Pylon Sounds

It feels like its been a while since we did a fun friday around here. So here goes.

How do you like your morning cup of coffee?

I go with the Cortado, ideally in a shot glass. Here's one from Kava, the coffee shop near my home in the far west village.

So how do you take your morning cup? Photos please.

Google announced so many things yesterday that it makes my head spin. Goodness all around in Google land.

But there is one thing that really caught my eye. Google will start selling a Galaxy S4 running "stock android" in the Play store on June 26th.

When folks ask me what Android phone to buy, I am always torn between the S4 which I believe to be the best Android handset in the market right now and the Nexus 4 which runs stock android but has no LTE support (the phone I currently use).

Now, or at least in a month or so, I will have a good answer. Get the S4 running stock android. If you can afford it. It's $650 unlocked.

So RIM has decided that it is time to make Blackberry Messenger (BBM) cross platform. They announced yesterday that by this summer BBM will be available on iOS and Android.

The time to do this was in 2008/2009 when BBM was huge and everyone was on it. The core users were beginning to leave for iOS and eventually Android and if RIM would have let them take BBM with them, they would now own the biggest cross platform messenger out there. BBM is great and everyone knew how to use it and was comfortable with it.

But RIM execs waited four years to make this move. When BBM hits iOS and Android this summer, they will face dozens of cross platform apps that people use to message each other, one of which is in the USV portfolio. My bet is this won't help RIM or BBM much at this point.

This is a classic case of the innovator's dillemma. RIM felt that letting BBM out in the open would make it easier for Blackberry users to leave. So they kept it proprietary. For way too long. Now they no longer have a dominant smartphone franchise or a dominant mobile messenger franchise.

You cannot fight innovation and opening markets. You have to go with the flow and adapt to the new reality.

Boards can be pretty patient. They can put up with a lot of failings, particularly in the early days of a startup when the product isn't where it needs to be. But one thing a Board cannot tolerate is when a CEO loses the confidence of the team.

I feel that I must say this because I know that many folks in our portfolio read AVC. This is not a post about any specific company or any CEO or any team. This is just a statement of fact that I wanted to put out there because I was thinking about it.

If I think about the times I have had to remove a CEO, by far the most common reason was the loss of confidence of the team in the CEO. You get the call from one of the senior team members. They tell you that they are going to leave and so is everyone else on the senior team unless you do something about the leader. It is a palace coup. No guns are fired. But the boss has to go. And so he or she does. No Board can ignore that call.

So if you think the Board is the most important group you need to manage, you are dead wrong. The most important group you need to manage is your team. If you lose them, you lose your job.

It's Monday, time for another lesson I've learned in the venture capital business. Today I will tell a story that I love telling. It has some of my favorite people in it.

Back in 2004, early in my blogging career, I heard about a service that had just launched called Feedburner. It provided a number of useful services for a blog's RSS feed. So I went and signed up and AVC became one of the first users of the service. I immediately liked the service and the idea. So I contacted the founder/CEO Dick Costolo, who has gone onto bigger and better things. I told Dick that I was interested in making an investment in Feedburner. My friend Brad Feld was also talking to Dick about the same thing so we decided to do the investment together.

As part of our investment process, we do a bunch of fact gathering/checking work that is called Due Diligence in the vernacular of the VC business. So my partner Brad Burnham and I put together a list of leading blogs and online publishers who had popular RSS feeds at the time. I think there were a dozen or so publications on that list. It included Weblogs (Engadget), Gawker (Gawker), NY Times, and a bunch more. We know most everyone who ran those operations so we called them.

What we heard was surprising. Not one of them was willing to hand over their RSS feed to a third party for analytics and monetization. We were very surprised to hear that and thought a bit about it. But, we decided, we could not invest in something that the big publishers would not support. So regrettably, I called Dick and told him we had to pass and why. Brad Feld went ahead with the investment and Feedburner closed their round without USV.

About six months later I ran into Dick at an industry conference. We decided to grab lunch together and during lunch he said to me "you know those dozen publishers you called?" I said "yes, what about them?" He said "every single one of them is on Feedburner now."

I was pissed. How could that be? So I said to Dick, "Would you consider letting us into that last round we walked away from." He said "No, but I will let you invest at a 50% increase in price". We did that and became an investor in Feedburner. And that worked out well when Feedburner was sold to Google a few years later.

So what did I learn from this lesson? First, trust your gut. I was using Feedburner and knew it was a very useful service. I felt that others would see that too. They did, but it took some time. Second, I learned that a service can get traction with the little guys and in time, the big guys will come along. I have seen that happen quite a bit since then. And finally, I learned that you can do too much due diligence. It's important to talk to the market and hear what it is saying. But you have to balance that with other things; the quality of the team, the product, the user experience, etc. You cannot rely alone on due diligence, particularly early on in the development of a company and a market.

Happy Mothers Day to all mothers out there. I am particularly grateful to the two mothers in my life, my mom and the Gotham Gal.

I looked at the mirror the other day and saw my mom in my face. I like that. She is a beatiful woman and if I age as well as she has, then I will be a lucky man. I am looking forward to calling her today and catching up on things as we do most every sunday.

We were at dinner last night with a young couple. The young man asked me when we started having children. I told him that the Gotham Gal insisted we have kids before we turned thirty. And so we did.

Jessica was born when we were 29. I am not sure that I was ready to be a father but Joanne was ready to be a mother and so we went for it. She has been an incredible mother to our kids and in many ways to me too.

Mothering is something we all need and thank god for all the mothers out there who provide it to us day in and day out. Today is your day. I hope it is a great one.

Happy Mothers Day to all mothers out there. I am particularly grateful to the two mothers in my life, my mom and the Gotham Gal.

I looked at the mirror the other day and saw my mom in my face. I like that. She is a beatiful woman and if I age as well as she has, then I will be a lucky man. I am looking forward to calling her today and catching up on things as we do most every sunday.

We were at dinner last night with a young couple. The young man asked me when we started having children. I told him that the Gotham Gal insisted we have kids before we turned thirty. And so we did.

Jessica was born when we were 29. I am not sure that I was ready to be a father but Joanne was ready to be a mother and so we went for it. She has been an incredible mother to our kids and in many ways to me too.

Mothering is something we all need and thank god for all the mothers out there who provide it to us day in and day out. Today is your day. I hope it is a great one.

The Gotham Gal and I just watched this TED talk. It's very thought provoking.

Yesterday I dedicated a song on Piki to my friend Whitney. He DM'd me and said "I haven't had that happen to me since the days of call-in radio shows".

Dedicating a song is my favorite feature on Piki. It is generous, fun, and viral.

I did it this morning with my daughter Jessica.

I picked a song

And then at the bottom of the dialog box, I typed in her name

That's all there is to it. She gets notified and ideally comes back to Piki and listens and/or picks some more music for everyone else to hear.

Virality is critical to make a social app spread. But the viral features must also be fun and meaningful. Dedicating a song is both and that's why I do it so much.

By the way, Piki is now available on the web (and iOS). Android is coming soon.

Patent trolls are one of the biggest scourges on the startup ecosystem in the US. The ideal solution, which was recently taken by the country of New Zealand, would be to ban software patents outright. But try as we might, it seems unlikely to happen in the US in the near term.

But that doesn't mean we aren't making headway against the trolls. A couple years ago, we got the America Invents Act which made some substantial changes to the way patents are reviewed and litigated. That bill had a provision (section 18) that allows financial services firms to take litigation over "covered business method patents" out of court and put them through a fast track USPTO process.

Last week Senator Chuck Schumer proposed to amend that bill with a one line amendment that extends the fast track USPTO review process for "covered business method patents" to everyone, not just financial service firms.

That seems like good policy for many reasons and I hope Senator Schumer's colleagues in the Senate and House jump onto this idea and help it become law.

My colleague Nick has a post on the USV blog about all of this and some suggestions for additional piecemeal patent reform that would help deal with this problem.

The almost two year long slump is over. I've led a new venture investment for USV, which closed a few weeks ago and was announced last night. The company is Coinbase and my blog post announcing the investment is on the USV blog. The WSJ also wrote about it here.

This hiatus, which I've blogged about a bit on and off, was mostly a result of being very full up with responsibilities for existing investments. I have made twenty investments since the founding of USV in the fall of 2004 (now 21) and have only exited six, so I have had fourteen investments that I am responsible for at USV. I take our responsibility to our portfolio companies higher than any other work related responsbility and these fourteen companies have required a lot of time and attention over the past two years.

Two things have happened to get me off the schneid (a hitless streak if you aren't familiar with that term). First, the fourteeen companies have all matured a lot in the past two years and the demands of that group of companies has waned a bit. And second, I have come to believe that a number of new fundamental technologies have hit the Internet and it is time to get busy putting out money.

One of these is Bitcoin. Here is a snippet of what I wrote today on the USV blog:

We believe that Bitcoin represents something fundamental and powerful, an open and distributed Internet peer to peer protocol for transferring purchasing power. It reminds us of SMTP, HTTP, RSS, and BitTorrent in its architecture and openness. Like what happened with those other low level protocols, entrepreneurs and developers are now building technology on top of Bitcoin to make it more useful, more accessible, and more secure.

It is possible that we may make more Bitcoin/digital currency investments but we will try to make sure they are not competitive with Coinbase. And there are other sectors out there that are emerging now that I am keeping my eye on as well. I hope to be more active in making new investments in the coming months. It's good to be back at it.

Disqus quietly pushed this out in the past few weeks.

The cool thing is this is interactive, meaning you can click on any of those bubbles and get to the blog post and discussion. I've been doing that every morning in addition to my regular collection of discovery tools.

I think it does a great job of showcasing the diversity and energy of the Disqus community. Well done Disqus team.

The widget came down on Tuesday night at midnight. The DonorsChoose campaign I called Good Things Come To Those Who Code is over.  Here are some stats:

Total Raised: $25,172

Donors: 162

Students Helped: 8,551

I really appreciate the generosity of everyone who participated. The number to focus on is 8,551 students who will have their classroom experience improved in some way because of you.

Here's a list of all the DonorsChoose campaigns I have done on this blog over the years. There have been seven in total since 2007. In total we have raised almost $190,000 in this community for teachers and their classrooms via DonorsChoose. That is fantastic.

I told this story in the comments to saturday's video post, but since not everyone reads the comments and I want this to make it into MBA Mondays, I figured I would turn it into a case study.

In the early days of Tumblr, I used to bug David Karp, the founder and CEO of the Company, about comments. Though I had hacked my tumblog with Disqus, I wanted to be able to comment on other tumblogs and the vast majority of them had no comments because Tumblr did not support them natively. I was fairly persistent in my argument.

But David held firm. He wanted Tumblr to be a positive place on the Internet. The entire design of the service was with that in mind. There were loves (upvotes) but no downvotes. If you wanted to talk about someone's post, you had to reblog it to your tumblog and then add whatever you wanted to say. David thought that would eliminate trolling.

Eventually, I gave up and moved on to pestering some other entrepreneur about something I thought they should do with their product. David kept building positivity into his product and today there are 106 million blogs with 50 billion posts on them collectively.

In hindsight, I think David was right and I was wrong. I wanted him to build something that felt more like Wordpress or Typepad (where I blog). He had something different in mind. And to David's credit, he had the courage of his convictions to follow his own instincts.

This is tricky territory for VCs and entrepreneurs. Because most of the time the entrepreneur will have a better feel for their product vision than the VC will. But there are times when what the entrepreneur is doing is not working and the VC will have to figure out how to get the entrepreneur to see that. I have learned to trust the entrepreneurs instincts until it is very clear I should not. Finding that line is art and not science and takes a lot of experience. And I still get it wrong from time to time.

The Gotham Gal and I just watched Dick Costolo's commencement speech which he gave yesterday at the University Of Michigan. He went back to his time doing improv in Chicago and cited two big lessions he got from that experience; take big chances and be in the moment.

It's a good talk, brief as these things go, and relevant to everyone working in the startup world. It's about 17 minutes long.

I talked to Mike Arrington this past week at TechCrunch Disrupt. We covered some fun topics, most of which will be well known to the AVC community. It's just shy of 30mins.