Posts from August 2015

So yesterday, out of the blue with no leaks no speculation & no anticipation, Google goes and reinvents itself.

How does the most important company in the world (note I did not say most valuable), do that?

I have always had a tremendous amount of respect for Larry Page and Sergey Brin and the senior team they surround themselves with. When it really matters, they do things right and get things right.

The way I see it, Google is the cash cow that finances all the big bets Larry and Sergey are making inside Alphabet. The public markets get the transparency of seeing how the cash cow is performing and how the entire holding company is performing.

Think about it this way. For $445bn, you get $70bn of cash, Google, which does $70bn of revenue and produces $20bn of operating cash flow (probably more now that is it not going to burdened by all of these other investments), and all of these big bets, including Google Ventures and Google Capital, which are about the biggest investors in the VC sector right now.

That’s what you got when you bought Google last month, but now it is a lot clearer what you are getting.

You could easily make the argument that buying Google at $445bn gets you all of these big bets for free because the cash cow is almost certainly worth the $375mm of enterprise value that the market is putting on it.

Makes me think seriously about going out and buying our family some of that alphabet soup. I think its going to be good.

I saw the TechCrunch blurb about Blockfeed this morning and my immediate reaction was “we tried that.” Almost a decade ago, we invested in Outside.in which was trying to do something very similar to Blockfeed.

Outside.in didn’t work but that doesn’t mean Blockfeed won’t work. The volume of hyperlocal content that is created today is likely an order of magnitude larger than what was available to serve up a decade ago. And geotagging capabilities have improved significantly in the past decade as well. And consuming hyperlocal content in a feed on a geolocated device is way easier and more common today than it was a decade ago.

So I wish Blockfeed well in their attempt to build a hyperlocal aggregated news service. The idea appeals to me as a user as much as it did ten years ago.

But it doesn’t appeal much to me as an investor. Because I’ve “been there done that.” And the emotions of trying something, working really hard on it, and coming up empty can get in the way of an investor’s willingness to try something again.

I know that I should get over this tendency to reject investment ideas that I’ve tried and whiffed on before. You could have tried streaming video in 1999, lost everything on it, and then passed on YouTube when it came around, and that would have been a mistake. You could have tried delivery services in 1999 (we did), lost everything on it (we did), and then passed on the latest batch of delivery services and that might be a mistake.

But even though I understand that rationally, it doesn’t help with the emotional aversion to trying something again that didn’t work last time. And venture capital investing is not a detached cold hyper-rational exercise. It is a deeply emotional and connected experience. And thus the reluctance to go there again.

A week or so ago, I happened to notice that my Twitter follower count had gone up by 75,000 in the span of several weeks. Since then, it’s gone up by another 15,000.

Here’s the chart from Twitter’s analytics service:

I’ve learned over the years to be highly suspect of anything that looks like a hockey stick and so I looked at the list of recent followers to see if anything was awry.

I was expecting to see a bunch of spam accounts and maybe that’s what is going on. But a lot of the recent followers look reasonably legit.

It’s not clear to me what is going on. It’s like once I crossed 400k followers my “who to follow” score went way up.

In any case, I’m happy to have so many new followers. Sadly I’ve not been tweeting much lately since I stopped tweeting out the AVC posts every day.

Maybe this will be an impetus to tweet more often. We will see.

Here’s a short video where Luis von Ahn, co-founder and CEO of our portfolio company DuoLingo, talks about the vision behind DuoLingo, and also lays out the big market opportunity for education applications.

I don’t know how many AVC community members watched the first Republican debate(s) last night, but I did and I thought it might be fun to talk about them today.

I’ve never been taken by Trump or Bush and wasn’t last night either.

I thought Kasich and Rubio were the best of the bunch. Kasich because he’s real and substantive and Rubio because he’s impressive and articulate.

I’m curious what others thought. If you didn’t see the debate, you should still feel free to weigh in. It’s fun friday afterall.

I’ve been sitting on private company boards since the early 90s. I have also sat on a few public company boards and a bunch of non-profit and civic boards. You could say that I am a professional board member.

Like all organizations, boards need leadership. It can come from a CEO, but often it comes from a Chairman or a board member who steps up and provides leadership without being named or titled as such.

The board is tasked with governance. The Board doesn’t run things, but it governs who runs things and how things are run. I’ve heard it said many times that a board does only one thing – hire and fire the CEO. While that is somewhat true, it simplifies the role of the board and trivializes it.

A board’s job is to make sure things are going in the right direction and when they are not to step in and make changes in an attempt to get things back on track. While that can and does include leadership changes, it also involves acting as a sounding board for management’s plans and a being a body that management is accountable to.

A good board can provide immense value to a CEO and his/her company.

If you are not getting what you want out of your board, or worse if your board is causing trouble for you and your company, consider addressing the board leadership question. There is nothing worse than a collection of strong minded people who don’t agree with each other all telling you what to do and pulling you in multiple and opposing directions. If that feels like what is going on with your board, you need to find someone on the board to step up and lead the group. It can be the CEO, but if you are the CEO and you aren’t getting what you want out of the board, it is very possible that you need someone else to provide board leadership. The easiest and best way to accomplish this is to find the strongest and most natural leader on the board, take them aside, tell them what you need from your board and what you aren’t getting, and ask them to step into the Chairman role and assist you in organizing, managing, and leading the board. You can do all of this without playing the Chairman card, but it makes it easier to name the role and put someone into it.

The leader of the Board should help you set the agenda of the board meetings. They should help you decide what is important to talk about at the meetings and what is not. They should help you get through the meeting on time and cover everything that needs to be covered. They should make sure the most important topics get the most air time. And they should make sure that everyone who wants to say things get to say them without taking over the meeting and wasting everyone’s time.

The leader of the Board should chair the executive session at the end of the meeting that happens without you. They should solicit feedback from the entire board and then they should share that with you so that you can process it and get value out of it.

The leader of the Board should also help you manage the most challenging and difficult Board members. They should advise you on how and when to communicate with them and what to emphasize and what to ask of them.

Most importantly, the leader of the Board should become your partner in managing your investors, your Board, and your company. They should be someone who can put their interests aside and act with the best interests of the company and management at heart.

If and when you find this person, they will be incredibly important and valuable to you. I’ve seen many people play this role masterfully over the years and I play it from time to time myself. It’s a very time consuming but rewarding job.

Yesterday we did another Apple Watch followup survey.

The results are in and the numbers continue to be impressive but the trend is not in the right direction.

The most impressive number to me is that 59% of respondents say they love it more now than they did at time of purchase. Clearly this device is working for many of the people who bought it.

But the trend is universally down. Less people wearing it every day, less people recommending it to others.

The picture that is emerging to me is a niche device that a small group of people have purchased and an even smaller group of people get value out of.

This is something to build on for Apple, but I remain on the fence on the question of whether the watch is the next big thing in mobile.

I’ve been seeing a fair number of negative reports on the Apple Watch and so I’d like to survey the Apple Watch users here at AVC again. We did this exact survey in late May. I’m interested to see if there are any changes to the results after a few more months of watch wearing.

The reason people go out and fundraise is they need capital for their business. I would not recommend doing it for any other reason. It’s hard and time consuming work and can be extremely frustrating.

But there is another benefit of fundraising. You get feedback on your business from people who see a lot of businesses like yours every day.

The feedback you get from any one investor can be horrible and you need to learn to ignore off base feedback from idiot investors. And you will find that on the fundraising trail.

However the aggregate feedback you get from a diverse collection of investors, ideally dozens or more, can be super helpful.

So what I suggest to entrepreneurs is to use some sort of note taking system, paper or electronic, and write down the hard questions you got and the points of feedback you received after each meeting. The sooner you do it after the meetings the better.

Then start to sort them into a list of “issues” that you are hearing about your business. And the ones you hear the most are the one to focus on.

These are not just sales hurdles to overcome in your financing (although they are that too), these are the things that make your business less attractive to investors and they are things you need to address in your business.

These issues could be about your team, your product, your competition, your market, your go to market strategy, your business model, etc, etc.

The point I am making is that fundraising is a bit like the customer development process. You are showing your business to the market and it is critical to listen to what the market is telling you as no business is perfect and investors will take the time to tell you what is wrong with yours, often right in the meeting.

So treat your fundraising process as two things. First and foremost, it is about getting the capital you need to operate and grow your business. But it is also a fact finding mission about the things you need to address to make your business better. Don’t forget to do the second thing because it is a fantastic opportunity to improve your business for the long haul.