Posts from 2015

One thing I’ve been pushing hard in my conversations with entrepreneurs, CEOs, and management teams I work with is the efficacy and capital efficiency of winback campaigns vs new customer acquisition campaigns.

Every company wants to grow their user base and increase retention.

As mobile becomes a more difficult environment to grow in (maturing market, more competition, growing dominance of the leaders), we see companies spending more and more money on new customer acquisition. While that is necessary, it is not likely the most capital efficient way to grow. Winning back churned out users can be a lot more cost effective if done right.

I like to ask these questions:

• how many downloads have we had on our app in total?
• how many of those users who downloaded our app are still active every month?
• how many of those apps are still on a user’s phone?
• can we notify those users?
• can we email those users?

Generally speaking, an app that has been in the market for 3-5 years will have an active user base that is 10-30% of the total downloads. There are a few exceptions where that number is a lot higher, but those are exceptions (and great apps).

So that means that 70-90% of the people who have downloaded your app are not using it.

Some of them will still have the app on their phone and can be notified.

Most of them will be reachable via email.

So that is the winback opportunity.

You can’t just spam those users with notifications or emails that say “hey, try out our app again.” That won’t work and will lead to users quickly uninstalling your app if they haven’t already done that.

But you can look for targeted opportunities to tell these churned users something useful to them and invite them back to get more useful stuff.

This could be an offer for a big discount if you have an e-commerce related app. This could be a geotargeted offer/insight if you have an app that is location oriented. This could be the fact that a close friend is active on the app and an invite to join them.

These winback campaigns, if done properly, can be incredibly effective.

If you aren’t doing winback campaigns, you should be.

If you are doing them, think about how you can do them better and do them more frequently.

This is about the lowest hanging fruit out there in the mobile app growth landscape.

My partner Andy got me interested in the livecoding phenomenon. As I’ve been checking it out, I came across this video. Pretty cool.

I use the Authy mobile app to serve up my 2-factor tokens when I need them. I’ve blogged about Authy before here at AVC so regular readers will be familiar with it.

Authy does something that I really like. Even though my password is stored on my mobile phone and I don’t need to type it in every time I log in, Authy regularly prompts me for my password so that I don’t forget it. The popup box has an “ignore” link on it that I can click if I don’t want to be bothered. But I type my password in every time I’m prompted to do this because I realize that regularly typing in my password is the best way to insure I don’t forget it.

It’s one of those things that makes so much sense and makes you wonder why more apps don’t do this.

Well done Authy.

 

I turn 54 today

54 is not prime

53 is

I enjoyed 53

I expect to enjoy 54 as well

Numbers are fun if you let them be

But numbers aren’t really that important

What is important is enjoying life

And I plan to do that today and every day

The godfather of computer science education in the NYC public schools is Mike Zamansky, who has been leading the computer science program at Stuyvesant High School since the mid 90s. A few years ago Mike started a summer program in partnership with St Joseph’s College in Brooklyn that allows middle and high school students who don’t go to Stuyvesant to get the same computer science education that his students at Stuyvesant get. It’s been a huge success but Mike doesn’t want to stop there.

So he’s extended his summer program to the weekends during the school year and is calling this program “Saturday Hacking Sessions”. Mike has turned to Kickstarter to see if he can crowdfund this program. The Kickstarter is here. I backed it yesterday and if you are so inclined, I am sure Mike would love your support as well.

Mike told me this via email yesterday:

If we can get this funded, I don’t have to charge anyone to make this happen which opens the door for kids to drop in (parental permission not withstanding).

I know I am sounding like a broken record on this but a computer science education program that is free and open to any student is the kind of thing that can change lives and provide economic opportunities where there aren’t enough right now.

I’ll finish by posting their Kickstarter video. As Mike says in the video, “we aren’t very good at making videos, but we are really good at inspiring kids and teaching them computer science.” With that disclaimer, here’s the video:

At USV, we are big believers in being public about our investment thesis and the work we do to arrive at them. We are also big believers in working with like minded VCs on our investments. A few years we decided to merge the two. My partners Albert and Andy started collaborating with Boris Wertz at Version Ventures on developing investment theses in the digital healthcare sector. They roped in two analysts, Zander and Angela and off they went. When Zander’s two year stint at USV ended, Jonathan replaced him on the effort.

For several years, this group has shared investment opportunities, research, and insights with each other. They have a shared database of startup companies and a shared market map. They have collaborated on one investment, Figure1, and thought seriously about a bunch more.

Yesterday, they started to share their learnings and, more importantly, their questions and concerns. It is called OnDigitalHealthCare and as it is currently conceived, it is a six part series on what they have learned and where they are going with all of those learnings. They are two parts into it right now.

I hope they don’t limit this to six parts and would love to see them continue to update this blog from time to time with additional learnings, questions, concerns, and insights. I think most everyone realizes that a computer in everyone’s pocket (and possibly elsewhere on their bodies) is going to massively impact healthcare over time. But how, when, and why is a lot less obvious to us, and I suspect everyone else. So we are trying to figure it out and sharing that process publicly in the belief that the more eyes and ears on our process the better outcomes for us and everyone else.

There has been a long standing debate in the past year over the need (or not) to increase the bitcoin block size. The debate has raged most intensely inside the small group of developers who have commit access to the bitcoin core. They are called the “core developers.” These software engineers control the basic architecture of bitcoin. This is how most open source software projects are managed and bitcoin is an open source software project at its core.

I won’t get into the technical arguments for and against the need (or not) to increase the block size. If you want to read up on it, I suggest you read Gavin Andresen’s blog, Mike Hearn’s blog post announcing the Bitcoin XT fork, and Rusty Russell’s blog post on the topic.

What is more interesting to me is that this XT fork showcases a number of interesting things about open source software and how it is governed. It also gets into the issues around trusting an open source system and the people who build it.

A group of open source core developers are a democratic system. They decide what gets “committed” to the code base and what does not. That generally works well but at times it does not. The debate around increasing the block size is an example of where that form of democracy is failing (or succeeding depending on where you sit in the block size debate).

So the developers who most fear a breakdown of bitcoin without a block size increase have taken it upon themselves to “fork” the bitcoin core and produce a new version called “Bitcoin XT.” Bitcoin XT is described here.

That’s where this gets interesting. Bitcoin is a democracy in more ways than its core developer group. The miners who operate the transactional infrastructure of bitcoin are also a democracy. They decide what software they want to run to mine bitcoin. And in doing so, they determine what technology will become the standard. The folks who have produced the Bitcoin XT fork are hoping that the miners will adopt their software. This is from the Bitcoin XT website and explains how this works:

By mining with Bitcoin XT you will produce blocks with a new version number. This indicates to the rest of the network that you support larger blocks. When 75% of the blocks are new-version blocks, a decision has been reached to start building larger blocks that will be rejected by Bitcoin Core nodes. At that point a waiting period of two weeks begins to allow news of the new consensus to spread and allow anyone who hasn’t upgraded yet to do so. During this time, existing Bitcoin Core nodes will be printing a message notifying the operators about the availability of an upgraded version.

If the hard fork occurs and you are still mining with Bitcoin Core, your node will reject the first new block that is larger than one megabyte in size. At that point there is a risk your newly mined coins will not be accepted at major exchanges or merchants.

So now that Bitcoin XT is out in the wild, the “market” will decide which version of bitcoin it wants to exist. And that market is driven by the miners. Of course, miners are not necessarily a representative sample of the entire bitcoin ecosystem. They have particular needs, desires, and are at times ruthless and mercenary. But they are the ones who operate the bitcoin transactional infrastructure and they will ultimately decide if the Bitcoin XT fork works or not.

It will be fascinating to watch this play out. If you are used to big corporations or governmental institutions making decisions behind closed doors about how your financial systems work, then you might enjoy watching a new model of innovation and technology evolution unfold. I believe we will see more and more things like this in the coming years.

For what it is worth, I support a larger block size and think it will be good for bitcoin. A list of supporters and detractors is here.

When your tech company was in need of new management you used to go get a proven executive, like Lou Gerstner or Meg Whitman, who had experience running large companies.

But now, it seems, you go get a strong technical person who rose up the ranks of product management and knows how to ship great products.

The new tech CEO archetype is a computer scientist who got into product management early in their career, led large product teams at a big important tech company, is in their 40s, and has great taste in technology, tech talent, and most of all tech products.

Marissa Mayer, Satya Nadella, and Sundar Pichai are examples of this archetype.

It’s not really different from what we look for in startup founders. Most of the time, the founders we back come from product backgrounds. They have a track record of building and shipping products. They are technical and can go toe to toe with their engineering team. They understand where technology is headed and they understand how software products are made and evolve.

When young people tell me they want to start or run a tech company, I always tell them to go work in product at a big tech company. I believe that product is the heart and soul of tech companies, it is where it all comes together. You can’t build a great company without great products (or great people).

So it’s heartening to me to see that the next generation of technology leaders is coming from product management. I think that bodes well for those companies and the tech industry in general.

This is an art project by Ian Cheng that is livestreaming on YouTube this month. My daughter Jessica helped Ian get this up and streaming. She works for Ian part-time.

What is cool about this art project is that it is machine made, meaning that the scenes are being created by a machine, and the project evolves over time. If you check in tomorrow, it will look different from what it looks like today because it has evolved over time.

We’ve been running this on the monitor in the USV lobby along with some other video art this month, so if you’ve been by our office you’ve probably seen this already.