On Fab’s Financing and the CEO’s Responsibilities
AllThingsD has a nice piece this morning on the Fab financing (raised $150MM at $1B valuation). I think it’s nice because it reports the facts, but then also does a nice job of capturing the general tech scene sentiment around both the deal and the company. The TL;DR on AllThingsD’s piece is: very attractive financing, but wary hope (even outright skepticism) for the company long term.
Say whatever you want about the company, any CEO that’s able to put together this kind of financing is fulfilling one of the three key roles of a CEO.* The three CEO responsibilities are:
- Recruit great talent. You have to be able to build a team of people around you that are individually amazing contributors, and also work well together to make 1 + 1 = 3.
- Be the keeper of the vision. As the CEO, you need to be able to hold out the torch in front of you in the dark, rainy jungle, point boldly in one direction, and announce “Come on guys, we’re going THIS way!” The vision is in part the product to be built, but it’s also the company culture you want to foster, the social mission that guides you beyond just profit… your company’s raison d’etre.
- Fund your growth. To build a great company, you will need money. You can get this money from one of three places: A) profit B) debt C) selling equity. This third responsibility is a means to an end, it is not the end. In other words, the startup that raises the most capital does not necessarily win. The CEO needs to make sure the company is amply capitalized in order to support the team towards pursuing the vision. This third responsibility enables the first two.
So, coming around back to Fab, this financing is evidence of Jason Goldberg’s great execution on leg three of a three-legged stool.
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* These are taken out of the mouth of a fellow investor from a board meeting about 18 months ago. I’ll keep it anonymous to protect the innocent here, but if he/she wants credit, just say so and I’ll amend the post. I’ve adopted his/her words and used this framework a number of times as my own since then.
Update: looks like Fred beat me to this one by a couple years. HT Christina. Fred was not the source I was implying in my footnote, but I wouldn’t be surprised if “all roads lead to Fred” on this one.
Computer Science Resource Management Opportunity
When I wrote code in college, I started in C. And in C, a regular concern is memory management: malloc() and free(). The core problem is making sure my program can fit into available memory, and then there are a bunch of ancillary bugs that emerge because of manual memory management.
Later in school, higher order languages grew in popularity and these memory management issues became substantially reduced (though not non-existent). malloc() and free() were out of sight, but some of the core issues of fitting a program into a single box still exist.
When I hear problems modern data-obsessed startups face, my rookie Computer Science experience serves as a nice analogy to a real business opportunity today. These companies are still worried about resource management, but now instead of stressing over fitting a program into the RAM on a single box, they stress about fitting an app into a cost-reasonable number of EC2 instances and low enough i/o to make S3 affordable. It’s still the resource management game, but it’s now at cloud scale.
Building your app in such a way that its resource footprint automatically scales itself up or down to your current needs in an affordable way is a solvable problem (just like memory management on a single box program was quite solvable), but it requires a bunch of extra code and cognitive overhead for the developer.
We are in the “C” days of building software across multiple boxes in the cloud. We are making “malloc()” and “free()”-esque decisions every time we need to manually choose to spin up/down a new instance (or not).
It’s time for higher order cloud languages. Like garbage collected languages on a single box, a higher order cloud language (or more likely, a platform) would scale cleanly to your app’s demands, and make smart decisions so that you don’t wake up to a $100K bill next week.
Heroku started to scratch this opportunity by making scaling a web app as simple as dragging slider bars in a very well designed interface. But it’s still all manual and still requires cognitive overhead on behalf of the developer (err… devops?). That doesn’t sound like it goes far enough to me. From what I can tell, Google App Engine is a good cut at this vision, but I think requiring developers to use their own proprietary BigTable-esque data model was a misstep. Developers want to use whatever data model and data storage tools they want, and scaling underneath those choices should happen automatically.
I’m sure there’s a field of startups already chasing this opportunity, and I don’t I’m the right investor for them because I’m clueless in infrastructure and in enterprise sales. But I know when cross-computer programming is cleanly abstracted to the point that it feels the same as garbage collected memory, there will be a wave of new developers and companies taking advantage of this fundamentally simple approach to cloud computing. This will be big.
Will You Be Missed?
When I opened my email this morning, my inbox was littered newsletters and deals. Not Spam, but “Bacn.” At first I was confused why it was such an unusual mess, and then I realized that SaneBox must be down, the tool I use to filter signal from noise in my inbox. I immediately missed SaneBox, but I also knew that with patience it would be back online shortly and would catch up on the mess that accumulated in its absence.
The fact that I missed SaneBox is a great positive signal for its product quality.
If I were filling out a customer feedback survey for SaneBox, they might ask me a question along the lines of “If SaneBox were no longer available, how much would you miss it? (Scale 1 - 5).” And I could try to answer them truthfully. But the silver lining of downtime for any startup is establishing Ground Truth on this typical feedback question, instead of just relying on self-reported survey data.
No one wants their service to go down, ever. It’s incredibly stressful. But once you’re back online, a quick scan of your customer support email or Twitter mentions will give you a good gut check on just how much you’re missed.
Cyber-Weapons
I apologize for going a bit “dark” with this post, but in the context of increasing cyber warfare resources and NSA spying, this scenario has been rattling around in my mind recently:
Imagine it’s WWII, but with today’s information architecture and data dependencies.
The US is at war and is working on the Manhattan Project, but also simultaneously working on a virus capable of crippling and deleting a country’s data. Imagine a virus like Stuxnet, except instead of crippling militarized nuclear installations, it’s designed to infiltrate banks and delete every corporate transaction of a specific currency (in the context of WWII, it’s the Yen). I guess the best analogy is the MacGuffin-side of the plot of Fight Club, but with a virus instead of bombing financial company buildings.
You are Truman. Which is more humane? One bomb can level a single city, demoralize an army, and kills hundreds of thousands in the process. The other can destroy the livelihoods of millions and destabilize a nation, but the loss of life would be only indirect: from subsequent rioting.
I don’t mean to be so dark or overly-dramatic, but in a post-atom-bomb reality, many new moral questions and international tensions emerged. I think we are arriving at a similar crossroads over the next 5 years as all economies move digital.
Related Digression: Five years ago I was talking to a WoW addict about the virtual gold in his account. I asked him if he was nervous about have so much value in something that is just a number on a game server in the cloud. He responded: “What do you think your bank account is?”
On the NSA Spying Scandal
The big news of last night and this morning is the NSA project PRISM, which monitors all major Internet communication systems (Microsoft, Google, Yahoo, Apple, etc) for terrorist threats. In theory the program is not used to spy on US citizens domestically, but, using Occam’s Razor, of course US citizen data is stored and monitored by PRISM: it would be too difficult to isolate only international data.
I worry a bit that public social networks has put Americans into a bit if a daze when it comes to their privacy. Think about how much more we live in public now than previously:
Showing someone your Résumé used to be sensitive data and a sign you were job hunting. Now we all broadcast it publicly on LinkedIn all the time.
Showing someone your photos from your wedding used to require breaking out the physical photo album in your home. Now, any of the friends of people tagged in the wedding photos on Facebook have full access. Which means roughly 200 (avg wedding guests?) * 400 (avg FB friends?) = 80,000 people have access to your wedding photos.
Sure, there are privacy setting to restrict access. But who really changes default settings ever? At most 3-5% of a user base.
So in a world where we choose to live in public, the shock of the NSA spying program loses its edge. It kinda feels like just another FB stalker. And that’s wrong.
Public Metrics
When stalking website growth as an outsider, I’ve used some combination of Alexa, Compete and Quantcast over the past seven years. As the FB app ecosystem emerged, I added AppData to the mix. Now that mobile has become a primary distribution channel for many companies, I now rely on AppAnnie regularly for competitive intelligence. When looking at open source technology companies, I track GitHub Stars, Forks, and PRs.
What tools am I missing? Anyone else have best practices they’d like to share for public metrics tracking?
After 30 years, should we consider Phish a great band? - Grantland (via gregcohn)
Ouch.
Of course this begs to question, do the Blue Album and Pinkerton rock less simply because everything Weezer has released since then sucks? Maybe? When was the last time you thought “Man I want to listen to that awesome Bad Religion song!” probably not since ‘92. But what if No Control was the last record they ever put out? It might be a lot more often. What if Red Hot Chili Peppers broke up after The Uplift Mofo Party Plan? Would you want to die right there on the spot anytime a DJ says he’s playing one of their songs next?
But who’s to say Joy Division would have started release half assed songs? When The Mars Volta and Sparta rose from the ashes of At The Drive In it was pretty damn obvious where the talent was and wasn’t. But New Order’s catalog (especially the first 10 years or so) suggests that the all songwriting genius didn’t die with Ian. We lost his lyrics of course, but he was a pretty morbid fucked up guy to begin with and I think it’s a stretch to suggest if he’d lived he would have cheered up somehow. I mean, Rivers Cuomo is a weird guy too, but come on now, does anyone think there’s a world where Ian Curtis could have written the equivalent to ‘Heart Songs’ or ‘We Are All On Drugs’ or ‘Cold Dark World’ or named an album something like Raditude?
FFS.
(via seanbonner)See also: the peak-end rule:
http://en.m.wikipedia.org/wiki/Peak–end_rule
Aka “go out with a bang not a whimper” rule.
(via bustr)Of all the evil things Harvard has done (say… killing my bracket this year, educating the countless Goldman execs that ruined out economy), I still think their most evil act was the brainwashing of Rivers Cuomo. Pre-Harvard Rivers was epic. Post-Harvard Rivers cannot possibly be the same songwriter. It was either brainwashing or alien abduction.
Product vs Marketing Dollars Trade-offs
According to a quick scan of financial history in Google, Tesla has raised roughly $1.8BN in a combination of equity and debt over the past 4 years. The vast majority has gone to R&D, Manufacturing, Capex, etc…
In that same time frame Ford has spent roughly $16BN on just Ads and Marketing alone.
That’s an order of magnitude larger. And I think Tesla is in a much more interesting strategic position for the next ten years than Ford is.
Sometimes, as a big company, it’s just easier to tell people you have a better product (over and over again… with a Tom Brady cameo) than it is to actually build a better product. But this is always a short term solution.
It’s a classic trade-off that even the earliest startups face. Every dollar you invest in marketing is a dollar you didn’t use to build a better mousetrap.
I’m not saying, “Don’t market your product.” Instead, I’m stressing the importance of capital efficiency in marketing. Paying for users is a drug that is very hard to ween yourself off of later.
The Mental Model of Verbs in App Design
When I talk to people that use web apps infrequently, they are often surprised by the way the “like” verb works inside Facebook. People don’t say they are surprised explicitly… but its clear there is confusion when you tease it out via conversation.
Like in Facebook: it is intuitive that “Like” should be a statement of appreciation because that’s how we all use the verb “Like” in every day language. Here is how most people first encounter the “like” link for the first time in Facebook:
[Some Facebook News Feed post goes here]
That simple three-link “bar” is affixed below all updates in the Facebook news feed is where most people first encounter “Like”. They fact that these three links are juxtaposed implies that they do materially different thinks from each other. Intuitively, if I want to share this post with my friends, I would click “Share”, and if I only want to show appreciation, I’d click “Like”.
But, a quick scan of your news feed (assuming you have enough active Facebook friends), shows you page after page of things people have “liked”. So if you tie this “liked” verb back to the “Like” action previously seen, then you start to unpack just what “Like”ing something does. It sends the content to your friends’ news feeds.
So, “Like” starts to take on a new meaning. It means now, I appreciate this, but I also want to send it to all my friends too. If you’ve arrived at this mental model, you now understand how the “Like” verb works in the news feed. But wait… there’s another “Like” elsewhere:
Go to any fan page. How about this one from Dove. The call to action on the page is to “Like” it. So, using our newly acquired mental model of “Like,” this means I will be both showing appreciation and sending it to my friends. But, this “Like” on a fan page is now going to do a third thing: it’s going to sign me up for a subscription to all of Dove’s updates in my news feed. Again, not intuitive… until you do it once and hopefully when you see Dove updates in your news feed, you then mentally tie it back to the action of liking the page.
So now we have three meanings: A) sign of appreciation B) send this to my friends and C) subscribe me to future updates (but only if I’m on a fan page).
In Other Apps: The various meanings of “Like” are made less intuitive in the social web in general because they vary between different social apps. In Twitter, the “heart” was ambiguous for years because some users used “heart” to bookmark items for themselves later. It used to be that when you “heart”ed a Twitter update that contained a link, you could get other Read Later apps to suck it up. But then Twitter flipped a switch so you could see when other users hit “heart” on your tweets, and suddenly “heart” became the “signal of appreciation” it always should have been.
Perhaps the best (worst?) verb choice of all was Last.fm, who was doing quite new, innovative stuff in the primordial days of the social web. They invented a verb to cover their key behavior: scrobble. As far as I’m aware, that one never made it into the OED.
Other Verbs in Facebook: For a brief period in Facebook about a year ago, other verbs were even trickier. ”Watch”ing a video or “Read”ing an article would syndicate it to all your friends’ news feeds… and they would not involving clicking a link. It was all implicit sharing. This is how Viddy and Socialcam blew up a year ago… and then came back down to earth when Facebook realized that implicit sharing from app-defined verbs like “Watch” or “Read” was causing users to inadvertently share things they didn’t want to share… which is a bad user experience.
The moral is this. If you’re building a web app, choose your verbs carefully. They bring prior meaning… both from how they work on other apps and how they are used in common language. To Facebook, the fact that the word “Like” implies “appreciation” but doesn’t imply “share this with my friends” is probably a feature not a bug… because it leads to more sharing, intentional or otherwise. But be careful about walking this slightly spammy line in your own app. Facebook gets to do things other apps can’t because of their sheer scale and network effect.
Inspired by this timehop’d tweet from today I thought I’d muse a bit on how I use startups for business travel.
I tried airbnb 4 times before I gave in and switched back to hotels. I liked the novelty of staying in people’s homes. But the two big pain points that made me switch back were one: 1) booking requires a conversation, it’s not just on-demand and 2) the key swap stage of an airbnb stay is annoying. Sometimes I’m running around all day and don’t actually get to my hotel room until 12am. That doesn’t work with airbnb.
I now use HotelTonight exclusively for all my business travel. I love it and have sung their praises on this blog before.
I avoid cabs whenever possible. Public transit FTW. That said, when I have to take a cab I usually book in advance instead of on-demand services like Uber or Hailo. I love the Hailo workflow, it’s an awesome user experience. But when I need a cab at 4am, it must come at 4am exactly. Hailo/Uber can’t nail that use case for me yet.
If I’m going somewhere that has no public transit and it’s a round trip, ill try to zipcar instead of cab in general.
For travel around Boston, I use Hubway all day long. It’s the Boston Citibike, which we’ve had for 2 years now. I’m completely hooked.
For information on where to go, I rely on Foursquare domestically on-the-spot and TripAdvisor for more international and planning use cases.
I still use Tripit to parse all my travel emails. It’s on autopilot, automatically scanning my inbox.
What travel related services do you all love?
