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brycedotvc: After all the talk of VCs vs. Founders. This. This...

Mon, 20 May 2013 14:36:36 -0400

brycedotvc:

After all the talk of VCs vs. Founders.

This.

This is the kind of relationship we’re all hoping to build with the founders we back.

Congratulations to all involved.

via bijan

the story of a startup always wants to be told in broad, antiseptic strokes about VCs, founders, A-rounds, “traction,” valuations, “value add” and a bunch of other ways that we try to normalize the whole company building process.

at the end it is just about human relationships and the things they create.

Hallway Chat, #14. A super-sized episode where @bijan and I chat...

Thu, 09 May 2013 12:16:00 -0400

Hallway Chat, #14.

A super-sized episode where @bijan and I chat about the new HTC One, the methodology of the Forbes Midas List, and maintaining the faith in both startups and big companies (namely Apple). Plus we answer some of the most common questions that came out of Spark’s decision last week to cover our own legal fees.

Previous episodes of Hallway Chat, should you be so inclined, can be found here. Or subscribe through iTunes.

The Effect of a Down Round on your Team

Mon, 06 May 2013 22:27:00 -0400

My friend and colleague Siqi Chen, never afraid to question the status quo, wrote a comment questioning the wisdom of “not pricing a round of financing too high”:

“Whenever I hear advice about pricing a round too high for the next round, I can’t help but think: well, if the choice (ceteris paribus) is between

a) doing what is effectively a down round preemptively when I don’t have to, by underpricing my current round in this market vs

b) accepting the market price along with some risk of taking a down round in the future, if I don’t hit my milestones,

why would I ever choose b)?”

Mark Suster then responded with a good post about the psychology of down rounds on fundraising, best summed up as, “a down round is even more complicated than having no demand for your investment round.”

That is true, but we also shouldn’t ignore the psychological impact on the team should a down round actually get done.

If you’ve ever been part of a public company with a collapsing stock price you’ve got an idea of what this does. Skeptics on the team start to win arguments, especially when the founders aren’t in the room. It can be quite hard to keep trust with the team, especially since you’ve now shown poor judgement as a leader by guiding the team to this down round. That can feel doubly worse if it was a self inflicted wound caused because you over-optimized on price previously.

And although I made the analogy to a public company stock price, in practice it is much worse than that because you are by definition in a much more vulnerable state. Sure, the team may believe in your long term vision, but that is balanced against their calculus about whether it is actually going to happen. And you just added a whole lot of doubt to that.

In worst case scenarios I’ve spoken to founders who have nicely growing companies, but have a team that has become suddenly demoralized despite their success because of the down round they just were backed into.

Imagine you are coaching a basketball team and you are always saying, “we are going undefeated the next 10 games no matter what!” then you may have set an audacious goal but keeping people’s faith is going to be tough over the long term. And winning eight games suddenly feels like failure when it may have been great. The best founders, and coaches, take it one game at a time, continually building one brick on top of the other.

Managing the psychology of success has a massive impact on everything from ability to hire, to fundraising, to retaining talent, to team cohesion, to ability to do bizdev deals.

It’s worth keeping in mind that it is a balance between price, dilution, capital, investors, founders, and team. As with most things, nothing is free so just be certain you understand what you are giving up if you are pushing one part of this equation abnormally high.

"Bitcoin could basically be thought of as the Internet, applied to Money"

Sun, 05 May 2013 23:39:00 -0400

“Bitcoin could basically be thought of as the Internet, applied to Money”

- Let’s Cut Through the Bitcoin Hype: A Hacker-Entrepreneur’s Take - Dan Kaminsky - Wired Opinion

Picking up our own tab

Wed, 24 Apr 2013 15:35:39 -0400

Picking up our own tab: The first time I raised venture capital, over a decade ago, I was hit with the same shock that I think every founder goes through, “wait, what, I have to pay the VCs legal bills?” It just seemed strange when the whole point was to talk about how much money the business needed to succeed, not to start siphoning it off immediately for other stuff.

I’m happy that we can say we are now footing the bill for our portion of legal expenses. Bijan has a good post on the details: “My partners and I at Spark Capital are going to pay our own legal fees at the earliest days of the company up to a cap of $25k going forward. If this cap lasts a few rounds even better. The only fine print we can think of is if there are multiple co investors we would ask them to pay their own way as well. If not than we wil just pay our pro rata.”

It’s a small thing, but it’s another way we can keep the focus where it should be - on helping to build great companies not financial engineering.

For wearable computing, the ground feels softer than ever

Sun, 17 Mar 2013 21:02:00 -0400

(cross posted at Techcrunch)

It’s no coincidence that the last 12 months have seen an explosion in human-computer interfaces (HCI). Google Glass, Oculus Rift, Myo, Leap Motion, and several others that are still in stealth mode and are quickly forming the new class of companies transforming our computing environments. And unlike previous generations, this new group is generating the strong public and developer support, in some cases combined with millions in pre-orders, that are necessary to have a chance at breaking through.

We’ve been talking about augmented reality, virtual reality, and wearable computing for quite some time now. When I moved to Boston some 12 years ago, it was largely because of the MIT Media Lab, a hub of innovation that was focused on that crazy mixture of art and technology that they rightly believed would lead to the next stage of computing.

MIT Media Lab wearable computing group, circa 1997. (Photo by Sam Ogden)

While it was a fruitful era for ideas, and wonderfully geeky photo opportunities, it was a failure for a new generation of global companies. There were advances thanks to eInk, Harmonix, Color Kinetics, Ambient Devices, iRobot, and others, but there have been no truly iconic companies – the Apples and IBMs – that the first generation of computing created. More importantly, our experiences with computers stayed largely the same.

So what has changed that may make things different this time? Two small things, and one big thing.

1. Technology. Core components, from accelerometers to displays, that used to be expensive and custom, are becoming commodities thanks to cell phones. Leap Motion, for example, hugely benefits from the hundreds of millions of cameras embedded in cell phones every year that have drastically reduced their price points.

2. Pitch and design. With any startup, getting people to believe is the hardest thing, and it is doubly hard when you are pitching a new category of experiences. Thanks to many factors, from 3D printing to the video demo culture pioneered by Kickstarter, companies are learning how to make a broad market message of beautiful design and ease of use at their earliest stages.

3. Culture. Sometimes the timing is just right culturally. While much of the technology involved here is difficult, it is not unique to this time and place. I believe the current wave has as much to do with the last generation of gaming consoles and cellphones than about cheaper components or a slick video.

That may sound strange, but I believe it was Nolan Bushnell who said that every great technological advancement starts out seeming like a toy.

The first commercial peripheral to use your body was the Nintendo Power Glove back in 1989. It was a commercial failure, selling 100,000 units, grossing under $100 million, and driving the parent company into bankruptcy. It was geeky fun kids stuff, but the product wasn’t awesome.

Fast forward and the picture of the advances in HCI is much more like this.

The last five years have seen the sale of 120 million Wii’s, the widest-selling game platform in history. It has seen unique interfaces such as Guitar Hero and DDR used to create powerful, even transformative, experiences. It has seen the Xbox Kinect sell 8 million units in its first 60 days, making it the fastest-selling consumer electronics product in history. And of course it has seen the Apple iOS devices introduce the world to flicking angered birds on touch interfaces.

In that context, the last five years starts to feel like it was softening the ground for a mainstream populace to accept new inputs. All of these advancements haven’t just taught people to stand in front of their televisions or tap away at their screens. It is teaching people to expect more out of interacting with their computers.

And that’s enough to make one very optimistic about the next five years of computing and the hardware startups that will be building it.

Thoughts on Spark Capital IV

Tue, 26 Feb 2013 14:43:28 -0500

It’s almost on the exact one year anniversary of me joining Spark that we’re happy to announce the raising of our fourth fund.

As a firm we spend a lot more time helping promote and assist our portfolio of companies than ourselves, so it was nice to have an occasion for my partners Todd and Bijan to talk about the values that matter to us.

We’re a pretty odd firm, really. The nine folks around the table have incredibly diverse backgrounds, both ethnically and professionally. Plus we are in Boston & NY, not the center of the startup ecosystem, but have been able to get a chance to work with some of the best companies both locally and around the globe. And while a bunch of other folks have tried prolific seed strategies and late stage growth deals, we have been successful by investing in what we love and know best; early stage consumer startups at the precipice of turning from product into purpose.

As Sarah talked about in her coverage, it’s not exactly a model that most folks thought would have worked when the firm started. But that’s the nature of startups, the winners can always surprise you. All you can do is get behind a mission you believe in and work with people you respect and admire.

I feel privileged to get a chance to do that with these partners and the entrepreneurs we work with.

Why aren't Founder/CEOs the norm in successful companies?

Wed, 23 Jan 2013 11:37:00 -0500

Reid Hoffman wrote a excellent counter-trend post this week, when founders should hire professional CEOs. It reminds me of Horrowitz’s post on The Case for the Fat Startup, in that it helps to reset expectations on a trend that might just be getting too dogmatic. The cult of the Founder is at a massive high right now, so much so that VC firms name themselves after them, they get their own corporate cards, and I even know of a startup that allows -every- employee to earn the title Founder.

So it’s natural for someone to want to give a dose of reality that founder/CEOs of successful companies are actually more of the exception than the rule. That most companies, like Yahoo, Google, and Cisco, didn’t have Founder/CEOs. In followups he said, “When do we stop listing Yahoo and Google and LinkedIn as exceptions and realize the rule we’ve all started to believe over the last few years is actually incorrect?”

But I think the correlation arrow might be pointed in the wrong direction here. Twenty years ago the common feeling was that one needed a professional CEO - it was the “cultural norm.” That meant that VCs pushed for it to happen, more Founders asked for it to happen, and so it happened more often right or wrong. By comparison, it is also the cultural norm today that women are paid 90% of the wages men are paid for the same work, but that does not make it a good or proper thing.

The cultural norm has now clearly shifted to the Founder as CEO, and I couldn’t be happier about that. The goal for any growing startup is to build a culture of people who are “missionaries” not “mercenaries” for your company. And the best way to make that culture happen is to have someone at the helm who was there when no one believed. Someone who is clearly on a mission. The job of CEO can really only be learned through the crucible of doing, and the absolute best case is that the Founder is the person who learns it, a point Reid himself admits.

Of course, the perfect counter-example is his own company, LinkedIn, so this is very much a personal story for him. That’s a case where a Founder came to the realization that he didn’t have the skills or desires necessary to run the next stage of a company. If Reid’s post helps a few Founder/CEOs realize they need to do this, then he’s doing a great service. But I for one hope the cultural norm stays about where it is now, and we do a better job helping great Founders become great CEOs.

Hallway Chat, #12. How should entrepreneurs manage themselves...

Wed, 09 Jan 2013 12:01:00 -0500

Hallway Chat, #12.

How should entrepreneurs manage themselves through the “barbell” of today’s funding environment? Plus a rundown of some interesting new tech out of CES, and a brief review of the amazing new Sony RX1 digital camera, a full frame sensor in a compact size. All in under 20 minutes.

Previous episodes are here. Or subscribe through iTunes.

Watching your competitors release "your" features

Fri, 04 Jan 2013 12:17:00 -0500

A startup CEO sent me a pained email the other day looking for a little reassurance. I’ll keep the person anonymous as the specifics are less important.

The gist was that a competitor (loosely defined) had just released a great new feature to their product. That feature had been on the drawing board for this CEO for months, and they even had a prototype built. But they hadn’t finished it because they were focusing on a growth-oriented pipeline and this wasn’t on it.

Any of us who have built product have had this happen. Ideas move faster than action, so inevitably something on the drawing board gets produced elsewhere first. What follows sometimes is the agonizing stream of Twitter comments and Techcrunch articles about how this feature was amazing and pioneering. Even the most zen-like product makers can have a twinge of regret and envy.

You know that should you release a similar feature in the future, it will go from “pioneering” to “copycat”, and won’t be nearly as surprising and delightful for your users. It’s not an entirely logical feeling, but it is a painful feeling for creators nonetheless.

When this used to happen to me, I’d usually try and center myself by thinking through a few thoughts. I shared these with the CEO and thought I’d repost here for the next time this may happen to you.

- Pipeline: The pipeline of your ideas is always larger than your possible throughput. So matter what you’ve made priority #1, someone else is going to get to item #12 on your list first.

This is a good checkpoint to make sure you have a clearly prioritized pipeline, and arent just flapping in the wind. It’s also a good milestone to remind your team again why you are prioritizing the way you are. In this case the CEO was properly focused on growth, so it makes sense they hadn’t gotten to this retention feature (yet). Especially since they already have amazing retention and users love the product.

- Ego karma: Don’t forget that you are releasing features too. Instead of pining after what was lost, focus your energy on making the next feature something that delights your users so much it would make all your competitors envious.

What’s to say that your next feature wasn’t #12 on your competitors list? Make it count, less for your competitor, more for your users.

- Call it an alpha: On the product side, it’s not necessarily a bad thing to have someone else release the first version of an idea. You get to form a perspective on what they did right, and wrong, and how that might translate to your product. That is, once the time is right.

"I’ve always been pushing that envelope. I want to risk hitting my head on the ceiling of my talent...."

Fri, 04 Jan 2013 10:18:25 -0500

“I’ve always been pushing that envelope. I want to risk hitting my head on the ceiling of my talent. I want to really test it out and say: O.K., you’re not that good. You just reached the level here. I don’t ever want to fail, but I want to risk failure every time out of the gate.”

- Quentin Tarantino Q&A w NYTIMES (via msg)

Happy holidays everyone. I hope these holidays gave you the time...

Tue, 01 Jan 2013 00:22:04 -0500

Happy holidays everyone. I hope these holidays gave you the time you needed. To hear your loved one’s laugh, drink, and be merry. To reconnect, remember, and reflect. To get enough distance from your work to remember how much you enjoy it. And if not, to gather the fortitude to change that.

It sure did for me. So here’s to a grand 2013 with all of you.

"[Kickstarter] made me unafraid of being open… The Kickstarter thing and the documentary that we’re..."

Sun, 23 Dec 2012 22:50:00 -0500

“[Kickstarter] made me unafraid of being open… The Kickstarter thing and the documentary that we’re doing with the Kickstarter has just taught me that there’s nothing to be afraid of. You release your stuff out. You show a piece of concept art that may or may not be in the game. It doesn’t matter. People are just like, “Oh, that’s cool!”

People get on your side more, not get on your side less. The fear is that if it’s not perfect, you can’t show it to people because they’ll freak out. The fact is, they just feel more bought in. They feel like they’re part of the development team.

”

- Tim Schafer on VentureBeat (via kickstarter)

The role of the living room

Thu, 13 Dec 2012 12:30:00 -0500

We are at the cusp of a generational shift in the living room. The Nintendo Wii U, the sequel to the most popular game console in history, was just released. It was the first in a series of salvos aimed at transforming the TV, the next up is the indy darling console from Ouya, then the new Xbox, then perhaps Apple, and there are rumors of Valve entering the fray as well.

Is it even worth it?

The tablet feels like the future, and it certainly is. With that in mind it’s easy to look at the set top box war as something akin to the war between HD-DVD and Blueray, a kind of annoying sideshow on the way to an all digital media future. Isn’t everyone just going to play games and watch movies on their iphone and ipad?

I don’t buy it.

It’s worth remembering that in games, this has happened before.

Back in the day there were consoles, and they were awesome but getting a little long in the tooth. Then this new, mobile, portable, device came out that changed everything in mobile gaming. Yes, the graphics were worse than a console, but it was in your pocket convenience, and it was multiplayer. And it took off like a ROCKET.

It was the Nintendo DS. Every kid got one, they were transformative in a way that the Gameboy never was. And once they played, they engaged socially in Mario Kart, Pokemon, and other games in places they never could with a console. The average number of minutes of kids playing games went WAY up, and with games like Nintendogs & Brain Age there were a whole group of non gamers (mostly older women) who bought it as well.

But, a funny thing happened. This huge mobile explosion of play, of convenience and disruption that is textbook Innovators Dilemma, it DID NOT cause the console to die. You would think it would make the console suddenly “niche” and just for hardcore users. Somewhat like what the iPhone is doing to the compact camera market, but it didn’t.

In fact, it just expanded the market for consoles. It made more people think of themselves as gamers — it paved the way for a new generation of consoles (like the Wii & Xbox) to become the fastest selling, highest penetration consoles ever.

It’s worth noting that during the last few years TV watching has not gone down. And while retail sales of consoles are down, overall time spent is up. While there may be some replacement play, the much more important trend is that the ”media pie” is getting bigger overall. It is more about expansion of the market than cannibalization.

The tablet is a new world for media, including gaming. It’s amazing. It will likely kill the DS, for sure.

And it will introduce a whole new generation of people to consider themselves gamers, or re-find their gaming past.

And then some subset of those users will buy a console to enrich their experience. It won’t be “powered by their tablet” the same way the DS didn’t power the Wii. Because it’ll be inspired by, but not the same, experience. It’ll be something new, and fresh, and interesting - and it is just as likely to come from incumbents as a new upstart.

Marketplaces

Tue, 04 Dec 2012 00:22:00 -0500

My colleague David Haber wrote a great piece on marketplaces over at Techcrunch this week. And today we announced our investment in one such marketplace, the luxury goods leader 1stdibs, along with Index and Benchmark.

Marketplaces are popular right now, but they are certainly not new. Ebay, the mother of all online marketplaces was founded in 1995, and spawned a cottage industry in the late 1990s. The one in particular I remember was the classic “only in the go-go 90s” marketplace, Nets Inc.

Suffice to say, virtually every possible flavor of marketplace was tried in the late 90s and most failed. So why has this remained ripe territory? There is no denying the results, from Etsy to Skillshare to Kickstarter to Workmarket to Airbnb, there has been a steady stream of good companies.

I think it’s a fairly simple reminder that we are still in the early stages of software “eating everything.” There are many businesses in the late ’90s that were simply too early, but probably none would feel it so strongly as a marketplace. Without ample liquidity in both sides of a marketplace, that startup would crash and burn even faster than most.

So as more types of consumers, and more types of business, come online there are increasingly more opportunities to help them find liquidity for the goods and services they can offer. And if that isn’t enough, mobile smart phone penetration means we are just now getting to real liquidity for mobile first marketplaces.

Searching for Sesame Street

Thu, 29 Nov 2012 12:30:20 -0500

My seven year old son will choose an iPhone/iPad every time over a TV, Wii, Xbox, or Nintendo DS given the chance. I know of some parents who are very nervous about this trend and are careful to limit their kids iPad use, while at the same time letting them watch hours of television. For the most part I would easily trade 15 minutes of passive media consumption for 15 minutes of interactive entertainment. That is, if the content was of similar value.

Unfortunately even with thousands of apps to choose from, it doesn’t feel like there is a company that has gotten that right mix of entertainment and education for kids. In a way, it feels the way television must have felt before Sesame Street.

Sesame Street was started on one simple idea, what if we could make education “go down more like ice cream than spinach.” It is both an education and an entertainment company. And it succeeded in providing beneficial pre-school education to millions, and also be something that kids actually wanted to watch. In 1979 fully 83% of U.S. pre-schoolers watched Sesame Street.

Today it is still a major force thanks to a revamp a few years ago, and is the inspirational model for two full cable channels of programming that parents can reliably turn to, PBS Kids and Sprout. But on mobile the model is different for me and my kids.

While I control what they download onto the device, they control what they end up spending their time on. I may download Stack the States, which has hovered in the top 10 Education apps for some time, but my son spends most of his time playing Mino Monsters right now regardless.

In more reductionist parlance: parents = installs, kids = dau, both = rev/dau. What’s missing is a company that creates wildly entertaining content, but in a way that educates. I’m curious if others have found apps that strike that balance for their kids. It feels essential, not just for what I personally want at home, but in order to compete in the mobile world where there are two masters of the mobile kids minute.

Today @bijan and i discussed: - iPad Mini and whether...

Wed, 21 Nov 2012 14:16:00 -0500

Today @bijan and i discussed:

- iPad Mini and whether Apple’s best days are behind them, and my decision to take another Android plunge
- Where are the future of consumer electronics and hardware startups headed?
- Our different take on Eric Feng’s post App Prosperity
- Discovering other podcasts (please share your recommendations in the comments)

You can now subscribe to our podcast on iTunes. Thanks for listening!

Update : looks like this episode hasn’t made it to iTunes yet. Hopefully it will get there soon!

Apple's standards are clearly slipping.

Fri, 16 Nov 2012 12:30:28 -0500

Apple's standards are clearly slipping.:

They’ve now put the first 10 episodes of Hallway Chat up in iTunes.

15 minutes of chatter on products and startups. Today @bijan...

Mon, 12 Nov 2012 16:21:00 -0500

15 minutes of chatter on products and startups.

Today @bijan and I discuss the crazy cool new Oakley Airwave’s, Evernote vs Simplenote (and Bijan’s one feature request), Tapestry and the slow web movement.

A data driven election

Wed, 07 Nov 2012 16:29:36 -0500

A data driven election:

Great Time Magazine piece about the data driven nature of Obama’s win.

It’s a useful comparison to think about being data-driven in the context of politics. Great leadership moments (the big pivots) come from deep inside a person, not generally because the polls tell you to. But at the same time, trying to run just on instinct and faith is a recipe for failure.