Posts from entrepreneurship

Hashtags As Social Networks

Our portfolio company Kik launched hashtags yesterday. Kik is a mobile messenger so in Kik’s model hashtags are private or public group chats.

If I send a hashtag to a friend in Kik that says let’s chat about tonight’s knicks game at #knickskik, then that becomes a private group between me and that friend (and any others who we invite). I’ve done that so the #knickskik hashtag is now private on Kik.

But hashtags can also be public. If you have the latest version of Kik on your phone (came out yesterday), type #avckikgroup into a chat and then click on that link. Up to 50 of us can be in that group.

The cool thing about Kik is that it doesn’t use phone numbers like other messengers. It uses usernames and is not tied to your phone number or Facebook username. And so Kik, unlike other messengers, is used for both chatting with people you know (like other messengers) and people you don’t know.

That makes Kik an ideal platform for these public (and searchable) group chats. You can meet people in these public chatrooms and then take your conversations private in a one to one chat in Kik.

Ted Livingston, Kik’s founder and CEO, called this “hashtags as social networks” in a blog post yesterday.  I agree with Ted that Facebook’s model of the one network to rule them all has not really worked and that many of us are using messengers as defacto social networks. My friend Kirk told me that his wife’s family uses a group in WhatsApp like their personal family facebook feed. I think that’s the phase of social networking we are now into and so Kik’s hashtag as social network model makes a ton of sense to me.

The Perfect Board

Last month Sam Altman wrote a post about board members and why you should want them. I read it and then tweeted it out:

In Sam’s post, he says:

Personally, I think the ideal board structure for most early-stage companies is a 5-member board with 2 founders, 2 investors, and one outsider.  I think a 4-member board with 2 founders, 1 investor and 1 outsider is also good (in practice, the even number is almost never a problem).

I’ve been serving on boards for 25 years. I’ve been in every conceivable configuration. To my mind, the perfect board is either five or seven and it looks like this:

Founder CEO, Two Independents, Two Investors

Founder CEO, Three Independents, Three Investors

If the Founder is no longer the CEO, then I like this configuration:

CEO, Founder, Two Independents, Three Investors

If you have less than three investors (yay!), then replace investors with independents in each formula and you’ve got a winning configuration.

An entrepreneur the Gotham Gal is invested in asked me this question via email a few weeks ago, and I told him this:

This is a long way of saying that you aren’t done once you put one independent on the board. You are going to need a bunch.
Finally – don’t try to satisfy your VCs. They will want “names” “trophies” and the like. Satisfy yourself. Find people, ideally peer CEOs, you like respect and want to spend time with who you know can and will add value.
A great company deserves a great board. And a great board has bunch of people on it, ideally a bunch of people who are experienced at running a business, growing a business, and dealing with all the stuff that comes with that. Do yourself a favor and build a great board for your company.

Development Is Cheap. Production Is Not.

This is a line from a blog post written by my brother in law Jerry Solomon. He is talking about film production, specifically short form videos. But the point is true of all projects, from designing a building, a home, a film, an art project, a hardware project, a software project, or whatever.

The design process is relatively inexpensive. The build process is not.

In the kinds of companies we invest in the “development” work comes from the product organization. The “production” work comes from the engineering team.

I have seen engineering teams spin their wheels and burn through countless hours of writing code that ends up getting tossed out just because the design process was not right or not specific enough or not thought through enough.

While we might think these issues and challenges are unique to the world of tech, software, internet, and mobile, the truth is these issues pervade everywhere you are making something.

This is not so applicable to a startup trying to find product market fit. But it becomes very relevant once your company starts to scale. A commitment to thinking things through, getting it right at the start, and being efficient in the “production” process is something all great companies figure out how to do. It’s really important.

Veniam

I’ve been talking a lot and writing a lot about mesh networking. I think it has the potential to wrest control of the last mile of the wired and wireless internet from the carriers who mostly control it around the world. Peter Kafka noticed yesterday that we had finally put those words to work with a mesh networking investment:

We made this investment, in a neat company called Veniam that comes out of Porto Portugal, some time earlier this year but they finally got around to announcing it yesterday.

My partner Brad talked about it in a short post on usv.com yesterday. And our partner in the investment Om Malik talked about it here.

I had breakfast with Om in NYC earlier this year and told him about Veniam. Those breakfasts do pay dividends eventually. This is how Om describes that breakfast and what came of it:

Union Square Ventures’ Fred Wilson introduced me to João after a long, spirited discussion about network neutrality, new models of networks, and policies that will influence the future of the internet. As we walked back to our office (aka my favorite cafe), he said, “You should talk to this guy in Portugal that my partner Brad [Burnham] has been in touch with. He has some interesting ideas.” An email introduction with João followed, and we were soon talking to each other via Skype. He quickly came to San Francisco, and we met for coffee on the weekend and then again the next day. João likes to talk: It is his super power. And here we are.

So enough about all of that. What does Veniam do? They make a “stack” of wireless technology that lets moving objects (think buses, garbage trucks, cars, vans, etc) carry a wifi access point/router and mesh with each other and anyone else who wants to join the network. With enough density, buses driving around your city can provision a wireless mesh that anyone can use on their smartphone when they are out and about. It’s a big vision and will take a lot of work (and luck) to realize, but this or something like it is eventually going to work and we are going to have a better way to access the internet on our phones than we have today.

Here’s a video of Veniam’s technology in action in Porto. I suspect you will want this in your city too. I certainly do.

The Emerging Architecture Of Internet Applications

The bitcoin blockchain is not just going to change the way money works on the Internet (and off). It’s going to change the way Internet applications are built. We have been working hard to understand how things are going to look in five to ten years and Joel Monegro has been providing much of that thought leadership inside our firm.

Since we are not into keeping our insights to ourselves, we have encouraged Joel to publish all of our work in this area (and every area). And today Joel has posted something that is really important and needs to be understood by every Internet/mobile entrepreneur, investor, developer, employee, and analyst. It is the blockchain stack and it looks like this.

blockchain stack

The most important things to understand about this blockchain stack are the overlay networks (most of which are still emerging), and the shared data layer and the shared protocol layer. Please read Joel’s post which describes each of these in some detail.

What is most important about this emerging stack is, in Joel’s words,

This imposes a very interesting set of challenges for developers, entrepreneurs, and investors as so much of the value in the current Internet stack will be commoditized by this architecture.

Differentiation and defensibility and network effects will be much harder to obtain with this architecture. Most things will work like email. Take your keys from one app to another and all your data and relationships come with it.

Fun times are ahead. Time to put your seat belt on.

A Couple Of Good Books For Entrepreneurs

I feel like we are in this zone where everyone is doing a startup. Of course that is a great thing. Getting people out of dead end jobs and into their creative zone seems like a good thing no matter what the outcome. There is a flood of angel and seed capital flowing through the economy and it is easier than ever to do the thing you’ve always wanted to do.

Another thing that is driving this startup phase is the plethora of information on how to do it. It started with blogs, like this one, but has moved to podcasts, videos, and books. It is so easy to share what you’ve learned these days that more and more people are doing exactly that.

Two friends of mine have recently published books that are excellent and quick reads for entrepreneurs.

Randy Hunt is the Creative Director at Etsy. He built and leads Etsy’s team of designers who help create Etsy’s web and mobile applications. He has taken everything he’s learned in that role over the past five years and put it down on paper. The book is called Product Design For The Web, but it is highly relevant for designing mobile applications as well. The great thing about Randy’s book is you don’t need to be deeply technical to get value out of it. In fact, I think it might be most useful to someone who is just getting into designing interactive applications.

But knowing how to design and build something is not the only thing you need to know. Maybe most importantly you need to know what to build.

My friend Frank Rimalovski has been a VC since the late 90s. He currently runs the NYU Entrepreneurial Institute and the NYU Innovation Venture Fund. He explains in this blog post that in the 16 years he’s been working with entrepreneurs, he has seen countless numbers of them build something first and only then seek customer feedback. Frank believes that seeking feedback after you’ve built the product is tough because by then you are so invested in your product that you don’t hear the negatives well enough. And so he and another friend, and sometimes commenter at AVC, Giff Constable, have written Talking To Humans, a book that explains how to do the customer development interviews in a way that will get you the most accurate and actionable feedback.

Reading these two books in tandem will help you figure out exactly what to build and how to design it in a way that users will love it. And that is a recipe for success in the startup world.

Paul Graham Dropping Serious Wisdom

Every so often Paul Graham will email me something and say “can you read this before I post it?”. He did that last week. It was a talk he was going to deliver in Sam Altman‘s startup class. It was great. I told him I wouldn’t change a thing. I am not sure if he changed it before he delivered it, but what I do know is he posted it yesterday. And here it is.

I just went back to my emails with him and pulled these quotes out for all of you. These are some nuggets that I particularly liked.

On Investors – “our function is to tell founders things they will ignore”

On Selecting Investors, Co-Founders, Etc – “If you’re thinking about getting involved with someone– as a cofounder, an employee, an investor, or an acquirer– and you have misgivings about them, trust your gut. If someone seems slippery, or bogus, or a jerk, don’t ignore it.”

On Knowing About Business Before Doing A Startup – “The way to succeed in a startup is not to be an expert on startups, but to be an expert on your users.”

On Success – “Y Combinator has now funded several companies that can be called big successes, and in every single case the founders say the same thing. It never gets any easier. The nature of the problems change. You’re worrying about construction delays at your London office instead of the broken air conditioner in your studio apartment. But the total volume of worry never decreases; if anything it increases.”

On Finding The Next Big Thing – “If you think of technology as something that’s spreading like a sort of fractal stain, almost every point on the edge represents an interesting problem.”

Those are the quotes I called out in my emails back to Paul. They all resonate hugely with me. But the whole post is great. Give it a read.