When you hit your Big Fucking Goal

I was chatting with Jonathan Wegener, CEO of Timehop, last week. Timehop is a product that has always enjoyed almost unbelievably high retention and engagement, but previously struggled to hit hyper growth. After a ton of iteration over the last year suddenly they have started to grow quite quickly - breaking the top 50 in the US iOS Appstore, and the top 10 free overall in the UK. 

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Jonathan and his team have steered the product very well, so you can imagine there were a few congratulations in order. But, partly as a testament to the way Jonathan thinks, we spent a lot less time talking about how good growth is and a lot more about the right way to push going forward.

You see, some three months ago Jonathan set a big hairy goal of growing 10x. You know those moments, when you gather the team and say, “I know this sounds impossible but we need to find a way to get to this crazy place in a pretty short time frame.”

Now, I don’t know how his team took it, but I know that when I’ve set a goal like this with a team there is a really fine balance to be walked. On the one hand a single BIG FUCKING GOAL is bound to get their attention and feels exciting. On the other hand, you have to make the more skeptical folks on your team actually believe there is a chance it’s possible or they will think you’ve lost it.

Despite some probable skepticism, Jonathan did set that crazy goal, and then in less than three months they actually hit it! So the big question is “what now!”. The analogy I would paint is that you spend all this time, months or years, trying to push this big boulder called growth from the top of a hill. And you are trying every damn trick you can hear about or think of to get this damn thing to move. And then suddenly, sometimes, the boulder finally moves!

This moment is when you find out just how much drive you have in yourself, and how much you have recruited for the right kind of drive in your team. The drive isn’t just for when you are in “The Struggle” it’s for when you are in “Win More” mode. It’s that push to win a Game 7 in a long basketball playoff series, and then pick yourself back up, and despite what Nate Silver says, keep pushing and defy the odds again.

In times like these there are two natural instincts: a) it’s working, don’t fuck it up, b) take a quick breath to recover. Continue reading "When you hit your Big Fucking Goal"

One of the oldest VC firms’ secret to success is not what you’d expect

NVP Managing Partners
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New venture capital firms seem to be cropping up left and right every day, but Norwest Venture Partners (NVP) has been around since 1961, and it has certainly learned a thing or two over the years.

Today, the firm is announcing its twelfth fund, which will total $1.2 billion. This new fund will bring its total capital under management to a little under $5 billion and will be structured much like its eleventh fund, which was also $1.2 billion.

“A key strategy for success at NVP is investment diversification. We invest across multiple sectors, stages, and geographies, all with a team approach that enables our portfolio Continue reading "One of the oldest VC firms’ secret to success is not what you’d expect"

Ruthlessness and Grit in Startups

Startups are in a state of perpetual change. During a startup’s first few years of establishing product market and winning the first set of customers, this state of change is obvious. But as a startup scales, the company must adapt by learning and reinventing. Whether it’s building the processes to grow the team, creating new sales and marketing initiatives to pursue adjacent customers, developing customer success teams or handling an unforseen crisis, this process of reacting to the market and evolving the company happens at every level in each function.

Standards of Performance & Organizational Values

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I recently finished reading the seminal leadership book, The Score Takes Care of Itself, by Bill Walsh, the legendary 49ers Head Coach. In 1979 when Walsh took over the 49ers, the franchise was the laughing stock of the NFL as it managed to win only two games that season. However, in less than two years, Walsh led the 49ers from last place to Super Bowl Champs. A true Cinderella story. When Walsh left the franchise ten years later, the team had won three Super Bowl Championships and completed perhaps the greatest run in NFL history. 

How did Walsh fuel this transformation and build one of the great NFL dynasties? He credited his “Standards of Performance” as the catalyst for driving organizational change and maintaining a high level of performance during his tenure with the team. Walsh codified his “Standards of Performance” and drove them throughout every level of the organization including the administrative staff.  Within the first year, there was a dramatic shift in the way that everyone approached and performed their jobs.  Nothing short of excellence and a team first attitude would be tolerated.  

Without further ado, here are Bill Walsh’s Standards of Performance:  

  • Exhibit a ferocious and intelligently applied work ethic directed at continual improvement
  • Demonstrate respect for each person in the organization
  • Be deeply committed to learning and teaching
  • Be fair
  • Demonstrate character
  • Honor the direct connection between details and improvement, relentlessly seek the latter
  • Show self-control, especially under pressure
  • Demonstrate and prize loyalty
  • Use positive language and have a positive attitude
  • Take pride in my effort as an entity separate from the result of that effort
  • Be willing to go the extra distance for the organization
  • Deal appropriately with victory and defeat, adulation and humiliation
  • Promote internal communication that is both open and substantive
  • Seek poise in myself and those I lead
  • Put the team’s welfare and priorities ahead of my own
  • Maintain an ongoing level of concentration and focus that is abnormally high
  • Make sacrifice and commitment the organization’s trademark

Coach Walsh’s standards and values clearly set the tone for the organization.  It’s a huge reason why The 49ers organization went from worst place to Super Bowl Champs.  As the title of the book suggests, Bill and the team weren’t focused on the score at the end of the game but rather all the things that happen leading up to the game and behind the scenes. Treating teammates with respect.  Putting in an extra hour in the weight room. Answering the phone with professionalism.  Perfecting technique.  Studying film.  Dressing appropriately. There are hundreds of examples. As my former partner, Ben Lerer, once said to me, “It’s not about the light Continue reading “Standards of Performance & Organizational Values”

The present and future of video

tl;dr Consumption will be digital and mobile. Industry has to adapt to business models that support this change.

Today, TV is changing radically down to what the word even means. This week in the US, the FCC is voting on net neutrality rules affecting the future of digital video. At the same time, the medium is changing in short form, changing windows, and the rise of mobility.

Wired

Consumption of media is changing. The average American adult spends 11 hours per day with electronic media. The top two forms are still TV and radio.

In What Does ‘Watching TV’ Even Mean?, Katherine Rosman writes:

We spend a full five hours and 16 minutes a day in front of a screen, and that’s without even turning on a television. Adults are watching their televisions slightly less—with a daily intake of four hours and 31 minutes this year, seven minutes less

Continue reading "The present and future of video"

The present and future of video

tl;dr Consumption will be digital and mobile. Industry has to adapt to business models that support this change.

Today, TV is changing radically down to what the word even means. This week in the US, the FCC is voting on net neutrality rules affecting the future of digital video. At the same time, the medium is changing in short form, changing windows, and the rise of mobility.

Wired

Consumption of media is changing. The average American adult spends 11 hours per day with electronic media. The top two forms are still TV and radio.

In What Does ‘Watching TV’ Even Mean?, Katherine Rosman writes:

We spend a full five hours and 16 minutes a day in front of a screen, and that’s without even turning on a television. Adults are watching their televisions slightly less—with a daily intake of four hours and 31 minutes this year, seven minutes less than in 2012.

The traditional subscribers of TV through cable, satellite and fiber fell by 250K in 2013 as reported by Bloomberg.

Looking at TV ad spending slowing growth, Peter Kafka asks Peak TV? (emphasis question mark)

Ad spending on TV in the US grew only 3% last year. The average price of a 30-second ad is down 12% since 2009. Channels have responded by running more ads (14:15 per hour on broadcast TV and 15:38 on cable).

There is a limit to how many ads a channel can stuff in.

While the average American household now now gets 189 cable TV channels, they watch only 17.

In response to this change in consumption, the business of video is changing. Existing cable networks have seen dramatic consolidation as evidences by this fantastic WSJ graphic.

Video Consolidation.

Digital Video

Digital video is the disruption that has been a long time coming. Here are a couple of ways to look at it.

High level, digital media in aggregate now has overtaken TV. Digital video is still a fraction of time spent and ad spend is proportionately less although digital is growing dramatically faster. For digital video, it is still early, Nielsen reports the daily average time spent as 5 hrs and 4 min on TV relative to 13 min on desktop video or 11 min on smart phone video.1

For ad dollars, digital video is a small fraction at $4B growing 40% yoy vs $66B on TV. This is complicated by worries about the effectiveness of the format with reports that up to half of video ads are not viewed.

In terms of time spent, digital media (total internet usage) broadly over took TV in 2013 with 43% of time spent vs 37% on TV.

The big four:

Netflix is the Continue reading "The present and future of video"

Startup Best Practices 7 – How to Use Andy Grove’s Stagger Chart to Build Predictability into a Startup

Predictability is sexy. Startups that have tuned their growth engines well enough to accurately forecast their growth, presuming these growth rates are attractive, will command much higher valuations in the market, simply because there is less risk in the company. As a result, investors prize these companies disproportionately. The challenge with predictability is predictability isn’t an end state. A business doesn’t become predictable one day and remain in that state in perpetuity.

The State Of Big Data in 2014: a Chart

Note: This post appeared on VentureBeat, here.

It’s been almost two years since I took a first stab at charting the booming Big Data ecosystem, and it’s been a period of incredible activity in the space. An updated chart was long overdue, and here it is:

(click on the arrows at the bottom right of the screen to expand)

A few thoughts on this revised chart, and the Big Data market in general, largely from a VC perspective:

Getting crowded: Entrepreneurs have flocked to the space, VCs have poured money into promising startups, and as a result, the market is starting to get crowded. Certain categories like databases (whether NoSQL or NewSQL) or social media analytics feel ripe for consolidation or some sort of shakeout (which may have already started in social analytics with Twitter’s acquisitions of BlueFin and GNIP). While there will be always room for great new startups, it seems that a lot of the early bets in the broader infrastructure and analytics segments have been made at this stage, and the bar for success is getting higher – which doesn’t mean that VC money will stop pouring in. In terms of this specific industry chart, we’ve clearly reached the limit of how many companies we can fit one page. I’m sure there are a number of great companies we either missed or didn’t have enough space to include – apologies in advance to those, and I’d love to hear people’s thoughts and suggestions in the comments section about who else should be included.

Still early: Overall, we’re still in the early innings of this market. Over the last couple of years, some promising companies failed (for example: Drawn to Scale), a number saw early exits (for example: Precog, Prior Knowledge, Lucky Sort, Rapleaf, Nodeable, Karmasphere, etc.), and a handful saw more meaningful outcomes (for example: Infochimps, Causata, Streambase, ParAccel, Aspera, GNIP, BlueFin labs, BlueKai). Meanwhile, some companies seem to be reaching significant scale, and have raised spectacular amounts of money (for example, MongoDB has now raised over $230M, Palantir almost $900M and Cloudera $1B). But overall, we’re still early in the curve in terms of successful IPOs (Splunk or Tableau notwithstanding) and large exits, although the big companies are getting more acquisitive in the space (Oracle with BlueKai, IBM with Cloudant). In many segments, startups and large companies are jockeying for position and no obvious leader has emerged.

Hype, meet reality: A few years into a period of incredible hype, is Big Data still a thing? While less press worthy, the next couple of years are going to be hugely important for this market, as corporations start moving Big Data projects from experimentation

Continue reading "The State Of Big Data in 2014: a Chart"

Why U.S. VC firms missed out on Alibaba — and most other big Chinese opportunities


Alibaba’s recently announced $16 billion IPO has VentureBeat reporters scratching our collective head: Why weren’t more U.S. growth funds involved in Alibaba’s rise to domination?

Alibaba has a hand in every game imaginable: Social networking, payments, travel, online commerce, and dozens more. Its own list of investments rivals that of any major VC firm.

But somehow, while one U.S. private equity firm (Silver Lake Partners) and Yahoo participated in the mega-giant’s funding, most American firms sat it out.

So, why? Why are U.S. investors squeamish on one of the most exciting investment opportunities on planet Earth right now?

For many of the folks we spoke to, it comes down to an acknowledged lack of understanding about the Chinese startup market. It’s booming, but it’s hard to know the entire competitive landscape. It’s hard to sniff out a good deal in a less regulated economy. Plus, China has Continue reading "Why U.S. VC firms missed out on Alibaba — and most other big Chinese opportunities"

Why U.S. VC firms missed out on Alibaba — and most other big Chinese opportunities

Alibaba chief executive Jack Ma

Alibaba’s recently announced $16 billion IPO has VentureBeat reporters scratching our collective head: Why weren’t more U.S. growth funds involved in Alibaba’s rise to domination?

Alibaba has a hand in every game imaginable: Social networking, payments, travel, online commerce, and dozens more. Its own list of investments rivals that of any major VC firm.

But somehow, while one U.S. private equity firm (Silver Lake Partners) and Yahoo participated in the mega-giant’s funding, most American firms sat it out.

So, why? Why are U.S. investors squeamish on one of the most exciting investment opportunities on planet Earth right now?

For many of the folks we spoke to, it comes down to an acknowledged lack of understanding about the Chinese startup market. It’s booming, but it’s hard to know the entire competitive landscape. It’s hard to sniff out a good deal in a less regulated economy. Plus, China has Continue reading "Why U.S. VC firms missed out on Alibaba — and most other big Chinese opportunities"

From The Runway To Silicon Valley: Why Fashion is The Next Big Thing in VC

SaaS, enterprise, and mobile all have one thing in common: they are the bread and butter of most VC firms and angel investors. You would be hard pressed to find a VC who doesn’t have a portfolio dominated by tech startups.

But as the global economy evolves, we are beginning to see disruptions in areas that were once ignored. However, there is still one industry that has yet to go mainstream with investors: fashion.

It’s no surprise that fashion isn’t on the radar of traditional Silicon Valley investors - VC’s aren’t exactly known for their expertise of haute couture. To most VC’s, they see the industry as gaudy, over the top and a domain reserved only for women.

But as a former fashion designer turned venture capitalist, I see dollar signs - and lots of them.

Let’s take a quick look at the numbers:

$1.2 trillion market size and Continue reading "From The Runway To Silicon Valley: Why Fashion is The Next Big Thing in VC"

From The Runway To Silicon Valley: Why Fashion is The Next Big Thing in VC

SaaS, enterprise, and mobile all have one thing in common: they are the bread and butter of most VC firms and angel investors. You would be hard pressed to find a VC who doesn’t have a portfolio dominated by tech startups.

But as the global economy evolves, we are beginning to see disruptions in areas that were once ignored. However, there is still one industry that has yet to go mainstream with investors: fashion.

It’s no surprise that fashion isn’t on the radar of traditional Silicon Valley investors - VC’s aren’t exactly known for their expertise of haute couture. To most VC’s, they see the industry as gaudy, over the top and a domain reserved only for women.

But as a former fashion designer turned venture capitalist, I see dollar signs - and lots of them.

Let’s take a quick look at the numbers:

$1.2 trillion market size and Continue reading "From The Runway To Silicon Valley: Why Fashion is The Next Big Thing in VC"

From The Runway To Silicon Valley: Why Fashion is The Next Big Thing in VC

SaaS, enterprise, and mobile all have one thing in common: they are the bread and butter of most VC firms and angel investors. You would be hard pressed to find a VC who doesn’t have a portfolio dominated by tech startups.

But as the global economy evolves, we are beginning to see disruptions in areas that were once ignored. However, there is still one industry that has yet to go mainstream with investors: fashion.

It’s no surprise that fashion isn’t on the radar of traditional Silicon Valley investors - VC’s aren’t exactly known for their expertise of haute couture. To most VC’s, they see the industry as gaudy, over the top and a domain reserved only for women.

But as a former fashion designer turned venture capitalist, I see dollar signs - and lots of them.

Let’s take a quick look at the numbers:

$1.2 trillion market size and Continue reading "From The Runway To Silicon Valley: Why Fashion is The Next Big Thing in VC"

From The Runway To Silicon Valley: Why Fashion is The Next Big Thing in VC

SaaS, enterprise, and mobile all have one thing in common: they are the bread and butter of most VC firms and angel investors. You would be hard pressed to find a VC who doesn’t have a portfolio dominated by tech startups. But as the global economy evolves, we are beginning to see disruptions in areas that were once ignored. However, there is still one industry that has yet to go mainstream with investors: fashion. It’s no surprise that fashion isn’t on the radar of traditional Silicon Valley investors - VC’s aren’t exactly known for their expertise of haute couture. To most VC’s, they see the industry as gaudy, over the top and a domain reserved only for women. But as a former fashion designer turned venture capitalist, I see dollar signs - and lots of them. Let’s take a quick look at the numbers: $1.2 trillion market size and Continue reading "From The Runway To Silicon Valley: Why Fashion is The Next Big Thing in VC"

From The Runway To Silicon Valley: Why Fashion is The Next Big Thing in VC

SaaS, enterprise, and mobile all have one thing in common: they are the bread and butter of most VC firms and angel investors. You would be hard pressed to find a VC who doesn’t have a portfolio dominated by tech startups.

But as the global economy evolves, we are beginning to see disruptions in areas that were once ignored. However, there is still one industry that has yet to go mainstream with investors: fashion.

It’s no surprise that fashion isn’t on the radar of traditional Silicon Valley investors - VC’s aren’t exactly known for their expertise of haute couture. To most VC’s, they see the industry as gaudy, over the top and a domain reserved only for women.

But as a former fashion designer turned venture capitalist, I see dollar signs - and lots of them.

Let’s take a quick look at the numbers:

$1.2 trillion market size and expected to grow to 2 trillion by 2018.

To put that into perspective, the global SaaS market is around 20 billion, cloud services is 131 billion, and enterprise software, 120 billion.

Overall, the fashion and apparel industry is a juggernaut and it’s easy to see why: everyone needs clothing and it’s a product that we use every day.

And that’s the beauty of fashion and why it holds untapped potential for VC’s; its the perfect combination of market size, unending global demand and it’s a industry that has yet to be fully disrupted.

As you are about to see, there are still many problems that need to be solved in the fashion industry and the payout for solving them will be significant:

-Affordability. It’s no surprise that people want to look good for less. Companies like FAB are trying to solve this problem but I believe they and many others are only beginning to scratch the surface.

Subscription boxes like StyleMint and Popbasic will continue to be popular but there is still room for innovation when it comes to affordable fashion. I also see a future where crowdsourced apparel will become mainstream.

-Big data. One of the most vexing problems that retailers continue to face is knowing what to buy and stock on their shelves. Unsold inventory costs retailers billions of dollars a year and only now are we beginning to see startups like EDITD take a big data approach to solving this problem.

With millions of retail stores around the world, a big data solution to fashion inventory can become a very lucrative market.

-Manufacturing. How can we make the best quality clothing while maintaining good profit margins? Companies like Nike and Lululemon have long struggled to balance both while trying to maintain a positive image of their overseas Continue reading "From The Runway To Silicon Valley: Why Fashion is The Next Big Thing in VC"

The Worst Time of Year to Raise A Seed Round

Has there been optimal time of year to raise a seed round? The chart above shows the number of seed rounds by quarter of the year from 2009-2013. At first blush, it would seem that the first quarter of the year is the most attractive period to raise a seed round. But that’s a faulty conclusion. First, there’s no statistical difference between the number of rounds raised in each quarter, according to a t-test on the four years of Crunchbase data I tested.

Demo Day Pitching, Part 2: Telling a Story

Inside an Investor's Mind

Last week, I wrote a post about common problems I frequently see in demo day startup pitches. One thing that was intentionally missing from that post was the most common problem that I see, which I'd like to illustrate with a fictitious presentation:
"Hi, I'm Joe and I'm the founder and CEO of Foobar. Foobar is killing it! We already have 8 pilot customers, and thirty more -- including Yahoo and Dropbox -- are in the pipeline. Our team is amazing. We've worked at huge tech companies like Facebook and Google, and two of us have built and sold HR startups in the past. My cofounders and I are building software that streamlines the performance review process. Our tool is extremely easy to use and cuts review times by 80%. It also allows employees to submit feedback whenever they want instead of during a magical once-a-year Continue reading "Demo Day Pitching, Part 2: Telling a Story"

Demo Day Pitching, Part 2: Telling a Story

Inside an Investor's Mind

Last week, I wrote a post about common problems I frequently see in demo day startup pitches. One thing that was intentionally missing from that post was the most common problem that I see, which I'd like to illustrate with a fictitious presentation:

"Hi, I'm Joe and I'm the founder and CEO of Foobar. Foobar is killing it! We already have 8 pilot customers, and thirty more -- including Yahoo and Dropbox -- are in the pipeline. Our team is amazing. We've worked at huge tech companies like Facebook and Google, and two of us have built and sold HR startups in the past. My cofounders and I are building software that streamlines the performance review process. Our tool is extremely easy to use and cuts review times by 80%. It also allows employees to submit feedback whenever they want instead of during a magical once-a-year period. Research indicates that employees spend 3% of their year on performance reviews, which results in $15B of wasted productivity every year. Everyone hates performance reviews because they take up so much time and because it's hard to remember what each of your dozen coworkers accomplished last year. If you're interested, please talk to me, Joe, after the demo."

What's the problem with this [artificially constructed in order to be illustrative] pitch? It doesn't tell a story. The individual sentences make good points, but there's no cohesion. Let's proceed line-by-line and imagine what an investor might think as they listen to the this presentation.

Presenter: "Hi, I'm Joe and I'm the founder and CEO of Foobar."

Investor: "Foobar? Pretty good name -- although it sounds kind of generic."

Presenter: "Foobar is killing it!"

Investor: "Killing what?"

Presenter: "We already have 8 pilot customers, and thirty more -- including Yahoo and Dropbox -- are in the pipeline."

Investor: "8 customers? What do you do? What are you selling? That number could be impressive if your software costs $1m/year or unimpressive if it costs $100/year."

Presenter: "Our team is amazing. We've worked at huge tech companies like Facebook and Google, and two of us have built and sold HR startups in the past."

Investor: "Good for you. Is it supposed to be important that you mentioned you founded HR startups and not 3D printing startups or social networking startups? Also, I still have no idea what you do."

Presenter: "My cofounders and I are building software that streamlines the performance review process."

Investor: "Ok, finally I know what you do. I wonder: is this actually a meaningful problem?"

Presenter: "Our tool is extremely easy to use and cuts review times by Continue reading "Demo Day Pitching, Part 2: Telling a Story"

9 Books Every Entrepreneur Should Read

Some of the best content to be found about startups is locked in books. Thomas Kjemperud asked me yesterday for a 140 character recommendation of one book for founders. Reducing my list to just one and condensing an argument for why founders ought to read it in just 117 characters was just too great a challenge for me. Instead I’ve written a blog post about the nine favorite books I’ve read over the last five years have helped me understand startups and the processes that make them successful.

The Current State of the Consumer Internet Market

Last week, we reviewed the state of the public SaaS market and observed the average company had lost 33% of its value from their highs. How have newly public consumer companies fared in the same environment and what does that mean for the tech industry broadly? I created a basket of most of the venture-backed consumer IPOs since 2010 and added bellwethers Facebook and Google. Above is a chart of these companies enterprise value (market cap minus cash) over the past six months.