Eric Stromberg

Something New

Mon, 23 Jul 2012 11:38:25 -0400

I recently started a company with my friends Andrew and Willem. I’ve long been fascinated by the transition of the printed book to digital, which is where this new endeavor will take me. We have a clear mission, and look forward to producing the best work of our lives. I couldn’t be more excited to be working on this product, at this time, with this group of people.

I’ve had some amazing mentors guiding me the past few years to get to this point. It’s these people and my cofounders that give me some level of calmness among the chaos of starting a company. I look forward to giving back in some small way by sharing my experience and lessons learned on this blog.

On that note, back to work.

Speculation on Top of Speculation

Thu, 29 Mar 2012 11:48:44 -0400

One of the defining characteristics of the technology world is the pace at which innovations one day become standards the next. Twitter, Tumblr, and Facebook trained the world to understand what a feed of content was. We take this for granted now, but it wasn’t long ago that an activity feed was a foreign concept. In the same way, Pinterest offered a different take on the feed structure, deprioritizing time as the lead indicator of “interestingness,” with the result being a board structure. Soon after, lots of startups had adopted this interface.

The key lesson here is that the technology community is very observant about what succeeds and is quick to implement successful innovations into new products. Every product has core assumptions that are validated by looking to prior successes (e.g., “people like the board layouts”). And the best ones also push the limits in some variety. In other words, great products assume some things, and test others. Where Twitter had to test a chronological feed structure, a new startup may not because they believe it has proven to be a successful product feature.

This framework can also be applied to innovative business models inspiring a slew of “X for Y” companies (e.g. “Zynga for Twitter”). For every company that brings a new model to the market and raises capital, it seems 10 companies pop up replicating the model in different areas. Of course, this can have a tremendously positive impact on the pace of technological innovation.

However, problems arise when a company’s perceived success is decoupled from its actual success. It causes fast followers to assume things as fact that they should treat as unvalidated. “X for Y” is only interesting to the extent that “X” has proven successful. And when the “X” proves unsuccessful (or is simply perceived as unsuccessful), the consequences reverberate through the ecosystem. This is not to say that “X for Y” startups can’t work, only that you have to be ruthlessly honest about what the “X” startup has validated, and what it hasn’t.

Startup founders are taught to test each hypothesis they have. However, founders can easily overlook key assumptions in situations where speculation is disguised as fact, leading them to form hypotheses on top of that speculation. In other words, when they speculate on top of speculation.

Increasing User Engagement in Emails

Thu, 16 Feb 2012 11:32:00 -0500

For any consumer application, email is an important tool to drive engagement. Last year, Fred Wilson went as far as calling it “Social Media’s Secret Weapon.” After optimizing the Hunch weekly recommendation emails for a few months last summer, I thought it might be useful to share some of the key lessons we learned to increase user engagement in emails and acquire new subscribers.

As background, while Hunch had transitioned from a consumer destinations site to more of a B2B approach (that eventually led to an acquisition by eBay), we found that sending weekly emails with personalized product recommendations was an effective way to showcase our technology and drive interesting partnerships. So we wanted to make them good. We ran countless A/B tests on groups of 10,000 users to see what worked best. For each test, we tried to constrain by cohort and keep all other variables constant. Below are a few things we learned along the way:

1. Previews in the subject line are key - People get numb to receiving the same subject lines every week, so if you can send a user something different from what they received last week, you’ll get a better response. But probably more importantly, by offering users a preview of the content of the email you’ll increase the chances you’ll catch their interest and get them to open it. Results:

Subject Line 1: 33% Open Rate

Subject Line 2: 40% Open Rate

2. People like clicking on their own name - People like what is familiar, and nothing is more familiar to you than your name. It grabs their attention and calls out that this email is just for them. You’ll notice that Amazon does this on nearly all emails. Results:

Subject Line 3: 44% Open Rate

3. Picture quality is important - Moving from Layout 1 to Layout 2 (shown below) boosted our click-through rates by 16%. It’s true across the web, but we were surprised by the strong effect that switching to large, high quality pictures had on engagement. Results:

Layout 1- 18% Click-out, 1.5% unsubscribe, 1.90 clicks per person.

Layout 2 - 22% Click-out, .9% unsubscribe, 2.44 clicks per person.

4. Editorial should not be overlooked - A/B testing is great for fine-tuning a strategy (climbing higher up the same hill), but often the greatest increases in engagement come from talking to customers and attacking the problem from a different angle completely (climbing a different hill). So, I asked our users what their favorite emails were, and what they loved about them. One consistent piece of feedback was that the best emails had some element of editorial (there’s a reason Groupon employs hundreds of writers). Adding editorial means that each time a user opens an email, they get a human voice talking to them. That is powerful.

Editorial is easy to overlook for a technology company because it isn’t particularly scalable. But that doesn’t mean it isn’t important. So, we developed a method where we chose the best recommendation descriptions for each item, using a combination of software and human judgment. We then included not just a title and picture, but also a description of why this recommendation was being made. As you can see from the results below, this was one of our big innovations in increasing engagement with these emails - people loved the descriptions. Results:

Layout 3- 28% click-out rate, .7% unsubscribe, 2.64 clicks per person.

5. Faded screen overlays are effective - We experimented on the acquisition side by asking people to sign up for our weekly emails on the Hunch website. At first we just put a bar across the top but eventually moved to a faded screen overlay (You’ll notice that Fab.com does this a lot).

It’s hard to argue that these overlays are anything but an annoying user experience. And this test does not take into account long-term usage of the product, which may be effected by this method. But, the facts were clear - it works (and yes we did check the database to make sure the emails we captured were real). Results:

Top Bar - .18% conversion to email signup

Overlay - .99% conversion to email signup

6. Clear messaging lowers the perceived cost of signup - I’d heard anecdotally that with Facebook Connect adding the messaging “We’ll never post to your wall without your permission” increases conversions by 50%. So I thought I’d apply the same principle to our email capture on landing pages. In fact, adding, “We hate spam too and you’ll never see any from us” to our popover increased conversions by 21%. Results:

Popover - 1.20% conversion to email signup

Final Note: Everyone’s product is unique. You’ll notice if you do a quick Google search for “best time to send emails,” the advice is all over the place. The best time to send an email for a content startup sending news articles might not be the best time for an e-commerce company. It’s important to run small tests to find what’s right for your product. But hopefully the above lessons we learned will help you get started.

How to Make an Impact During the First Month of Your Startup Job

Thu, 01 Dec 2011 11:11:00 -0500

A lot has been written on the process of joining a startup, and I’ve written a bit on the topic. Less is written about what to do once you join. Truth is, that’s when the fun starts, and it’s important to optimize your experience from day one. There are a few things I wish someone had told me before I started, so hopefully the tips below will help you get up the learning curve faster during the initial phase of your startup job:

1. Find new projects - This was one of the biggest differences I observed moving from finance to a startup. In finance, you are a good employee if you execute flawlessly what your manager tells you. My friends tell me stories about how they’ll do nothing from 10 am to 7 pm, until their boss drops something in their laps on his way out the door, and they work on it until 3 am so that it’s on their boss’ desk the next morning. In a startup, people won’t always tell you exactly what to do. You have to identify the need and keep yourself busy. There may be weeks where nobody tells you what to do, but that doesn’t mean you can just sit there and wait for something to fall into your lap.

2. Take ownership - A good attitude to take is that nothing will get done unless you do it yourself. This may not be the case, but better to lean toward this extreme than the other. New employees are often eager to think about ways they can improve a product. This is a good thing, but be ready for the following exchange:

New employee: “Hey, have you guys ever thought about adding rainbows to the confirmation page? I really think this is the key to sending revenue through the roof.”

Generally the next part of this conversation involves the manager turning it back on the employee:

Manager: “That’s an interesting idea. Make it happen.”

Most startups give their employees a lot of power to trust their instincts and quickly take action to test something out, so take advantage of this luxury from the beginning. And don’t assume that “there’s someone else who’ll take care of that,” because that someone else should probably be you.

3. Be optimistic - The quickest way to tell someone that they shouldn’t have hired you is to tell them why something won’t work before you’ve spent any time working it. This is especially true in the beginning. Good entrepreneurs spend their days trying to figure out ways to make seemingly impossible things happen. It’s way too easy to think of reasons why something won’t work, and much harder to envision a way that it will. It’s a common trap to want to debate all day the problems with a solution rather than test the solutions to a problem. At least initially, train yourself to focus on the latter.

4. Don’t get stuck on the theoretical - This can be difficult for new startup employees. When getting acclimated to the startup landscape and before actually joining a startup, people often live in a world of theory, strategy and evaluation. You may look at other startups and debate with friends for days on end what will and won’t work. Most of the blogs you read live in the world of the theoretical. The world of implementation / operations can be much different. Now things actually need to get prioritized and built, not just discussed. Be sure to understand the line between when another hour of theoretical evaluation will be less effective than running an A/B test.

5. Find out what hasn’t worked - What you see in the current product suffers from survivorship bias. You know what’s succeeded, but you likely don’t know what features or processes haven’t panned out. Both are incredibly important to understand. Try to sit with as many people as possible and ask, “What are some of the things we pushed live that fell flat?” And don’t just stop there, try to get their opinions on *why they think it didn’t work* and *why they thought it would work*. Earlier this year Eric Ries visited Hunch HQ and said something that stuck with me:

“The main unit of progress at a startup is learning.”

Take advantage of that progress. At a startup, a lot of knowledge is trapped in people’s heads. It is your responsibility to be proactive and ask questions, not someone else’s. By learning from past trial and error you’ll save yourself a lot of time in the long run.

6. Write down your opinions - The more time you spend within the organization, the less objectively you can evaluate the company and the product. Interestingly, this makes new employees the most important beta testers because they aren’t yet biased.

After your first week, take the time to write down your initial thoughts on the direction of the company, the product, and your role within the organization. What would you do as the CEO? What product features would you add or take away? Where do you see yourself making the biggest impact? Observation is so often the foundation for learning, and asking these questions will force you to observe.

As your experience at the company continues, and you begin to loose your objective lens, these early notes will help bring you back down to the perception of someone who isn’t in the weeds of it. This perspective is an edge no matter what your role. Also, see if your initial instincts turned out to be correct or not. This can be a great learning experience in showing that your gut instincts are great, or not. It’s the same reason that new investors write down literally every thought they have on a company they evaluate - it’s a tremendous learning experience to revisit these notes years later to see where you guessed right, and where your blind spots were.

Final Note: Working in a startup environment can be a bit startling. It may take some time to understand that there is a method to the madness. These represent a few things I wish I’d taken to practice from day one. If you’ve recently joined a startup and have some thoughts, I’d love to hear from you in the comments.

How to Raise Your First Round

Mon, 31 Oct 2011 11:15:18 -0400

Last week Chris taught a Skillshare class at the Union Square Ventures office called “Planting the Seed: How to Raise Your First Round.” The room was full of energy, with lots of first-time entrepreneurs. It was a fun event, so I thought I’d post some of the key concepts for those who couldn’t make it to the class. Enjoy!

1. The process gets much easier after getting one “yes” - Having a lead investor is an important signal to the market that *someone* has conviction in you. A lot of investors will say, “I’ll invest if you can find a lead investor.” This is basically the investor asking for a free option on the investment, so don’t make the mistake of counting it as a firm commitment. However, finding that lead investor can turn a lot of those weak commitments into strong ones.

2. Being active in the tech community will help you raise money - Investing is a trust business. The investor has to trust that if they give you money you’ll use it wisely. Being active in the community and having people who can vouch for you is key. Go to meetups, blog, and engage with people on twitter. You should try to become a known entity in the community. Ideally an investor will recognize your name when they first see it.

Every investor has filters they use to source introductions. Entrepreneurs they’ve already funded are a nice place to start because they are generally sympathetic to the fundraising process. After receiving an introduction, probably the first thing an investor will do is Google you. So understand that Google results effectively are your reputation.

3. “Come back in a month” usually means “no” - Additional information that comes with the passage of time is beneficial to investors so they will often delay making a decision to “flip over another card.” Again, they are looking for a free option on the investment. Why give up the option to invest if they don’t have to? In contrast, entrepreneurs generally have constraints that make them want to raise money soon. Less experienced entrepreneurs may mistake “come back in a month” as a positive signal. In fact, it basically means, “I’m not interested.” Anything short of, “I’ll write you a check” is “not interested.”

4. There are four main types of investors- Friends and family, Strategic investors (Someone in the industry - for example if you are a payments startup getting American Express to invest), “Dabblers” (such as the person who just made 20 million on a startup and wants to invest on the side) and venture-style investors. Try to avoid the first type - being an entrepreneur is stressful enough without having to worry about losing grandma’s life savings.

5. Understand the type of investor you are pitching - Venture investors think a lot about whether a company will be able to continue to get funding at the next milestone, and eventually have the chance to be a billion dollar company. So pitch the upside of the business, not the mean. You’d prefer to leave the investor thinking that there’s a 1% chance you’re the next Google rather than a 25% chance you’ll be a $10 million dollar company. Remember that the difference between a good venture fund and a great one can be one big exit.

The number one kiss of death to a company is for an investor to say “it doesn’t seem big enough.” Technique and bravado are key here. Simply changing the pitch or creating an emotional narrative can go a long way. And if you don’t think you have a chance of being a billion dollar company, that’s fine, but perhaps you shouldn’t be raising money from this style of capital.

6. Pitch the story, not the numbers - On the first pitch focus on the narrative, and move the numbers to the appendix. Have numbers ready but if you start with them you may lose your audience fast. The best pitches talk about how the world is changing and why the product fits well into the macro trends. You also have to answer the question “why now?” Why didn’t this happen 10 years ago? For example, now everyone has a smartphone and therefore can check-in everywhere they go. That wasn’t possible 10 years ago.

A typical deck is about 6-8 slides - Here’s a great post on putting together an investor deck. And a product demo is necessary - venture investors will demand it. But again, before showing the demo you want to frame things as a narrative form. For example “here’s why what I’m about to show you matters.”

7. In an early-stage deal the team is usually most important - The product is really a window into the quality of the team, because quite often the product changes. Also key is that the team has demonstrated mastery of the industry they’re in. Over time other metrics emerge that signal the quality of the product, such as traction and revenue. The later-stage the investment, the more these other signals matter.

8. Option pool and acceleration on change of control are key terms - Employee option pools generally come into play at the Series A. Entrepreneurs often underestimate how much the option pool will cut into their ownership, tending to focus more on money raised as a percent of valuation.

Also, acceleration of vesting on change of control is relatively easy to get and can really make a difference. For example, you can negotiate to have vesting acceleration to 3 years if acquired within the first year after the financing. This can make a big difference if it actually comes into effect.

9. Don’t get creative with the legal documents. Use the standard stuff - Gunderson, Cooley, Fenwick & West, and Wilson Sonsini are a few “standard” startup lawyers. Using standard lawyers with standard documents saves you time and money later because most investors (and even acquirers) know these documents and trust them.

The one legal book you need to read is The Entrepreneurs Guide to Business Law. It goes through the most common ways entrepreneurs mess up. For example, it discusses the “forgotten founders problem” - describing the situation when someone who helped you out early in the life of the company and sues you when you show signs of success. Ideally, you would have gotten a release from them as soon as they stopped working. Good lawyers will make sure everything is clean when you raise money.

10. Be thoughtful about how much money you raise and at what valuation - If you can avoid raising money you should. You’ll retain ownership, and not every business is a venture-style business (i.e. shooting for a billion dollar business). But if you decide to raise money you should aim to raise enough to get to an accretive milestone - be it profitability, sale, or whatever makes the company worth notably more than it is today. Figure out that milestone and work backwards. Ask, what is the team I need to get there, what milestones do I have to hit? And then add 50% to that just to be safe. Finally, remember that the valuation of the last round sets the bar for your next round. This is important, because you don’t want a down round.

Additional tip (from me):

Be completely transparent about the market and competitors. Assume the investor will do their research. And when they realize you didn’t bring up any of the competitors, or identify the main issues with the market, they’ll either think: a) you were being deceptive (see point #2 about investing being a trust business) or b) that you don’t know what you’re doing. It may help to send over some industry research from Gartner or the equivalent. An investor isn’t going to invest in an industry he or she doesn’t understand, so it’s in your interest to get them understanding the market as fast as possible. A good rule of thumb is that when in doubt, always err on the side of being upfront and open.

Keeping Users Logged In

Thu, 15 Sep 2011 11:16:00 -0400

It’s no secret that a logged in user is more valuable to a company than a logged out user. A user must be logged in to receive a truly personalized experience, be a content producer, or make a purchase. The beauty of mobile is that once a user connects to an application, they are always logged in. We are beginning to see a movement toward this experience on the web as well.

Twitter and Facebook Connect have proven effective (yet imperfect) solutions for the “forgotten password” problem. Both are high-use products, meaning it’s likely a user is logged in to these services and therefore yours. Third-party logins help *get users over the wall*.

New product trends aim to *keep users over the wall*. In particular, Quora has been among the first to innovate in interesting ways around this concept, but they likely won’t be the last. Below are a few interesting things that signal a focus on keeping users logged in, and moving closer to an always logged in web experience:

1. Two-click logout is the new standard - It wasn’t long ago that three of the web’s favorite services - Facebook, Twitter, and Google - displayed a big “logout” link in the upper right-hand corner. Click that once, and you were out. In February 2010 Facebook began rolling out a two-click logout, where the logout link is hidden behind the “Account” drop-down. In September of 2010 Twitter made the switch, and in February of this year Google followed the pattern. The likely logic? Out of sight, out of mind. All these services aim to be platforms, and step one is keeping users logged in.

Facebook - February 2010 Update

Before:

After:

Twitter - September, 2010 Update

Before:

After:

Google - February, 2011 Update

Before:

After:

Fun thing to try: Go login to Amazon and try to figure out how to logout. Now imagine what that task would be like for the average web user.

2. Two-page logout - Though not widely adopted (yet!), Quora has taken the two-click logout a step further. Although they make the logout option prominent in the site navigation, clicking does not actually log you out in the traditional sense. Rather, it takes you to another page, where you can click on your image to login, sans password.

Press “logout”…

When you return you’ll see this page. Click the image and you’re in.

Side note: When you return to Quora, the landing page shows your face. People like what is familiar, and nothing is more familiar than your name or face. This increases the likelihood the user will click to login and pass this stage of the funnel. It’s the same reason that putting first names in the subject line of weekly emails at Hunch boosted our open rates by 15%.

3. Infinite login sessions - Anecdotally I’ve seen most sites have login sessions of a few hours before they boot you off. When I logged off Quora, I got the below message telling me that I was still logged in on 27 (yes, 27!) browsers. As you can see, somewhere in Charleston, SC, I am logged in to Quora, even 17 months later. I must admit though - as someone who uses Quora every day, never having to login has made my experience more enjoyable. And they do give you the clarity and control that other sites don’t.

4. Login from email - Email is probably the single most effective tool in driving site engagement. But how many times have you gotten an email from a service, clicked on a link and then quickly closed the page because you didn’t feel like logging in? Quora allows users to immediately login upon clicking out from an email. Yipit does the same thing so that you can change your daily deal preferences. As a passive user who enjoys Yipit’s emails but rarely visits the site, I’ve enjoyed being able to quickly update my preferences without having to login. Of course, it would be difficult for a company that had a user’s credit card information to pull this off, but these sites could follow a similar model and only ask for credentials at the point of purchase.

Final Note: From a product perspective, the shift toward an always logged in experience will increase user engagement. As referring traffic from social sharing continues to rise, having an always logged in experience also increases the likelihood of serendipitous engagement. Keeping users logged in removes a step in the funnel from which a user can exit the site.

From a security perspective, I am less enthusiastic. But, if we look to history as the guide we’ll see that when these decisions come down to engagement vs. privacy / security, it is generally engagement that prevails in the market. Companies will push the envelope until the lack of privacy / security damages the user experience rather than enhances it.

How to Choose the Right Startup to Join

Thu, 21 Jul 2011 11:11:03 -0400

The idea of joining a startup is exciting. But the overwhelming desire to leave something old to join something new can become a double-edged sword. Just because you are eager to get your foot in the door does not mean you shouldn’t be picky. You are a valuable asset, and it’s important to remember this during the search process.

Not all startups are created equal. In my last post I wrote that your experience is subject to greater variance at a startup than at an investment bank. If you get a job at Morgan Stanley, you can be fairly certain it will prepare you to be a banker. They’ve been running the analyst program for years: they have it down to a science. Startup experiences, on the other hand, will vary widely in their ability to prepare you for an entrepreneurial career.

You are an investor, but instead of investing money you are investing time. Just as a venture capitalist must make the most of a 30-minute meeting with an entrepreneur to assess the risk and potential return, you have to do the due diligence to ensure you make the right investment. Here are a few tips that may help you choose the right startup to join:

1. Make sure there are mentors - By mentor, I don’t mean someone who will hold your hand as you learn. What is important, though, is to find people who take an interest in your professional development. I recently read a phenomenal post on how bored people quit their jobs, and how managers can protect against it. But, it takes an observant and caring manager to detect boredom in an employee, and act to reverse it. You can increase your chances of happiness at a startup if you surround yourself with people that care about your development.

So, in a short interview, how can you see if there is a culture of mentorship? One way is to ask employees who their mentor is at the company. See if they stumble. Also try to observe if the interviewer takes an interest in your long-term goals. Do they ask questions like ”What would you like to be doing 5 years from now? 10?” or ”What do you want to learn through this job?” or “What is your motivation in wanting to work at a startup?” Do they dig deeper by asking thoughtful follow-up questions that are tailored to your answers? All of these are positive signals that the interviewer cares about your development. They don’t just see you as an interchangeable part in their startup machine.

2. Understand the stage - People throw around the word “startup” to describe everything from Twitter to a 2-person startup launching at a hackathon. So, it’s important to scrutinize exactly where a startup is in its lifecycle, and what that means for your experience. First, it affects the risk you undertake. Four main elements that de-risk a startup are: raising capital, finding product/market fit, having revenue, and being profitable (the trump card). The more elements a startup has, the lower their risk of failure, and the less risk to you. *Warning* - a lot of startups will say they have product/market fit, but few do. Form an objective opinion by doing your own research.

Second, different stages require different roles. For example, if a company has not yet achieved product/market fit, your job will be more exploratory, and there’s a greater chance your role will change dramatically as the company evolves. You could be working on two very different projects in the course of a few months. Also, the larger the company, the less likely you will be exposed to different parts of the business and be able to “wear many different hats” - and the more likely you’ll be a specialist. Neither is objectively good or bad, but it’s important to know they are different experiences.

3. Meet the founders - Recruiting is one of the main roles of the founding team. So, at a startup with fewer than 30 people, there’s really no excuse for you not to be able to meet with at least one of the founders. What should you look for? Honesty in the founding team is probably the most important thing. It’s a positive sign if the founders are open about the hurdles they still have to overcome. In the same vein, if you do receive an offer and have an equity allotment, ask what percentage your shares represent. When asked, most will tell you the percent. If they aren’t open with you about this I’d worry they aren’t being open about other things too.

Also look at whether the founders are inspiring. Great startups require great people, and if they can’t inspire you, they likely won’t be able to inspire other prospective employees or investors. This is also a good time to ask “high level” questions. See if there is “vision alignment,” or an alignment between your vision for the company and founder’s. Be sure to distinguish between where you see it going and where they see it. You may be surprised to find that you and the founders see very different paths for the company. Interestingly, this is a mistake some investors make - investing in their vision for the company, not the founder’s - only to regret it later.

4. Analyze the operating history - Ask the hard questions, most important among them ”Has anyone left the company?” If the answer to that question is no, that is a positive signal. If yes, try to find out why the person left. The answers you receive likely will be telling. If employees left to join other startups, that’s a negative signal. If they left to start their own company, that’s a pretty neutral signal, and potentially a positive one. Employees who left to pursue something completely unrelated (a Physics PhD, for example) is also pretty neutral. And, of course, If an employee left to work at a bank, run. I’ve never seen that happen, so something weird is going on there :)

Also, it may be interesting to ask the founders how they funded the business prior to raising capital. It will give you a sense of how good the founders are at managing cash. This is a requirement of good CEO’s (one main reason startups fail is because they run out of money). So if the CEO tells you they worked odd jobs for a year just to keep the company running, all while growing the business, this is a sign that they are good at managing cash. Also ask what their current runway is - it may surprise you to hear a founder tell you they only have 6 months of cash left in the bank.

5. Spend significant time in the office - Startups will often ask potential employees to undertake a project before hiring them. This is a great opportunity to ask if you can complete the project working out of their offices for a day or two. If you get that opportunity, be observant of the day-to-day culture of the company and see if it matches what you want.

Some people like quiet working environments. Others like loud. Some love to discuss the latest technology trends as well as new product releases or partnership announcements of other startups. Others are less interested in the larger tech landscape outside of their market. A nice signal that the former environment exists is if people at the company tweet or maintain a blog. These are little signs that employees have unique ideas, and more importantly, that they are eager to share them and *get feedback*. If this isn’t the case, it’s not necessarily a bad thing - it’s just different. And it may not predict success, but could predict if you’ll enjoy the work environment. You’ll see a lot of the details you may otherwise overlook by spending a full day or two in the office.

6. Ask the happiness question - Be upfront and ask employees direct questions such as “So, you love working here?” or “What’s your favorite part of the job?” It’s hard to describe in words how an unhappy employee will answer these questions, but when you see it, you just know. If unhappy, they’ll likely give short, terse answers like “Things are good - I like what I’m doing” and offer other formulaic responses. Kind of like when you ask a friend how they feel about someone they’ve been dating for a couple months, only to receive the lukewarm, “Yea, things are pretty solid, they’re a very nice person.” Most people who love their jobs and the product they are working on will seemingly talk about it for hours if you let them. Pay attention to the nuances in how employees at different companies answer this question.

7. Find a problem you are passionate about solving - In your interview ask, “What are some interesting problems you are trying to solve right now?” Use this time to be visibly inquisitive about the problem, so you understand all aspects of it. After you leave the interview and have had a chance to unwind, does your mind wander back to these problems and consider potential solutions? If so, congrats - you’ve found a problem you are interested in solving, one that you’ll likely be passionate about.

Solving problems is a combination of both active and passive thinking. I see active thinking as problem solving that is done at work where you are consciously trying to solve the problem. Passive thinking is what you do on your walk home, or when taking a shower, and often the biggest breakthroughs come from these times. If you work on a problem you are truly interested in, you’ll maximize your passive thinking time as your mind keeps wandering back to the problem, and increase your chances of coming up with creative solutions.

Final Thought - Everyone I’ve met who wants to join the startup world is incredibly eager to do so. This is a great thing. The startup community has marketed itself well - and I think has a great product to offer! But during the search process it’s important to pause, take a step back, and make sure you are joining the right company. Because joining the wrong company will likely result in a worse outcome than pausing until you find the right match.

5 Reasons to Join a Startup After Graduating

Thu, 02 Jun 2011 11:22:00 -0400

After I wrote my last post, a surprising number of people emailed me asking why I decided to join a startup after graduating from Duke. Many of those I heard from face similar decisions today: either they are college seniors choosing between a big company and a startup, or they are recent graduates who work at a big company and are thinking about making the switch. What’s interesting is that most are already leaning towards the startup career path: it seems they just want someone to assure them it’s a rational move. Their friends and family are skeptical: “How can you turn down a job at Morgan Stanley for a 10-person startup?” Hopefully this post will give those who want to join startups some good points to bring back to the skeptics as to why it’s a good idea to join a startup early in your career.

First, an important point: As much as I’d like to say that everyone should join a tech startup as soon as they graduate, I don’t think it’s that simple. People have different passions, and I’m not a fan of projecting my own interests onto others and assuming that what I did was somehow the “right” thing to do. So, the first piece of advice I’d give is to pursue whatever you are passionate about. What is passion? In defining it, I’ll take inspiration from Steve Blank’s recent graduation speech at Philadelphia University. This quote caught my eye:

It’s your curiosity and enthusiasm that will get you noticed and make your life interesting.

I think he nails it: passion is enthusiasm coupled with curiosity. Which leads me to the first reason to join a startup early in your career:

1. Passion is the ultimate competitive advantage - When I was an intern on Wall Street, I took a look around the room of my peers and thought, “What is my competitive advantage here? Everyone is smart and works hard, right?” What I quickly found was that those who excel in that job are passionate about financial markets. I thought finance was interesting, but didn’t have the same level of enthusiasm and curiosity about it as my peers did. I didn’t have a competitive advantage in the Wall Street world. However, I did have a passion for technology and for startups. If I could work for a startup, I could use this to my advantage.

A nice way to tell if you have a passion for what you are working on is to ask this: Do your weekends look a lot like your weekdays? When you get home from work, do you find yourself wanting *more*? Do your ears perk up whenever someone talks about a certain subject? Do you feel compelled to ask questions and really listen to the answers? That’s passion, and it fuels a competitive advantage that can’t be faked. It’s what drives you to work when you don’t have to, to think about new solutions to old problems when everyone else is spending the weekend flipping the “work” switch off.

2. Startup years are like dog years - One year at a startup is like seven anywhere else. In Hackers and Painters, Paul Graham writes, “Economically, you can think of a startup as a way to compress your whole working life into a few years. Instead of working at a low intensity for 40 years, you work as hard as you possibly can for four.” For a young and hungry person, startups provide an awesome opportunity to accelerate your career. By their very nature, high growth startups always have more tasks to be done than people to do them. This necessarily results in a lot of employee “stretching.” By this, I mean being put in a situation where you have to do work that you might not be quite ready to do. This is the best way to learn.

Companies tend to change most in their earliest stages (as opposed to later when they are executing a proven model). As an early employee, you have a front row seat to this evolution. Because your role, and perhaps even the role of the company in the market, changes at such a rapid pace it is much harder to reach a point of diminishing marginal returns at a startup.

3. Sunk costs only grow with time - A lot of people I meet reason that joining a big company will de-risk their career path. If they can get a brand name on their resume, even if they join a startup and the startup fails, they will still have that brand name to fall back on. There is a recurring question: “When do I cash in the chips I’ve accumulated and do something I really want to do?” In reality, what I’ve found in talking with older friends in other career paths is that the further you go down one path, the harder it will be to make the switch to another. The weight of momentum can be overbearing, especially when the skills accumulated in most industries outside of tech are little transferable to tech startups.

4. If you want to start a company, a startup is the best place to learn - I’ve long known that at some point in the future I want to be a founder. It’s hard to describe the effect that working at a startup has to help move that aspiration from abstract to real. Before working at Hunch, I’d always think about starting a company, but it would be in an “armchair” fashion, where I’d be thinking of everything in theoretical terms. Working at a startup allows you to observe how one startup is run, and help shape a concrete vision of how you would want to run your company. What type of person do you want to hire? What kind of culture do you want to set? How do you onboard new employees efficiently? I don’t have perfect answers to every question, but these are the types of things I’ve been obsessing over for the past year, whereas prior to joining Hunch I didn’t even know the right questions to ask.

All of this stems from the fact that at a startup you have greater access to and can better observe the actions of the founding team. At a big company I’d likely be several levels of management removed from the people I work with at Hunch everyday. I’d wager that more than half of what I learn is through observation, and its tough to learn how to be a founder sitting in a cubicle where you don’t interact on a daily basis with the people who shape the vision of the company.

5. Your experience is subject to greater variance - At a big company, your role is usually defined for you. The analyst program you go through is identical to the program the kid last year went through. Not the case at a startup. In many cases you define your role, and no two people have the same experience. If you see a problem and have a solution to fix it, you’ll likely get ownership of that problem. But that’s the key: you have to own it. Nobody will tell you exactly how to do your job, or hold your hand. Your peers at big companies will likely not be afforded the same responsibility in the earliest stages of their career. This is an incredibly exciting thought for some, and super terrifying for others who have moved from institution to institution, brand name to brand name, their whole life. But, if this idea excites you it can be incredibly rewarding, both in terms of what you can get done and what you can learn.

Final Thought - Clearly I have a ton of bias here because this is the route that I chose. And, I’m sure there are benefits to joining a big company as well. But, if you are someone who wants to join a startup but just needs an extra nudge, hopefully the above points will give you some ammunition to take back to your friends and family who tell you that you are an idiot for turning down a job at a brand name company for the chance to work at a startup.

How to get a job at a startup if you aren't a developer

Wed, 20 Apr 2011 11:43:00 -0400

Recently, I’ve received an increasing number of emails from “business people” looking for advice on how to get a job at a startup. Most have the same story, “I could go work at a big company, but want to join a startup. One problem: I don’t know where to start the process.” Everyone knows how to get their foot in the door at an investment bank - just apply online. At least when I was at Duke, there were hundreds of people each year applying to big banks so everyone knew what to expect. Less clear is the path to joining a startup, especially for those lacking technical skills.

What I usually tell people is that it’s not as scary as it sounds, and it is not as difficult provided you are passionate about your goal. A few pieces of advice on how to get a job at a startup if you aren’t a developer:

1. Know the tech landscape better than anybody else - Pick a few verticals and drill down. Know the names and histories of companies in that space and be up to date on what they do and why they do it. A good place to start is here. Separate yourself by also learning tech history - macro trends are more clear in retrospect. There are a bunch of good tech history books in this list. For me, twitter is the best source of news and information. Follow people who are respected in the startup world, and read what they are reading. I’ve found that Twitter is a bit like Wikipedia in the way it pulls you in. If you follow an interesting person you are bound to find 50 more solely by seeing who they interact with.

2. Form an opinion and start a blog - Knowing the facts is a requisite to forming an opinion. Just memorizing the details and not being able to articulate an opinion is pretty worthless. So, make sure you know not only that a prominent startup recently released a new feature, but be able to comment on whether, given the market, this release was a good strategic move. Product-wise, what did you like about the new feature? What did you hate? How will the new feature affect the direction of the company? Write these thoughts down on twitter and on your blog (even if nobody is listening now, it will give you something to point to when you do reach out to a company).

3. Be familiar with the startup culture - Each sport, industry, or college has a unique culture, with its own lingo, success stories, and taboos. Startup culture is no different. Be familiar with all of these elements. A nice place to start is Paul Graham’s Hackers and Painters. Aside from being a thought-provoking book, it offers deep insights into the startup / hacker culture. I’d also recommend hanging out on tech-heavy communities like Hacker News or Reddit. Observe how people interact. Pay close attention to which articles and comments get voted up or down. It will go a long way in figuring out what the startup culture sees as valuable. Decide if these values mesh with what you see as important.

4. Offer a concrete skill - I remember during my first interview with a startup, I described myself as someone who was “willing to do anything.” I didn’t realize that this wasn’t the right way to pitch myself. Though flexibility is a great quality, it is assumed of all good candidates. Ditto for an “eagerness to learn.” To set yourself apart, do some research into the position and talk about the specifics of why you’d be good for that role. If it is an analytics role, read some books on online analytics. If it’s more of a product role, build something! If it’s a business development role, come in with a list of the top 10 companies you think would be promising partners for company. I learned to be proficient in photoshop so that I could create quick mockups that would inspire potential partners. Whatever that skill is, go learn it (hint: you’ll likely have to teach it to yourself). My point is to put some thought into how you can prove passion and commitment.

5. Take an internship - I wasn’t aware of this when I was looking for a job, but startups will often bring on someone as a consultant or intern before hiring them. It’s kind of like a test drive. I’d say the hardest part is getting your foot in the door. Once you do that, it’s up to you to prove your value. Check your ego at the door and don’t worry about how all your friends are full-time employees and you are a lowly intern. (Note: I started out as a summer intern at hunch, which lead to a full-time job.)

6. Send cold emails - Contrary to popular belief, they work. I sent dozens off emails during my job search inquiring about jobs and heard back from a handful of companies. That’s a handful more than I would have heard from otherwise. (Of course, try to make these emails meaningful, not just templates). The best piece of advice I can give is to get the conversation started early.

I’d start by emailing a few entry-level employees at some of the companies you find most interesting. Find their email addresses online and send them a quick note along with your resume - you’d be surprised how few people looking for jobs in startups even take the time to do this. If you can’t find their email then send them a note on twitter or comment on their blog.

The reason most startups will be respond to your inquiry is that although they aren’t always hiring, startups are always looking to meet exceptional people. In a fast-growing company, hiring needs pop up quickly and the faster they can fill the job, the less time they spend away from product-building. Getting to know potential employees before the need arises is key to finding the best people and filling roles fast.

I’ve heard of this referred to as a “bench” of potential hires (hat tip to Brian Chesky of Airbnb who is the first person I heard this term from). It describes people the company knows and would love to hire given the need. When the need arises, the company calls on its “bench.” Your goal should be to get on the “bench” of several startups, so that when an opportunity opens, they will think of you. This is particularly true for college seniors.

7. Understand that most people get non-technical jobs at startups through their network, not job postings - When I was searching for a startup job I got some good advice: “Any startup job you find on a job board will be one you don’t want.” Many startups won’t business development roles because they generate overwhelming inbound interest, often from unqualified candidates. Rather, they’ll let people in their professional network know they are looking for someone, and rely on referrals to drive high quality candidates. Again, get to know people by reaching out via email, twitter, or by commenting on their blog. If someone you contact tells you they aren’t hiring, ask if they’d mind referring you to a startup they know that is.

Final thought: I don’t aim to convince people to choose a startup over Wall Street - only to let those interested know that the option is there and it is not as daunting as it may appear. Hopefully the above pointers will help demystify the process for those eager to get into the startup world.

What is your product's burst mode?

Wed, 05 Jan 2011 11:03:00 -0500

The board game Carcassonne has become a bit of an obsession at Hunch HQ these days. Though we do play the physical board game, many of us also play the iPhone version. In a discussion of why Carcassonne is such an enjoyable iPhone game, Chris offered one explanation: “it’s bursty.” You can make a quick move, go away for a while, come back, quickly make sense of the board, and repeat. It lends itself well to popping in and popping out without skipping a beat.

Conventional product wisdom is that consumer facing products should have at least 2 modes: single-player mode and multi-player mode. Single-player mode means the user can get value out of the application even when using it by themselves. In this case, we assume none of the user’s friends are using the app. For example, single-player mode on Foursquare involves checking in, getting badges and mayorships, and seeing stats on where you’ve been in the past weeks. You can do all of these things by yourself. Multi-player mode is valuable once your friends are using the service. On Foursquare, you can see where they are, “shout” to them, post pictures, and see comments they’ve made.

I’d like to propose a third mode that consumer products should offer: burst mode. Also known as “waiting for coffee” mode or “early to a business meeting” mode, burst mode applies to use on a mobile device. The user most appreciates burst mode when bored with a few moments to fill. We’ve all been in this situation, and burst mode allows you to capitalize on these moments of boredom. We are not looking to accomplish anything in particular; we just want to be entertained. I wouldn’t equate burst mode with any interaction on a mobile device, because there are often times when I have 10 or 20 minutes to spare. Burst mode is all about interactions that are measured in seconds, not minutes.

So what are some general rules for making an application bursty?

1. Loading is lightning fast. If I’m waiting in line for coffee and have 25 seconds, I can’t wait 15 seconds for the app to load (I’m looking at you, ESPN Scorecenter).

2. Discovery is simple. I shouldn’t have to dig for content. If more than three clicks are required to get to the bursty content, I won’t think about interacting with the app when I’m waiting for the elevator. If it takes one click, I can deal with that.

3. Passive consumption as opposed to active consumption. Again, assume the user has no neat thought, no photo to add, no restaurant to search for. The user is just plain bored and wants to be entertained. Don’t set the barrier for interaction higher by making the user think about what they want.

4. Short content is better than long. I find my attention span is about half of what it normally is when I am on my phone. Moreover, I could be interrupted at any point. If I am pulled away, I want to be able to get back into burst mode quickly and at any time. This is why, for example, a long blog post or detailed response on Quora would not be suitable for burst mode; I can’t pop in and pop out easily without losing my train of thought, whereas Twitter is ideal for burst mode.

5. Content is refreshed frequently. Although I have about 50 apps on my Android, I regularly use only a handful. Frequently updating bursty content is key to getting me to come back and keeping it at the top of my mind.

6. Low cost of interruption. Ask, what would be the limitations of the product if someone used it in bits of 30 seconds, spread over the course of a day?

Every application can and should offer a burst mode of their product if it is not already built into the product itself. True, some products lend themselves better to burst mode than others, but I believe strongly that these “20 seconds of interaction” will be increasingly important to the success of products.

A good example of an app that was not inherently bursty, but found a way to be is the Airbnb iPhone app. How can finding a place to stay be bursty? Isn’t that something that requires much scrutiny, research, and time? Well, it can take time. But people also like just looking at cool places, and thinking about how nice it would be to travel and stay in that cool place. Even if I am not in the market for a vacation spot, I still enjoy looking at the “Top 40” section showcasing awesome Airbnb properties while I wait at the dentist’s office. In this sense, the Airbnb burst mode is aspirational in nature and can turn a browser into a buyer.

Key takeaway here: the burst mode need not be the core product, but rather can be an ancillary product that naturally leads into the app. It can be a powerful gateway.

New Facebook Friends Sidebar Subtly Guides Users to Create Lists

Thu, 09 Dec 2010 12:01:00 -0500

Facebook recently released their redesign of the profile page. The details of the new design can be found here. To me, the most interesting piece of the redesign is the tweaked display of your friends, which amounts to little more than a bait to get users to indicate the strength of their relationships through lists (which Facebook has been trying to get users to do for some time, to no avail). Let me explain.

The old Facebook design displayed a list of a few friends that truly appeared to be random. I never saw a high density of friends that I was particularly close to. However, a user could click on the pencil icon in the upper right corner to control exactly who appeared in this section and how many friends were displayed (see below).

The new Friends Display is quite different. The display now pops more than it used to. This is in part because the left sidebar is more streamlined, there is more white space around the displayed friends, and their full names and networks are shown. It also isn’t constrained by a blue header, and is no longer underneath basic information like birthday and current city.

What’s fascinating is who Facebook has chosen to display. Like the old design, each time I reload the page, I have a different set of friends displayed in the space. Right? Well, almost.

What initially caught my attention was the high density of friends displayed that really were my closest friends (my sister, girlfriend, college roommate, and high school best friends, to be exact). It seems that as I reload the page, it persistently shows me (or any of my friends who view my profile page) about 4-5 friends that I am actually very close with along with 4-5 friends whom I haven’t communicated with in years, if I really ever knew them at all. The latter group is made up of people who I never see in my newsfeed, have never communicated with on Facebook and with whom I have few mutual friends. I can assume with fairly high confidence that Facebook knows I have a low strength of relationship with these people.

Which brings me to my hypothesis: in the UI for this new “friends” sidebar, Facebook intentionally is sprinkling in among people you do care about, people who you don’t care about. In essence, they are taking your top 5 strongest relationships and putting them next to your 5 weakest connections.

When I continually see people that are my real-life best friends in this space, I am pushed to believe that this is the where people I am closest to should appear. It is reinforced by the fact that the person you are in a relationship with has a dedicated space in this sidebar, as does your siblings. However, when I see a mixture of people I am very close to positioned next to people I hardly know, the juxtaposition triggers a subtle voice in my head tells me something isn’t right - and I feel a nudge to correct the mistake. And this is exactly what Facebook is trying to get the users to do, click that little pencil icon in the upper right hand corner to edit this section.

Users would be forgiven to believe that clicking the icon will allow them to edit who is displayed here. This would be too easy, right? I’d just make a few quick adjustments, remove friends I don’t care about, add friends that I do, and be done with it.

Alas, this is not the case. There is no way to alter the people that are displayed in this space. Yes, the same icon does a different thing in the new version than in the old. But wait, there is a consolation prize! When I click this icon, I am prompted to make new lists! Classic bait-and-switch.

So how am I to get rid of the visual prominence given to these “hardly-knows” on my profile? Well, I can create new lists that trump the auto-generated list “friends.” The more I make, the further down on my page these people go. And that is exactly what I am driven to do - create relationship lists.

So part of what this redesign is about is baiting users to create priority lists. From this, they can solve a number of problems, including determining the context in which certain people are important to you and others are not, as well as solving the whole “I have 800 Facebook friends, but I dont care about 700 of them” problem.

It seems in this design Facebook has employed the best tactic known to compel a user to action: display something publicly about a user that is incorrect (or in this case, slightly off, but enough to be unsettling). I see 5 people I barely know position next to my 5 best friends in my featured friends list, and I want to do something about it. It is quite clear that Facebook knows who my top friends are, but they choose not to display it to me all at once! Likewise, they have a sense for whom I am least connected to, and they do choose to display these people.

This also highlights the idea that the best way to get a user to do something is to make it prominent in the UI. Though not a particularly novel idea, it is one that many web services seem to forget. If featured relationships are prominent, I’ll update them. If my job, current location and hometown are prominent, I’ll keep those up to date. Heck, I don’t know of anyone who initially indicated on Facebook the languages they speak, but I’d bet a large portion will now.

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If you thought this was interesting, you may want to follow me on twitter.

Zuckerberg's "Social is Not a Layer" Comments Reveal Limits of Facebook Integration Strategy

Wed, 06 Oct 2010 11:00:51 -0400

In an interview with TechCrunch, Mark Zuckerberg commented that most companies don’t truly understand social. He said:

“Even the companies that are starting to come around to thinking, ‘oh maybe we should do some social stuff’’, I still think a lot of them are only thinking about it on a surface layer,” Zuckerberg says. “It’s like ‘OK, I have my product, maybe I’ll add two or three social features and we’ll check that box’,” he continues. “That’s not what social is.“

“You have to design it in from the ground up,” [Zynga and Quora have] designed their whole product around the idea that your friends will be here with you,” he says.

While I agree with this idea, these comments seem a bit hypocritical considering that a large part of Facebook’s strategy for extending its reach on the web has been through Social Plugins and Instant Personalization, an approach that I’d argue is merely adding a social layer to third party sites.

To date Yelp, Pandora, RottenTomatoes, Docs.com and Scribd have implemented Instant Personalization through Facebook. This means that a user need not explicitly authorize each of these sites to use Facebook data. They need only be logged into Facebook while they are using the other site. For example, when I visit RottenTomatoes while I am also logged into Facebook, I immediately see “Movies my Friends Like,” “Movies Recommended For Me” and my Friend’s Activity on the site, based on information gleaned from my Facebook data. [1] In the past, I had to explicitly authorize the Facebook integration to view my social graph in the context of the third party website. Now the integration is automatic.

Neat as these features are, they still don’t embed “social” into the core of the experience. Yes, they give me information based on some social relationships, but they do not turn my visit into a social experience. I can’t comment around specific movies with my friends, message my friends, see where my movie tastes overlap with my friends, invite my friends to see a movie with me, interact in any way with my friends. The features that Facebook tout so highly only add a social veneer to an otherwise non-social product. These sites are adding window-dressing in order to “check a box” rather than to enable a social experience.

Although Zuckerberg’s comments were perhaps a jab at Google’s planned product roll-out of Google Me later this year, he was actually making the case against the value of his company’s own product, at least in its current form, as a valuable extension to other sites.

I think the fastest path to creating a scalable way for third-parties to incorporate genuine social elements into their sites would be to make web apps that integrate into the site’s core and enable users to take action with friends as part of that experience. One of the best ways I can think to do this is through “data threesomes“ that allow flexibility in how social is integrated into a third-party site.

As Steve Cheney writes, “there is incredible power in blending silo’d data across web services.” For example, lets say in the future a group-buying site begins to incorporate into their API several discounts within a particular vertical, let’s say movies. A movie-ticket vendor like Fandango could blend the Facebook Social Graph with the API of this group-buying site to show users which of their friends haven’t seen a given movie and might like it, and offer them a discount if they buy the ticket with three or more of their friends. This would create a real social experience. This application would not simply show users their friend’s data, but allow them to interact with their friends around third party content. It would be more than a cosmetic layer, but rather a function deeply integrated into the experience and the intrinsic value that Fandango offers.

Genuinely interactive apps would create a more flexible and constructive use of Facebook on a third party site. It would bring more value than the current method of adding a few buttons here or showing a few friends there - a method that Facebook as a company is publicly praising, but one which, it would appear, Zuckerberg personally loathes.

Notes

[1] Interestingly, “Movies Recommended for Me” is blank for me because I have never “liked” any movies. It would appear at this point Facebook is unable, or has not yet released the ability, to extrapolate across categories.

The iPad Will Transform Online Conversations (and not in a good way)

Sun, 06 Jun 2010 18:00:00 -0400

I love my iPad. I’ve had it for less than 72 hours, but already it’s become disruptive to my everyday routine. Traditionally, the first thing I did when I woke up was look at email on my blackberry, then head over to my laptop to check the WSJ, Twitter, Google Reader, Hacker News, Facebook and ESPN, usually in that order. Where I used to do all of this on my laptop, I now do it all on my iPad.

However, to me, the iPad’s greatest weakness is exposed when I try to type. Let’s face it: the iPad really isn’t suited for writing more than a few sentences. I’m sure some will disagree, but it remains that to me (and my guess a large portion of the iPad userbase) it is a whole lot easier to type on a keyboard than a touchscreen. In fact, I’d argue that it is much easier to type on my BlackBerry than on my iPad. Theoretically you could solve this problem by adding a keyboard via Bluetooth, but this detracts from the value of the iPad: its touchscreen, simplicity and portability.

The iPad is fine if I want to craft a witty tweet or jot down a note. Its not fine when I want to produce a new blog post, a comprehensive response to an article I’ve read, or a long email.

Many have noted that in its present form the iPad is a consumption, not a production, device. Most can accept this. When they want to go on a binge of information or media consumption they grab the iPad. When they really want to get something done that requires a large amount of text input they move to their laptop. The iPad is bifurcating consumption and production in a way that we haven’t really seen before, and I’m not sure it’s a good thing.

When I read Hacker News on my iPad it is an entirely passive experience. But, isn’t the point of the Hacker News online community to read and interact? The iPad makes it incredibly unlikely that I will read an interesting article and write a thorough response. Similarly, when I read interesting articles on my laptop, I might email it to a few friends along with some commentary, or maybe respond in the comments section of the article. Again, on my iPad commentary of more than a few sentences seems like a chore.

Online interaction around content, I believe, will see the effects of this. In fact, we might see the “Twitterization” of online communities, comments on blog posts or articles, and email discussions with friends. Where people are much more likely to write a quick, two line response on their iPad, they are much less likely to write several paragraphs of insightful content that make Hacker News, the comments section of AVC.com, or an email thread with my friends enjoyable.

The Accidental Billionaires

Sat, 29 May 2010 18:18:00 -0400

I just finished reading The Accidental Billionaires by Ben Mezrich, who also authored the book-turned-movie Bringing Down the House. I bought the book at the suggestion of a friend who is in Pheonix S-K, the Harvard finals club that the book describes in detail (Facebook co-founder Eduardo Severin was a member). My friend alerted me a few years ago that Mezarich was conducting research on campus and that I should look out for the book.

So, when I saw it at Barnes & Noble I decided to pick it up. The book describes the founding and rise of Facebook, and pays significant attention to the company when it was in its nascent stages at Harvard College.

I was looking for a behind-the-scenes look at the founding and rise of Facebook and deep insights into the mind of Mark Zuckerberg and the key players that contributed to its rise.

To be honest I was pretty disappointed by the book. Mezrich is a fabulous storyteller, but the book really lacks substance. It is written more as a novel, paying more attention to painting a scene than giving the reader fact and insight. The book is extremely sparse on the details of the actual events and reaction from the key players. When evaluated for its ability to shed light on the development of Facebook, it’s written more from the perspective of an outsider than an insider.

The book is also a bit misleading because a solid ½ of the book is devoted to the story of Tyler and Cameron Winklevoss, the twins who sued Mark Zuckerberg after they hired Zuckerberg to complete a site similar to Facebook. When I bought the book I wasn’t ready to spend more than 2 pages on this topic. As it turns out every other chapter is devoted to their story.

I’ve read a few preview pages of David Kirkpatrick’s The Facebook Effect (set for release June 8). Already I can see the dramatic difference in the insight into Facebook that these two books offer. From what I can tell, in contrast to The Accidental Billionaires, Fitzpatrick’s account is heavy on the details and sparse on the fluff.

I expect that Fitzpatrick’s book will be more of what I was expecting from Mezrich’s book. The Accidental Billionaires whet my appetite for this story, and hopefully The Facebook Effect will satisfy it.

Grade: B-

Foursquare's Growth Dilemma

Wed, 14 Apr 2010 15:06:00 -0400

Crossing the chasm from early adopters to the mainstream market poses significant problems for foursquare. It’s a classic Catch-22. How does foursquare engage a mainstream audience - we’ll call them “normals” - without alienating the core group of early-adopters who catapulted them to 1 million users?

To recap, the debate so far has been around which of the following foursquare features will be most attractive to the mainstream consumer market:

1) Discount

2) Game Dynamics (badges, points, etc.)

3) Tips related to location (See Chris Dixon’s post)

Though these features are not mutually exclusive, I believe discounts are the most attractive to the mainstream market, and will be necessary for foursquare to cross the chasm. Normals may come for the novelty of the product, but eventually will want a return for their patronage; otherwise they just don’t have, or won’t make, the time to use the service. I’ve written about this previously, and a recent Dave McClure blog post echoed these sentiments. He writes:

Without financial incentives or discounts, there is absolutely no reason on god’s green earth to “check-in” for your stoner cousin, your luddite penny-pinching aunt, and certainly not your clueless grandmother. they could give a rat’s ass about your stupid little iPhone app with the pretty pictures and clever auto-discovery that barely works while draining the hell out of the battery… that is, until you give them $5 off their next beer or 5-dollar foot long…. at which point guess what? HELLO, MAINSTREAM CONSUMER MARKET! while there may be ways to s[t]imulate financial incentives & discounts with virtual goods, frequent flier miles, or other point-based systems & psychological motivations, nothing works better to increase conversion than a cool $5 bucks in yr digital wallet, or 20% off yr next offline purchase.

While I don’t agree with everything he wrote (specifically, that rewards programs are more similar to game dynamics than to discounts) I do agree on the basic premise: that “normals” do not care about shiny badges, they care about saving money.

However, venturing into discounts could pose a problem for foursquare. I was speaking with an analyst at a VC firm the other day who pointed out that early-adopter users often react negatively to being “given” something in return for using a product. Early-adopters use the product because of the intrinsic enjoyment it brings them. This value is diminished when they are given something tangible for using the product.

It’s kind of like students receiving money for getting A’s in school. Though on the surface it sounds like a good idea (why not add another motivating factor!), this actually has been proven to reduce student performance, because enjoyment switches from intrinsic (or internal) motivation to extrinsic (or external) motivation. Intrinsic motivation is more powerful and sustainable than extrinsic. When motivated by intrinsic factors, a user is willing to act irrationally, giving more than he or she receives materially from the service; the user is compensated by inherent enjoyment. They do not see usage of the product as a market transaction governed by market rules: rather, it is an emotional decision.

However, when motivation switches to extrinsic factors, the user will adopt logical market expectations that are associated with a market transaction and expect a 1:1 correlation of what they give and what they receive. It is no longer an emotional decision. If what they receive in discounts does not compensate for the effort of checking-in, the user will not use the product.

Giving discounts to users could prove devastating in foursquare’s efforts to keep their core users engaged. The internal motivation subsides, as it is replaced by external motivation and likely an increasingly apathetic core user base. Also, the thrill of early adoption no doubt fades as more normals become regular users. It’s not so cool to blast your locations and insights about them when you find your archeology professor or sweet aunt chatted them up some time before you.

So, on one hand foursquare needs discounts to attract a mainstream market. How can they grow as a company and increase monetization if they stall at 1 million users? On the other, they may alienate their existing user base if they move too much in this direction. Early-stage technology companies are extremely reliant on their initial users. A striking example on point is Aardvark, acquired by Google. For the social search service, 20% of users accounted for 85% of all answers. So, which way to go? It’s a fine line, and the outcome cannot easily be predicted. But I’ll leave with one idea: the Roger’s Innovation Adoption Curve (pictured below).

The curve classifies users of innovative products on the basis of when they start using the product: some will adopt early, most will adopt mid-stream and others will adopt later. It is a normal distribution curve, and identifies innovators, early adopters, the early majority, the late majority and the laggards. In this model, 2.5% of users are innovators, 13.5% are early adopters, and the other 84% are what we would classify as “normals.” Right now it would appear that foursquare is just crossing the chasm between innovators and early adopters. The foursquare service is most powerful when used on a large scale. My best guess is that they will do all they can to capture the remaining ~97% of the market through discounts, but will do everything they can to keep their early adopters engaged through game dynamics. We may very well see an increasingly segmented foursquare user base; core users attracted for the game dynamics while largely ignoring discounts, and mainstream users attracted by discounts while apathetic to badges and points.

Joel on Twitter

Mon, 15 Mar 2010 00:00:00 -0400

I still have mixed feelings about Twitter, but I generally agree with the points that Joel makes. In particular I think that if you can do more listening than you do talking you can maximize its usefulness as a tool. He writes:

Although I appreciate that many people find Twitter to be valuable, I find it a truly awful way to exchange thoughts and ideas. It creates a mentally stunted world in which the most complicated thought you can think is one sentence long. It’s a cacophony of people shouting their thoughts into the abyss without listening to what anyone else is saying. Logging on gives you a page full of little hand grenades: impossible-to-understand, context-free sentences that take five minutes of research to unravel and which then turn out to be stupid, irrelevant, or pertaining to the television series Battlestar Galactica. I would write an essay describing why Twitter gives me a headache and makes me fear for the future of humanity, but it doesn’t deserve more than 140 characters of explanation, and I’ve already spent 820.

The other day I was having a conversation with my parents about the purpose of Twitter. I argued that it was to attain useful information. I use it to find interesting articles and conversations. I think the key here is that it helps me find them. The entirety of these conversations does not actually occur on the Twitter platform. My parents argued that it was yet another tool of my generation that provides entertainment to the ever-growing portion of the population who have a short attention span. The difference between “learning” and “empty enjoyment” may help illuminate the segmented market of Twtitter users. So, when you use Twitter, do you find yourself gaining knowledge; do you “learn” something of interest or value? Or is it just a way to pass them time; a vehicle for empty enjoyment? I think the answers to these questions are important for the impact Twitter will have on my generation.

The Geo Stack

Sun, 14 Feb 2010 00:00:00 -0500

If you haven’t already taken a look, Chris Dixon wrote a great post discussing the “geo stack.” In particular, I found interesting his thoughts on the monetization layer. He writes:

Finally, monetization could be a very valuable layer. There are (at least) two parts to monetizing location. Getting local businesses to embrace the internet has been very slow going. Companies that make money on local businesses today (Yelp, Yext, ReachLocal) use expensive outbound calling and other “push” techniques to sign up local businesses. There remains a huge opportunity to supplant the yellow pages as the default advertising platform in local business owners’ minds. If apps like Foursquare can build up enough marketing / PR momentum that every restaurant, dry cleaner etc feels like they need to “get on Foursquare” this could finally open the floodgates for local business advertising.

The second part of monetizing location is facilitating and tracking offline purchases. 90%+ of purchases are still offline, although for many of those transactions people do research and make their decisions online. The internet doesn’t get paid for these transactions. Companies like Milo (disclosure: I’m an investor) are doing interesting things in this space and I expect we’ll see a lot more activity on this layer soon.

Below is my response as I wrote on his blog:

Interesting commentary. However, I’m not sure that recs delivered to your phone would appeal to a wide population. There is a huge difference between recs or “tips” delivered to you at home on your laptop vs. outside on your phone. On a laptop, the user is probably seated, has time, and is committed to making a decision. Often this is a purchasing decision, and they are actively searching for the rec (like when they go to Hunch.com).

When delivered to a phone, the tip is delivered involuntarily (like on 4square), and the person is often in a rush, already has a plan for the next few hours at least, and not making a decision related to the tip. They could be at Starbucks and get the tip “Eric. S thinks you’d like XYZ restaurant or XYZ store.” However, its early in the morning, and the user isn’t making a decision related to eating or buying. People are less likely to remember a tip when they are not making a decision related to it. So, the tips aren’t useful, but rather annoying. I’d bet that a small portion of the population would read these tips, and an even smaller portion would act upon them.

If tips are less about where else to go, and more about what types of product to buy once you are at the store, maybe it is more relevant. I could see a wider audience finding location-specific tips useful, such as “you are at XYZ restaurant. People like you loved the steak,” but is the there really a big difference (to Normals, not early adopters) between looking at this tip and simply asking the waiter what is good?

I think the real usefulness to Normals is real-time rewards, delivered to your phone (similar to what Fred Wilson wrote about a few weeks back). Everyone likes to save money, and the rewards would be directly related to the purchasing decision at that moment (“hey, this is your 10th stop at Starbucks, you get a free coffee”).

Becoming an “expert”

Fri, 12 Feb 2010 00:00:00 -0500

Disclaimer: I am by no means an expert, and in the spectrum of knowing, taking a view, and acting, I’m somewhere between knowing and taking a view. Below is just what I’ve observed, I’m not speaking as someone who has mastered these stages.

When I worked in Sales and Trading this summer, I was given one piece of advice more than any other: take a view. All the full-time employees expected each summer analyst to read the Wall Street Journal and talk to other traders about the latest market activity. But, many people had difficulty translating the knowledge they acquired into a coherent view on the market. It’s one thing to know the price of oil relative to equities and to read why the “experts” think the trend will either continue or cease. It’s quite another to develop your own genuine view on the subject.

It’s tricky too. In stating your opinion, where does regurgitation end and originality begin? My answer would be that forming an original opinion requires a return to primary sources – a study of the original facts or statistics, combined with a critical review of many secondary sources. So, you aren’t taking a view, but rather only being knowledgeable if you restate the opinion of one of the senior researchers at the firm or mimic the column you read in the opinion section. Taking a view requires the examination of original data and the analysis of diverse and contending readings in order to figure out what you might be missing. Only then can a person advance from simply knowing to taking a view.

Now that I am transitioning from the finance world and to the startup world, I see the same principles being important. There is a stark difference between knowing what web products do, who started them, and how they were funded (this is the “memorize TechCrunch” approach to becoming an expert) and being able to predict which will be successful and then explain why.

Some mistake simple knowledge for expertise. In fact, expertise = (knowing + taking a view + acting). And knowing, taking a view, and acting must occur in this order. Which is why it’s so important for anyone new to a particular industry to not only take in information that you read online or elsewhere (the knowing) but also engage with it (the taking a view) by talking with other people, be it in person or virtually. Laying the foundations of knowledge and taking a view early will increase your chances of success in action beyond the basal rate of luck. And then you may become an expert.

The Importance of Blogging

Wed, 10 Feb 2010 00:00:00 -0500

This website represents my first venture into the world of blogging. I have long considered posting my thoughts on the web, but have always been limited by a few factors, least among them being time. I figure that many people like the idea of having a blog and sharing there thoughts, but are constrained for one reason or another. So, I’ve decided to give a quick list the hesitations I had about entering the blogosphere, and the reasons why these hesitations subsided.

1) Having a blog, a Twitter account, a Facebook page, and a personal webpage is simply narcissistic.

I’ll admit that I used to suffer from the same syndrome that is usually associated with the generation before me, not my own: I am not quite sure who would want to hear what I have to say.

Yet, my generation sees these elements as necessary to stay connected to their world, not as narcissism. As of January 2010, Facebook had 26 million users ages 18-24, representing 25% of their user base.

This obsession with establishing an online presence is not limited to my peers. What is most staggering about the Facebook population is that the highest concentration of users are ages 35-54, making up 29% of the user base. Granted, this is a wider range of age, but it still discounts the theory that establishing an online presence is something that only the college generation finds important. In fact, according to an April 2009 comScore report, in the U.S, 14 % of Twitter users are between 55 and 64, nearly the same amount of users as those between 18 and 24, which accounted for about 12 % of the total.

As for the blogging world, there are an average of 900,000 new blog posts in any 24 hour period, and 133 million blogs have been indexed by Technorati since 2002. World internet penetration stands at about 1.7 billion, meaning there is about 1 blog for every 12 people. In light of these statistics it is clear that this is the new social norm.

So, given this changing landscape, where an individual having a web presence this is becoming a societal norm, this excuse breaks down.

2) I have great ideas, but I like to read, not write.

Let’s be honest, you may have great ideas, and you may like to read, but you the real reason you don’t like to write is because you’re lazy. Yes I said it. And it’s not okay.

I have long been a passive participant in online forums. Realgm.com for basketball. Hacker News and Reddit for Tech and Startup News. These sites sparked new thoughts and ideas, many of which I am passionate about for a few hours, then I moved to the next thing. I tricked myself into thinking that I was absorbing all the information, and didn’t need a blog, or a place to express my ideas.

Writing down your thoughts and ideas forces you to think about them in a linear and logical way. It forces the critical thinker to examine all aspects of a given idea. What precipitated the idea, and what is the context of that idea, and what is the impact. It forces you to dig a bit deeper for statistics and other evidence that supports your theories. So, this is where the physical writing helps stimulate your thought process.

Publishing it to the world is another advantage. Often, I would have a cool idea, or take on an argument, and keep it to myself. My argument and solution was the best, and if it wasn’t who would tell me? Blogging provides an avenue for people to tell you that you are wrong. This trains your mind to think about the various angles at which your argument or insight can be refuted, and results in a much clearer and thorough expression of thought.

3) It’s really not that important

I remember reading an article that talked about how at some point during the late 90’s, individual businesses began to set up web presences. If you weren’t on the web, you couldn’t be found and did not exist. It seems that we see a similar trend, but for individuals. A strong web presence is so undervalued as a facilitator for success, and I see this trend only becoming more clear. Take a look at this Union Square Ventures job posting. They ask candidates to send them links to their online presence in place of a resume. I’ve heard similar stories of Venture Capitalists getting exposure and eventually jobs in large part due to their Twitter following.

Yet, there is still such a large part of the population that does not appreciate the significant impact a web presence can have. It may be commonplace in the web world, but it is far from the norm among other professionals. When I worked in finance this summer, almost none of my peers utilized the tremendous power of blogging and twittering to express their ideas.

So, for job-seekers, having a blog can be the differentiating factor, particularly if it is a qualitative, writing-intensive role. When people read your blog, they feel like they know you on a personal level before even meeting you. This has tremendous power.

4) I’ll do it later, when I acquire some sort of expertise or reason for people to listen to me

This one was pretty high up there for me. I’m a college student, who has little industry experience. I thought, “I’ll definitely start blogging once I work full-time, or become an expert in online marketing, or have a successful startup business.”

Content is a great equalizer. If your content is good, internet users will find you. Besides, naturally you will get better with practice, and blogging now and honing your skills will allow you to seize the opportunity once you do have an audience.

5) I have no time.

Lies. This post has cost me 30 minutes of my day (and it shows, you say!) Perhaps, but it has allowed me to delve deeper into my ideas about why blogging is so important, and for this, I can sacrifice the 30 minutes that I usually devote to watching YouTube videos.

Now, go write down on (e)-paper your ideas about how stupid or fantastic this blog post is.

Real-Time Rewards

Fri, 05 Feb 2010 00:00:00 -0500

Fred Wilson recently made a post about rewards and monetization of the foursquare platform. He writes:

“the most interesting way to reward a checkin is to provide some real value at the moment of checkin. For example, when I show up a my local cafe in the morning and checkin, I’d love to occasionally get a message on my checkin screen that says ‘you’ve checked in for the tenth time and earned a free espresso drink.”

With respect to online communities such as foursquare, I’ve always wondered how powerful the incentive of gaining new badges really is from the users perspective. Sure, it is a status thing and can be addictive, but is it sustainable long-term? Perhaps tech early adopter types hold the value of a certain number of points in high regard, but I don’t think this is generalizable to the general public. Keep in mind that many of these early-adopters are either in the tech business, or hope to be. Active engagement in these online communities, and the building of a significant “web presence” can lead to career rewards. As I outlined in a previous post, both venture capital firms and startups value people who are actively engaged on the web. However this incentive isn’t something that is generalizable to those outside of the tech world.

But, everyone likes to save money. I think the more sustainable incentive for users is the accumulation of rewards. In this case, rewards are powerful because they are granted in real time, and the user is being rewarded monetarily (through a discount) by using the service. My guess is that we will see a trend of real-time rewards replacing “badges” and “points” as an incentive for usage in many online communities.

However, I think we’ll see real-time rewards limited to national brands, at least initially. National brands provide the most scalable targets from an operational standpoint- one national affiliate can give discounts all over the country. These will be the early adopters, followed only later by “mom and pop” shops. As Chris Dixon recently pointed out on his blog:

The problem is that, for the most part, these local business either don’t think of the web as an important medium or don’t understand how to use it.

So what does this mean? If location-based services like foursquare discover that they can best engage users through real-time rewards then they will quickly move to put in place deals with vendors to give their users discounts. Because of the factors outlined above, I think this will be initially limited to national vendors, meaning a delay in the “going local” trend that many have talked about with respect to these types of location services.

A few weeks ago at the Hackers and Founder event in NYC, Udorse demoed its new iPhone Rewards Camera App (full disclosure: I plan on joining the Udorse team this summer). I’m excited about the product because I think it plays into emerging market signals. Real-time rewards delivered to your phone is highly motivating for users. In this case, I predict that businesses will be willing to pay per action (and provide discounts) for a qualified user of the product.

But the true power of these real-time rewards lies in the sharing of these rewards with a wider social network. The ability of a business to leverage an existing user’s network to pull in new customers through discounts is scalable in an exponential way. The promise (and delivery) of real-time rewards can pull in new users in a way that the promise of new badges and points cannot.