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October 31, 2005
Boston Web Innovators Meetup - 6:30pm Nov 8th at Tommy Doyle's
Just an update to my previous post about the Boston Web Innovators Meetup that I am organizing. We now have a location – Tommy Doyle’s in Kendall Square. The private back-room is solely reserved for our function, with a cash bar available.
It’s going to be an informal meetup of like-minded individuals interested in internet / Web2.0 / mobile innovation based in the Boston/Cambridge area. The event starts at 6:30pm on Tuesday November 8th, brief demo presentations from self-funded start-ups (Kiko, reddit, Blogniscient) will begin at 7pm, and general schmoozing will follow.
So far, we already have a few dozen attendees, which is absolutely great. If you are planning on attending, please let us know by RSVP’ing on our wiki page: http://www.seedwiki.com/wiki/bostonweb/. Any additional updates and additional information will be found on that page as well.
All who are interested in attending are welcome and encouraged to invite others to join us.
If you are a self-funded start-up interested in demo’ing, please drop me an e-mail.
I am looking forward to seeing everyone in a week. It should be an engaging event.
October 26, 2005
Smart Little Things (Part II: Updating on Your Successes)
Yesterday, I posted about a smart little thing that I’ve seen entrepreneurs do when they pitch to us here at Masthead – asking if there is anyone who s/he should talk to that might be helpful. Today I wanted to highlight another one. As with all VCs, we are in the position of having to say “no” to 99% of all opportunities. There are many reasons why we wouldn’t do a deal, and a significant one of them comes down to timing. Perhaps it is too early for us to get involved without having that key channel partner, a demonstrated customer usage pattern, or other external validation. However, it doesn’t necessarily mean that we aren’t interested at all.
A few smart entrepreneurs that we’ve met with have periodically kept in touch with us via e-mail, updating us on new customer wins and other successes. With some of these people we’ve reengaged with to re-explore a potential investment. Others we’ve ended up introducing to potential partners and other valuable people that we’ve met since the initial pitch. A timely periodic, short, e-mail is a great way to keep VCs you’ve talked to updated on your company’s accomplishments. If it’s done a way that isn’t overly frequent or overly intrusive, I think only good things could come of it.
October 25, 2005
Smart Little Things (Part I)
At Masthead, we meet with many entrepreneurs pitching us their startup for a potential investment. A lot has been written in the blogosphere recommending how to generally approach these meetings, so instead I thought it would be good to highlight some of the small smart things that I’ve seen entrepreneurs do outside the meat of these conversations. They aren’t the significant make or break actions, but rather little ones that I notice which were deliberate, conscious, and beneficial.
The first thing that struck me recently was two separate entrepreneurs who, at the end of their formal pitch while the conversation was transitioning to small talk, posed a simple question. Both of them casually asked if we knew anyone it would be helpful for them to speak to. They didn’t ask for an introduction to anyone specific, but rather just posed an open inquiry about an introduction to anyone that might be useful to their business. VCs are well-connected and well-networked people, and are often able to facilitate an introduction that could be helpful to a startup. I am not suggesting that an entrepreneur should be looking for a VC to open up their rolodex after just meeting them for the first couple times, but rather that it could be helpful inquiring if anybody immediately comes to mind – if delivered correctly. While nobody immediately emerged in the first instance described above, someone occurred to us in the second. And whether or not we end up funding the company, both entrepreneurs did a smart little thing in these cases.
I’ll post a few more soon.
October 24, 2005
Boston Web Innovators Meetup - Nov 8th
Last month, Rags Gupta and I put together a very informal meetup of like-minded individuals interested in internet / Web2.0 / mobile innovation based in the Boston/Cambridge area. Attendees included entrepreneurs (both self-funded & VC-backed), a few VCs, and a number of forward-thinking people excited about the space. Based on the excitement from that get-together, I am organizing another one and spreading the word via my blog here. All who are interested in attending are welcome and encouraged to invite others to join as well.
Boston Web Innovators Meetup
November 8th 2005 @ 6:30pm
Location in Cambridge TBD, depending on attendee interest
Please RSVP on this wiki: http://www.seedwiki.com/wiki/bostonweb/
This event is going to be a slightly more structured than the previous one. For example, to start off, we are planning on having a few self-funded start-ups give a five minute demo. If you are interested in presenting, please e-mail me.
I'll also post an update with additional details on this blog, and am looking forward to seeing everyone in two weeks.
(Hat tip to the folks over at TechCrunch for what looks to have become a good model for organizing events like these.)
October 18, 2005
Seven Questions Employees Should Ask Before Joining a Startup
In continuing what is turning out to be my “list of sevens” series (see also: Seven Reasons To Become a Founding Entrepreneur and Seven Founding Sins), I wanted to list seven questions which prospective employees that should ask before joining a startup. While most of the material I’ve written in this blog about startups has been related to founders/entrepreneurs and venture capitalists, most people involved in startup endeavors fall under neither of those categories. They’re employees.
There are many benefits associated with joining a startup as an employee at any level (energized work atmosphere, little bureaucracy, upside), but there are many significant risks coupled with them as well. Of course, a prospective employee should ask numerous questions of both his/her role and the company before joining any firm, but there is a set of questions specific to joining a startup that people should pose. I’ve tried to outline what I think are some of the most important questions below. Keep in mind that this is by no means an exhaustive list, merely a suggested seven to get a discussion going. I encourage everyone to suggest additional questions in the comments section below.
If you are receiving employee options, what is the number of fully-diluted outstanding shares? Typically, option grants are a key component of compensation in a start-up and are often promoted as such. But the details surrounding stock options are often complex and confusing for non financially-oriented individuals. It is best for employees to understand as much as possible about their option grants (this subject could be the topic for an entire series), but the first place to start is to ask how many outstanding shares there are. From that point, one can calculate the percentage of the company an employee will own and a better gauge of the magnitude of this compensation component. It surprises me how many startup employees I know who are excited to have received a grant of x number of options, but never bothered to ask what relative percentage of the company that translates into.
Has there ever been a down round, a flat round, or a CEO change? Any of these three events are an indicator that the startup has faced some difficulties in the past and may not be on track moving forward. If one of them has occurred, prospective employees should seek out as much information as they can the context of the situation. After all, there are exceptions to blind the assumption that these are a black mark (e.g. a founding CEO stepping aside to make room for professional management could be an indicator of successful growth). However, if any of these issues have arisen, it is a signal to dig deeper into the health of the business.
What is the burn rate and how much cash is in the bank now? Even if a start-up is successfully executing, it could still face a cash crunch if it is not yet profitable. Employees should ask to find out how much longer the company will ride without the infusion of another round capital. While the actual answer to this question won’t necessarily provide a definitive answer about the ability for the company to access both cash and capital, it will open up a discussion about it.
What is the plan for exit strategy and its timeframe? The answer to this question is a soft one with many factors, and can always change depending on circumstances. However, it is best to find out management’s view of a possible exit strategy. Is the company pieced together for a quick flip, building for multi-year significant value creation, or plan on holding for the long term as an eventual cash cow (for founder/investors)? These expectations will affect not only how long employees may be working for the company as it exists today, but more importantly, the resulting surrounding corporate culture.
Could you meet the CEO, the founder(s), and those on the management team? Start-ups are all about the people involved. And there are a small number of people who are largely going to affect the organization. Even if an entry-level employee is going to work in engineering, I think it makes sense for him/her to meet the VP Sales; likewise, a marketing manager should meet the CTO. Yet it might not happen unless the prospective employee requests it. The handful at the top are going to have a profound affect on the future of the company as a whole and the position (regardless of function), and therefore it is best to meet as many people possible in the company possible before joining.
Are there plans in the next six months to hire anyone along the chain-in-command between your position and the CEO? Start-ups often have key vacant positions open as the companies expand and grow quickly. I recommend explicitly asking if there is an anticipated change in the reporting structure in the foreseeable future, as any modifications or additions (even those a few rungs up in the ladder) could significantly affect employees’ roles and responsibilities.
How many employees did/does/will the company have six month ago, now, six months from now, a year from now? Employee count is a strong (but not a perfect) proxy for management’s and investors’ outlook on the business. Start-ups hire ahead of growth (or at least predicted growth), which translate into a viable company, a healthy work environment, and future internal opportunities. Financial figures and projections are helpful indicators, certainly, but are often a distortion of the full picture (especially early on in a company’s cycle). The growth in employee count (or lack thereof) directly signals how much work needs to be accomplished how rosy the expectations are.
October 14, 2005
Reasonable Demands
I thought this article in today’s San Jose Mercury News correctly assesses the current funding atmosphere. It promotes the notion that today’s Internet entrepreneurs are looking for more than just money out of their venture capital partners. This demand should be true regardless, but it’s apparent now more than ever. The last line reads,
“If you [VC’s] really want to have a seat at the table… you've got to be involved at an earlier stage -- putting in little dollars, and then really work the deal.”Posted by at 4:18 PM | Permalink | Comments (0) | TrackBacks (0)
October 12, 2005
Stealth Mode
I’ve recently been introduced to a number of startups that are operating in “stealth mode,” and have been thinking about what to make of this fact. In a post yesterday, Keith Robinson clearly articulated one of my conclusions,
“I’ve heard quite a bit about start-ups and “stealth mode.” Most of what I’d read told me that it’s not a good idea. Frankly I think that really depends on what you’re doing, how ready you are to take your company to the public and a whole bunch of other factors.”
I think that there are a number of good reasons why a startup would find the need to be covert about its plans. Alternatively, there are many motivations why a startup would pursue a clear, articulate, and open communication policy to their strategy and intentions. Masthead portfolio company NewsGator has pursued the latter approach (with both their corporate and founder’s blog, among others), which I believe has significantly benefited the company.
Yet there are indeed many situations in which I think it makes sense to operate covertly. Some argue that if a company has a defensible product, it shouldn’t worry about having its idea “stolen,” and that stealth mode is irrelevant at best or a sign of weakness at worst. I disagree – there are many reasons to keep a low profile, including avoiding tipping off large competitors of your plans, acquiring cachet to recruit employees, and the ability to create buzz when the product is unveiled. To completely dismiss a company as making a poor decision because it is in stealth mode is off the mark.
Moreover, the notion of “stealth mode” isn’t necessarily a binary either/or proposition – it’s a gradual scale. A company out of stealth mode can be clandestine about an upcoming product launch or keep its beta version of the product circulated to a limited set of prospective users or customers. There are many in-between shades of grey for revealing information to the public and when. Like all communications, information about a company’s current endeavors and future plans should be deliberately and consciously shared with the right people at the right time, depending on the complex set of surrounding circumstances.
Posted by at 5:15 PM | Permalink | Comments (1) | TrackBacks (0)October 11, 2005
Conferences are for Conversations
After attending the Web 2.0 Conference last week, a number of people have asked me, “How were the sessions?” Of course I picked up some useful pieces of knowledge, but I really didn’t have one of those “a-ha” moments that really got me excited. Yet that’s not why I attended in the first place. To me, conferences are for conversations – it’s all about the people. This past one I had an opportunity to meet and chat with other fellow bloggers, founders from newly launched (and some stealth) startups, and many others excited about the innovation occurring in the space. It may sound cliché, but what happens outside the formal sessions is more important (to me) than what happens inside. There’s a reason that people attend conferences instead of just reading summaries: the fact that others are attending as well.
Posted by at 7:02 PM | Permalink | Comments (0) | TrackBacks (0)October 10, 2005
A Healthy Skepticism about Web 2.0
The strongest impression that was made on me during the Web 2.0 Conference last week was that of enthusiasm. People are excited about the new developments, the new opportunities, and the new creation cycle that is currently happening in the Web 2.0 space. And I do understand and agree with this enthusiasm. However, it did strike me that a majority of the conversations and presentations that I saw lacked a healthy sense of skepticism that should correspond with any new company, initiative, or trend. It seemed, at times, like much of the zeal was taken at face value, without a critical eye given to ideas.
That being said, there are notable exceptions, some of which are turning up in the blogosphere (Fred Wilson, Om Malik). I thought that it was interesting to note that John Battelle, who helped organize the entire hyped-up event, is launching his new company underneath and away from the public display of excitement and enthusiasm that he helped create over the past couple days. It was his sobering remark in the last few hours of the conference about his wanting to avoid getting caught up in the hype this time around that I believed signified a sobering closure to the event. Even this man, who orchestrated the entire conference, has the perspective this time around to realize the difference between marketing spin and potentially genuine opportunity.
I hope that during this next boom we remember to critically test all ideas and notions with a healthy skepticism. I didn’t sense much of it over the past few days in San Fran, but I suspect that it will follow after the lessons we’ve learned.
October 9, 2005
What “Web 2.0” Means to Me
Originally, I was skeptical of the term Web 2.0. But after having been immersed in talk about innovation in the Internet space at the Web 2.0 conference last week, I have changed my opinion. While I don’t particularly like the label itself, it has become the standard accepted vernacular for what’s going on in the Internet space. And so the phrase has come to mean something. Many people have expressed their view, most notably Tim O’Reilly in his must-read piece on the subject, What is Web 2.0?
I don’t think there is any denying that the Internet has changed over the past ten years and that there is a current emerging excitement. I’d argue that this enthusiasm isn’t merely a rehash of what happened during the past boom. The current situation is now different than it was, and the Web 2.0 label characterizes that distinction – that we are genuinely in a second phase of evolution of how people and machines interact with each other on Internet.
The purpose of adding my own distilled summary perspective which follows is twofold: to contribute to the existing conversation in the blogosphere of people discussing this topic, and to also communicate to those readers who aren’t already immersed in Web 2.0 a better characterization of why I feel there is a legitimate recent newfound excitement around the Internet. In sum, I believe that we are on the verge of strong potential value creation and innovation in the Web 2.0 space because of the support, participation, and connectedness that the web now embodies.
Support. Support for innovation on the web is now stronger than it ever has been along three dimensions: infrastructure, technology, organizational structure. We now have a physical infrastructure that wasn’t available to us just a few years ago. The penetration of broadband in America is finally at a level which gives a critical mass of users access to the network. With Wifi proliferation, numerous connected devices have become untethered from the desktop. Moreover, server hardware costs have dramatically decreased to a point in which the price barriers to launch a new web service have become minimal. Both new and existing Web 2.0 companies rest on this fundamental infrastructure foundation.
Technology adoption is also boosting the support for innovation on the ‘Net. Though the specification isn’t new, the recent popularization of RSS (Really Simple Syndication) is facilitating the freeing of content to be used and consumed differently. Many other technologies (like AJAX for rich internet applications) are providing the support for managing and expressing data and services in new ways.
Finally, the organizational structure of the Internet is notably different than it was a few years ago. One of the most dramatic changes is the realization and implementation of a self-service model of offerings which enable the smaller niche organizations or individual users access to the same services as large players originally enjoyed. For example, Google’s Adsense fundamentally changed the ability for content to become monetized across the entire web.
It is with these three levels of support that are laying the groundwork for startups to offer services and monetize them in a way that just wasn’t possible during the last boom.
Participation. Much has been said about the recent popularization of blogging. But I think that the notion of “participation” goes much further beyond that. This category has expanded beyond it to encompass all media types of user-generated content. Written word like blogs and wikis are emerging as a way for people to express themselves. And tagging and contribution along other media types (like photos, videos, and audio) signify that users of the Web 2.0 type services want to not just consume them but also contribute to them as well. We are moving from a web in which the content available is not a static, but rather circular and participatory.
Also, participation is not just for the users, but for the developers as well. A key component of Web 2.0 is the notion that developers engage with users in an iterative perpetual development cycle. Whereas when the medium was new during Web 1.0, the interaction with nearly all actors involved was passive. Now, both users and developers have grown to become comfortable with participating in the web, and this comfortability is opening new doors.
Connectedness. Lastly, Web 2.0 to me means connectedness along many planes – computers are now connected differently to each other, people are truly connecting to other people, and people’s connection to their devices are changing. Web services are empowering computers to interface with each other in new ways (whether through open APIs, syndication protocols, or P2P file transfer methods like BitTorrent). Now I understand why Bezos said, “Web 2.0 is making the Internet better for computers.”
Possibly more importantly, connectedness is valued by people as well in this stage of the Internet. E-mail was the original killer app in Web 1.0, but now we are seeing a myriad of other ways the web can link people (who either know each other or don’t). Social software and Skype are just two examples, and with both of these, the network effects are creating immense value as the value of the service increases at a rate exponentially in line with the number of people who use it. Moreover, the power of people connectedness has demonstrated viability of viral marketing and word-of-mouth as a primary marketing tool for web startups, as opposed to large media advertising spends.
Thirdly, there is a new connectedness between users and their devices. Online rich UI applications facilitate ease of interaction. Mobile devices have started to and will continue to evolve in allowing people to connect to devices at any time and any place.
These concepts – support, participation, and connectedness – represent to me a top-level summary of all of the changes that have and are occurring which are facilitating the industry. These notions are fostering newfound opportunity for creation that wasn’t available previously. Please don’t interpret my excitement about the potential for innovation in this space as an opinion that there we won’t be part of a typical boom-bust cycle and that there won’t be many (catastrophic and public) failures. In fact, I believe that we need to apply a healthy skepticism to any new ideas, concepts, and business (see my post on the subject). That being said, I truly believe that Web 2.0 signifies that there is new opportunity to create value – and wealth – on the Internet that wasn’t available to us just a few years ago.
October 6, 2005
My Favorite Quote from Web2.0 Today - Authenticity
“The day that I am unauthentic, there would be no reason to have a blog.” – Sun Microsystems President and Chief Operating Officer Jonathan Schwartz, Web 2.0 Conference during the Thursday morning session.
Posted by at 1:23 PM | Permalink | Comments (1) | TrackBacks (0)Minor Tidbits from Web2.0 Conference
I spent all of yesterday (and continue today and tomorrow) at the Web2.0 Conference in San Francisco. Obviously, there are many covering the event (Om Malik lists his ten “exciting side notes” and Jeff Jarvis reviews his thoughts from the companies profiled at the Launch session). I’ll post something later this week with my higher-level thoughts from the event, but the following are just a few tidbit reactions to some of the sessions yesterday.
Tagging is a short word, but requires a long explanation. Jeff Jarvis crystallized it right during the session on tags when he said, “I want a tutorial in the art of tagging.” The crowd – which was a sophisticated one – agreed. Others echoed wondering if they were “doing it right.” While I believe that there is immense power in the collective input towards categorizing and labeling media units, there is definitely a significant barrier transitioning usage from the digerati to the average consumer. How do I explain when someone with moderate internet savvy asks me, “What is tagging? Why and how should I do it?” Yes, there’s a compelling answer that I can give, yet it’s not a short one. But I do think that we are still in the exploratory phase and that the response will become more concise and clear over time.
Difficulty of collective action. I heard presentations from many companies and organizations that are pursuing and pushing initiatives that would arguably positively affect the industry as a whole - attention data management, structured blogging, central identity management – but they face a significant challenge of adoption. Unlike the potential incremental embracement of consumers which can ramp over time, these appear to me to require collective action on both consumer and organization fronts. While many of these are noble pursuits, I am skeptical about the ability of these to solve the chicken and egg adoption problem facing them. What am I missing here?
Measuring abstract concepts. Caterina Fake talked about the “interestingness” of specific photos on Flickr: a measurement somewhere between relevance and popularity. People in the advertising models session talked about “engagement”: the measurement of how deep the relationship a viewer has with an online advertisement. Both of these notions go beyond are the basic dimensions originally associated with these objects. Striving towards them may seem like a reach now, but it’s a good reminder to think that relevance and tracking pay-per-performance were originally challenges during the Web 1.0 time-period.
Posted by at 1:17 PM | Permalink | Comments (2) | TrackBacks (20)