my job as a "first check" investor and part time recruiter for my portfolio to be where other investors might not be.(image)
Sun, 04 Dec 2016 23:03:18 +0000
One of my favorite phrases is "performing inception". Inception is one of my favorite movies and I love the idea of meticulously planning out the placement of an idea in someone else's head.
That's basically what founders have to do when they fundraise, because you'll never be more successful with an investor who thought it was their brilliant idea to invest in your company, not yours.
Remember what we learned from the movie. Ideas that stick well in other people's heads have to be simple, and they're better when based on positive emotions.
Who invests is also important--these are people who want to make money, but also be seen investing in the "hot" companies. Sometimes, just proving out a business model isn't enough.
Are you creating a company that looks like something they'd be excited to share?scrolling="no" allowfullscreen="" src="//www.youtube.com/embed/AIXnBBuyDBU?wmode=opaque&enablejsapi=1" width="854" frameborder="0" height="480">
So what ideas are you trying to place in your next round investor's heads? And how do you do it?
It has to be simple.
If an investor had to believe one simple thing about the world that would eventually lead them to investing in your company, what would it be?
That very idea should be at the heart of all of your PR.
Is it that there is a lot of money to be made in your sector?
Is it that your team is the best out there?
Is it that your business model rises above everything else or is really innovative?
Maybe you're the next obvious iteration of a model that works?
Customers need your product to live happy lives--perhaps that's it.
How many times can you repeat that, and where, and who can you get to repeat it for you? What relationships does this VC have that can help reinforce the message? Content you create, interviews, podcasts, speaking engagements, survey data you research and disseminate, events, engagement over social media... VCs need to see your message time and time again.
Founders should also be spending time in networks of other venture-backed founders--not only to learn, but to have their message and reputation echo back to other VCs.
"Have you met so-and-so? They're really impressive."
Simplicity, consistency, repetition and pervasiveness. That's how to get an idea to stick in a VC's head.(image)
Mon, 21 Nov 2016 13:27:56 +0000Honestly, it's difficult to think about anything else besides the election and this impending clown show of an administration these days--but I'd really like to get back to blogging about startups. Consider this post part of my own transition team of posts.While the country is far from a startup, founders find themselves as essentially newly hired CEOs with a lot of uncertainty surrounding them. This is the position Donald Trump finds himself in now, and by watching what he's up to, we can learn a lot of lessons around how to handle it (or how not to, mostly.)1) Get to work.Watching a President-Elect comment on every single SNL skit is like watching a founder who won't stop adding on to their fundraising around. Fundraising feels good when it works out, especially towards the end when there are always a few more angels who want to squeeze into an oversubscribed round. You need to come off of riding that high and put your head down and out of the spotlight for a while after that, and do some real work once you've got your fundraising win.2) Hire people who create confidence, not the people you already happen to know.Hiring should be a process--from Day One. If you don't create a process that seeks out the best people from wherever they are today, how are you ever going to do it two years from now, four years from now, etc. Eventually, you run out of people you know well--and frankly, most of these people aren't the best people for the job anyway. Once again, this isn't exactly what's going on in the Trump administration and anyone who has built teams knows it's going to hurt his chances for success later on.3) Stay positive.Your competition is going to launch just before you or there's going to be some press saying how the funding cycle is done for your industry. Maybe you'll get a bad review or two for your beta release. These are all people you will need to convince and get the support of in the future, so while discrediting them might feel good in the short term, it doesn't help you win in the future. Instead, why not listen to their criticisms fairly and double down in your efforts to win their support with action and results later?4) Being a CEO isn't that glamorous. A lot of people start companies because they want to be their own boss or be in a fast paced environment, but most days, you won't feel like either of these things are true. You're always lacking for resources or time, and you're not moving nearly as fast as you want. The best companies build for the long term, and the job of the CEO is to create processes that effectively take the founder out of way. So, if you're a developer, marketer or salesperson, you're going to have to reckon with the fact that you're now a manager. Instead of building, you're taking meeting after meeting after meeting, and you won't be able to have your hands in everything. This is the job you asked for--so don't kid yourself what it's going to be like once you get into it. Success can be a curse if you're not realistic about what it's like--it seems from the sobered expression Trump seems to carry around all the time, actually being President isn't nearly going to be as fun for him as running for the job.5) Don't surround yourself with "Yes" people.It's easy to live in your own little filter bubble, especially as a founder, or, apparently, as a President-Elect. You can forget that there are lots of people who didn't think your ideas were very good--and those are the people who can make you a better founder, and who can make your company better. It's easy to satisfy a small, vocal minority that feels like "everyone" until you need to build things that really scale. Make sure you listen to a few skeptics along the way and[...]
Wed, 09 Nov 2016 14:09:47 +0000
In 2008, I tried to fundraise for my startup the week that Lehman Brothers went under.
You can imagine how well that worked out.
Basically, VCs told us that they were going to wait and see how the election turned out--and things didn't really thaw out until the following September.
Extreme uncertainty slows the VC market to a crawl--that's what I learned. We didn't get a bubble, but we got a really tough year fundingwise and that's what I'm expecting. Over the long term, innovation prevailed and 2008 turned out to be a great year to have a 1-3 year old company if you could make it through the next year.
Here's what I would suggest:
1) Reassure your teams about your mission. If you felt good about what you were doing at your company yesterday, you should feel good about it today. Listen to them. Let them ask questions and listen to them. Talk out their concerns. That's most important above all.
2) Find a way to extend your runway--whether it's pausing hiring for a little bit, and yes, thinking about salaries. I don't think there's any worse morale killer than a salary cut, but if you're worried about your company going out of business, some hard decisions may need to happen. Feel free to reach out to me and your other investors and talk about this. This also means taking on extra capital. If you're concerned at all about the fundraising cycle, reach out to anyone who has been floating around the company. Preemptively tell them that you're concerned about the near term uncertainty but you believe in your business and believe you'll have opportunities to make hires, double down on sales, etc., so if they want to talk about coming in at a reasonable valuation, you want to fill them in on all the positives.
3) Find something positive to do as a company--like volunteering. Clear your heads, feel good about helping--because if there's anything we learned last night is that a lot of people feel disadvantaged and we need to start caring about a much wider tent of people than we have been.
I'm available if you need to chat.
Text me and I'll ring you back...
Mon, 07 Nov 2016 13:14:36 +0000
Yesterday, I got caught up in letting my frustration over the election boil over onto Twitter, and it's definitely not the first time.
It made me ask the following question:
Were we better off in 2016 having Facebook and Twitter around?
I talked about it with a few people. One brought up #blacklivesmatter and while I hope some important issues were highlighted, I really don't see these platforms bringing about positive change in the real world. I retweeted and liked things I cared about, but I can't say they led me to take much in the way of real action.
There's a narrative around these platforms that all connection is good--a pride they seem to take in things like #Arabspring, as if revolutions never happened before social media. They seem blind to what's going on in the everyday experience.
We didn't used to be this dumb.
I'm annoyed that these platforms with so much human potential are designed not to make us more educated, more aware, or more empathetic, but to keep us clicking--to suck us in no better than when the nightly news warns of what will kill us, just later in the program.
Someone mentioned the other day that news used to be a loss-leader for media companies, so they never tried to make it into entertainment. They did the news out of a sense of responsibility. As the media business model got more competitive, and the "Big Three" networks felt competition, the function of news changed.
Perhaps Facebook needs to start thinking of news the way monopolistic media giants used to think about it--one of the few ways they didn't make much money. With great power comes great responsibility, no?
I'm not saying Facebook needs to take a view--but it can have a mission to improve the level of dialogue.
Technology has the capability to verify claims and to inform us of skewed perspectives. It can encourage more out of us. After all, who posts an Instagram without working on it for a few minutes first?
What if social media stopped you before you reposted something dubious or inflammatory--even if just for a moment, to remind you of what you were doing.
What if there was a cost to hate?
When I drive around in a Car2Go rental, it reminds me whether I'm driving smoothly and in an eco-friendly manner or whether I'm treating this Smart car like my Mustang. If I'm not, it threatens to suspend my account.
What if I was only allotted a few hate points a month?
The smartest designers in the world could help us be our best selves--and for sure, we need to be better than we are.
Sometimes we're great and sometimes we're not--but I fear that 2016 has brought out the worst in too many of us. If we are to accomplish anything, we need to live on the other end of this spectrum.
Perhaps the greatest thing the Chan-Zuckerberg Initiative can work on is Facebook itself, before it tears ourselves apart.
Other people can raise money for cancer and poverty, but unlocking mass human potential through discourse is a unique opportunity for social media problems to take more seriously.
I wish them all the best at it, starting the day after tomorrow. Our only hope is that tomorrow marks the end of a very bad time for social platforms.(image)
Thu, 03 Nov 2016 16:54:55 +0000Classpass is nothing short of phenomenon--and it's particularly noticeable to me because I passed on its seed round.In my defense, I passed when it was Classtivity, a completely different model focused searching for classes. Obviously, the pivot worked out for them.Still, it's a bit frustrating to see them end their "Unlimited" option to the chagrin of many of their users--just a few months after raising their prices. The types of businesses I like investing in are ones whose economics *get better* at scale, not worse. Remember how much AOL sucked at peak times back in the day? How much does your local gym suck when everyone else is there?You should be building something where the more people that use and absolutely love the product, the better your economics get--and the better the offering becomes. This may even sacrifice top line in the short term, but I think these companies will build better, more sustainable businesses.Now if we can only get all the VCs to think this way.Here are a bunch of examples of Brooklyn Bridge Ventures companies getting better at scale:Canary's explosive growth has enabled it to process more video every second than Youtube, learning patterns in order to make its alert algorithms better. The more people who buy and use it, the smarter it gets. Check out its new indoor/outdoor product Flex.Tinybop's revenues have enabled it to build more and more apps--meaning that when you discover them, there are so many more titles to choose from for your kids. Now, you can buy their apps in bundles at better pricing than just one at a time. Ringly has expanded its product line to include a bracelet and more and more apps for notifications everyday, enabling lots more use cases.goTenna's new Mesh product enables off-grid communications in a network that improves as more people have it. Whether the power is out or you're in a remote place, the more users it has, the better it keeps you connected.Orchard Platform gathers lots of data about the P2P market over time, because they've been integrating with more and more lenders. In turn, they've created more product offerings and enable institutions to get better insight into their investments in this asset class.Logcheck turns maintenance rounds into actionable data. The more items you track with it and the more buildings you get on the platform, the more insight you can get into your real estate portfolio's health and upkeep. Plum Print digitizes kids art and turns it into keepsakes and gifts. The more you scan, the less macaroni necklaces and hand turkeys you have cluttering up your house, and the more memorable the coffee table books become as they track your child's creative progression through the years.The more your product and engineering team uses Clubhouse as its product management software, the more organized and efficient your company gets. Over time, Clubhouse will use that data to make predictions about estimations, deadlines, and bottlenecks that will enable better team planning. You can't go anywhere in Manhattan these days without seeing Homer Logistics riders in their neon shirts and black box backpacks. The more businesses they sign up, the more efficient their network gets, cutting delivery times, improving service levels, and most important for me as an investor, improving their bottom line. Instead of hemorrhaging more cash at scale like many other last mile delivery businesses, Homer's economics have only improved with its growth. That also means better economics for riders, too--because they make more tips as the network delivers more per rider per hour.Tinkergarten is now available across 13 states with over 200 l[...]
Tue, 01 Nov 2016 18:16:34 +0000I can't think of a single time when a white man came to pitch me and I told him his fundraising plans weren't aggressive enough.Yet this is a message I'm giving to women and people of color all the time. It's not that this latter group isn't aggressive enough--after all, they're ditching everything else they could to to start companies. Something else is at play. Yesterday, I met with a founder with an interesting model who was raising $400k to bring the finishing touches to her product to make it customer-ready. There was no reason to think that her technical team couldn't accomplish this--and, in fact, customers had already been using various hacked together versions of it previously. Yet, for some reason, the goals for her pitch were incremental--despite being in an extremely hot space. I couldn't figure out why she wasn't raising $2 million.Today, same thing--same rinky dink $300k type pitch--to take a company with a handful of paying customers and get, wait for it, some more paying customers. These aren't gamechanging leaps of value creation. This is nickle and diming it. So why are so many diverse entrepreneurs shortchanging themselves? This is a complex issue and I think there are probably a few different overlapping issues at work here. Pulling them apart and shedding light on them is an extremely delicate operation for a white male investor, and probably not a good idea, but I'm going to go ahead with it anyway.First off, the vast majority of venture dollars goes to white men. That is a fact. That does not mean, however, that anyone else outside that category is unable to raise. In fact, the only founder I've ever seen completely run the table for a multi-million dollar seed round based off of a Powerpoint is Chantel Waterbury of chloe + isabel. Seriously, not a single investor turned her down.Right this very minute, I'm also working hard to secure my spot in an oversubscribed round for a pre-product company led by a female entrepreneur, while simultaneously wrapping up a seed round in a founder of color who didn't have a problem raising at all. This blog post is not about debating if "enough" diverse founders get funding--whatever that might mean . What is factual is that they do not raise as often as white men--and that undoubtedly sends a signal to diverse founders that it is going to be harder for them, regardless of whether that is true.And what happens when any founder thinks that fundraising is going to be unnecessarily tough? They ask for *less* money, which might actually exacerbate the problem. If I told you I had the best idea since sliced bread, and I was raising $10k, you would assume a few things. Maybe the product needs to be tested? Maybe I'm not sure if it really is that good, so I don't want to commit the next two years of my career to it? Maybe we're not sure if customers would pay for it. Either way, you're signalling to others that whatever you've got, it doesn't measure up to the other stuff that's in market.And the other stuff in the market? It's mostly crap, to be honest. So, when you say you're just raising a tiny amount, most investors are assuming it's not as polished, tested, or certain as the thing that knucklehead just e-mailed me asking for $2 million. The assumption being that you wouldn't ask for that much unless you really knew you had something.You know what? It's not a terribly bad assumption either. There's so much transparency in the market around fundraising and entrepreneurs are so connected to each other, that it seems unlikely someone wouldn't get the en[...]
Fri, 28 Oct 2016 12:15:07 +0000I just read this article about Andy Dunn and Bonobos--or was it a press release. I'm not completely sure. If you've met Andy Dunn, you'll know why that's going to be a fine line for any reporter, because it's nearly impossible to have a conversation with him without getting wrapped up in a story optimized to share.And damn, does he have his story and the ability to perform inception with it down cold. That's what should be pretty obvious about getting good press: You can't get other people to tell your story unless you know how to tell it first. Sometimes, you're obviously the best thing since the last best thing, but those stories are boring, and frankly, few and far between. It sucks being the 20th journalist to write about Pokemon Go. Most of the time, when something isn't a phenomenon, the media isn't really sure what to think about you between fundraisings and product launches. They're more interested to know if that company that raised all that money is falling apart at the seams. Startup failure comes quick and often messy--great for storytelling. Most success, however, is like watching paint dry and isn't particularly interesting to write about--unless you know how to frame it.The Coveteur article featuring Andy and Bonobos encapsulated exactly how a founder worth writing about will act:"...He speaks in sound bites and buzzwords as though he’s about to step onstage at a TED Talk (which, honestly, makes for a lot of valuable takeaways when you’re talking to him one-on-one); he’s brimming with advice (you don’t even need to ask); and he remembers just about every moment of his story in minute detail (which is full of fortuitous “accidents”)." If anyone is ever going to write about you, you have to give them something to take away. Otherwise, who cares?Telling your story isn't just about conveying information about your company--it's about giving someone a framework that makes them feel like they know how to be successful as well. The audience will relate to you better.What do you think people want to hear? "Here's how we did it" or "It's actually really simple, and here's how anyone could do this in their own life."The former is bragging and the latter is inspiring--or if nothing else, enlightening.That's why it's not surprising that you could take this whole article, which is mostly Andy telling his story, and use it to craft your narrative. I took the article, pasted it, and made it a little bit like Madlibs, making all the Bonobos parts [INSERT YOUR THING HERE] sections.Here's what I would suggest you do:1) Copy it and try to fill it in with your story. It will be a great exercise to make sure you've reviewed your complete narrative.2) Pay careful attention to the gaps. Can't answer the one about how you want your customers to feel when using your product? Can't answer what your whole team is obsessed with? These are problems around mission and focus that need to be addressed.3) Chop this up and distribute it. If you want to get press, or speak at a conference, or just get your content strategy going, bite sized chunks of this narrative can be turned into posts of their own, slides, white papers, video interviews, etc., to share. 4) Thank Andy Dunn for showing us the way to be one of the best storytelling founders ever.This was the structure I found in the article:[FOUNDER] might be the ultimate [HOW WOULD SOMEONE DESCRIBE YOU SUPERLATIVELY--SURFER, MOM, DAD, SCIENTIST] entrepreneur: [WHAT'S NOTICABLE ABOUT BEING IN YOUR PRESENCE?] ([WHAT AFFECT WOULD THAT HAVE ON OTHERS?]); he’s brimmi[...]
Wed, 19 Oct 2016 22:04:19 +0000It means a lot to me to find financial opportunities investing in companies that I can be really proud of--education companies like Tinybop and Tinkergarten, or companies at the forefront of fair labor practices like Homer Logistics. There are others that haven't launched that I'm equally as proud and excited about--and now one more has launched. I'm thrilled to be an investor in The Wing--a Home Base for Women on Their Way.Having a portfolio where half the companies have at least one female founder or person of color has made me think a lot about our culture. It has been a learning experience around language, power dynamics, perception and the value of listening. The same can be said for being a witness to this election cycle--where the double standard is fairly obvious.The Wing is a home base for women. It’s a multi-purpose space designed to make women’s lives easier, born out of the belief that magic is created when women gather together and take up space. Located in the Ladies Mile Historic District in Manhattan, The Wing contains all the practical essentials: plenty of place to work, strong caffeine, strong wifi, a clean shower, changing rooms, and an all the electrical outlets your dying phone could ever need. Moreover, it has a community built around diverse perspectives, support and empowerment. Members of The Wing are shaping our culture, our politics, and our technology everyday.The Wing was actually the first brick and mortar space Brooklyn Bridge Ventures has invested in, closing a month before our investment in Ample Hills about a year ago. Both spaces are about narrative and experience. As someone who works in a space designed to make people feel at home more than they are at work, I can appreciate firsthand how creativity and productivity stems from comfort. People, more and more, want to work in places that bring out our truest selves--not places that remind you that you are at work. Plus, having a shower at a workspace is a godsend for a workout regimen forever getting interrupted by work.Audrey and Lauren have now taken the first steps in creating an amazing platform to change the face of how women connect and influence society. Professional networking, for hundreds of years, has largely been a male construct, transactional in nature, urgent, and disjointed. Relationships built at The Wing, on the other hand, will have the space to grow and develop over time, leading to entrepreneurship, impact and influence. Informative and inspiring event programming will compliment the experience of the space itself. The goal for The Wing is to build a supportive, empowering and diverse community--and while the physical space looks great on day one, its culture and values will develop over time with the help of its community, and feedback from members and non-members alike. As an investor in female founders, and founders of color, I've listened to perspectives of what the investment world looks like to those who don't hold the power, who don't have insider connections, and whose presence isn't the norm. And that's why I felt incredibly fortunate to have been asked to invest in The Wing about a year ago, adding to an already diverse portfolio of founders and companies at Brooklyn Bridge Ventures. Inspired by founders like Audrey and Lauren, or Chantel from chloe + isabel, Daniela at goTenna, Christina at Ringly, Nicole at eCreditHero, and others, I've strived to create an investment platform that is the most accessible fund possible. I am deliberate and intentional a[...]
Mon, 17 Oct 2016 12:45:33 +0000This weekend, Heathens by Twenty One Pilots has been stuck in my head. It has such a great sound--and I wanted to figure out what else I could listen to that sounded like it. I don't mean bands that are liked by other people who like Twenty One Pilots. I literally mean songs that sound like it... or maybe just remixed versions of it. I wanted to engage with music, but I can't, because I don't have the ability to manipulate the "source code" of the song. But a computer could--and what if a computer could interpret my suggestions in order to manipulate creative works. Throw in a harpsichord in the background. Make those staccato guitar riffs louder.Earl grey. Hot. But, for music.We're doing that in creative fields already. I built this website through Squarespace's interface and I didn't have to touch any of the actual code.That's the way I think of what we now call "artificial intelligence". For all practical purposes, it's an interface--one that can make leaps where my instructions may not have been particularly precise. It's something that can catapult not only productivity, but also creativity. As phones and other web services have exploded the amount of audio and video created, the need for music to support it has far outpaced our ability to create it or source it through search. There just aren't enough musicians in the world to add complementary music to all of my Instagram clips, people's GoPro videos and all the baby's first steps captured by Canary--at least, not if you want it all to be unique.What if you could tell Spotify to play something you've never heard before... No no, something faster... with more drums... and a wailing guitar. What will the soundtrack for VR look like when you're not just watching a movie, but creating it on the fly. You're going to want different music depending on whether you choose to jump off the virtual canyon in your virtual squirrel suit or drive the race car.That's why I'm excited about Amper Music, a company that just came out of stealth after Brooklyn Bridge Investors backed it over a year ago. Amper is a company built by musicians for musicians. It's not just a "put a quarter in the jukebox and spit out a wave file" toy, but a tool built for professionals whose power can be integrated into a wide variety of consumer applications as well. Drew and his team have composed for a wide variety of well known films and shows--and in Amper they set out to replicate how a human would go about their composition work. That's why users will be able to get not just the audio output, but they will be able to manipulate their work as well--because it's not just rendering, but it's actually writing music. Amper is a companion more than it is any kind of replacement.One day, no vocalist or musician in the world will start from a blank sheet of music. The computer will "pair program" with them--riffing back, helping them explore sounds, mixing inspirations, etc.It will also help create more composers as well. How much more exciting would piano lessons have been if I could have skipped a few pages in the practice book and used a computer to help me compose real music? That would have inspired me to keep going with my work rather than keep playing boring scales over and over. Amper's AI composer is API-ready and is looking to work with media creation platforms of all kinds. Media companies are already using it and they're open to adding new beta customers. If you have any kind of musi[...]
Mon, 03 Oct 2016 12:08:56 +0000That was a question posed to me by a new analyst at a venture capital fund. Admittedly, I finished this person's sentence after their long pause... but the word "jerks" was agreed to as the direction they were taking the question. While there are lots and lots of really kind, generous people working in venture capital--the recently retired Howard Morgan, Hunter Walk, Brad Feld, and Karin Klein for example--it's really tough to argue that there isn't widespread jerkery. At least, that's how a lot of entrepreneurs feel.So what gives? Why do VC's get such a bad rap? I've got some theories:1) Don't blame the playa, blame the game.Entrepreneurship is a very personal endeavor. You sink your savings into something, take a pay cut, risk friends and family money into *your* idea. That's literally your baby--and 98% of the time, a VC will tell you that your baby is ugly.It shouldn't be surprising that more than a few people are going to take issue with that--no matter how nicely we say it. That being said, there does seem to be something more going on here than just being a professional party pooper.2) Self selection for judgemental power seekers.The media portrays the job of a venture capitalist as one of "picking" a winner. We're "kingmakers" whose investment has the "Midas Touch." Forget the fact that a VC's job is more akin to that of a NASCAR passenger, perhaps occasionally pointing out a track hazard or cheering the driver on, but certainly not the main component of success. From the outside, VC seems like a pretty cushy job where you give a Chuck Norris-like thumbs up or thumbs down every so often--not exactly the kind of thing that someone who wants to be a social worker, missionary, or early childhood educator might want to do.That's probably why the vast majority of applications for VC positions tend to be from males. Generally speaking, women are more inclined to listen well, work with others and to offer help--so when the job gets seen as just a lone, final yes/no, where you bark out advice after listening to a founder for five minutes, that might seem less interesting. Perhaps if we spend more time talking about board participation, counseling entrepreneurs on decisions, helping them solve problems and working hard to recruit people, the type of people who apply to the job might change. 3) Access to money.VC, in large part, is done by people with access to money. Generally speaking, we're a bunch of "haves". We disproportionately hangout with other "haves", too. Not only does that create a filter by which people judge investor actions, but it colors our perspective of the world, too. It can be too easy not to appreciate the struggle of others and to appreciate how hard it is to accomplish the things that we see people do. "You should just bootstrap this.""Learn how to code and build an MVP.""Raise money from your family first."We're not jerks. We just live in a white privilege filter bubble. 4) We're told we are smart, even if the jury is still out.Success in venture has a lot to do with luck. Even people who make successful investments over time have benefitted from luck--mostly around timing and scale. To continue to get dollars to invest, you have to get lucky enough, early enough to make it look like you know what you're doing. If Canary hadn't taken off right away, and been within the first year of investing in my first Brooklyn Bridge Ventures fund, I might not have been able to raise a second fund so eas[...]
Wed, 28 Sep 2016 16:00:00 +0000When hardware maker Quirky went out of business, Ben Einstein at Bolt had this to say:"A good company builds one product, learns from its customers, and iterates to make that product exceptional. Each step in the process is designed to refine a product and find the often elusive “product/market fit” that is the basis for all successful startups. Imagine if Apple built the first app-free iPhone and then moved on to the Apple Watch, or GoPro only sold one version of its camera and then decided to launch something totally different."Iterating as a hardware company, of course, isn't the easiest thing in the world. Design and production cycles are long, and you can't upgrade the physical parts on the fly. That's why so many companies never make it to a second product. Take Nest, for example, that wowed the world with its thermostat, but never followed up with anything consumers really felt the same way about. Often times, the challenge is coming up with a first product that people like that you can deliver in a reasonable amount of time, knowing it won't have everything you could ever hope to build. The tricky part is doing that while not distracting yourself and diverting too many resources away from a product that more closely reflects your long term, ultimate goal.That's why I'm so excited to see a Brooklyn Bridge Ventures portfolio company, goTenna, launch its new product, goTenna Mesh.goTenna Mesh is the first 100% off-grid, mobile, long-range consumer-ready mesh network device, which will be available internationally. The announcement comes along with the launch of goTenna’s premium service, goTenna Plus, and the release of the goTenna open Software Development Kit (SDK). goTenna Mesh pairs with any iOS or Android device to allow users to text and share GPS locations, up to several miles away depending on terrain and elevation. This is the first goTenna product that will be available outside the United States and it will be sold in pairs for $179 but is available in limited quantities at promotional pricing (starting at $129) today on a preorder basis before shipment begins later this year. Check out their video for more info.Unlike traditional networks, a mesh network gets stronger as more people use it. goTenna Mesh is smaller, sleeker than goTenna’s flagship product, and provides even greater utility thanks to the introduction of mesh networking. By automatically and privately relaying your message through other users if your recipient(s) are not within point-to-point range or are otherwise obstructed, you can effectively double or triple your range and be likelier to get a message through in difficult situations. goTenna Mesh is anchored by intelligent mesh protocols (named “Aspen Grove”) that deliver a 100% off-grid, entirely mobile, long-range mesh network. Such a technology has never been achieved outside hulking military tactical systems that cost tens of thousands of dollars per unit. Congrats to the goTenna team on a huge accomplishment for their customers. This is the product that Daniela and Jorge had in mind when they first started the company--when goTenna was just a box full of wires that sent a text across a table to another box full of wires. I'm excited to have been their first VC backer.I can't wait to see what's next! ;)[...]
Mon, 26 Sep 2016 11:21:02 +0000Early on in this election, my dad was a Trump supporter. He was tired of politics as usual and decided that he wanted to vote for an "outsider"--someone who speaks from the heart, who isn't burdened by special interests, and who could shake things up.When shoot from the hip Donald Trump stepped up in the election, he appreciated his style. Trump ran circles around a really awful field of Republican contenders who didn't know what hit them, gaining popularity with a lot of people who felt the same way.Over time, though, lines were crossed--lines of common decency. Trump went from pushing around the Washington elite to pushing around everyone. The election seemed to fuel his ego and bravado. Right around the time Trump criticized the Khan family who had lost their military son, my dad had enough. He realized Trump wasn't someone he wanted representing this country.I get that feeling of wanting an outsider. Politicians don't ever seem like they're working for the people anymore--and part of that is because you always feel like you represent "the people". The truth is, there are a lot of people who don't want what you want, so it's very likely that anyone could ever get elected and fully represent everything you want.Second, there's a really unfortunate truth to this country. It is very hard to get elected President without being an "insider"--either Washington or big business. Perhaps if we elect another actor like Ronald Reagan (who was also Governor of California), that won't be the case, but for the most part, if you have national name recognition, it's because you were elected to a nationally visible post, or because you have boatloads of money to market yourself. Unfortunately, having boatloads of money usually means not everything you do is going to be acceptable to the American public, as we're finding out with Donald Trump. Trump has expertly lead his companies in and out of the bankruptcy process multiple times--pulling payments out for himself, leaving lots of creditors and small business people left holding his bag. It's almost like someone somehow getting out at the bottom of a roller coaster and somehow always getting back on at the time--only around for the good parts but never quite being around for the ones that aren't exciting. While his companies go up and down, Trump shields himself from the bad parts--sometimes legally, sometimes less so. Trump isn't like Elon Musk, Mike Bloomberg, or Sarah Blakely whose wealth comes from the kind of entrepreneurship where companies are created from scratch and money is made off of equity or revenue. Trump makes "deals" not companies. He licenses his name, he flips buildings and he signs contracts. These are ways to make money that really only enrich himself, not lots of working class people.The other thing about being a Washington "insider" is that while you may owe people some favors, you also know how the system works. The US Government and the whole international landscape is incredibly complex. Do you think it would be easy to be President if you didn't understand what ethnic groups are clashing in the Middle East, what they want, and for how long they've been going at it? Do you think you could understand what to do about China without understanding how their government works, what's allowed and what's not, and how their economy functions? To be President, you practically need a PhD just to understand the rules of the gam[...]