Boards are important. They might not do the day to day work of company building but they set the tone at the top. The group that the CEO reports to has a big impact on the CEO’s mindset which trickles down.
If you raise capital for your business you are likely to get investors on your board. If you choose well you might get some good board members that way. But you might also get indifferent or worse.
The biggest piece of advice I give to entrepreneurs on the topic of boards is to get some independent directors on their board. Ideally these would be peer CEOs who have a lot of experience building and managing companies.
Recruiting board members takes time. Most entrepreneurs prefer to recruit people who work for them and can impact the day to day effectiveness of their organizations. And so they prioritize that.
What they miss by putting off the work of adding independent directors is that they should be also investing their time in improving the effectiveness of the group they work for.
If your board is you and your cofounder(s) and some investors you have a suboptimal board structure. Do yourself a big favor and recruit a few strong and experienced independents. It is well worth the time and energy you will spend on it.
I thought I’d provide a bit of history since this was an interesting investment for us.
Back when Apple was launching its app platform in the winter of 2008, we met with Greg Yardley who had teamed up with Jesse Rohland to build an analytics service for app developers. We had known Greg from his work with Seth Goldstein at Root and we were fans. And it seemed to be a smart idea to give developers the ability to see what people were doing in their mobile apps. So we provided seed financing to Greg and Jesse along with our friends at First Round.
Pinch launched the first iOS analytics service and got rapid adoption. But they ran into some challenges, the two primary ones were monetization and getting onto Android and Blackberry (which was relevant back then). And that’s where Flurry entered the picture.
Flurry was a pivot into the same business as Pinch was in. They were already on Android and Blackberry but were far behind Pinch on iOS. They were led by a hard charging CEO named Simon Khalaf who had big ideas for monetization. It was a match made in heaven. So the two companies merged and Flurry became the surviving company.
Flurry continues to lead the mobile app analytics business. According to Simon’s blog post yesterday, there are 170,000 developers with 542,000 mobile apps using the Flurry service.
And now Flurry becomes a Yahoo! branded offering. There is no question that the Flurry data and its advertising products (powered by Flurry’s data) will be a great fit for Yahoo!’s mobile ambitions.
So we have a happy ending to a startup story with a few twists and turns. This is an example of where 1+1 equaled a lot more than two. I’ve been involved in a number of “startup mergers”. Some work. Some don’t. This one worked beautifully.
I just landed in Berlin after an overnight flight from the US.
In the past, turning on your phone after landing overseas could be an expensive experience as the phone downloads all the email you received since taking off at international mobile data rates.
I’ve used a host of techniques over the years to avoid the experience of landing, turning on my phone, and immediately getting a text message that I’ve blown past my international data roaming cap.
I’ve turned off mobile data and waited until I got to hotel WiFi to download my email but that meant no mobile data for directions to the hotel. I’ve bought SIM cards in airports. And more recently I’ve rented a pocket WiFi before traveling overseas.
But last year the Gotham Gal and I switched back to T-Mobile after they introduced free low bandwidth international data roaming for all customers in the US.
Here is the experience when I land. I turn on the phone, it finds the local mobile network, connects, and my phone lights up with notifications and emails start coming in.
In addition I get a text message from T-Mobile offering to upgrade me to an international data pass that offers 4G in 100MB buckets at roughly $10/100MB.
I buy the upgrade every time and am happy to pay for the higher speeds.
But the important thing here is the customer experience. No longer do customers have to fear turning on their phone. No longer do customers have to jump through hoops to procure an affordable mobile data plan. If you want faster speeds, T-Mobile makes it drop dead simple to upgrade right on your phone.
This approach to international mobile data should be adopted by all the mobile carriers. It’s a great experience.
I’ve written about this stuff before, but I continue to be interested in it.
I actively use the following messaging apps on my phone:
Kik – my primary channel for The Gotham Gal, my daughter Jessica, and USV people
Snapchat – my primary channel for my son Josh
SMS – my primary channel for my daughter Emily and a lot of my friends
Hangouts – secondary channel for my daughter Jessica and USV people
Twitter DM – primary channel for people who don’t have my cell number
Though I don’t use them, I realize the following apps are quite popular in the US as well
So how is it possible that we can all have and use four, five, six or more messenger apps on our phones?
It’s because the notifications channel is the primary UI on mobile, replacing the home screen, and its easy to communicate with people using a variety of applications on your phone.
What I’m wondering is if we will see even more fragmentation in our messaging behavior on mobile in the coming years, or if five to six apps per person is status quo, or might we see some consolidation?
I personally don’t see any reason for consolidation and if I had to make a bet, it would be on further fragmentation. Each of the apps I use offers something slightly different than the others. And so for certain people, and certain kinds of conversations, one messaging app is preferable to another. It’s very possible that entrepreneurs will continue to come up with unique and differentiated experiences and that will drive further fragmentation.
I gave this talk at NYU last week. It’s about three things I am spending a lot of time on and thinking a lot about these days.
The talk is about 30mins long and the Q&A goes on for about as long after the talk.
AVC community member Shana Carp has been building a neat service that A/B tests headlines for WordPress posts and helps you figure out the one that will bring the most traffic.
Although I think it’s a great idea for someone who wants to optimize their posts for more traffic, I have not implemented it here at AVC.
As I told Shana, I like to write my own headlines and I am not that concerned with traffic. There’s already a healthy number of people who come here every day and engage.
But if you are still building your readership and want to make sure you’ve got a headline that pops in social media channels like Facebook and Twitter, you should give BayesianWitch a try.
I am sure Shana will be hanging out in the comments and please let her know what you think about the service, how it works, etc, etc.
The fourth annual Kickstarter Film Festival is upon us. Tomorrow night in Fort Greene Park in the fine city of Brooklyn NY from 7-11pm, Kickstarter will be showing films, and featuring musicians and local food purveyors. The festival will be replayed in Los Angeles on Sept 12th, and also in London later this fall.
Here’s a short trailer for the festival:
Here’s the website for the festival. It lists all the films that will be featured. Attendance is free.
It’s going to be a beautiful night in NYC tomorrow night. If you are considering your weekend plans, think hard about spending friday night in Fort Greene Park watching the amazing things that emerging filmmakers are doing right now.
One of my favorite observations about places to vacation is that the harder it is to get there, the better they are:
Aspen beats Vail
Montauk beats East Hampton
Tulum beats Cancun
And I think the same is often true of Internet services.
My friend Brad Feld tweeted this out yesterday:
i’ve grown tired of spotify and pandora – listening to the same stuff. so i’m going to try soundcloud for a while – any hints?
— Brad Feld (@bfeld) July 15, 2014
I replied with a suggestion on how to get started
— Fred Wilson (@fredwilson) July 15, 2014
But regardless of my help, Brad is in for a harder time getting SoundCloud working for him than getting Pandora working for him. But if he sticks it out, follows the right people, curates tracks by liking them and reposting them, he will find there is a richness to SoundCloud that simply doesn’t exist on “just hit play” audio services.
The same is true of Twitter. I read this research note on Twitter yesterday:
Twitter: Study Vol. 3 suggests fixable user issues and mass market potential; Buy – MKM Partners
MKM Partners finished another proprietary study on TWTR. Findings:
-User attrition is the key issue for TWTR. Like other volumes, this survey shows polarized indicators of stickiness
-Strong indications that improved user experience and streamlined content mgmt would fix churn issues
So Wall Street is finally figuring out that Twitter isn’t Facebook. It exhibits “polarized indicators of stickiness”.
Which to me means, some people love Twitter and become obsessed with it. And others churn out quickly.
Twitter is a lot like SoundCloud. You have to do a lot of work to get to “that place” with Twitter. You have to follow the right people (for you). You have to favorite, retweet, reply, and engage. But when you do there is a richness to Twitter that doesn’t exist on simpler and easier social nets.
I am sure we can find many other examples of this. That might be a good exercise for our comment discussion.
When it comes to social media, no pain means no gain.
Disclosure: USV provided early stage venture capital investments to both SoundCloud and Twitter. And I personally own a lot of Twitter stock.
Last week, at an event I attended, I was at the bar after dinner and a few people sat down wearing the latest Android Smartwatch from Samsung.
There were a bunch of oohs and aahs.
I mentioned that I’ve never worn a watch and can’t imagine ever wearing one, no matter what is on it. I just have never gotten used to wearing something on my wrist, though I have tried many times.
I don’t think the ability to see notifications and calls coming in on my wrist instead of my phone will change that.
This reporter from New York Magazine suggests that nobody other than tech moguls and geeks are interested in smartwatches.
I don’t really have an opinion on whether the smart watch is going to be a hit or not.
But I do know that pulling my phone out of my pocket will remain the primary way I connect to the world when I am out and about.
I am not bearish on wearables in general however.
I really like wearing a “necklace” which I blogged about a few weeks ago. I like the vibration on my neck when a call comes in. I like being able to easily connect to the audio services on my phone without taking out the phone.
I can imagine there will be a plethora of wearables in the market in a few years and some of us will tend toward the watches, others will tend toward the necklaces, others will adopt the rings, and some will go for the glasses.
It will be fun to watch this market evolve.
Tonight, at 6:30pm at NYU’s Eisner and Lubin Auditorium, I am giving a talk on the topic of Bitcoin and Charities. If you want to come, the ticket is $25, paid in Bitcoin, and all ticket proceeds are going to CSNYC.
We are expecting about 300 people right now based on ticket sales and there are another 100 seats left so there’s room if you want to come.
Here’s why I think Bitcoin will become important to charities.
Traditionally non-profits have spent upwards of 20% of their budget raising money. The Internet, software, and the crowd have dramatically changed that. Non-profits like Charity Water, DonorsChoose, and others have shown that using the Internet and the crowd can bring those costs down considerably. And now we have crowdfunding networks like CrowdRise that can help every charity be like Charity Water and DonorsChoose.
But there remains a pesky cost to online fundraising that is harder to eliminate and that is the payment processing fees. A charity may be able to lower their cost of fundraising from 20% to 5% by using these online tools, but virtually the entirety of that last 5% is going towards credit card processing fees.
This is where Bitcoin comes in. If you own Bitcoin, at Coinbase or in your own wallet, you can gift your Bitcoins to charity and save them pretty much all of their online fundraising costs.
The nirvana of charitable fundraising is that all of the money raised goes to the cause, not the operations and fundraising costs of the non-profit. Some non-profits have founders or boards that cover the overhead and fundraising costs so that all funds raised go to the cause. That’s how CSNYC works. The Gotham Gal and I cover the operating and fundraising costs. So if you make a donation to CSNYC, all of your funds go to our mission (which is bringing CS Education to the NYC public schools).
But most non-profits don’t have founders or boards that can support them like that. So when you make a donation, you are funding not only the mission, but the costs of raising those funds. The Internet and bitcoin can change that.
If you run a charity or work at one, consider signing up for a fundraiser on CrowdRise and connect with CrowdRise about accepting Bitcoin as an option. There is no less expensive way to raise money than that.
I will get into all of this in more detail tonight, including providing a basic description and history of Bitcoin, how it works, and why it is important. I hope to see you there.
There’s an article in the NY Times Sunday Business Section today that lays out a very important question we have all been dancing around but will increasingly be dealing with. The article is nominally about Amazon’s fight with Hachette but it is really about internet platforms and monopolies.
The author of the NY Times piece tells the story of Vincent Zandri, an author of mystery and suspense novels, who has moved all of his publishing activities over to Amazon’s platform and is enjoying the benefits of doing that.
This could easily have been the story of the journalist who moves her writing from The Wall Street Journal to her own blog, or the story of the filmmaker who moves from the Hollywood studio system to Kickstarter and VHX. It could be the story of the band that leaves their record label and does direct deals with SoundCloud and Spotify. It could be the story of the yellow cab driver who moves his driving business to Uber or Sidecar.
The story of Vincent Zandri is the story of our times.
The Internet, at its core, is a marketplace that, over time, removes the need for the middleman. That is very good news for the talent that has been giving up a fairly large part of its value to all of the toll takers in between them and their end customers.
Take Etsy for example. Before Etsy, if you made knit hats, you would sell them to a boutique for $10, and that boutique would turn around and sell them to your customers for $25. Now you sell them to your customers on Etsy for $25 and pay a 20cents listing fee and 3.5% of the transaction and a payment processing fee. In the old model the knitter made $10 per hat. In the new model, the knitter makes about $23 per hat. That’s a big deal. And you see it all over the place in the Internet marketplace economy.
But there is another aspect to the Internet that is not so comforting. And that is that the Internet is a network and the dominant platforms enjoy network effects that, over time, lead to dominant monopolies.
We see that with Google today. Google’s global search market share is around 70%. It would be larger if not for China and Russia, where the governments have given benefits to local players. But even with its current market share, Google is pretty close to a monopoly in search. It is a benign monopoly for the most part and, as such, has largely stayed out of the sights of regulators. I, for one, am happy with that game of chicken between Google and the regulators.
Amazon is increasingly looking like a monopoly in publishing. This part of the NY Times piece is how all of these Internet stories have played out:
At first, those in the publishing business considered Amazon a cute toy (you could see a book’s exact sales ranking!) and a useful counterweight to Barnes & Noble and Borders, chains willing to throw their weight around. Now Borders is dead, Barnes & Noble is weak and Amazon owns the publishing platform of the digital era.
It’s strange for me to write this post because this is our playbook at USV. We invest in networks that can emerge as dominant platforms by virtue of network effects. We like things that are laughed at. The more they are derided, the more we want to invest.
But here’s the rub. When a platform like Amazon emerges as the dominant monopoly in publishing, who will keep them honest? When every author has left the publishing house system and has gone direct with Amazon, what does that world look like?
That is the question the NY Times is asking in their story this morning. And that is an issue that we at USV have been confronting for a while now and we are investing against it.
We have invested in Wattpad, which is a bottoms up competitor to Amazon, as opposed to Hachette which is a top down competitor to Amazon. We think its easier for a more open, less commercial platform like Wattpad to keep Amazon honest than it is for a legacy publishing house.
We have invested in Sidecar, which has built a true open marketplace for ridesharing. We think its more likely that true peer marketplace will keep Uber honest than the legacy fleets of limos and taxis that are fighting for their life against Uber right now.
But maybe most importantly, we are investing in bitcoin and the blockchain, which is the foundation for truly distributed peer to peer marketplaces without the Internet middleman.
For this is the truth that we are now facing. For all of its democratizing power, the Internet, in its current form, has simply replaced the old boss with a new boss. And these new bosses have market power that, in time, will be vastly larger than that of the old boss.
So, as an investor, when you see a dominant market power emerge, you should start asking yourself “what will undo that market power?” And you should start investing in that. We’ve begun doing that, but are not anywhere near done with this effort.
A month or so ago, I taped an episode of The High Road With Mario Batali. We went to the Frick Museum, we bowled in the basement of the Frick, we ate grilled cheese sandwiches, and we rode around on the upper level of a double decker bus. Mario asked me a bunch of questions along the way. It’s about ten minutes long and it came out well. I apologize in advance for the ads at the start and in the middle.
To add SoundCloud to your Sonos system, you simply visit ‘Add Music Services’ in the new Sonos app and add it to your music services. SoundCloud tracks are also now available in the universal search feature in the new Sonos app.
We have had the unofficial SoundCloud hack for Sonos running on our systems for a long time now but it was a bit wonky to set up and it was not included in universal search.
If you want something to listen to this morning on your Sonos, you can try listening to my favorite tracks on SoundCloud.
I don’t recall who drove it into me when I was young, but I have always been obsessive about checking my work. Whenever I do a math problem, I take my answer and do a reverse check to make sure the answer makes sense. I do this even when adding a tip to a bill at the end of a dinner. It drives the Gotham Gal crazy to see me take so much time to do a simple math problem. It’s not even a conscious thing for me. It’s just how my mind works.
I tell all of you this because it relates to writing. I was talking to an educator that I respect greatly last night and I asked her what is the most effective technique for teaching kids to write. I expected her to say one on one editing sessions with a mentor, coach, or teacher was the most effective way to teach writing. But she told me that forcing kids to rewrite their work, solo, was the most effective technique to improve their writing.
When I write a blog post, I tend to write it as the idea forms in my brain. I write the whole thing out. And then I rewrite it. I go over every line and make sure the spelling and grammar are correct, I look at the phrasing. I consider the flow. I read it start to finish at least three or four times. I think about the whole and then each part. And I’ll cut out paragraphs, move things, rewrite parts, and mess with it for almost as long as it took me to write it in the first place. And I’ll do that even after I’ve posted it. I actually get some extra benefit from editing while the post is live. I am not sure why that is, but often times the best edits come to me after the post is live.
And so it turns out, if my educator friend is right and I would imagine she is, that this kind of obsessive self editing is the best way to become a better writer. I don’t consider myself a great writer by any means, but I have improved immensely over the years I’ve been blogging. Some of that, for certain, comes from writing every day. According to WordPress, I have written over 6,500 posts here at AVC. That’s a lot of writing. But you don’t learn as much from the process of putting words on paper (or online). You learn most from the process of perfecting the piece.
Based on the countless hours I have worked with my kids over the years, getting students to spend time on a project after they feel like they have finished it is really hard. They get annoyed. “It’s done, it’s right, why are you making me do this?” is a common refrain. But if you want your kids or students to learn and improve, you have to force them to do that. Like someone did for me when I was young. It’s a gift that pays dividends for me every day.