I wrote this post a long time ago. When I did it was a little too close to home for a company to have me publish it. Much time has passed. And I felt it was instructive still so I thought I would publish.
I decided to water down some details to protect the innocent. But both stories are still accurate. I hope it still resonates.
A while back I received a frantic phone call from the CEO of a company in which I invested. He had just received notice from a major media organization that they were going to run a very negative news story.
As you can imagine we began scrambling.
Our first request of the journalist was an appeal for time to digest his information, determine its accuracy, respond to his claims and then the story was his to run with. He granted us a few days.
The founder was as dumbfounded as I was. We had sat down with the entire executive team on 2 separate occasions a year before the journalist called and had a stated policy to be as “white hat” on this issue as the best in the industry.
We had greatly limited our feature set as a preemptive response to never be on the wrong side of this issue. We had agreed to a stated internal policy that even though taking this stance would mean our product would have considerably less traffic it was an important part of what we felt our long-term brand represented.
We went through the accusations of the journalists. It was such a small and narrow claim and something we felt was unfairly picking on us. We had no known major violations but the story was based on the possibility that we could be exploited.
When the journalist pointed out our potential weakness we shut down the loophole in less than an hour. That’s how prepared we were and how serious we were about the issue.
I think I’ve read Paul Graham’s post on “Startup = Growth” three or four times now. And of course on Twitter I’ve seen the Tweets, ReTweets and superlatives on what a great post it is.
Viewing the article through the lens of a venture capitalist there’s much to agree with under the mantra of “growth!” And when you read the article carefully it allows for a period of discovery in your business. For example
“The growth of a successful startup usually has three phases:
There’s an initial period of slow or no growth while the startup tries to figure out what it’s doing.
As the startup figures out how to make something lots of people want and how to reach those people, there’s a period of rapid growth.
Eventually a successful startup will grow into a big company. Growth will slow, partly due to internal limits and partly because the company is starting to bump up against the limits of the markets it serves.
You know the old saying about trust … “It takes years to build and seconds to destroy.”
And once destroyed it is very difficult if not impossible to repair. You need to be the guardian of your own reputation. You need to constantly ask yourself whether your actions in rapidly scaling an online community are worth the potential downsides of destroying trust amongst your users.
I talk about this often with startups in which I’m involved. For example, I have had rigorous debates about the need to crack down on explicit online content – even in the face of lower growth.
My arguments aren’t from a prudish perspective – I’m an ardent believer in free speech – but from a practical one. There are some communities in which “anything goes” is the norm (think Reddit) and others where a zero tolerance approach is required (Disney).
Another fine line companies are skating is with how much user information they make publicly available. Tred this line carefully. We all remember the brushback Facebook had when they launched Beacon.
For the past several years I’ve undertaken many initiatives to “get more organized,” which basically means to make another attempt at implementing and running a solid task list that I can share with others with whom I collaborate.
I seem to be really good at kicking off well-structured lists, but less good at “working them.”
I know there’s no real point in creating a task list if you’re not actually going to open it up and parse through tasks.
My working theory is that the best task lists would be fully integrated with email since that’s where we spend much of our working lives anyways.
I guess I should therefore check out Streak, which several people have suggested.
And I’ve promised myself that I would sign up for Boomerang, which I’m genuinely excited to give a go at. I think I’ll add that to my to do list.
Over the holiday I became aware of a new tech blog that aims to have deep insights into the next generation of technology, which they call The Hypernet.
Why should you care?
Well, it is established by some of the industries more successful investors – Mike Maples and Roger McNamee.
My favorite post was this one (image above) in which they talked about their 10 hypothesis for technology investing.
It maps to a lot of my own views so I was interested to learn more. If you click through to Roger & Mike’s blog you’ll see that this blog post then links to a detailed presentation on the topic.
The ones I focus on the most are 2-7 and 10.
Hope you enjoy it. And I hope they keep up their early momentum.
There are certain topics that even some of the best journalists can’t fully grok. One of them is profitability.
I find it amusing when a journalist writes an article about a prominent startup (either privately held or preparing for an IPO) and decries that, “They’re not even profitable!”
I mention journalists here because they perpetuate the myth that focusing on profits is ALWAYS the right answer and then I hear many entrepreneurs (and certainly many “normals”) repeating the same mantra.
There is a healthy tension between profits & growth. To grow faster businesses need resources in today’s financial period to fund growth that may not come for 6 months to a year. The most obvious way to explain this is with sales people.
If you hire 6 sales reps in January at $120,000 / year salary then you’ve taken on an extra $60,000 per month in costs yet these sales people might not close new business for 4-6 months. So your Q1 results will be $180,000 less profitable than if you hadn’t hired them.