Do talk to Corp Dev

I've read Paul Graham's "essays" for years, and usually agree with him, but for some reason in the last month I've disagreed with two of them.   The most recent one he has titled "Don't Talk To Corp Dev" and although the title is slightly misleading, I think it's silly and, well...wrong.

I think what Paul actually means is "don't get sucked in by corp dev" which is a much different thing than "don't talk to them".  He's concerned about the economy of attention you have while running a startup, which I do totally agree with.  And I too have seen companies sucked in too deep by corp dev discussions, and a few companies killed when transactions didn't go through (for legitimate reasons) and the company had no working capital with which to operate after the process.

That said, my advice to startups I advise is "Get to know Corp Dev folks as early as possible" - and I say this for a number of reasons:

1)  Corp dev folks are connected to everyone, and they move around a lot.   If you strike a good relationship with them, they are good people to know.  For instance, the two people I did the FeedBurner deal with at Google now run corp dev at Facebook and Groupon, and I still talk to other corp dev folks from other companies we dealt with that we didn't end up selling to 7 years later.

2) Raising money and selling your company aren't that much different.  In both cases you acually are selling your company - in one case usually about 30% of it, and in the other case 100% of it.   When the time comes to raise a round, I believe it actually benefits you to test the waters for all possibilities, as more demand is more demand, and that's what drives up your stock price and thus valuation. It also allows you to play "if you aren't a seller, then you're a buyer" with your existing investors when appropriate.

3) If you don't sell your company now, you might at some point in the future.  Actually you don't want to ever sell your company, you want it to be bought.  A subtle difference in words with a huge difference in price.  There are certain companies that are really killing it, really strategic for the acquirer, or just great businesses that get acquired.   Even in those cases, my experience is that there is still a "human" component to many acquisitions.   The relationship you have with the acquirer matters.  Not only with corp dev, but also with other internal "champions".  The point being, you never know when these things will heat up, and I think it's better to have already forged relationships with the right people when the time is right.

Okay, so to sum up:  Network with corp dev; don't get sucked in unless you really think it's the best possibility for your company and you can quickly get to a term sheet (or not).

I think the key to using Slack is no DMs

We've been using Slack quite a bit for communication at Blinkfire Analytics, and I'm starting to learn what's effective and what's not.  We're a pretty distributed team, and spend a bit of time visiting customers and partners.



I sent this message to my team at Blinkfire Analytics (in Slack) because I really think it's been a great tool given we are working in a highly distributed environment, and I am travelling from office to office much of the time.

Communication - In a distributed environment like we have and will continue to have, it's super important to over communicate what you are working on, what you are having trouble with, and what you have accomplished on a daily basis.
Slack is the best groupware tool I've used in my career, and I love that the team has found creative ways to use it and communicate  ( Great profile of Stewart, here: http://www.wired.com/2014/08/the-most-fascinating-profile-youll-ever-read-about-a-guy-and-his-boring-startup/ ) - but I think the key to making it work is that 99% of the conversations have to be public.   In fact, if i can figure out how to turn off DMs in it, I'm thinking hard about it.   Really, the only conversations that should be private are HR and in some cases, corporate finance related.  If you have to ask me or anyone else a question that isn't HR related, you should do it in most relevant public channel so we can all learn from the answers and know what's going on.

Many times, I get a DM from a team member, and I ask them to switch to the public channel.  Most of the time, the team benefits from seeing these private conversations turned public.

Interestingly, we haven't had to pay for Slack yet, and it made me question their "premium" vectors of charging not for the number of users, but for data archival and the number of connected services, but after using it for a few months, I now think it's genius.  I also know they will have us as a paying customer really soon.

If you are a startup and aren't using eShares, use eShares

One of the great things about being in the Foundry Group family again is the mailing list they provide for all their founders.  It's such a great way to share ideas, and ask questions of other founders.  And it's so simple.

Today someone asked about 409a valuations at the seed level and my answer was basically, "do not pass GO, just start using eShares" to manage your cap table, shares and option grants, as well as your 409a valuation.

For those of you who don't know what a 409a valuation is - when you issue options to employees, the board has to agree on a strike price for the options that are granted.  It's usually equal to the fair market value of your common stock.  Here's another definition.  Sure, they can look at comps and come up with the number themselves, but in my experience, it's much better to have a third party do this.    It makes the number non-negotiable, and well, it's CYA.

Normally, when you raise money you will get 900 emails from some of these firms offering to do your 409a valuation.  Ignore them all, and go to eShares.   They do the same thing as a service based on a monthly fee, and I think it's much cheaper in the long run than continuing to get this done.

They also do a number of other things, such as making sure your cap table is in order.  When you investors ask for your cap table, you just export and send.  Done.

You can also play with "what if" scenarios in your cap table as you are figuring out how to raise your next round.

Anyway, if you couldn't tell already - I'm a big fan of eShares being on the list of SaaS companies I use on a daily basis.  For a few hundy a month, it's totally worth your time as a startup CEO or COO.

Or you can just work with the other 95% of engineers where they are

I recently read Paul Graham's post on immigration and the need to import the best engineers into the states.   I think it's absolutely true that immigration reform needs to happen and I have experienced how messed up the visa process is for immigrants in tech startups, but I also think the workplace is changing in such a way where we can now work more globally as teams.

In fact, I'm living this right now as we are building Blinkfire Analytics.  As it stands, half of our team is in Chicago, and half of our team is in Valencia, Spain.   This is not an "outsourcing" relationship. We work as a team remotely using a combination of video technology (Google Hangouts) and live text/HTML messaging channels ( Slack).   These two enabling technologies, and primarily the former which is allowed because of the availability of high bandwidth, are game changers for remote teams.

There are a a number of things I have put in place to make this work:

1) No audio calls

To me, video conferencing is infinitely better than audio on the phone, almost to the point where I shun a regular phone meeting these days.   If someone suggests a phone call to me while they are driving in a car, I immediately ask to reschedule as I find these calls to be useless 95% of the time, especially if it is a conference call with multiple parties.  So I insist on video meetings that are remote.

2) You still need in-person visits

As good as video is these days, it's not a replacement for in-person meetings.   So we still have built into our plan travel back and forth between locations.  What is true, is that video conferencing is much easier once you have met someone face to face.   I learned this working at Google where we often had to work across locations.  I was much more successful visiting remote offices and meeting people face to face, and then flying back and working remotely.

3) Only keep people who can work in this environment

Some employees can work this way, some can't.  Do your best to find people who can work with others remotely.  They are usually driven, motivated, and will get on the plane to do #2.   It's all about communication.   If you choose to work in a distributed fashion and an employee can only work with people who are sitting next to them, or they lose focus when not with others, let that person go and move on.

This is generally working well, and it's been a great way to attract really talented engineers that would be much harder to find in Chicago, or anywhere else for that matter.

Working globally in a distributed environment is not seamless, however.  Even if engineering talent is quite a bit cheaper outside the US, there's definitely some overhead in having multiple locations, and international ones at that.  For instance, you have to pay two sets of lawyers, accountains, payroll systems, and there's always this nagging set of tax consequences you never feel good about.

Nevertheless, it seems to be a better alternative to me than fighing with the US Government on getting talented engineers visas, green cards, or citizenship.  We now live in a global economy.  Deal with it.

How Apple can turn the U2 fiasco into a business model

I've been somewhat fascinated by watching the whole Apple / U2 fiasco over the last few weeks.  In case you missed it, as part of the iPhone 6 announcement, Apple worked a deal with U2 to give every iTunes user a free copy of U2's new album, Songs of Innocence,  by automatically placing it in the user's iTunes library and allowing them to download it for free before a certain date.

Now, I've been a U2 fan ever since the mid eighties, so I was quite grateful to Apple and U2 for doing this, but many people were not.  I get this.   If they put a Jay-Z album in my account, I probably wouldn't want it either, and would probably find a way to delete it.  It would probably annoy me.

Seeing this article about how this whole move prompted a huge sales bump in U2's back catalog, though, it got me thinking about my whole music consumption and purchasing experience these days. As where I just used to just walk into a store and pick something that seemed to be marketed to me and would take a chance, these days I typically listen to something on either Spotify or Google Play, and if something grabs me I'll usually still buy it, and in many cases I will buy a bit of the back catalog.  Sometimes in one sitting, sometimes bit by bit over time.

Putting these two things together, Songs of Innocence is just and ad for the rest of U2's back catalog, and for those that like U2, it seems to have worked. The problem was that the ad was totally untargeted, and users generally don't like ads that aren't targeted to their interests, or their purchase intent.

The thing is, Apple also has this thing called iTunes match, where I can upload my entire library to iCloud.  This allows them to pitch me music I might like.   For bands that are similar to what's in my music library, why not allow me to opt-in to having Apple sell my music library as targeting to bands whose albums I don't own, and putting in albums from those bands that might make me buy the back catalog?

So the money would flow like this:   the music label would pay Apple to target me and put their album in my collection for a month, and if I download it I get to keep it.  Hopefully, I would buy more of that band's back catalog and then the band would make up the cost of the placement and more.  Hopefully they bought a fan.

I don't know all the numbers to actually work out if this would be a viable money maker for any of the parties involved, but it feels like there would be something there if done right.

Full text of recent interview with Built In Chicago

A lot of interviews I do are by email.  I prefer it that way actually, but I always think it's helpful for readers to see the full text of the interview.  Most publications tend to have word limits, and my responses tend to be wordy, so a lot ends up on the cutting room floor.  This time I'm posting the full responses to the interview with Built In Chicago that recently wrote this article regarding Blinkfire Analtyics. Here it is. Enjoy.


1. How did you realize that there was a need for Blinkfire in the marketplace?

Working for Google, I worked on the Doubleclick products which enabled large media companies to sell advertising on their properties, and allow large brands to find that inventory.   After leaving Google I started looking at the sports market and noticed two things were happening.  First, sports franchises were becoming digital media companies themselves, producing large amounts of both written and video content to satisfy their existing fans and attract new fans.  Second, by distributing this content through social media, they were dis-intermediating the existing sports media companies in many ways because the fans were now coming directly to the leagues, teams, and players for media content on Twitter, Facebook, Google, and Instagram.    Sponsors and brands want to buy as much reach as possible, but they need to have metrics for this, so as the money follows the eyeballs to these channels, there seemed to be a great opportunity to better track their sponsorships.  At the same time, social media is becoming more and more visual, so we really saw the additional opportunity to provide a better solution than any existing social media analytics solution by tracking the brands people interact with in video and images, in addition to text.

2. What were the most significant challenges you faced on your way to this funding round?

Like any other funding round, it's a matter of finding that lead partner that you want to work with and believes in the founders and the team.   That wasn't the biggest challenge as I worked closely to the Foundry Group partners while we were creating FeedBurner, and I've stayed in contact ever since. Getting that critical mass to all come together at the same time was perhaps the challenging part.   We were actually oversubscribed from the amount we originally wanted to raise, so it was a bit of a challenge to choose the final investors with whom we wanted to work and we thought would accelerate our progress the most.
Additionally, we used AngelList as a platform to fill out the FG Angels syndicate.  In the end, it worked great, but it was a wild ride as you can see the sausage being made in how the investments get backed.   You have to set a limit, so there's a lot of backing investors trying to get a bigger piece, some dropping out, others trying to go around the syndicate fund, and other interesting things that happen in real time while the fund gets filled to your limit. 

3. Now that you have the money, where do you plan to go from here in the next year or so?

Our mission is to be in the middle of every digital transaction that happens between the brands and publishers (teams, leagues, players in our case).   We think we can use computer vision to tie together online and offline campaigns in a way that fills out all 360° of the circle in the way these publishers sell to their sponsors.  So we're going to do that.
But to me, the most critical part of building a startup is building the right team.   It's about finding people who are really passionate about something that's going to drive you on the right vector toward success.   For us, that might be a person who's really passionate about sports, but it also might be an engineer who is super passionate about design, or databases, or pattern matching algorithms.  So I'm aggressively putting together that team.

 4. Is there anything else you'd like to say to the Chicago tech startup sphere?

Chicago is a great place to build a startup.   There's a lot of talent here, and people are generally hard-working.  But I think the way the Chicago startup tech scene gets stronger is by having entrepreneurs spend time out of Chicago as well.  The reality is, your publication and few others notwithstanding, the national tech press doesn't focus as much on Chicago as it does on San Francisco and New York. So you need to get out there and participate on the coasts in events and networking.  I talk to a lot of small companies that think they can sit at their desk here in Chicago and deals will just come to them.  I think for some businesses that's possible, but for others, you need to get out of your comfort zone and talk to customers and partners.  You have to get out there and make something happen.

Amazon, I really want AutoRip for books

I read most of my books electronically these days - it's just easier and more portable.   That said, there are certain books I still prefer in paper format.   These are usually the ones that are "high design" with lots of pictures and diagrams - where the layout counts. They are just better in paper format.

But the biggest drag with these (literally) is their size.   My backpack needs to be as light as possible.  I hate carrying around books.

I don't understand if I buy the paper book from Amazon why I don't get the Kindle version as well.

Amazon, you made this happen with the music industry;  when I buy most physical CDs I get the MP3 version automatically put in my account.

Please, make this happen with books too.

Three is the magic number, for messaging clients that is

I've found it interesting that throughout my career, the number of messaging apps I use simultaneously has been about 3. Three is a magic number.

There are always challengers to break into the top 3, but the core number has remained about 3. I'm talking about mostly synchronous instant messenger clients.  This doesn't include email or things like Linked-In In-Messages.

I'm also convinced there will never be unified messaging. The road is littered with companies who have tried.

Instant messaging is a commodity by itself, but the social network attached to the messaging system is not, because there is value in the social network attached to the messenger.  It's probably also the case that a person can handle at most 3 social networks at a time.   I haven't thought more about that, but it's probably true.

The other observation is that popularity of messaging apps seems to extremely localized across either geographic, cultural, or lingual boundaries. At the start of my career, there was Aol Instant Messenger (AIM), Yahoo Messenger!, and ICQ. The first two were split across whosever Mail product you used, and ICQ was pretty much for the rest of the world. Over time, I think MSN Messenger supplanted ICQ, especially in Asia because they supported extender character sets.

These days the 3 are Google Hangouts (Talk),  Apple Messages (SMS) , and Avocado.

What's app is waiting near the ring to knock out one of the contenders soon, for my co-workers in Europe.

Google still has the best feed reader

Yes, we all know Google Reader was shut down for good on July 2 of last year.   It's creators went on to do great things, and are still at it.  Users had an emotional attachment to Google Reader; it was the best for those that understood RSS. Many were upset at its sunsetting.  That's well known.

What's less well known is that Google is rebuilding a smarter newsreader, from the consumer point of view.   What I don't understand is where it is hidden: inside the Google Play Library under "My News".  For the last year, I thought this was a place for Google to sell magazines to compete with the quite weak iOS Newstand, so I never ventured into Play News.

But yesterday, I actually wanted to buy a digital copy of a magazine (hard to believe I know) - and discovered that Play News is so much more than a digital magazine stand.   It's a news reader with a feed reader underneath.

In fact, they do a pretty good job of mixing both together.  But just as a basic newsreader it's pretty damn good.

You can navigate to the publications you like, and this part is genius, it will auto promote the publisher's mobile app if it appears in the Play store.    Little golf claps for the PM at Google who created this feature.

And underneath, yes there is a feed reader.   In fact, here's how this blog looks inside of My News:

So yes, RIP Google Reader, but let's hope Play News combined with the news that appears in Google Now can fill the void.    Google has always been good at creating relevant news products, they've just been really poor at marketing them.  Let's hope this incarnation stays alive.

Update:  This app is actually called "Play Newstand" and does have it's own icon in Android if you dig into all your apps.

I didn't correct my flawed name uses above to underscore Google's lack of branding.   Getting the name to dsiplay without an ellipsis as "Play News..." isn't easy.