Posts from August 2009

From Wall Street Analyst to Game Producer?

Our portfolio company Zynga is looking to hire a bunch of new product managers for their social games. And they are looking for them in an interesting place – Wall Street.

As founder/CEO Mark Pincus explained to me in an email, the product manager position requires strong analytical skills and a desire to do whatever it takes to get it right. They are finding that young people coming out of two year analyst programs (both consulting and investment banking) who are passionate about games and social networking are doing very well in this position. So they are looking for more.

Here's the spec:

Zynga’s Product Manager will be responsible for creating a list of
features to one of our hit games! This person will have to work
independently to provide a detailed roadmap on the implementation
process. The implementation process should include designing,
executing, and optimizing the feature(s).They’ll own the outcome of
these new features by working with our talented team of engineers to
get the features implemented.
Required Skills:
•       We are looking for an enthusiastic, performance-driven self-starter and team player
•       Demonstrated capacity for developing and understanding strategy
•       Strong aptitude for determining the optimal way to position products in the market
•       Strong passion for games
•       Strong organizational and analytical skills & attention to detail
•       BA/BS degree – CS/EE/Engineering degree preferred
•       2-5 years of experience in product management in consumer web
or game development OR another extremely analytical workplace!
•       Passion for creating fun, compelling and addictive user experiences
•       Passion for writing product specifications, white papers
•       Outstanding written and oral communication skills
•       Previous start-up experience is a strong plus, especially in social networking

Apply by sending your resume to [email protected] !

#VC & Technology

Disqus V3 Is Live On This Blog

Sometime in the past twelve hours, Disqus flipped a switch somewhere and this blog is now running V3. You can check it by leaving a comment to this post. Let me know what you think.

I believe it will be rolled out to the entire user base in the next week. Hopefully Daniel will stop by and leave a comment with a more specific time frame for the rollout.



Yesterday afternoon I celebrated my 48th birthday and the start of an end of summer vacation by playing nine holes of golf with my son. On the eighth hole, a 509 yard dogleg right, I bombed a drive far enough to get a look at the green. When we got to my ball, I asked my caddie for a six iron to lay up and he looked at me and shook his head. He said, "when you get the opportunity, you have to go for it". So I took the three wood from him and blasted a 230 yard shot that landed just short of the green, rolled right over the hole, and stopped six feet past. I then made the mistake I always make and gave away the hole and lipped out the putt coming back for a tap in birdie. I was so excited about that three wood shot that I reached into my bag on the walk from the eighth green to the ninth tee and send this message out to the world via twitter.

Just hit driver, three wood to six feet on the 8th hole at east hampton (dogleg par five) and lipped out the eagle put

And I got a few responses from friends advising me to put the phone back in the bag.

@fredwilson Put that phone down and play the game! – Plunkman


@fredwilson wow a tweet-filled round of golf – I hope I never get there myself 🙂Matt Blumberg

The day before, I was sitting in a friend's office showing him foursquare. My friend happens to run a number of fine restaurants in New York City and when I showed him how I could "check in" to his restaurant, he launched into a discussion of the impact of cell phones on the restaurant business. He pointed out to me that it might be nice to put the phone away and just enjoy a wonderful meal with friends and conversation.

Now I agree with Craig, Matt, and my friend about the need to put the phone away and enjoy life the old fashioned way. My blackberry stays in my golf bag most rounds since I don't often smoke a three wood 230+ yards to six feet. And my phone stays in my pocket during dinners. I like to "check in" to restaurants on foursquare before I walk in the door.

I also understand that many people will never twitter about their golf exploits or check into restaurants via foursquare. Not everyone wants to "life stream" like I do.

But a lot of people do. Extroversion on the web is a growing phenomenon. I see it with my kids who were trained in social media by Facebook and they were reluctant to embrace public social media like blogs, twitter, and the like. But they are coming around and public sharing of information is becoming much more accepted in their generation.

That is great news for Facebook as they try to move the default information sharing mode in their service to public. I bet they'll be reasonably successful with that.

And there is something about the mobile web that leads to more of this behavior. I've been playing golf for almost 35 years. I've had my share of great shots and most of them have been witnessed by a couple of friends at best. Yesterday, I shared the news with almost 30,000 people. Most probably couldn't care less. But I know that some of my followers do. I am sure my friend Steven Johnson smiled when he saw that tweet.

The fact is that if you are out and about and see something or do something special, you want to share it. And more and more people are doing just that. I did it this morning when I reached lazy point on my morning ride. It's a beautiful peaceful spot that I love and want to share with others. I'll leave you with this photo and the thought that extroversion has its place and that done right, its an additive experience in our lives and one we should celebrate.

Early bike ride to lazy point


Some Birthday Wishes

I’m forty-eight today and thought I’d share with you some wishes that will be going through my mind when I blow out the candles on the cake tonight.

1) This guy from IMF is right and that the “global recession is over” and the recovery is under way

2) That we get truly universal health care for all americans this year

3) That we’ll see cold fusion become a reality in our lifetime

4)  The IPO market for venture backed companies returns and will be healthy again

5) That we get at least one and ideally two viable mobile OS/app ecosystems other than the iPhone

6) That “TV Everywhere” really means TV everywhere

7) That the NY Knicks, Mets, and Jets start winning again before I give up on them

8) That if you are in a giving mood, you’ll contribute to my birthday challenge below:

#Random Posts

Tumblr and Music

N128392166150_9893 MySpace has always been the social media destination for musicians and their fans. The rumored acquisition of iLike (new mgmt's first purchase), suggests that music and entertainment will be even more of a focus for MySpace going forward as it looks to differentiate itself from Facebook and other social networks.

But I am starting to see evidence that musicians and their fans are starting to embrace Tumblr as an alternative music destination. Most of you know, but for those that don't, our firm has an investment in Tumblr and I host my personal weblog there as well.

I've been posting and sharing music on Tumblr for as long as I've been using it. Here's my personal radio station that is auto generated from the music I post to Tumblr. I've got a group of about fifteen or twenty tumblogs that I listen to every day and share music with. So Tumblr has always been a place where fans talk about and share music.

But recently I've found a bunch of new Tumblogs that suggest to me that "something is happening here". Universal Music has set up shop on Tumblr. So has Colin Meloy, the front man of the Decemberists. And last week, Soundcloud started a tumblog.

So in a short period of time, we are seeing labels, artists, and new music services setting up shop on Tumblr. I think we'll see more of this activity.

Like MySpace, it is easy to post music to Tumblr and share it with your friends and/or fans. Through features like favoriting (called "like" in Tumblr) and reblogging, the music can move virally through the Tumblr network, just like what happens in a traditional social net like MySpace.

But unlike MySpace, Tumblr is at its core a blogging service. You get your own space that you can do most anything with. You can domain map your tumblog like I have done so you control the domain and the traffic that comes to it.

I've noticed as my girls have turned into young adults that they have started blogs under their own names/domains. They still use Facebook like they always have, but there is something about wanting your own place on the web that you control that is fundamental to who we are. And I think it's as important in music as it is in any media type.

So I'm thinking that we are going to see more musicians and the music industry at large embrace Tumblr. And when that happens, the blogs that are already on Tumblr will benefit because their will be even more content to view in the dashboard and like and reblog. It's a virtuous circle and excited to be a part of it.

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The Ideal First Round Term Sheet

Chris Dixon is killing it on his blog right now. My post on saturday was inspired by a blog post of his and I am going to repeat that today.

Chris laid out the ideal set of first round terms and I agree with them. What's interesting is that Chris is a serial entrepreneur and I am a VC. And yet we agree on what the term sheet should say. That's progress.

In fact, Chris' favorite law firm, Gunderson, has put together a term sheet and a set of documents that we've been using lately to do a "quick closing". We were inspired by a number of people, most notably Paul Graham and Y Combinator who do this as well.

We are in the process of closing our first investment with the Gunderson docs. We (the VCs) don't have a law firm on this investment and we are not negotiating the documents. We agreed on the term sheet and we are closing on a set of documents we've signed off on prior to issuing the term sheet. They are "boilerplate documents."

There are multiple benefits to doing it this way. First, it leads to a very fast close. Second, the legal costs are minimal, certainly less than $10k and they should be less than $5k. And third, it sets the company up well for future rounds of financing because there is nothing funky in the docs.

It certainly doesn't hurt that the company's counsel, Gunderson, is a firm that we have used on multiple transactions as well. We trust them and so does the company.

I'd like to see this practice become standard in our industry. We need to lower the time and cost of raising capital. We need to eliminate a lot of bad terms that have caused a lot of harm (tranched investments, mutiple liquidation preferences, super pro-ratas, etc, etc). We need to converge on a set of standard Series A terms that everyone uses.

I'm really pleased to see that entrepreneurs, VCs, and the lawyers are all coming together on this issue. That's a very good sign

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Scanning Headlines

We all scan headlines, whether it's the printed newspaper, Techmeme, Huffington Post, Hacker News, Seeking Alpha, Google Reader, Google search results, or Twitter. That's the way we consume information. For any given set of headlines, we might click on one link and read a full story. That's the way I've been reading the newspaper since I was a teenager.

So it should not be surprising to anyone that the same is true online. Arnon Mishkin, a partner at Mitchell Madison Group, has a post on Paid Content where he asserts that:

We did a study of traffic on several sites that aggregate purely a menu
of news stories. In all cases, there was at least twice as much traffic
on the home page as there were clicks going to the stories that were on

What that says to me is one out of every two visitors found nothing they wanted to dig deeper on when visiting one of these link pages. And that may well be true.

But it does not mean that the other 50%, who did click on a link and go visit a story, are not valuable.

I get 52% of my monthly visits from "referring traffic". And another 16% from search. Only 32% of my monthly visits come direct.

So if I somehow took my posts out of the "link economy", my traffic would in theory decrease by 68%.

It's the sad truth of the content business, certainly many parts of the content business, on the Internet. If you are a content owner, the front door to your content has moved to a place you don't control. You can get it back by walking away from the link economy. But I don't see many content owners doing that. It's likely suicide.

As Arnon points out, the better move is to try to become an aggregator.

Consider partnering with other content makers and developing appropriate aggregation sites of their own.

NBC and News Corp did that with Hulu and the results so far appear to be quite good. If the front page of linked to everything interesting on the web instead of just their own stories, they could play the same game. I understand the organization reluctance to do that, but I wonder if they have any other choice.

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Milestone Based Investing

Early stage venture capital is by definition milestone based investing. The entrepreneur raises enough capital to get to a significantly different place with his or her business and both the entrepreneur and the investor hope that the next round will be done at a significantly higher price that reflects the progress made.

This is one of the main reasons why I think early stage venture capital is a much less risky form of investing than many outsiders think. Most experienced venture capital investors scale the dollars invested in a startup such that they don’t have much capital at risk when the investment is the most speculative and they increase the capital invested as the risk is mitigated.

But sometimes investors get too cute with this milestone based investing approach and try to build that into the investment round itself. This is called “tranched investing” and serial entrepreneur Chris Dixon has a post on it this morning.

I agree with Chris that tranched investing is a bad idea all around. But first, let me explain how it works.

The entrepreneur will agree to raise a set amount of money, let’s call it $3mm for a set amount of equity, let’s say it is 25% of the company ($9mm pre, $12mm post). If it is three tranches, then $1mm will come in at the first closing and the entrepreneur will dilute 8.33% (1/3 of 25%). There will be a set of agreed upon milestones set in advance. Let’s say tranche two miletstone is the shipping of a product and tranche three is the first contracted revenue for that product. When each of those milestones is hit, the investors will invest the second and third $1mm tranches and the entire round will be completed and the full 25% dilution will have been taken.

Let’s be honest and see this as what it is. It’s an option for the investor to put more money in at the old price as the investment increases in value and the risk is mitigated. It’s a bad deal for the entpreneur and a great deal for the investor.

But as Chris explains, there are other problems with this approach:

Milestones change anyway:  At the early stage you often realize that
what milestones you originally thought were important actually were the
wrong milestones.   So you either have to renegotiate the milestones or
the entrepreneur ends up targeting the wrong things just to get the

The idea that you are going to hard wire the key goals of an early stage company is nutty. The best entpreneurs weave and bob their way into the market, changing things as they go. Setting hard goals is a mistake early on in the life of a company.

The idea behind tranching is right which is to limit the capital at risk (and the dilution) until the business increases in value and risk is mitigated. The right way to do this is raise smaller rounds more frequently and negotiate the prices of each financing as the round is done.

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Sports and Cards Analogies

Business is filled with sports analogies. I myself made one via twitter last week.

But I prefer card games when it comes to business analogies. I blogged about the poker analogy early in the days of this blog. And recently, I talked about doubling down.

We were playing texas hold'em at home last night (with real cards and chips, not on Facebook) and it occurred to me that card games are a great way to learn important business lessons.

I was watching my son Josh evaluate the risk of sticking with a losing hand or folding. That's something we have to deal with in the venture capital business all the time and it's not an easy decision. It gets harder the more money you have on the line.

And the decision about how much to bet early on is also directly relevant to business. If you have great cards, you might be tempted to bet a lot right off the bat, but doing so may lead to the other players folding. So you want to suck the other players in by betting less early in the hand and increasing it over time. I've worked with a number of companies who have had "great hands" but have not shared that with anyone waiting for as long as possible to reveal the strength of their business. I'm not saying that playing business with your cards close to your vest is always the right approach, but at times it is.

I'm not a huge bridge player but it is not surprising to me that Warren Buffet and Bill Gates are fanatic bridge players. Cards and business have a lot in common.

Playing cards also sharpens the mind. I try to count cards when I am playing a hand. I'm not as good at it as I'd like to be. When I'm on vacation and playing a lot of cards with the family, I find myself getting better at counting. It's a great way to exercise the mind (at least the left side of the brain).

Business is competitive. So looking at sports and cards for business analogies is a good practice. It can help bring a concept home to a team you are working with and it can help close a deal you are negotiating. If you have any good ones to share, leave them in the comments.

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