Tag Archives: LinkedIn

Cha-ching! AngelList’s new round

TechCrunch is reporting that AngelList is raising a “big round of financing at a valuation that multiple sources say will top $150M.”  As a first round of outside financing, it’s a whopper.

I couldn’t be more excited for the team and for AngelList.  It’s been a great service, one which has inserted itself into the necessary workflow of any early stage company executive or investor, making it one of the great interest-based networks out there.  I look at AngelList  a bit like a look at Quora–a key new social property that is immensely useful in my everyday life.  Kudos and congratulations.

I am fascinated by what the opportunity this round holds and by the potential of what AngelList seeks to become.  It is riding several important waves, which the TechCrunch article points out–notably the recently passed JOBS act.  Always a good thing.

If you’re a startup, you’ll want to be working on your AL profile.  AngelList will gain an increasing importance for startups, if it hasn’t already.  It’s like keeping your LinkedIn profile up to date–make sure you’re keeping your AngelList profile up to date.

If you’re a professional investor, you’ll want to be working on your AL profile.  Basically the same type of thing.  If you’re not there or you don’t ‘get’ ANgelList, then spend the time to figure it out.

About the only word of caution I’d have is this.  If you’re a startup, then getting on AngelList <> getting investment.  There’s a lot that goes in to building a company and attracting investors.  AngelList postings aren’t going to do it on your own.  If you’re an investor, same type of message.  Early stage investing is risky business.  The JOBS act and other efforts are lowering the barriers to anyone investing in these early stage ventures.  The adage of fools and their money holds true here.

 

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Silicon Valley is Stupid

David Weekly is in terrific form with his post today on GigaOm Silicon Valley is Stupid Which is Why it Works.  It is a delight to read his writing–David’s energy, intelligence, wit, and wattage come shining through.  The article itself is spot on, and is really a must read, particularly for groups trying to build more of the Silicon Valley ethos into their region, town or country.

One additional element to Silicon Valley that I think is important, at least based on my own experience, is the openness and general inclusiveness of the community.

In most places, the existing social hierarchy–where one went to school, whose kid you are, whether you have friends in high places–exerts a huge influence and can be a huge help (or barrier) depending on where you fit.  Of course, Silicon Valley has an element of this–certainly being on a first name basis with A-listers like a Ron Conway, Mark Zuckerberg or John Doerr would likely confer a some benefit to you: who you know matters.

It’s not as much who you know, it’s what you’re doing.  In my experience, two elements really balance this out.  First, here in Silicon Valley, the core arbiter is really around what you’re doing and what you’re building.  This focus on what you’re doing (and the quality of the people you’re doing this with) overshadows, in my view, whomever you might know.  For example, I’ve talked to people who claim they were the right hands to Larry (Ellison) and then went built businesses for Steve (Jobs) whom I thought were complete yo-yos.  At the same time, we’ve funded successful companies where the founders were basically unknown and unreferenceable, as they had so few LI connections or prior real work experience. Put another way–if you had the choice of being an awesome team working on awesome projects with no network versus being super networked but working on a meh project with a meh team, you’d take door #1 in a second.

Silicon Valley is more open.  The second element is that the Silicon Valley network is as open as I think you’ll find anywhere in the world.  Not only are the most seasoned and experienced investors or executives generally findable and reachable, but the vast majority of them operate with an ethos that they’ve always got to be growing their networks.  This is not to say that barraging them with a spray and pray email form letter is going to get a response, of course.  That style blows and you won’t get far.

But broadly speaking, if you want to connect with anyone, and you work at it thoughtfully, you can get it done.  Concretely, visualize Bud Fox (Charlie Sheen) in the movie Wall Street, who’d chased his prey, Gordon Gekko (Michael Douglas).  You may have to work at it to connect with someone, but with persistence, creativity, and quality, you should to connect to them.

My own experience in Silicon Valley over these last 5 years is evidence of this.  I moved to Palo Alto from Tokyo, Japan, where I’d spent nearly 4 years working for Microsoft in its Japan subsidiary.  Although I’d really enjoyed my time at Microsoft, I really felt that in the tech industry, so much growth and innovative thinking was occurring in SV that I had to get there.  I knew that I wanted to stay in tech, and I knew I wanted to get involved in smaller companies (an easy threshold to meet, given that when I left MSFT had more than 90,000 employees).

In any case, when I showed up in Palo Alto, other than some former Microsoft colleagues who’d moved here, I effectively knew no one.  I had a network of zero, basically.  From day 0, however, I found that I got great opportunities to meet great new people, that vast majority of them were interested in helping me find my way.  This ethos was quite broad, and time and time again, I was struck at how helpful and thoughtful people were in helping me out when there really wasn’t much upside for them.

Nowhere is this more clear than how I actually met David Weekly.  When I lived in Tokyo, working for Microsoft, I was getting really serious about leaving MSFT to head into the great unknown of Silicon Valley.  I was reading about Silicon Valley, and surfing around LinkedIn to learn about people.  I stumbled onto an article about the SuperHappyDev House events that David was hosting at the times.  (They’ve since mushroomed into something much bigger and more broad.)  These were apparently all night hackathons at some house he was retngin up in Hillsborough.  And what struck me was that his LinkedIn profile had an Endorsement from a police officer who had come to, I guess, break up one of these parties.  I remember thinking to myself, “I’ve *got* to meet this David Weekly guy!”  (I also became a user of PBWiki, a great product, btw.)

Anyway, fast forward 3 or 4 years, and I’ve got myself here, helping out at the FounderInstitute, Adeo Ressi‘s global startup incubator.  Adeo and I were basically neighbors when I moved to Silicon Valley, and he couldnt have been more helpful and fun to get to know.  He was getting the FI rolling, and he was kind enough to give me opportunities to speak, facilitate, and at times just help out.

Anyway, I was moderating an evening’s events at the San Francisco FounderInstitute, and there as one of the guest speakers, was David Weekly.  I introduced myself like a total fanboy, though I’m not sure that I asked for an autograph.  :)  I introduced him to the FI founders with my Tokyo story.

A culture where people are most honed in on what you’re building and what you’re doing.  An environment that’s really open, where people tend to want to just be helpful to others in getting out there and building cool stuff.  Those are two more of our additional stupidities out here that make this place so very great.  Thanks David for the great article!

 

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UberConference’s Awesome Video

For founders seeking funding and investment, one of the most common pieces of advice is to start a pitch by answering this question:  “What problem do you solve?”

It’s good advice–the last thing you want to do is launch into some obtuse description of your game-changing, proprietary, patent-pending, SaaS-based architecture with a REST API thingamajig without providing any context for the pain that your thingamajig will ease.

For pitch days, top tier startup incubators like Y-Combinator, 500Startups, and AngelPad do a terrific job getting all their founders to describe cogently and quickly what’s broken and what they aim to fix.  It’s grounding, it builds confidence and credibility in the team.   One of the many, many reasons that these and other incubators are providing so much value and usefulness.

One of the challenges though is to understand at what altitude to fly with these problem statements.  Do you just go with “Job hunting sucks,” or “We find your lost socks!”, or is there something more to it.

In general, I’d say stay high-level.  Fewer words are better.

At the same time, in a longer pitch, you are going to want to show concrete and clear understanding of the customer pain point you are trying to solve.  In my mind, this speaks to the product chops of the team, and the depth of understanding of the opportunity.

For a *GREAT* example of this depth and concreteness of understanding, check out Uberconference’s video.  It’s 90 seconds of awesome.

It frames up as well as anything I’ve seen in a while the problems with Conference Calling that the team is seeking to solve.

 

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Reflections from Glimpse Social Discovery Conference

This week, I got the opportunity to participate on an investor panel at the Glimpse Social Discovery Conference in San Francisco.  I was onstage with Aydin Senkut of Felicis Ventures, Josh Elman of Greylock, Christina Brodbeck (Co-Founder of theicebreak, and prominent angel investor), with Dylan Tweney of VentureBeat moderating.

It was an interesting discussion for a few reasons.  First, there had been a pretty prominent set of press the morning of the event around a recent Paul Graham note to his YC companies and alums saying that the fund-raising environment was going to get more challenging as a result of the weakness of the Facebook IPO.  Also, there was a lot of interest in the category of “Social Discovery,” in part owing to Facebook and LinkedIn’s recent IPOs, and with the excitement and interest that we’re seeing with services like Pinterest, Instagram, and others.

I thought the insights from the other panelists was great.  Elman, in particular, whom I’d not met before, really I think framed well the whole category as basically saying that he thought social and social discovery was basically just replacing what he called “media”.  I think this is apparent–but what I liked here as that he’s just thinking about it simply.  Nothing fancy, just good old fashion disruption.  Elman also pointed out, based on his experiences working at Facebook, Twitter and others, that for him as an investor, distribution is really key.  Figuring out how the flows of the product and the sharing really draws people in and enables you to gain new users is vital as he evaluates early stage teams and business opportunities.  Great advice here, and indeed this is something that in my experience many teams skip over or think about too lightly.

Another point that was a fun discussion was raised when Dylan asked us how businesses get built via social discovery.  In my view, again, borrowing from Elman’s thesis that this is all replacing media, is that with eyeballs comes the opportunity for revenue from businesses.  With all the information and intent information that these new services are capturing–where you are, what you like, what you want, etc.–the proposition in terms of promotions to offer are way more interesting and useful than what I’d call old world media.  I continue ot believe that.  I also talked a bit about how I believe that we’ll continue to see growing social media channels–how I interact on Path is different from how I interact on Twitter is different from Facebook, etc.  Given that, I think we’ll have different media channels, as we have many different cable TV channels today on TV.  This was basically just a reprise of articles I’ve written before.

So all in all, a lot of fun and I got some good info from.  Hope to get chance to participate next year!

 

 

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Don’t Go All In, Unless You’re All In

With last week’s monster acquisition of Instagram by Facebook, much discussion ensued.  Is it the dawn of a new bubble?  What happened to RIP Good Times?  Is now the time to start a new company?  Or is Instagram/FBK just too much of an anomaly for us to draw anything from?

FounderInstitute’s Adeo Ressi penned on TechCrunch Instagram Aftermath: It’s Time For Entrepreneurs To Go All-In, which argued that the good times were now in full roll.  Now was the time to start a company, take the leap, etc.

One of the first comments however came from 500startups’ Dave McClure, who basically said, hey don’t go crazy, dawg.

I consider both of these guys terrific for startups at a global scale.  You won’t find two more dedicated to helping founders build and scale their businesses.  So that’s great.

In my own view, I’m more McClurian in my views.  Before I get into the substance of my current views, I do want to provide some historical perspective.  I was in tech during the first bubble, working for Microsoft.  What I saw during the run up of Bubble 1.0 was a lot of people who had no real interest or business in getting started in startups, they just read a bunch of magazine articles and watched CNBC showing the huge pops of an overinflated IPO market and the riches that founders were attaining.  This drew a glut of folks who weren’t really involved in startups for the right reasons, they were interested in getting rich really really fast.  Nothing wrong with that desire per se, but frankly SV appears to be a magnet to this type of thing, and I want to be a caution against it.

So learning from the  97-00 run up, I’d say here what should have been said then: don’t come out here just because it seems like the market is great.  A small group may get lucky, but more likely, you’ll not be one of them, and you’ll be wasting precious time chasing a dream that’s not really yours.  Instead, come out here if you really believe in startups and if you can’t be stopped–by anyting, least of all the state of the market.

OK, history lesson over, now on to my substantive views on the Instagram / Facebook deal as it pertains to whether you should go “All In.”  This is basically just a bit more detail on what I’ve already said, but here goes.

On the one hand, Instagram / Facebook signifies that for truly extraordinary, breakout products, the big guys are going to have to pay up at real prices.  Its also all the more notable given that Instagram didn’t have any revenue.  With the thawing of the IPO markets that we’ve seen in watching Groupon, LinkedIn, and Zynga go out, we’re seeing more paths to liquidity.  All this is good and supports that the market is improving.

At the same time, I’d not go so far as to say that now is the time to go “All In.”  Starting a company is really, really hard for the vast majority of companies.  Finding and building the right founding team: difficult.  Building something that people want : difficult.  Figuring out how to recruit and keep the team on board before you have money to pay them: difficult.  Growing your measly user base: difficult.  Etc.  Etc.  Even in a *GREAT* market, its difficult.

So while FBK-Instagram is exciting and signals an increasing momentum in the marketplace, it doesn’t really change the reality of startups, which is that they are really difficult.

Given that startups are really difficult irrespetive of market, then my view is that you want to think much more about whether you are really well-suited to be involved in startups before you get into starting a company.  If you are wired for the hard work, for the uncertainty, etc., then I’d say anytime is a great time to start a company.  I’d say that you’d probably want to start with Paul Graham‘s blog, which I think is the most useful and concrete place to find useful advice.  And then I’d figure out how you go about getting involved in startups.  Again, irrespective of market.

 

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Traction Speaks Louder Than Words In Today’s Social Software Space

As covered elsewhere, I am a believer that we are going to see more social media software brands and experiences.  I think that users will want to have different social media channels and experiences to engage with depending on what type of context, which relationships, etc. that they want to engage in at that particular moment.  If I’m coming out of the gym, I might hit Fitocracy and not hit Facebook, as I don’t want all my friends to know about my exercising habits as that seems a little weird. Etc., We could roll out scenarios like this all day long.

I expect that we will see lots of efforts that try, and like many startups in a growing, well hyped market, there will be lots that flame out and some that survive.  And that’s ok, that’s the startup world.

In today’s world of software, especially in social, focusing in on nailing product-market fit has never been more important.  On the one hand, the costs of building and distributing software has never been cheaper, and these costs are dropping every day.  Add to this the large number of talented teams and the broadly available tools and resources for founders to build and manage their businesses, and you’ve got an environment where social software companies are popping up everywhere.

On the other hand, with social media services, there’s certainly no single recipe for success.  Why does Pinterest break through with its pinning and matrix mechanic, when other social services haven’t taken off?  Why does Thumb with a very simple mechanic drive crazy high engagement, when other mobile Q&A sites struggle to get liquidity in their markets?

Ahead of time, I think no one really knows–users just tend to gravitate towards certain services.  Recall many thought Twitter was frivolous and stupid a few short years ago, now its been essential in driving mass scale changes in the way the world communicates.

Like the saying ‘success has many fathers,’ once the product-market fit is established and an early path towards growth is on track, then many can start to explain why a Pinterest, Twitter, Thumb or others are working.  The impossibly hard effort, however, is getting to that early product market fit and early growth path.

This is hard, and its critically essential.  In today’s world of startups, where software can be built and launched so cheaply, one would think it’d be easier to drive to scale and funding and all that goo stuff.  I think the opposite is actually true in many ways: with the low costs of launching and iterating, the bar has been raised on startups.  Now you had better be able to showcase early traction, product market fit, and growth, otherwise there’s another startup out there that can.

 

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2012 Prediction: Early Stage = Revenue Stage

2011 was an eventful year in the our industry.  The tech behemoths showed how dynamic things were.  Once the unassailled leader in business and mobility, RIMM saw a string of setbacks.  HP, the granddaddy of them all as far as tech brands, was completely humbled in its venture into mobile, and put into place yet another CEO.  Google saw Android surge to the top of the market share leader board, and they bought Motorola Mobility for good measure.  And, sadly, we grieved with the passing of Steve Jobs.

With emerging franchise businesses, we saw the reopening, slightly, of the IPO window, with Groupon, Zynga, LinkedIn all going public.

Despite all this activity, we also saw the very rapid rise of early stage companies that have literally exploded onto the scene.  These companies (AirBNB, Instagram, Pinterest, etc.) are driving revenue, eyeballs, etc. at rates once unthinkable, now more common.  In a recent Economist article, angel investor Ron Conway provocatively posed the question: “Perhaps 2012 will see a company develop a $1 billion business inside 12 months.”

Exciting times indeed.

At the same time,however, there is evidence that a coming ‘pause’ is on path for 2012, at least from the venture side.  Yesterday’s a WSJ article described the enthusiasm in venture investors in 2011, and noted that Marc Andreessen‘s venture capital firm Andreessen Horowitz has “taken a step back.”  The article then goes on to describe how investors are seeking ways to make investments at less heady values and with more thoughtful consideration.

I don’t think things will pause too much.  Still a lot of great companies out there doing innovative things and showcasing more and more traction along the way.  While I’m not worried about a crash, convulsion or whatever in 2012, my take is that 2012 will be a great year for early stage companies that are driving to and scaling revenue early.   A few reasons for this.

The first, and the most important, is taht founding teams that have revenue coming in the door have vastly more flexibility than those that don’t.  If investor markets cool, as the WSJ predicts, revenue generating firms can hunker down and postpone raising; pre-revenue firms are subject to forces beyond their control.

The second is that unlike 5 or 10 years ago, there are so many more established revenue models that startups can roll out “from day 1.”  As a marketplace, AirBNB was making revenue basically from the first transaction on its system.  Selling virtual goods, Zynga was able to drive revenue from some of its earliest days.

And third, with the dramatic growth and ubiquity of twitter, facebook and mobile, distribution and promotion capabilities enable much more rapid growth of all new tech services, including those that are making revenue.  Zynga built on FBK’s platform, eg., AirBNB has similarly leveraged different broad scale social (Facebook) and commerce platforms (CraigsList) masterfully.  In other words, startups can both build eyeballs fast and build revenue early.  That’s a change.  It used to be choose eyeballs or revenue first, where most chose eyeballs first, monetization later.

An “eyeballs first, revenue later” business model can absolutely still work.  Pinterest, Instgram, etc. are living examples that this approach is still yielding the most broad, ubiquitous new consumer tech services in our industry.

My sense though is that as the 2012 “pause” filters its way through the industry that those start-ups that are showcasing revenue and growth will find navigating 2012  easier and valuations more strong.

 

 

 

 

 

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