Audio Of The Week: Rebecca Kaden on Twenty Minute VC
My partner Rebecca Kaden was on the Twenty Minute VC podcast last week.
Once you get past the 3:20 mins of audio ad readouts (I advise to fast forward through them), she talks about areas in e-commerce that are possibly outside of the Amazon kill zone, the opportunities to build new trusted brands in healthcare, education, and financial services, and why small early-stage venture capital firms are the best firms to work at.
Comments (Archived):
what’s the economic business model alternative to 3:20 mins of audio ad readouts?
A fee for each episode or paid subscription? How much do the ads or skipping the ads annoy you? For me it would probably be around 10 cents per episode.Of course, if the podcast was not available for free with ads then I would probably consider paying more, although this short format is not my favourite.It would be interesting to know how much the fee would need to be to cover current advertising revenue for this podcast (and for others).
when crypto comes of age the tech may permit me the choice to skip the ads with a micro payment if i value my time more than my token.
I am not sure he is getting ‘paid’ for those ads. Maybe but… On a quick check it doesn’t appear that he is even soliciting advertising for the podcast episodes on his website at all..So offering to mention companies of people he interviews may be the (or a) angle that he uses (or has used) to get people on his show. And getting people on his show and making a name for himself is just a vehicle to be branded for later use whereby you turn that ‘fame’ into revenue in some other way. And/or gain access to people that will pay attention to him (for something else he does or plans to do later). That is my take. I think I am right after further research now below.Note that on Harry’s ‘about’ page:http://www.thetwentyminutev……He mentions this ‘Smart Passive Income’ which influenced him:https://www.smartpassiveinc…It is kind of clear what is going on here. Essentially making money by showing others how to make money the same way you have made money. Not saying it’s not legit (if it works then great) or that there isn’t some other branch that will fall from this (there can be for sure). But that is what is going on in this model most likely. [2] If he is reading this for some reason he might want to leave that part out (about how he got into the business) because it makes it less legit.[1] (Seminars, books, consulting, speaking engagements etc.)[2] The nominal revenue you could get from ads on this content isn’t the reason for doing it I say it’s a ‘barter’ for content.
“Essentially making money by showing others how to make money the same way you have made money.”Yes, it seems to be that technique, which we see reworked with every new technology innovation cycle. It’s worked well for the founders of Ethereum (ERC20). Gavin Wood never seems to pass up an opportunity to publicly point out the technical limits and deficiencies of Ethereum vis a vis his shiny new creation. The Pied Piper of Hamelin syndrome?- the old #metoo before it became the new #metooThere’s an advert doing the rounds on YouTube in the UK. A Forex trader who “made millions in my twenties” and who now wants to do everyone a big favour by showing how they can do the same. There are many adverts on YT playing this same psychological game.With so many arriviste nouveau riche funds coming out of crypto’s 2017 bubble i wonder if USV feels the need to push its brand that little bit harder?
I passed by a music learning center when picking up sushi the other night and it had a fair amount of activity. Parents there to take their kids to learn an instrument because ‘that is what you do because you know playing a musical instrument is good flat out’ (goes the thinking). [1] Then I thought why isn’t there a similar center for something a bit more useful like learning about business and how actual small business works? I don’t mean the things that are being taught now or the way it’s taught. I just mean a place where kids can go and learn and study about how certain business models work. How does the sushi business make money? How does Harry Stebbins make money? How does VC make money? How do franchises work? (Endless list of topics and discussions here). And not MBA Monday things. But the actual grass roots details of business ‘getting a person or a company to pay you money’ and how it works at the base level. And this is important: Taught in a way that a kid could understand and apply. Also not with a focus on ‘startups’ and simply ‘raise vc funds or do a kickstarter’ but you know kind of do the way it has been done pre-internet and is being done successfully post internet. That entire side of business has been pushed aside by kids feeling that the only way to earn a buck is by some web idea or business. Nowing this doesn’t prevent you from using or doing it the more modern way. But I think it could give you a leg up and greater understanding that would be more helpful than guitar lessons.[1] Good luck earning a living and/or paying for $20k a year in family healthcare with music skills.
.Actually, they are being taught. The subject of “entrepreneurship” education at the collegiate level is alive and well.Take a look at Florida State’s entire new college of entrepreneurship, funded by an ……………………………………… entrepreneur.I, personally, am in the midst of an effort at VMI to create an inter-disciplinary, cross departmental entrepreneurial education. It is very much in its fledgling status — slime ooozing from the swamp point of evolution.VMI has recognized that its secret sauce is leadership and that its grads all end up running something (highest number of CEOs per capita of any school in the US – the key is “per capita” as VMI has fewer than 20K living grads).A VMI grad is chin deep in leadership, but the school doesn’t direct that focus toward business because 60%+ end up being commissioned into the armed forces (20% go to grad school – there are 26 schools which admit VMI grads with either reduced or no application requirements, such as UVa Law).I am very bullish on entrepreneurial education in the US at the collegiate level. Get it completely that you are observing something at a lower level.JLMwww.themusingsofthebigredca…
Didn’t know about FSU and just took a look at it. Noting that it says this which in part is some of what I am rejecting concept wise (for the idea I am proposing at least):https://jimmoranschool.fsu….You will learn how to start and harvest a micro business, learn the advantages and costs of the various sources of venture capital, and the process of obtaining it. You will also focus on opportunity recognition, market research, and feasibility. You will study technology commercialization, financial analysis, legal issues, and human resource managementOn a positive note a quick check shows that some of the faculty have actually run and started a business (and a traditional business not a ‘hit it out of the park’ unicorn light). That is a positive and they should be talking about that a bit in their marketing.This is a good idea and I also like the low dollar amount in which the money is actually a proxy for learning something and making it more interesting:https://jimmoranschool.fsu….
.On another approach, look at the Acton School in ATX.JLMwww.themusingsofthebigredca…
That looks great. And quite frankly anything that takes kids away from the nonsense they shovel at a traditional (and lame) public school is a step in the right direction.I think the other night my step daughter was answering questions about some Hemingway book and stuck and taking way to long. Like there is all this info in the world now and the best they can do to teach a child how to think and how to analyze is to do the same thing they did 40 or 50 years ago.I will tell you one other thing about places like Acton. They are better just because they are self selecting and places that people try to get into and/or have parents that care more. That is a large part of learning being around others who are motivated and not slacking off or providing bad examples (Yale drinking culture may be the exception for the highly gifted or those from wealthy families).
The best course I took in my MBA was an entrepreneurship course more than 25 years ago by a guy called Jeff Sandefer. You had to submit a resume and then convince him to allow you to take that class.Except that it was more than a enterpreneurship course, it was a way to think about business at a grass-roots level. I do remember first understanding basic concepts like float very early in that class. And thinking real hard about what activities you are doing within a organization that a customer will actually pay for.More than 15 years after I took that course, I was in Xiamen China and I met a UT professor who was there for an executive training program. I said I remember Sandefer’s enterpreneurship course from UT…and he said – Oh, he left UT and founded the Acton school.
Good description of much of what is really important. When I was a B-school prof (did that to be more able to help my fatally ill wife), I thought that the school was teaching next to nothing important for business except maybe the courses in accounting. Business law? I had a friend, a scion of a good business, who had in the family business done a lot with business law, learned from his lawyers, handled cases of serious accidents, labor, contracts, EPA, etc. who just laughed at the B-school business law course.> the only way to earn a buckDad thought that the sure fire way was to get a college education and then a good job as an employee. Net, he did okay, but he was plenty bright and good and could have done much better.For some years, I did quite well with his view in math and computing for US national security around DC. Only later did I appreciate that that success was from a special time and place, although maybe it is still that special. I should have STAYED there.Eventually it occurred to me to look at the families I knew growing up: There were several cases of big truck — little truck. One guy was selling scrap iron. One guy married the daughter of a guy with a quite successful tire store. One of the families was growing their business quickly — rebuilt auto parts, water pumps, starting motors, alternators, etc.!!!! They did well in several states.One guy built houses, as fast as possible, for people without a lot of money. Dad knew a LOT about such trades and saw the flaws in the houses. Soon the guy was a partner in some local family restaurants. Then he took a trip across the US with his family and concluded that some good quality, franchised motels would be a good business. It was. He had a son my age, and we went grades 1-12 together. He went to college at Vanderbilt; I went there on a summer NSF math program. He ended up on the Board of the college I went to.Finally it dawned on me that the guys in the yacht clubs (maybe not the best one in NYC) and paying full tuition to Ivy League schools, living in $2+ million houses, etc. were mostly doing well in local small business, with a geographical barrier to entry, e.g., running 10 McDonald’s, running several medical testing labs, several hardware and lumber yards, etc.When I was a B-school prof, one of my students was doing well running Wendy’s restaurants — right, the B-school was Ohio State in Columbus, home of Wendy’s. He explained that paying close attention to seasons, days of the week, weather predictions during the day, events such as high school football games, etc. and adjusting staffing levels carefully to meet the demand could alone make a big difference in the bottom line. E.g., assume open 7-11, 16 hours a day, save on cost of 2 people or get earnings of two people per hour, 365, people at, say, now, full cost, $20 per hour, let me see2 * 16 * 365 * 20 = 233,600dollars extra pre-tax earnings a year. Do that while owning 10 Wendy’s, and presto, bingo, $2 million house, 55′ yacht, winter vacation in the Alps, and full tuition for two at Ivy League college of choice, the first year.Or, good execution can be IMPORTANT.Right, such staffing management could be automated; for the suckers for the hype, call the work artificial intelligence. Instead, the core of the work would be much like airline crew scheduling, that is, 0-1 integer linear programming.In a major sense, such businesses are the most important for students — shooting for CEO of GM, Facebook, or my startup is MUCH less important. For those most important businesses, you have a good start on a syllabus! JLM has presented several, e.g., on rental real estate. A LOT that JLM has written looks much better than I saw as a B-school prof.I discussed such things with the scion and had him consider what a course would look like with his very successful father as the lecturer — clearly not so good. Net, pulling the materials together to have good results would be challenging.An old problem was the social norm that any such business was based mostly on just contemptible high pressure selling and shady tactics and that a good college education, especially for a profession, would be much better.I’ve known some guys that were bright, hard working immigrants and had gotten good educations, e.g., UNC mechanical engineering, SUNY Buffalo computer science Ph.D. The UNC guy dumped mechanical engineering and did better selling artificial marble. The Ph.D. guy had friends from the same home country who laughed at the Ph.D.-employee situation and were doing better in, just, say, landscaping.In the last several decades, due to the US importing products, having a geographical barrier to entry has been an important “pattern”. So, for some businesses, being the best in a radius of 50 miles can mean doing well.
Good student! You have learned well!!! Your professor is proud!Yourfor something else he does or plans to do later … making money …are, of course, special cases of my frequent lectures with”Always look for the hidden agenda.””Follow the money.”Extra credit for knowing sources earlier than I!!!
This is why it’s so important for young people (and I always harp on this point) to go out and do things and make decisions on their own and not rely to much on what they read or what others tell them. This takes time and is not easy. But you become (if willing to put in effort) a better thinker that way. Because you are forced to figure it out and hypothesize about the behavior you experience and conclude something which then you can see is right or not right.In the case of Harry possible he didn’t know the angle upfront and where he would end up. Very possible he just figured one way or the other if he met important people that would be good in some way. Then he did (or will) figure it out later and get some benefit.In a sense Harry is doing what amounts to social engineering. I do things like that quite frequently myself. With social engineering you don’t start off with what you want you go in from another angle or door and build to be able to get to the end goal.
She is a prophetic thinker in a challenging space where I’ve spent a chunk of my career.Thanks!
Fin Tech will change big time-but the major domo players will be highly acquisitive. Most of them aren’t going away, especially with TBTF and the way they can influence the regulatory landscape to eliminate competition. I really believe regulators need to rethink how we regulate the industry. Instead of regulating from fear, they need to regulate on principle and opportunity.
.The big guys in fin tech are not going to allow anybody to flank them on anything. They will simply buy them.These particular dinosaurs have checkbooks. They will buy their way clear of the next ice age.Why people don’t get that is unfathomable.JLMwww.themusingsofthebigredca…
USV is lucky to have Rebecca as a General Partner. That definition of “fun + experience + emotional connection + discovery” as differentiation from Amazon is a powerful one.
For the criteria”fun + experience + emotional connection + discovery”IMHO on a really good day, that comes along only rarely, that situation and a dime will still have a tough time covering a 10 cent cup of coffee.IMHO Amazon works because customers can use the Amazon Web site to find stuff, evaluate it, order it, pay for it, receive it quickly, and return it if necessary. The variety is astoundingly large; the prices are relatively good; and the Web site is designed with very high quality. Amazon came along and, more importantly, grew up right along with PCs, Web browsers good with images, audio, and video, the astounding end to end data rate increases of the Internet, and the ability to set up a server farm as powerful as AWS (Amazon Web Services). In addition Bezos was smart enough to get the work done with high quality.Let’s see: Ms. Kaden’s background was in journalism. That is a special case of writing as in literature, that is, belle lettre, and there the main interest is art as in “communication, interpretation of human experience, emotion” and in more detail vicarious, escapist, fantasy, emotional experience entertainment (VEFEEE), i.e., that built Hollywood. Ms. Kaden’s criteria are really close to VEFEEE.I suggest that Ms. Kaden catch a plane and fly to Columbus, OH and chat with Leslie Wexner since he long did relatively well with such stuff.Maybe some entrepreneur can make a good information technology startup based on Ms. Kaden’s criteria, but even in that case likely the investment decision will be based not on the “theme” of Ms. Kaden’s criteria but almost entirely on traction, significant and growing rapidly, in a market large enough to create a company worth $1+ billion quickly plus a few other attributes with Ms. Kaden’s criteria lost down in the noise.Net, the VC community will look for the traction, not Ms. Kaden’s theme or any theme.Added: Watched the RSB (Right Side Broadcasting) introduction to the Trump rally in Topeka, Kansas: The RSB camera team walked the line of people waiting for the doors to open. Apparently the team walked the whole line maybe some miles long. So, get to see the people of Topeka that want a LOT to go to a Trump rally. There see a LOT of well worn blue denim and essentially none of the high end rag trade stuff Ms. Kaden is talking about.Lesson: Maybe those high end rags will sell in parts of Manhattan, but apparently they have no chance in Topeka.
Noting how Rebecca got into VC in the first place (and for that matter into business per the interview) is just another reason why young people have to place themselves in a ‘target rich environment’. Very unlikely that her career would roll out the way it has if she was just located anywhere USA. I love the way that she talks so fast!
.I usually find Freddie’s Saturday morning video homework to be interminable [OK, so I usually play hookie, but I was waiting for the start of the Texas v Oklahoma game, Hook ‘Em, Horns], but this first-pass brilliant woman is a refreshing bit of non-stop sunshine.I just wish she could talk faster.I used to go to a lot of cocktail parties at which I had the same conversations – though with a lot of different people — and would like to hire her. I would just say, “Well, I wonder what Rebecca thinks about that?”Then, I would go check out the water cracker, honeycomb, blue cheese with the single pistachio nut appetizers. Get a beer. Check back with her and she’d still be on rapid fire.I was particularly taken by something she said which I have preached since I first got into business before the invention of the PC – there is a real thing called “Execution Advantage.”I agree more with her on this subject than she does with herself. Amazon has it as part of their mojo and woe be the competitor who decides to take them on.This is the core value of elite military units and businesses. I didn’t used to use that specific term, but I used to preach — “There is always a company which is just better at the blocking and tackling of business. That is going to be us.”Fred, why did it take so long to add this woman to the team?Disclosure: Long RK Jan callsJLMwww.themusingsofthebigredca…Tx leads at halftime.
Here is an interesting trivia that only I could turn up (well anyone could turn it up but I am more curious than most and take the time to poke around the book stacks in the library even though I am allergic to dust.).Rebecca’s mother was the inspiration for the character played by Gina Gershon in ‘The Insider’ which also starred Russel Crowe. That is pretty cool definitely one of my favorite movies.https://www.youtube.com/wat…
The Insider and Michael Clayton are two highly under-rated movies about the corporate world.
That movie also highlighted an important principle in the way it handles the protagonist having to deal with his wife and her disappointment at potentially not having a country club life.You see everyone is a ‘kah nock er’ (big shot) until they personally are impacted from some action in a direct way. And adding that the impact matters to the degree it is material or not. It’s easy to be a ‘shvitzer’ (generous) when there is little impact.
Never heard of the Insider.. looks cool. I’ll have to dig it up and watch.
> Amazon has it as part of their mojo and woe be the competitor who decides to take them on.Amazon raced past Wal-Mart at about half the speed of light. But from all I can see, really, Wal-Mart has plenty of advantages over Amazon and should be able to beat Amazon: Wal-Mart knows how to buy, has warehouses and trucks for a distribution system, and has their stores.The Amazon advantage is the AWS (Amazon Web Services) server farm, with a lot of database work, and a really well done Web site. However, nearly all of this is just COTS (common off the shelf) stuff. Plenty of people — Google, Microsoft, Oracle, etc. — know very well how to do all or nearly all of that. So there in Arkansas, Wal-Mart should be able to do those things as well as Amazon. Wal-Mart does have a Web site, and it is useful, but to compete with Amazon they need a much better site and many more products. Then Wal-Mart could deliver the orders to their retail store closest to the customer’s destination for customer pickup or just local delivery, sure, maybe someday via drones. All those Wal-Mart retail stores and the trucking to them Amazon doesn’t have and is a Wal-Mart advantage.Sure, Wal-Mart, or the Waltons, might just let Bezos eat more of their lunch, but they don’t have to.
Ms. Kaden considers business concepts, attributes, and effects faster than raindrops fall in a Cat 5 hurricane. Maybe there is money to be made that way.Generally, in information technology (IT) investing, and here I set aside bio-technology investing, I see nearly all VCs as having at best superficial understanding of essentially all the important aspects of startups. In particular, VC attempts to make investment decisions based on analysis of broad patterns or “themes”, e.g., consumer, personalization, healthcare, education, crypto, strike me as too far from the crucial details of success in reality for any particular business and, thus, unpromising for high return on investment (ROI). “Themes” are just too superficial. E.g., a theme of investing in founders with two legs instead of four does filter out dogs and cats but does include chickens and omits everything about individual people. Or IMHO, such broad patterns would have the US DoD select the next fighter plane based on which proposals used metal instead of cloth for the outer skin. Gee, even in metal, we have to consider aluminum, stainless steel, and titanium.I’ve seen a lot in US national security technology projects: Apparently the good projects were proposed with full, high quality attention to even the smallest details of science and engineering. Nothing superficial about it.From this VC superficiality: (A) If a VC is really correct in evaluating business opportunities with broad patterns or themes, then they should move to the other side of the table and be a startup founder. There’s much more money in being a really successful startup founder than being a really successful VC. (B) If this superficiality seems to generate good VC ROI, then for an explanation I’d look for the “hidden agenda” or at least the hidden criteria. In particular, my guess at the main criteria of early stage VCs is:Traction, hopefully after tax earnings, significantly high and clearly growing rapidly, some barriers to entry, in a market large enough to build a company worth $100 billion, and maybe with some technological advantages. I have to suspect that the criteria above, especially “traction”, are what VCs really use, and nearly all of Ms. Kaden’s many business concepts, attributes, and effects are essentially irrelevant. But, if Ms. Kaden wants to work hard and dig deeper in project evaluations, then I’d suggest some other, more directly relevant details to consider.For one more, for the investment theme of education, I don’t see it:(1) Education is an old field, all the way back to one room school houses and the idea that the best education is Aristotle at one end of a log and the student at the other end. Tough to improve on a field that big and that old with, sure, plenty of smart people.(2) Education is based heavily on teachers being highly dedicated. Tough for an ambitious business startup to compete with that.(3) Much of education, the crucial core, is a student studying the material on their own. Super tough for a business or anything to replace that — really that core is the bottleneck that will block nearly all really big improvements.(4) Yes, it is super easy to find problems with US education, at every step, K-Ph.D. And there are some alternatives. Of course, due to the bottleneck in (3), none of the alternatives is exciting enough to justify a financially ambitious startup.Due to the interests in education recently at USV, I spent a few minutes thinking about alternatives: What if we just had some very well developed, highly respected nationwide subject achievement tests, at least K-12? And what if for those subjects we had corresponding study materials? Then a good student could race through the study materials, take the test, do well, have respected credentials in that subject, and move on to more such subjects and tests and, soon, presto, bingo, apply to college.Hmm, then I wondered, maybe such things already exist? With just a few keystrokes into the standard Google one line text box, presto, bingo, yes, such things do already exist.Result: Problem solved. Done deal.There can be some small improvements, but basically the problem is solved.I would suggest just two components:(1) Parents, teachers, and students very much need to make use of ONLY the very highest quality materials. I know from first hand that there are a lot excellent materials out there, and I also know that there is a much larger collection of materials not worth the student’s time down to really bad and even harmful. So, getting to the highest quality materials is crucial. E.g., in math, IMHO Khan Academy is junk. In stark contrast, for calculus, there are stacks of beautifully written, highly polished texts on analytic geometry and calculus. I learned from some of them and taught from some of them. Did I mention that Khan Academy is junk? Whatever sources, they have to be, that is, for the student NEED to be, much better than Khan Academy.(2) Parents and students need some high quality guidance on what subjects and materials to pursue and why. Much of this need could be met with just some essays on the Internet. For more, ambitious parents should seek some face to face discussion time with some of the best local sources, maybe subject matter specialists at the local Board of Education, recognized excellent teachers, and, ESPECIALLY selected college professors.With what already exists and is easily found with a few keystrokes into Google and (1) and (2), call the problem of really good K-12 education DONE.Yes, this alternative needs relatively diligent and well educated and/or informed parents and otherwise the existing system will be about the best and tough to beat.VC investment in education? F’get about it.