Posts from Mark Suster

One of the great things about the web is the ability for people located all around the world to be having a public conversation in real time in a single place. We see that in action here at AVC with the Disqus comment system. But it also exists on Twitter, Quora, Stack Overflow, Reddit, Hacker News, and a host of other places on the web. This kind of open public discourse is quite important and leads to greater understanding and ideally a progressive society that moves forward as new ideas and new ways of thinking propagate.

As the web is increasingly moving to mobile, there are opportunities and challenges. The opportunity is simple. Folks don’t need to be in front of a computer to be able to participate in a real-time discussion. The challenges are harder. Who here has tried to comment on AVC from a mobile phone or tablet? It’s not as easy. And what would a mobile app look like for commenting?

Those who solve these challenges will be the leaders in real-time discussions in the coming years. Because taking our conversations with us in our pockets will be critical.

I say all of this because of an experience I had yesterday. I had to take my son to take a test yesterday afternoon. As I left our home, I saw a tweet from Dave McClure responding to my post yesterday:

yo @fredwilson @msuster ur missing main point on notes — big reason they’re used over priced rounds isnt valuation, rather synchronization

— Dave McClure (@davemcclure) September 8, 2012

I responded to his tweet and then took my son to his test. A half hour later, after I dropped off my son, I checked Twitter and there was a lively discussion brewing. I responded to a few tweets and started driving home.

Every twenty blocks or so I would pull over, check twitter, reply to a few more tweets, and then start driving again. By the time I got home a half hour later, there was a full blown Twitter discussion.

Mark Ury did us all a favor and Storified the discussion for posterity. Mark Suster also contributed a curated version of the discussion on his blog.

What’s the takeaway from this story, other than investors get pretty emotional about things like convertible notes, priced equity, discounts, and signaling?

Mine is that I could have never participated in that discussion in real time had it not been for the Twitter client on my Android phone. But it was simple, in some ways simpler than doing it on the web, in Twitter’s mobile client.

So it’s high time for all those companies out there that are in the business of hosting and facilitating live real-time public conversations to do what Twitter has done and make your products work well in mobile. If you don’t, others will.

Mark Suster has a great post on this topic. In typical Mark fashion, it is long, with a lot of detail and substance. I highly recommend all entrepreneurs take the time to read it end to end.

For those who won't take the time to read it end to end, I'll summarize it.

Many high growth companies can be profitable. They have enough revenue to cover their essential costs and could easily decide to show a profitable income statement. But they don't make that choice. Instead they invest heavily in the business with the expectations that those investments will produce more revenue (by hiring salespeople), or additional products (by hiring engineers and product managers), or additional geographies (by hiring an international team), or any number of other value enhancing aspects of the business. The result of that decision is that the business loses money or simply breaks even (I prefer the latter approach).

There was a discussion of profits (or the lack of them) in the comments to the IPO Market blog post I wrote last week. A number of commenters pointed out that many web companies lack profits. I don't think that is actually true (certainly not for many that have gone public), but it is true that most, if not all, web companies are not optimizing for profits this year or next year. They are optimizing for the ultimate size of their businesss and the total amount of cash flow they can ultimately expect to generate when the business gets to maturity.

This is tricky stuff. If you are going to take all of your potential profits and reinvest them in the businesss in search of higher growth and greater profits in the future, you had better be right about those investments. And it is often hard for investors to see how those investments are going to pay off, so at times you can be penalized for making those choices. Right now the public markets seem to be paying companies more for long term growth than for near term profits, so it seems that public market investors (and VCs) are aligned in this respect. But that is not always the case. Markets are fickle. But the best entrepreneurs are focused on the long term vision and will invest in their businesses without paying too much mind to what investors want at any point in time.

Mark Suster has been writing and speaking out about the challenges of a 50/50 partnership between two cofounders. He makes a ton of great points. I would like to provide the counterpoint.

I've started two venture capital firms. The first with Jerry Colonna. The second one with Brad Burnham. Both were 50/50 partnerships. Both have been fantastic experiences. I knew Jerry for a few months before I partnered with him. I knew Brad for a decade but had never worked in the same organization as him. I recognize that venture capital firms are different than companies and that a partnership model works better in VC firms than it does in companies. But these two experiences have taught me that a 50/50 partnership, like a marriage, forces the two founders to come together on all the key decisions and can lead to better decision making.

When I look through the USV portfolio, I don't see a lot of 50/50 partnerships. Of the 38 companies listed on our website, only seven started out as 50/50 partnerships. But some of our best teams were formed that way. Paul and Rony, the founders and leaders of Indeed, are the iconic version of a partnership at the top of a company. They have built possibly the best all around company in our portfolio and they have done it via a partnership model.

Two other partnership driven startups come to mind as I think back over my investment history. Gian Fulgoni and Magid Abraham at ComScore has always been a partnership and they have built a fantastic company. And Jordan Levy and Ron Schrieber, the first entrepreneurs that I worked with as a board member, introduced me to the partnership model. They were even co-CEOs.

So while Mark is right that you don't need to be 50/50 partners with your co-founder, I would say that if you feel comfortable in a 50/50 partnership, it can be a terrific way to operate and build a business. It has worked very well for me over the years and when I see a true 50/50 team show up in our office, I am always more inclined to say yes. I have a great history and pattern recognition with this model.

Disqus (a portfolio company of USV) has rolled out a really sweet analytics service as part of its "add ons" that were released a few weeks ago. You get the analytics as part of every add on package, including the $19/month Plus service.

There are four main parts of the analytics service; snapshot, activity, people, and network. It's the network tab that has me the most interested. I'm always curious where the most active AVC community members hang out when they are not on AVC. Since Disqus is first and foremost a commenting system, "hanging out" means commenting for the purposes of this post.

Here's the answer:

I'd like to see more than the top six. Ideally I'd like to see the top 25 or more. But this is a good start. Happily I call each of these bloggers a friend, and one of them is my wife. If we had a dinner party with this group, it would be a blast. I'd sit Dave Winer next to Mark Suster and Howard Lindzon just to make things interesting.

This suggests a whole new set of features for Disqus. If they know the communities with the greatest overlap with this community, they can and should build network tools so that readers of this blog are aware of what is going on across the network. If there's a great post/conversation going on at Suster's blog, we should know about that here at AVC and have a quick link to get there from here.

Fortunately the team at Disqus knows that. I'm not announcing any features here. But I am pointing out that communities like AVC don't exist in a vacuum and there is a network of communities out there and Disqus is powering most if not all of them. And so there's a lot Disqus can do to make the network come to life in powerful ways. I'm looking forward to watching them do just that.