Startup Lessons


And edited version of this article first appeared on TechCrunch.

Startups in a world of massive markets can be confusing. The law of large numbers, platforms that can make your company blow up unexpectedly and the trendy nature of tech markets can be deceiving.

Success for many is ephemeral.

I have written about the deceiving nature of early successes before – in particular in the SaaS or B2B world leading to a phenomenon called “shelfware.” If you didn’t read it I recommend it. It’s important to understand.

This is why I loved Brad Feld’s recent post about the “illusion of product / market fit.” This, too, is a must read for any entrepreneur.

I am obsessed with a topic because it has literally become my job. I have many investments with early traction and I the entrepreneurs I work with must tire of my constantly saying,

“Are we really making a difference? Are our users addicted to our product? Are we making their lives better? Will we win the battle for share-of-mind every time they pick up their phone or log into their computers?”

I have seen many companies move rapidly up-and-to-the-right by Google search rankings only to crash when they rewrite the algorithm or start competing by offering the same service directly on the SERP. It’s ok to live-and-die by Google early.

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I was waiting for my son’s basketball game to start this morning and with the morning’s emails all drained I turned to Twitter and saw this Tweet from Marshall Kirkpatick

Test: open your twitter stream, look at the 1st item in it, think of something to say in response, say it. Theory: it’s really that simple.

— Marshall Kirkpatrick (@marshallk) January 24, 2015

I consider Marshall a business friend. A fellow thinker and tinkerer of technology. Somebody I respect. And like. But here’s the thing – I honestly can’t remember how many times I’ve actually met Marshall in person? I know him really through online and from that we’ve had phone calls to debate his business and such.

It’s an online relationship and I actually believe that as of 2015 I’ve met more of my close connections in the past 5-7 years online before offline. Brad Feld. Fred Wilson. Tristan Walker. And many, many more. Some through blog comments – your place or mine. Some on Twitter.

I responded to Marshall’s obvious comment bait with “I’m always surprised more people don’t engage.

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Any reader of this blog for a period of time will know that I’ve been long YouTube for years. Along with Greycroft, I was the first institutional investor in Maker Studios (sold to Disney for nearly $1 billion) and am still the largest investor in Mitu Network, the largest online video producer of Latino content. We have made 5 online video investments in total – some we will talk about later this year.

The reasons I have been long on YouTube specifically are very simple:

YouTube now has > 1 billion uniques / month. This is 14% of world population and 33% of all people online.
A new generation of content producer and video style has emerged that is distinctly different from what you see in TV. 40% of all of YouTube is viewed on mobile devices and of high-quality content I believe it is between 60-70% based on my insider data.
The stars of tomorrow are being built on these short-form formats. It’s hard to understand this until you attend something like VidCon and watch youth interaction with their “stars.

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I spend a lot of time with startups and thus hear many companies talk about their approach to sales and their interactions with customers. From these meetings you can really tell the leaders that care deeply about their customers and those the look down on them. Given customers & sales are the lifeblood of any organization you’d imagine everybody would respect their customers. You’d be very wrong.

I was thinking about it this week through some snippets of recent experiences.

Starting with a positive. I had dinner this week with a top new customer at one of our enterprise software investments. I wish I did more enterprise software investing because when I attend meetings like this I realize that this is my core DNA – rolling out business software solutions to customers. The entire dinner was a discussion of what it would take for our software to help this customer be successful, what he liked about it and where we needed to improve. It was a personal discussion and you could tell that our senior leaders and he shared friendship as well as respect and admiration.

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This week I wrote about obsessive and competitive founders and how this forms the basis of what I look for when I invest.

I had been thinking a lot about this recently because I’m often asked the question of “what I look for in an entrepreneur when I want to invest?” I look for a lot of things, actually: Persistence (above all else), resiliency, leadership, humility, attention-to-detail, street smarts, transparency and both obsession with one’s company and a burning desire to win.

In the comments section a clever question popped up about whether I would have invested in myself before I became an investor.

My first response mentally was, “Of course!” but then I realized I didn’t even need to answer the question. I had invested in myself for years. I quit a very well paid job at Accenture with very little time remaining before making partner and took a risk of having no job security at all. We had raised a $2 million seed round, which meant taking almost no salary so we could afford to hire staff.

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Obsession. The drive to succeed at all costs. When second place isn’t good enough because we live in winner-take-most markets. The desire to be better than anybody else in one’s field.

This blog started from a series of conversations I found myself having over and over again with founders and eventually decided I should just start writing them.It would often make my colleagues laugh because they’d hear me like a broken record and then the next week read my ramblings in a post.

Last week’s obsession was about obsession itself.

10 days ago I saw the film, Whiplash, which is one of my favorite films of the year. I would be shocked if it doesn’t win at least one Oscar. I won’t have any spoiler alerts here, don’t worry.

The protagonist in the film, Andrew, is a drummer and the story is his experiences in his freshman year of one of the most elite music conservatories in the country. He wants to compete to be the lead drummer in the competitive ensemble and study under Terence, an obsessive instructor who is hell bent on winning competitions for the school.

I absolutely loved the film. I loved the music.

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