Posts from March 2011

When music and computers come together, interesting stuff happens. When I was a kid, I'd imagine that my entire record collection was a bunch of digital files that I could access from any computer. I thought we'd all own huge file servers full of our music. I got it sort of right. I missed the cloud and streaming thing. But I've been thinking of what can happen when computers and music come together for a long time, at least 45 years, and I've been writing about this passion of mine since I started blogging in the fall of 2003.

Last month I posted a rant called Anatomy Of A Pirate in which I detailed my efforts to buy a record called Computers and Blues by The Streets. It was a healthy conversation (450 comments) and a fair bit of hating and loving on Twitter too.

I guess the record company in question saw the post because I got this email yesterday (name of sender withheld by request):

Since you're a fan, I wanted you to know The Streets' Computers and Blues will be released digitally next week by Rhino Records here in the US.

It's frustrating when albums don't have coordinated/shared international release dates - especially at digital retail - but it's not always that simple. Label repertoires can vary greatly by territory; oftentimes there are different rights holders/distributors depending on where the title is released.

In this case, Atlantic Records US is not the repertoire owner. The Streets are not on Atlantic's roster and Atlantic wasn't scheduled to release Computers and Blues. (As a fan, I personally badgered my contacts for months trying to get information on the project.) 

Rhino Records and the Warner Music UK int'l team worked ridiculously fast to gain the clearances necessary to schedule this title to US digital partners, including the publishing approvals that are typically out of our hands.  I know it seems like another example of the recorded music industry dropping the ball, a lot of hard work went into getting this release approved for US release, and quickly.

A while back a portfolio company of ours was working on a critical deal. The deal team was the chairman and the CEO of our portfolio company and me. It was one of those deals that had quite a few twists and turns. It almost fell apart several times.

A few days before the deal was to close, I got a short voice mail from the CEO of the company we were doing the deal with. It simply said "call me." I picked up that voice mail around 10pm and I thought it was too late to call. So I tossed and turned all night thinking the deal was dead.

At 8am the next morning, I called the CEO. Turns out he wanted to talk about something completely different. And at the end of the call, he said "how's our deal going?" I told him "just fine."

Then I picked up the phone and called the Chairman and CEO of our portfolio company. I told them the story, how I had freaked out when I got the voice mail, how I had tossed and turned all night, and how it turned out to be nothing. They laughed and thanked me for not sharing the voice mail with them the night before. I acknowledged the wisdom of that decision and added that "freakouts should not go viral".

UPDATE: Our very own Andy Swan has posted his version of the freakout that ends a bit differently than my story.

A few years ago, I was doing a talk at some conference. As I came off stage, a guy came on after me. He grabbed the mic and started rapping. Or at least it seemed like he was rapping. I stood on the side of the stage and was mesmerized. Out came advice, stories, staccato, fast and furious, with intensity and passion. I said to myself, "I have to know who this person is."

That person was and is Gary Vaynerchuk and after that moment we became fast friends. We share the same passions; social media, community, technology, business, entrepreneurship, and the Jets. Some of those passions have worked out better than others.

Gary's first book, Crush It, was more or less a bookification of the talk he gave that day. If I could pick one book that would make you quit your job and do a startup, that would be it.

He's followed up Crush It with a second book that went on sale yesterday. It is called The Thank You Economy. Gary sent me an advance copy of Thank You and he asked me to hold off on talking about it until it went on sale.

Thank You is a different book. It is about the power of social media, communities, and real people on your business and brand. Gary talks about how the small store owner knows his customers, greets them when they walk in the door, knows what they want, their family members' names, and what is going on in their lives. And the result is loyalty, trust, and repeatable business. He talks about how social media and communities allow entrepreneurs and brands to do a similar thing at scale online.

Readers of this blog have seen this in action here at AVC. This is a lesson I learned myself seven or eight years ago when I started blogging. And it has impacted everything I do in business. The same is true of Gary.

This is an important lesson for entrepreneurs, business owners, and brands, large and small. Some of you have already adopted this way of doing business. If you have, then maybe you won't find this book that eye opening. For those who are just dipping their toes into these waters, this is a book you need to read. You can get it on Kindle or in hardcover form.

We've invested in a few pivots over the years. Twitter is the one that immediately comes to mind. But we invested post pivot there. Return Path's pivot from email change of address to email deliverability happened after my investment and it is a real success story that Matt should blog about (or write a book about because it is a long story).

We've got a pivot in action in our portfolio right now called Hashable.

Hashable is "the ultimate networking app. Exchange business cards, make easy intros and 'check-in' with people to track meetings and calls." If you want to try it out, you can get the iPhone app here, the Android app here, or the web app out here.

Hashable started out as Tracked.com which I blogged about in Oct 2009. Tracked was a competitor to Yahoo Finance and Google Finance. It had a bunch of improvements over both services but it never gained traction. In the winter/spring of 2010, after trying for about six months to launch Tracked.com, the team decided to mothball Tracked.com, which is still live, and focus elsewhere.

The founder, Mike Yavonditte, cut his team down to about five or six people, took the burn way down, and brought in a few new product people (Emily, Teddy, Dave and Oz). Together they thought about different problems that had yet to be solved on the Internet as well as new tools and techniques that were available to them.

The "new tools" they focused on were Twitter, hashtags (that's where the name comes from), checkins, and the social web. The problem they wanted to solve was creating a better database of business connections, based on real world interactions (doing an intro, meeting someone, exchanging business cards, a meal, a meeting, etc). Just like Foursquare allows you to build a database of places you've actually been to, Hashable allows you to build a database of people you've actually met or are going to meet.

They launched a web version of Hashable invite only in the fall of last year and got a very active user base very quickly. The leaderboards and social interactions worked very well. But they also got a lot of feedback on the privacy model. It turns out most people don't want to share their business meetings and business intros publicly. And most importantly, they figured out that Hashable was a mobile first, web second application.

So back to the drawing board one more time. Over the winter, they rebuilt the app, went from default public to default private, and built two awesome mobile apps.

And now, just in time for SXSW (the ultimate networking event) they have launched Hashable (the ultimate networking app). I suggest getting one of the two mobile apps if you have an iPhone or Android and giving it a spin. If you are going to SXSW, you will see Hashable in action.

I'm a big believer in using real world interactions to build a social graph that reflects your real relationships. That in a nutshell is what Hashable is all about. Give it a spin and let me know what you think.

We are taking a break from our regularly scheduled programming (MBA Mondays) to share some exciting news about our newest portfolio company. I wrote this post on the USV blog and am cross posting it here.

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At Union Square Ventures, we seek to invest in large networks of engaged users. And we believe that the new beachhead for creating large networks is the mobile device.

When you look at the engaged user on the mobile device, the thing you notice is that messaging is the killer app. People like to talk and increasingly people like to text. But sms has all sorts of issues. It costs money to send a text. There has been a maddening lack of innovation in the sms channel.

So it makes total sense that something will come along and replace texting and we believe that thing is mobile push. And we think the killer app for mobile push is messaging. And for the past year, we have been seeking to make an investment in mobile messaging built on the push channel.

There are no lack of startups innovating in this sector. In fact, there are a ton of them. It is a very crowded space and we have had the benefit of meeting with and getting to know many of the teams working in this sector. There are a handful of excellent teams and excellent apps in this sector. Choosing a team to back has been hard for us.

Today, we have finally made that choice. Our newest portfolio company, Kik, has announced that it has raised a round of financing from RRE, Spark, and our firm. I am joining the board along with Adam Ludwin from RRE.

You may wonder – how did we decide which mobile messaging startup to back? For us, it came down to the product and the team. The Kik product is simple, fast, and elegant. It gets the job done and doesn't get in the way. And the team, led by founder Ted Livingston, has a vision for how to package a lot of power and functionality into a simple, easy, and quick utility. We believe that less is more and that message delivery speed is paramount.

If you want to experience Kik yourself, please visit the download page and give it a try.

Last week I blogged about mobile notifications which I think is a big game changer. There are a few other aspects of the mobile experience that I think present great opportunity. Another one is the always logged in experience.

On the web, you may or may not have a web app open in a tab in your browser and you may or may not be logged into it. But on your mobile, you are permanently logged into every app you have on your device. When you get a notification, you click on it and are taken right to the exact part of the mobile app you want to engage with. No log in is required. That in and of itself is a big deal.

But there is something more interesting. Think about OAuth and Facebook Connect and Sign In With Twitter and other similar techniques for signing into and connecting to apps. When you have lots of apps on your mobile device and you are permanently logged into them, there are a host of opportunities that open up which are harder to execute in the current web app paradigm.

Imagine you are building a mobile app that connects to the Facebook platform, the Twitter platform, the Foursquare platform, and the Google Maps platform. Assuming your users have all of those apps on their mobile, you can quickly and easily do the connections directly on the mobile device. And then you can pull data from those apps to create new experiences for the mobile users. You can create cross app notifications and other data driven experiences for users.

Like with mobile notifications, I have not done a deep dive on where we are with all of this stuff. Is there a mobile implementation of oauth that doesn't require a browser session to do the auth? Can one app deliver notifications that take the user to another app?

When I was at the music hackday a few weekends ago, I noticed that it was easy to build something interesting by simply snapping together a few web apps and then building some light glue between them. I suspect it will be even easier to do that on mobile and the era of "meta apps" that deliver functionality across multiple apps is upon us. And I think that has the potential to create some new startup opportunities.

The Goodwin Proctor "Founders Toolbox" blog posted an interview with the Gotham Gal yesterday. It's very good. So I'm cross posting it here.

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Name, Age, Current Occupation: Joanne Wilson, 49, Blogger, Angel Investor, Mentor and Philanthropist

My start-up path: I started out working as a buyer at Macy’s and then I ran a company in the garment district. While raising my kids as a stay-at-home mom, I started helping friends grow businesses, and I ended up working with Jason Calacanis at the Silicon Alley Reporter. We grew the business from a five-page stapled magazine into a beautiful magazine. I went on to chair MOUSE and then sat on a variety of for-profit and non-profit boards. Seven years ago, I started blogging. Then I became an investor in Lockhart Steele [the visionary behind Curbed], the blogosphere took off and by that point, my kids were older. So, I became an angel investor. I returned to this because I have always liked start-ups, growth and building a company. I enjoy helping entrepreneurs.

I start my day at 7 am and I end my day at all different times.

The biggest challenge of being an investor is: You can give advice, but the company doesn’t always have to take it. Entrepreneurs will ultimately make their own decisions. You have to trust that you put your money behind an entrepreneur that you believe in.

I find that new entrepreneurs struggle the most with understanding: Their valuation. You need to be realistic about your valuation and your potential growth in the company. You have to listen to the market. If you start a business and think it’s genius (as you should) and are totally into it but can’t get anyone to fund you, then maybe you should think about why. The market is telling you something.

My role as an investor in start-ups is: Sitting on the board of directors and acting as a mentor. There’s really no one for a CEO to talk to except for their investors and other CEOs. I like to help people think in the weeds and out of the weeds. It might be giving guidance on who to hire or feedback on whether to spend money on a new campaign.

Any thoughts on why there aren’t more female hackers? Is the gender disparity in start-ups environmental or is it more complicated than that? It’s environmental from the time you come out of the womb. Boys gravitate towards blocks. Girls gravitate to the dolls. That’s a generalization but in general, its true. I look at my own kids – my son, gamer extraordinaire. My daughters used to play those games but then they lost interest. I do think you’ll see more women in programming because of where we are going as a society over the next 10 years or so.

Is New York a better city to start a company for women compared to Silicon Valley and  Boston? Content companies in New York are exploding. And content is great for women. There’s a huge support community for women entrepreneurs. We just need to find each other and connect better. I went to a TechStars event and there were 10 women there! We need to not be focused on the fact that there’s not enough women. We just need to celebrate the women that are in the community already.

How will creating a stronger, deeper community of women entrepreneurs impact the overall tech and entrepreneur community? The impact is huge. Tech is a platform. It will seep into our economy, younger children and create better, longer lasting companies. We hope that from theWomen Entrepreneurs Festival there will be conversations and mentorships that come about and that women will see from the different panels all of the opportunities that are out there.

The differences between a female entrepreneur and a male entrepreneur are: An entrepreneur is an idea maker who executes on an idea. Every person, man or woman, has differences. But companies are better off when there’s a balance of genders. Women tend to provide more of a community, an understanding and a softer ear than men. But I know men who provide those same things.

One area where women could improve is: Women don’t stand on a table and say I rule.

The best piece of legal advice I ever received was: Read the document. Just because you have a lawyer, don’t assume that they are doing everything the way that you want.

The one legal concept I didn’t understand at the outset was: At the beginning, I didn’t fully understand post versus pre-valuation and convertible debt. You have to be in it to get it. It’s like anything else – someone can teach it to you, but when you get legal advice, until you actually have to use it, you don’t fully understand it.

Right now, the books I’m reading are: I am a huge reader. I just finished Mr. Peanut by Adam Ross. I just started reading about Keith Richards…what a life that guy had. I have a bunch sitting on my nightstand.

The blogs I’m reading are: I read the blogs of all of the companies I’m involved with.

It's friday so it's time for another suggested post from the amazing comment thread on the bloggers block post. Mark Suster suggested:

how about a post on your partners: who they are, how you guys work together & a bit more about how you guys reach decisions on deals?

I have two and half partners at Union Square Ventures.

Brad Burnham – Brad and I founded USV together in the summer/fall of 2003. We had both been in the venture business for more than a decade, had made a fair bit of money, but were still hungry to prove ourselves. Brad is the strategist and the most principled investor in our firm. It was Brad's idea to write a treatise on venture capital and the internet before we set off to raise our first fund and that exercise we did together continues to be our guding light. Brad is the person behind phrases like "the application layer of the technology stack" and "large networks of engaged users" that I use all the time. He gives me most of my good stuff which I often get credit for.

Albert Wenger – Albert was the President of Delicious until it was sold to Yahoo!. After that sale, he joined USV as a venture partner and as a general partner when we raised our second fund in 2008. I can't image operating USV wihtout Albert but we did for our first several years. Albert is hacker who still codes stuff up in his spare time. He's been a CTO, a VP Engineering, and has run businesses. And he is a great investor too. And he's the most underrated blogger in our firm. Albert has a very analytical mind, asks piercing questions, and thinks deeply about the web, its underlying technologies, and new business models.

John Buttrick – I can't link to John because he's managed to avoid any social media presence in his first fifty years on planet earth. We will get him on our website, but I'm not confident we will get him to do much more than that. John joined us officially in December when we raised our Opportunity Fund. You can read a bit about him in my post on the Opportunity Fund. John's been hanging around USV since formation advising us on legal, financial, and operational stuff. He's helping us evaluate the more established businesses we look at, but more than that he's helping us rethink the way we raise funds, structure funds, communicate with our investors, and run our firm. It's great having him around.

We run our busines in the model of the "sleepy little firm" that I spent my first ten years in the venture capital business with. We all work out of a single office. We have a total of six and half (John is half time) people at USV. It is quiet in the office on many days when we are out and about visiting companies. We value trust, respect, and consensus. We don't invest in companies that everyone is not 100% behind. We never vote. We don't exercise vetos. We don't yell. We don't blame each other for our failures, we blame our team, our process, and our collective decision making.

Many people think I am the "lead partner" at USV. That could not be further from the truth. Brad should get most of the credit for setting a strategy that we have executed very well. Albert should get the credit for steering us into new areas we would not have been in without him. I get to be the front man but that's really the easisest job in the partnership.

We are a true partnership where each person contributes deeply to our collective success. Trust and respect are the key operating words. And once a partner has worked one fund with us together, we are equal partners and share in the profits equally. We don't want to have too many partners and I don't think we will add many more. Maybe one more, maybe not. We will see. We are doing fine with the ones we have right now.

I love working in this partnership. It is easy, it works, and it has proven itself.

My two favorite tech news aggregators are Techmeme and Hacker News. I visit both multiple times per day for a quick scan of what is going on in techland.

They are very different and you can see that in action this morning. 

Here is the above the fold Techmeme right now (9am eastern):

We might as well call Techmeme news.apple.com many days. Or news.facebook.com or news.google.com or news.twitter.com. Techmeme is obsessive about the top companies and top stories of the moment.

Here's the above the fold for Hacker News right now (9am eastern):

Way more stories above the fold. Way more diversity. Very geeky. But you get plenty of stories about non tech stuff and the stories move rapidly through the system. And not one story about Apple or Facebook in the top 20 right now.

I use both multiple times per day, but I really love what Hacker News is doing and I struggle with Techmeme which feels a bit like an echo chamber on many days.