it took me about a nanosecond to click on that link and add a stop sopa banner to my twitter avatar. this is something i’ve wanted and expected for a month or more. now i’ve got it. slowly my twitter feed is filling up with avatars with the stop sopa banner on them.
my dream is all of twitter fills up with this banner. then maybe the politicians in washington will realize that the people don’t want their lousy idea of a piracy bill.
please join me in making this political statement.
So you've built and launched your product. It is well received. You've acheived "product market fit" and it is time to get more users or customers. You've graduated from the "building product" stage and have entered the "building usage" phase. What does this mean for your team?
Well first and foremost, it means you are going to have start building your team. You will need more engineers because you will have to scale the product/service and you will need to continue to build it out, make it available on more devices, and listen to and adapt to the needs of the market. You will need to make sure your product team grows in lockstep with your engineering team and the demands of your users. You will need more customer support/community team members because more users means more users you must engage with and support. You will need to think about a marketing person because acquiring more users is called marketing. You will need to think about business development because you will want to talk with other companies for distribution and for product/service integration. And you may need to hire a sales team if your product has an enterprise/SAAS focus. Finally, you might think about staffing business operations/HR/finance/legal which is probably consuming a fair bit of your time.
The one/two/three/four/or five person team that got your product to market and achieved product market fit is going to grow to at least double that and you may find yourself with upwards of twenty people by the time you are moving out of the "building usage" phase.
Your first management issue is likely to be in engineering because that is where most companies of this stage have the vast majority of their headcount. Your technical co-founder or lead engineer will find themselves managing more than coding. Managing engineering means quite a few things. It means recruiting more engineers. This is a huge time sink but it has to be done. It means retaining engineers. And it occasionally means terminating engineers. But more than building and managing headcount, managing engineers mean making sure the right people are working on the right things, it means making sure the teams are performing well, it means resolving roadblocks. It means creating the right environment for your engineers to be successful.
And many technical co-founders and lead engineers aren't the kind of people who enjoy managing. They would rather be building the product than building the team. You have a few options at this point. You can help your lead engineer become a good manager. I strongly suggest that because everyone can and should become better at managing people. Even if your lead engineer doesn't become your VP Engineering in the long run, this will have been a good investment. But you should also be actively discussing the long term management roadmap in engineering with your lead engineer and if it makes sense, you may have to bring in a VP Engineering who is a great manager and move your technical co-founder or lead engineer into a more technical role. That is often the CTO role.
The other management challenge at this stage is likely to be your own. If you go back to that second paragraph, you will see that many of the hires that are made in the "building usage" stage are going to report directly to the founder/CEO. The additional product hires may report to you because it is likely that you are running product as well. The community team may report to you. And who is leading that team? The business development person, the marketing person, the admin/finance/HR/legal person, and probably all the sales people are likely reporting to you. Have you ever had ten or twelve reports? It is not fun.
A founder/CEO in a management crisis at this stage of the company is a very common thing. In some ways it is unavoidable. None of the teams, other than possibly engineering, is large enough to have its own manager. And so the founder/CEO is mangaing the rest of the business. The best thing you can do in this situation is find other members of the team who have management talent or inclination and invest in their ability to help you manage the team. These is your bench so invest in it and let it help you. During this phase you will find your leaders for the next phase. Just because you have a flat structure and a lean organization doesn't mean you can't be investing in management.
Investing in management means building communication systems, business processes, feedback, and routines that let you scale the business and team as efficiently as possible. I strongly suggest that founder/CEOs at the "building usage" stage start working with coaches. CEO coaches can help you build your own management skills and can help you think about how to build management skills and processes on your team as well. If you have talented managers on your team that you want to invest in, offer them coaches as well.
The "building product" stage is all about individual contributors. And the "building usage" stage continues to be largely about individual contributors. But management starts to creep into the equation at this point. Strong individual contributors are often not natural managers. Some can make the transition. Some can't. And some may not even want to try. This is a very difficult and painful process and a huge management challenge for the founder/CEO.
Next week we will talk about the "building the company" phase when management starts taking a front seat to everything else.
This latin phrase translates to "first, do no harm" and is one of the principal tenets of the Hippocratic Oath that doctors take. I've been thinking about it a lot in the context of web services recently.
We all know about the many web services that have been purchased by large companies and have fallen by the wayside in the years following the acquisition. Services like delicious, myspace, flickr, bebo, and many more come to mind.
But there are also examples of web services that have not only survived, but thrived, under corporate ownership. Here in NYC two that I use daily are Reddit and Vimeo.
Reddit was purchased by Conde Nast in October of 2006. Here's how Reddit has done against its primary competitor Digg under Conde Nast's ownership:
Vimeo was purchased by IAC in August 2006. Here's how Vimeo has done since then:
And yet these two services have thrived under their corporate owners. What can we learn from that?
First and foremost, web services that are working should not be subject to wholesale change and reinvention. The investment that is made in product should go into scaling the system so that more users can access it at the same time, so that the service is reliable and available, and so that users get a great experience when they come to use the service. Changes that are made should be done incrementally and carefully. If it is not broken, don't fix it.
I do not mean to suggest that the teams that have been working on these two services haven't done anything. Both services have grown and developed into market leading web services. The work that has been done on them has been very good.
And it is also true that both Reddit and Vimeo have strong engaged communities of users who make the products what they are. And to Conde Nast and IAC's credit, the corporate owners have not done anything to alienate those communities. They have let these services and communities grow and develop slowly, patiently, and succcessfully.
I think there's a lot to learn from these two examples. Not just for corporate owners but for all operators of web services. Primum Non Nocere.
Our very own Kid Mercury has built a learning community (and game) called Fredsquare. The following is a guest post he has written to introduce all of you to it. I hope you’ll visit Fredsquare, play the game, and learn a bit about startups too.
I am sure the Kid will love to get your feedback on Fredsquare in the comments too.
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FredSquare is an application I’ve hacked together for the AVC community. Its mission statement is to help startups learn. Here’s how it works:
Articles and videos from around the web that help startups learn are imported the site.
Comments on AVC tagged #fs are also imported. If you’re leaving a comment that you think helps advance the FredSquare mission – help startups learn – please feel free to tag it #fs.
Imported content, #fs tagged comments, and original content contributed by FredSquare members is curated and organized to create FredSquare University. I like to think of it as “Wikipedia for startups”: an encyclopedia-style reference source that we can use to continue learning, so that we can build the best startups possible.
Those with the Bouncer Badge are responsible for curating content and building FredSquare University. (Currently this is just me, though hopefully we can grow to more Bouncers in time when it is warranted). The more content of yours that Bouncers add to our University, the more Badges you’ll earn. Each Badge is assigned a numerical value, and the sum of your Badges is your FredScore. Boosting your FredScore will unlock privileges as our game develops (right to launch your own storefront and accept FredBucks, discounts on other stores, etc – but all that comes later, once the community has some more engagement).
While building an educational resource is the paramount goal, effectively serving our mission goes beyond creating an encyclopedia – for learning is an interactive endeavor, and we humans tend to learn most by doing. And so, the game mechanics of FredSquare also reward founders for building their startup. Here are some Badges founders can earn for engaging in activities that most startups need to do to as part of their path towards sustainable success:
Remember that earning Badges boosts one’s FredScore. As our game develops, I’d like for FredScore to serve as a reputation metric of sorts. I hope that it can be used to identify startups getting traction that may be worthy of investment – either via crowdsourcing, should the legislative environment allow that, or by bringing qualified startups to the attention of accredited investors – like Fred. I believe that FredScore, in conjunction with private groups and discussion forums on FredSquare, will provide us with a richer environment for startups to network with each other — and thus to learn how to build great startups by doing the work involved.
Money, Governance, and Copyright
The creation and management of FredSquare is part of my larger objective of building learning-centric communities with game mechanics for blog stars that will include a P2P economy (i.e. users buy and sell with each other using Fredbucks – sellers must have a high enough FredScore). InformedTrades is a more developed prototype if you are looking for another example. Anyway, as game operator, I will impose a tax on all transactions once our economy develops, and will retain a portion of revenue via virtual goods and affiliate marketing. The goal is to share the majority of revenue with the community via FredBucks (which, in time, will be able to redeemed for a variety services that help startups grow – i.e. hosting, video production, web design, outsourced software development, etc), as well as with Fred’s favorite charity, Donor’s Choose. At present there are just banners on FredSquare, and 100% of all banner revenue is being donated to Donor’s Choose. A large percentage of virtual gift revenue will be donated to Donor’s Choose as well.
Fred appears to be down with giving me leeway to run this. But while I’m running things, if Fred tells me to do or not do something, I will obey, so long as the order does not violate any law imposed by the US Federal government or the state of Florida, USA. The goal is certainly to channel the brand of Fred and the spirit he has engendered here. I find it extremely unlikely this will be a cause for concern but I do find it worthwhile to clarify as much as possible at the outset.
All original content published on FredSquare is CC-BY licensed. Consistent with the spirit of Fred, FredSquare operates on that side of the business model debate pertaining to copyright, under the belief that such a policy will generate the most opportunity for all. If you do not find this agreeable, publishing original content on FredSquare or tagging your comments on AVC with #fs may not be for you.
Anyway, the first step is to build the community and get an economy going, then we can all argue about sharing money later. 🙂
By now the time has come for me to end this introduction to FredSquare, and for you to make a choice: you can ignore this blog post and tell yourself that there is no hope for society; government sucks, corporations suck, the economy sucks, most startups fail, your mom doesn’t love you, etc. Or you can enlist as a citizen of FredSquare, share your knowledge and build your startup, and be a part of creating the startup utopia that sets us free.
The past four fun fridays, we've discussed movies, books, and music. I enjoy the discussions these fun fridays create. It's a different vibe from the normal talk of tech, business, startups, etc, etc.
Yesterday I had my annual physical. My doctor gave me a clean bill of health. He asked what I do to exercise. I told him yoga, biking, and the elliptical when it's too cold to bike outside. He suggested I ditch the elliptical and do a spinning class when it's cold outside. So I'm now re-thinking my exercise routine.
I do yoga for flexibility, strength, and to keep my upper back, shoulders, and neck pain free. I do yoga at least twice a week. I bike because I love being out on the bike, the wind in my face, and the amazing feeling you get after a thirty mile bike ride. But I don't enjoy biking when its less than fifty degrees outside. So I guess I'm headed back to spinning class to get that cardio and pulmonary benefit when it's cold outside.
So that's what I do. I try to exercise at least four times a week for at least an hour each time.
a group of venture capitalists dialing back on certain deals after a breathless year of venture investing that had some comparing 2011 to the late 1990s dot-com bubble. Many venture capitalists said they now are increasingly passing on companies seeking frothy valuations, and some are trying to get off the beaten path to find cheaper deals.
I am not a fan of this start and stop style of investing. Nobody can time markets. You can't deliver great returns to your investors by being a momentum investor during some periods and a value investor in others.
I believe the only way to be a top performing investor in any asset class is to have a disciplined investment strategy and approach and apply it consistently and actively in all markets all the time.
I am proud that our firm has been investing at about the same rate of new investments per year for almost eight years now. It hasn't gone up much but it also has not gone down much. We will never be the most active venture capital firm. But we will never be inactive either. We are open for business as much today as any other day in the past eight years. If you are building a large network of engaged users that has the potential to disrupt a big market, please talk to us about what you are doing.
1) an awesome idea. "give me your email address, we'll send you interactive coding lessons weekly" is a damn good idea. tim o'reilly told the codecademy guys "i wish i'd thought of this". that's the definition of a good idea.
2) well timed – launching as a "new year's resolution" is genius. but also launching in a "dead news period" was equally genius. jan 1st and jan 2nd of this year were slow news days. so Code Year got plenty of airtime in the tech blogs and news aggregators over a sustained two day period.
4) the use of twitter and facebook to spread the word is simple and powerful. after you give your email address, you are given the option of tweeting out or posting to your wall. TechCrunch says 50% of the site traffic comes from Twitter and Facebook (with Twitter coming in at >33%).
5) a small ask. they didn't ask for money, the service is free. they simply asked for an email address, something everyone has and most are willing to share in return for real value.
So kudos to the Codecademy team and everyone else who was involved for great execution of a service launch. I am looking forward to getting my first coding lesson and getting started.
Our family spends hundreds of dollars a month with Time Warner Cable. And plenty more with the NBA league pass. And plenty more with tickets to Knicks games. It's not that we don't want to pay for our sports entertainment. And it's not that we are unwilling to pay more.
But last night we were turned into "pirates" as the entertainment industry likes to call us. As 2011 turned into 2012, the executives at Time Warner Cable and MSG Network were unable to make a deal to keep MSG on Time Warner Cable. My son was fuming and so was I.
So I did what many did last night. I opened Twitter on the family room iPad and tweeted out a question.
Screw cable. Where can I watch the Knicks game online tonight?
Within seconds the suggestions came pouring in. NBA.com's League Pass for broadband was widely suggested but they were blacking out the Knicks Raptors game in the NYC area. Note to NBA.com – take all Time Warner Broadband IP addresses out of your blackout code table. If you do, you'll sign up a bunch of new subsribers during this TWC/MSG spat.
So we went on to the pirate sites. That worked great. No blackout problems there. Here's the tweet I sent out when we got the game on the big screen in the family room (via our family room mac mini).
I added the #screwcable hashtag to that one. I hope others start using it. The industry sure deserves it for turning really good paying customers into pirates.
I've long believed that piracy is largely a business model problem not a human behavior problem. If you give people a legal way to consume the content they want, they will pay for it. But when you make it impossible to legally consume the content they want, they will pirate it. That's what happened last night and that is what will happen every night there is a Knicks game on TV for as long as MSG and Time Warner Cable continue to figure out how to screw their customers.
The first stage of a startup, what I call the Building Product stage is management light. The team should be small. We have portfolio companies like del.icio.us and duck duck go where the Building Product stage was accomplished by one person, the founder of course. That is not typical.
What is typical is a team of five or less. The founder/CEO is usually the product manager. There is often a technical co-founder who leads the development team. And there are often several developers (two or three). There can be a designer unless the founder is capable of doing the design. That is about it.
There are quite a few of our portfolio companies that had a two person founding team. Both members of the team built the product. Zach Sims and Ryan Bubinski of Codecademy are a good example. As are Daniel Ha and Jason Yan of Disqus. Both of these teams came out of Y Combinator. But two person teams are not limited to Y Combinator. Dennis and Naveen built Foursquare as a two person team. Greg Yardley and Jesse Rohland built Pinch which is now part of Flurry as a two person team. Billy and Yang built and launched Turntable.fm as a two person team. David Karp and Marco Arment built, launched, and ran Tumblr for well over a year as a two person team. I am sure there are other examples in our portfolio of two person founding teams.
Three person teams are also common. Etsy was built by Chris, Haim, and Rob. That is in many ways the classic founding team. Rob was CEO and product lead including all design. Chris and Haim were the dev team. They built and launched Etsy in about three months if I rememeber correctly.
Hopefully you get the point. Building product is not about having a large team to manage. It is about having a small team with the right people on it. You need product, design, and software engineering skills on the team. And you need to be focused, committed, and driven. Management at this point is all about small team dynamics; everyone on board, working together, and getting stuff done. Strong individual contributors are key in this stage. Management skills are not a requirement. In fact they may even be a hindrance.
Next week we will talk about the Building Usage stage where team building and management skills start becoming necessary.
It's that time of year for a new year's resolution. I've been thinking about mine all day. And then I learned about Code Year, a service built by our portfolio company Codecademy that helps you learn to code in 2012.
So my new year's resolution is to get back my long lost coding skills. I've signed up for the weekly email and plan to do them every week. You might want to join me. If so, go here and get started.
