Posts from May 2010

Every few months, I like to share some analytics on this blog's audience. Here's the google analytics refer logs for the past thirty days:

The thing that jumps out at me is the magnitude of the direct audience. If you add the direct category, this blog's RSS feed (Feedburner), and the avc.blogs.com domain (the original domain of this blog which still works), you get roughly 86,000 visits which is roughly half of all the visits.

That's a lot of direct visits for a website given all the distribution channels out there (Google, Twitter, Facebook, Techmeme, Hacker News, etc).

I think it reflects two things:

1) the loyalty of this blog's audience – many of you come to read this blog every day and I suspect that you come via a bookmark, the feed, or some other way you've set up to remember to do that.

2) Twitter – most of the traffic that comes from twitter clients still registers as direct traffic in google analytics. i hope Twitter and Google work out some way to fix that soon. it's been an issue for years now.

SInce I don't use a feed reader of any kind, I often forget how powerful that distribution channel is. I was one of the first users of Feedburner and was an investor in Feedburner before it was sold to Google. I don't think about Feedburner much any more. It's a set it and forget it sort of thing. But Feedburner is a huge distribution channel for this blog. Here are some stats for the past thirty days:

The reach number is the number of different feed readers that open a post from this blog per day. Feedburner tells us that an average of 11k readers per day open a post from this blog in their reader. Google Analytics says the number of web visits per day to this blog is between 5k and 10k on most days. So that means that there are more readers of this blog via the feed than the web.

It's pretty eye opening to be honest. I spend so much time thinking about internet distribution channels and the impact of search and social media on audience and traffic that I don't pay as much attention to the value of a loyal and consistent audience and yet that is exactly what we have here at AVC. Kind of ironic. 

For a tech company, product and engineering are the heart and soul of the business. When I do a quick mental query of headcount across our entire portfolio of ~30 companies, I think at least 50% and maybe as much as 60% of the entire headcount of our portfolio is in either product or engineering.

Many of the founding teams we back include a strong coder and a strong product person. A typical configuration is the founding CEO is also the "VP Product" at the start. This is a great configuration for a starting team. The two individuals can and should build a tight knit relationship with each focusing on their particular roles in getting the product built. The product person sets the overall requirements, specs them, focuses on the UI and UX and manages the process. The engineering person builds the product or manages the team that builds the product, or both. The yin and yang of product and engineering are represented in these two founders and their relationship and combined effort is what gets the product out the door.

As the company scales the yin and yang of product and engineering often gets out of whack. What typically happens is that the engineering team scales and the engineering leader either scales with the team or hands over the job of managing engineering to a seasoned executive. But the product side often does not scale in the same way. Many founding CEOs who are also acting in the VP Product role attempt to do that job for too long. Or they bring in product managers but don't build a highly functioning product organization. And hiring a really strong VP Product is often an afterthought.

I have seen many companies go through this phase. What happens is the company starts having trouble getting product out the door as rapidly as it had in its early days. Other issues start cropping up and the engineering team has to focus on them. A typical one is technical scaling issues. If the service is popular, the entire engineering team can get pulled into firefights related to scaling issues. And I have often seen companies spend a year or more rebuilding the guts of their product to make it scale better. During this time, product related efforts can languish and feature development takes a back seat.  This period in a company's development is brutal on the product team who gets frustrated with their inability to move the ball forward.

The prescription for these problems is two fold. First, the company needs a strong executive in both product and engineering. I say executive because the key skill set is the ability to manage people and create organization structures that are highly functional. The VP Engineering and the VP Product need to have a history of being highly skilled engineers or product managers, but in the role of leading these organizations, those skills will not be the ones they use. They will hire, fire, organize, manage, resolve lingering issues, and make tough decisions. They will be managers. And these two individuals need to pair up in the same way that the founding team did. They need to be partners with each other and reinforce each other. The ability of the VP Engineering and VP Product to work well together is so key to building a great tech company.

The second thing that has to happen is that product and engineering resources need to be divided up into small teams that actually build stuff. Teams should be between three and seven people. Anything more than that
should be broken up into two teams. Each team needs to have a product lead and a tech lead. And just like the two founders and the two VPs, the two team leads need to partner up and work well together.

So hopefully you see that this yin and yang of product and engineering must always be at the center of the company and they need to be in balance. If you have a super strong engineering team but a weak or understaffed product team, you will struggle. If you have built a functioning organization in engineering but not in product, you will struggle. If you have a team where one of your two team leads is weak, it will struggle.

If you are stuck between being the scrappy startup you used to be and the highly functioning big company you want to be, look at your product and engineering organizations and make sure they are well balanced and that you have strong leaders in both who work well together. If you don't see all of those things, think about making some changes to get there.

In a marketplace where leaderboards drive discovery and transactions, it helps to putt all your weight behind one offering. Twitter's purchase of Tweetie and release of Twitter for iPhone this week shows what can happen.

It will be interesting to see how this shakes out over a longer period of time, but right now it sure seems like the right move.

At the VCs Who Code panel at Google I/O yesterday, Dick Costolo asked the assembled VCs the biggest no-nos in a startup. Everyone gave excellent answers but my personal favorite came from Brad Feld who said "fear is the biggest no-no."

If I look back over 20+ years of entrepreneurs I've backed, the ones who were anxious and afraid of failure most certainly had worse outcomes than the ones who were agressive and confident. You simply can't be tentative in a startup. You have to go for it at every chance you get.

And if the leader of the organization is anxious, his or her fear pervades the organization. Everything comes from the top in a company. So it is best to have to have a leader who exudes confidence.

You can certainly have too much confidence. Arrogance and cockiness can be as harmful to a startup as anxiety and fear. A person who is quietly confident makes the best leader.

So if you are starting a company or building one, face your fears and move past them. It's critically important to your company.

I'm going to stop by Google I/O in SF this afternoon to see this panel (yes, a panel) of VCs that Google has assembled. The common trait among all of them is they write code or at least they used to write code for a living. Here's the list:

– my partner Albert Wenger

– Brad Feld

– Dave McClure

– Paul Graham

– Chris Dixon

I am a big fan of "VCs Who Code." I wrote software for a living very briefly during college and before business school and have a basic understanding of the process. But that was 25 years ago and modern software development is fairly different from what I did back then. I used punch cards in one of my jobs.

Software development is the foundational technology for everything that we invest in. And so having people in the venture industry who have their heads wrapped around software engineering is a very good thing.

Our firm has benefitted in many ways since Albert joined us full-time two and a half years ago. But one of the most important ways that we have benefitted is that our comfort with technology risks and technology issues has gone way up. You have to take risks to make money in the venture business. But you also have to understand the risks, asses their magnitude, and figure out how to mitigate them. The more technical chops you have in your partnership, the better off you will be.

It's also true that I have deep respect for every one of the investors on the panel this afternoon. Each of them is a superstar and they are among the most innovative and thoughtful VCs in the business right now. I wonder if that is derivative of their early years writing code? I suspect it may well be.

About a month ago, Boxee released a new build. I dutifully installed it but then we moved and it's taken me most of the past month to get my audio and video setup in our new home back to where it was in our old place. This past weekend I got our mac mini set up and loaded up Boxee. And here's what my feed looked like:

That first video was not shared via Boxee (like the next two were), it came from a friend of my son's via Facebook. It's a pretty funny video from This Just In.

Boxee also pulls videos from your Twitter feed. So now there are multiple ways for videos to get into your Boxee feed. You get videos that are shared by people you follow on Boxee, Facebook, and Twitter.

A few months ago I posted about the Boxee bookmarklet which I use all the time to "watch later." I've stopped interrupting my day watching videos that I come across on the web and email and I load up Boxee after dinner and do my video watching from the comfort of my family room. Now I can do that with Facebook and Twitter too. Very cool. Thanks Boxee.

Also, you should check out that second video called Up There. It is a really neat 13 minute documentary about the people who paint large advertisements on NYC buildings.

One of the best things to happen to startup land this spring is the arrival of Ben Horowitz as a serious blogger. Like his partner Marc Andreessen, Ben has a ton of great experiences to share and he is doing just that right now.

I particularly like his post on evaluating whether an executive "will scale." Ben writes:

evaluating people against the future needs of the company based on a theoretical view of how they will perform is counter-productive

I see this all the time in VC and startup land. An entrepreneur will come into our office and we will be discussing him or her after they leave. Someone will ask "will they scale into a big company CEO?" The answer as Ben points out so well is "who knows?"

Ben also points out that managing a lot of people well is a learned skill:

Managing at scale is a learned skill rather than a natural ability. Nobody comes out of the womb knowing how to manage a thousand people. Everybody learns at some point.

This is why I am a huge fan of getting mentors on the board and CEO coaches into the picture. Good VCs will try to help an entrepreneur "scale" but there is always going to be a tension between the investor and the entrepreneur and it is a good idea to get some other people involved if the entrepreneur wants to "scale" into a leader of hundreds or thousands.

The next time I hear someone says "that person won't scale" I am going to send them to read Ben's post.

I saw Jack Dorsey give this talk at The 99% Conference last month. It's a great talk. I particularly like his first point, which is that you should draw out your ideas before you start coding them.

The video is only 16 minutes long and it is well worth the time.

I've always thought that in the venture capital business you either want to be very early or very late but not in the middle. I've also thought you either want to be a boutique with a few investors or an institution with many, but never in the middle with the bureaucracy of an institution but without the scale.

And I think privacy is like that. You either want to be totally public or totally private, but never sort of private and sort of public. It's just too complicated to be semi-private. That middle ground is treacherous.

If you look at the Foursquare checkin screen:

You see that Foursquare is going to send the checkin to your "friends". That is the private channel where you've hand selected who is going to see that checkin. But you also have the option to send the checkin to Twitter and Facebook. Those are the public channels where your checkin is going to be seen by everyone.

The problem Facebook is having right now is that they are sort of private and sort of public. I think of them as a public channel. I don't post anything to Facebook that I don't want everyone to see. But that is not how many of their users see them. I believe Facebook is going to have to choose to be either totally public or totally private or they are going to gradually cede their social graph to services that stake out the totally public or totally private territory.

Privacy is pretty black and white. It either is or it isn't. And trying to have it both ways won't work.