The Most Interesting Online Video Trend

Posted on February 18, 2013 by Mark Suster — No Comments ↓

This article originally appeared on TechCrunch.

By now many of you know the Harlem Shake but what you may not appreciate is the broader trend behind the video and it has mirrored my general views on how TV will work in the future

Harlem Shake is a YouTube phenomenon that in just 2 weeks has gone from nothing to on air on both Jon Stewart & Stephen Colbert and collectively the Harlem Shake has been viewed around 200 million times. Two weeks. 200 million views. Suck it traditional TV.

Summary Version
Global audiences of prosumer video producers will create content that is viewed by global audiences in numbers far in excess of traditional TV. TV will enter the era of “participation” which is a much more important trend than “social video” even if it seems less sexy or less fundable.

It means the “torso TV” consumption patterns will be more important than the head or the long tail for the next era of media companies.

TV of the future will not always have linear stories. I know that’s hard for many people to accept but when the medium changes from one-way broadcast to the millions to the ability to interact with each other through video it is unlikely that the future will resemble the past. Why would it?

I have started thinking about what the future might look like and I’ve started imagining what I call, “MMOV” or massive multiplayer online video.

Sure, the revenue & margin will be significantly lower than traditional TV. You should only worry about this if you’re a large, traditional media company with fat margins. The future of TV will follow the rule of Deflationary Economics as I outline influenced by the book The Innovator’s Dilemma.

It will enable the naturally creative but geographically and socially disenfranchised to make money doing what they love – participating. Maybe small amounts of money for what founders reading these pages dream of but life-changing for many.

Gangnam Style Meets Torso TV
Of course you know Gangnam Style, which is now the most viewed video in history at 1.3 billion views. Before this South Korean wonder spread across the globe I had written about a trend in global audiences that exists when the costs of production are nearly zero and the costs of distribution are also nearly free. I called this trend “Torso TV” because the “head” of consumption (largest number of views) was dominated by platforms that had massive distribution (think TV stations, radio or retail outlets that sell CDs and DVDs. think Apple. think Amazon) and therefore hits with high production costs were more suited to the medium.

The problem with the “long tail” content is that only the platform provider (ie YouTube) makes money. So if you want to be a content producer and want to make money you can develop content for global “niches” of watchers who might like: Japanese Anime, South Korean drama, Bollywood productions, reality TV on any topic – fashion, cooking, travel.

I saw this trend with the growth of companies such as Viki, Drama Fever, Crunchyroll and the like. Global niches that turn out to be much larger than you’d imagine.

Gangnam Style is the manifestation of this trend which turned what should have likely been a medium size global audience into an global phenomenon like we’ve never seen. The Macarena on steroids. Every now and again you can strike lightning in a bottle. Who knows why hits turn into memes? But it shows that when content is unleashed we can all appreciate it no matter of the country of origin.

Harlem Shake
For those who still don’t know the origins, the Harlem Shake started as a small skit from a YouTuber named Filthy Frank (10 million views as of this writing) on January 30, 2013. It was then popularized into an Internet meme 3 days later by text an Australian group of guys called Sunny Coast Shake in what garnered about 300,000 views in a short period of time (now at 11.3 million views).

But then the Harlem Shake went batshit crazy when Vernon Shaw of Maker Studios saw the video on Reddit and suggested that Maker should, well, make a video of the Harlem Shake in an office environment. That video is the most viewed Harlem Shake (with more than 15 million views as of today). It was loaded on the channel of Hi I’m Rawn, a long-time YouTuber.

At 12.30pm in the afternoon the idea to create the video was hatched. They taped it at 3.30pm for 2 minutes. 1 take. Then back to work, people!

It was uploaded at around 4pm.

Maker’s talent started commenting on it and sharing it. ShayCarl (a Maker Studios co-founder) in particular. And then …

Boom.

It made national news. Maker was contacted by every major news outlet. And suddenly every office in the country was doing their own version of the Harlem Shake.

And here’s the thing. This is not Gangnam Style, a catchy tune consumed by billions.

This is Harlem Shake, a catchy tune produced by tens of thousands. As of this writing nearly 50,000 versions have been created and uploaded and watched by some 200,000,000 people. Yes. Two followed by eight zeros.

It is the production angle that is most fascinating to me and the biggest unspotted trend by most venture capitalists and traditional media executives.

I have been talking about the battle for the living room for years and then followed up with Why the TV Market is Ready for Disruption with a more recent discussion about Hollywood vs. Silicon Valley here (the video version with an LA interview that can be viewed here and then a subsequent session in NYC with Jon Miller which can be viewed here).

And I’ve opined on why the traditional media companies aren’t well poised to win at this new TV world. and again here.

So here’s the thing

The Broader Trend
While way too many startup companies (and investors) are focused on “social TV” or on “Instagram for TV” I believe they are missing the more fundamental shift in our industry.

There is a world filled with professional producers of video content who are extraordinarily talented but lack access to Hollywood. In fact, that’s how Maker Studios got started in the first place.

I first wanted to invest in this trend by backing a company called Filmaka. I didn’t end up investing but I always loved the concept. They help find talented film makers globally, enter them into competitions and advance the best of them toward winners that get to produce full-length films. Filmaka is the creation of Deepak Nayar who is the producer of films such as Buena Vista Social Club and Bend it Like Beckham.

But when you think about the movement we once called “Web 2.0″ it was the recognition of the fact that media doesn’t only want to flow one way.

Media in an age of:

low-cost capture from mobile devices
cheap post-production process by tools (think Pro Tools for audio, Instagram filters)
cheap local storage (without which media creation is not possible)
available bandwidth for uploading (which is assumed away as easy but only in recent years has been solved. most Internet connections have been asymmetric & optimized for downloads)
cheap or free cloud storage (YouTube, DropBox, Facebook)
easy sharing (through social networks or platforms like YouTube)
social amplification (from which memes are spread) by Twitter and the like; and …
commenting

means specifically one thing. People are going to want to participate. Participation. We are the media. We want to be in it. Create it. Take part in it. Have a say, a vote. Think American Idol voting, where the audience gets to feel like they’re participating. And where they’re willing to pay by dialing a paid number to feel like they’re, well, participating.

And the end of the Maker Studios show, Epic Rap Battles of History, the end the show ways “Who won, you decide?” where the audience gets to weigh in. Participation. At whatever level.

Serialized TV with Audience Participation
I’ve been thinking a lot about what I want to fund in the video creation world. One idea I’ve been searching for is a platform that enables the creation of serialized programs with audience participation.

And this is a concept that has been at work since at least the 17th century. An example of a great serialist was Charles Dickens in which Oliver Twist & Nicholas Nickleby and others were written and distributed serially.

From Wikipedia on Charles Dickens

“The instalment format allowed Dickens to evaluate his audience’s reaction, and he often modified his plot and character development based on such feedback”

I have talked to several YouTuber’s about my idea but haven’t yet gotten any takers.

Here’s what I imagine. You create a narrative episodic show and do the first four episodes to get the story arc and characters going. On the fifth episode the audience gets to create it’s version of the next show. You look at submissions and pick the best one. You reshoot that episode with a higher budget and your original cast but that producer now gets a financial take in the show or gets to participate in the production or whatever. Then you move on to the sixth show with new submissions.

You need to build a platform that allows submissions, workflow, multiple story flows, awards, producer profiles and the like. It can’t just be videos on YouTube but I’ll be that YouTube is the distribution platform.

Here’s the thing – if well done I think you could see the Harlem Shake effect where many people want to have a go at participating on the production. Most won’t be of the quality that you want but you now have tons of material and inspiration for your show and you own all of the submitted IP. You share financial results and/or fame as the incentive to participate. It’s American Idol for makers.

The first time you do it the participation will be light. The next time you’ll get more. And the fan producers all help market your show because they too want the attention. Whether they are selected or not! I repeat – free marketing. Done by the masses.

And finally you could stitch together multiple narratives or versions of shows for people who WANT to watch all of the derivative shows. Your costs of production of these additional versions – zero.

To all of the traditional TV people who keep telling me this “low cost, low quality YouTube content will eventually go away. The production quality is terrible” I say, “Please study The Innovator’s Dilemma because it predicts the disruption of your industry presciently.” Let me remind you of the math: Gangnam Style = 1.3 billion views. Each episode of Epic Rap Battles of History gets between 30,000,000 – 75,000,000 views.

And to those who keep telling me that the CPMs are too low to make a business please stop thinking about two-way entertainment in only CPM terms. There are many more ways to monetize an audience of fans that simply pre-roll ads.

Think creatively. Study the video game industry. The music industry. Your world is changing, too. And you have so many examples from which to build your future that you have no excuse to put your head in the sand.

MMOV
The other theme I’ve been playing around with in my head (and in the numerous debates with media execs who aspire to do startups) I’ve started calling MMOV.

It’s a play on MMOG (massive multiplayer online games, think World of Warcraft).

What exactly is World of Warcraft?

It’s entertainment. With rich graphics and characters. It has a story, a world, that unfolds. It has interaction with other players. It is – by definition – participation. It exists precisely because there is a network. I grew up in the era where we got to play video games alone. I was inspired by Zork. It was a computer challenging my imagination and crying out for logic and participation. It was text-based. And anything but MM or O. But it scratched the same need – participation. Engagement.

And when the O is attached and thus other humans are on the other end of your game and when graphics are professional it is the ultimate in computer entertainment with other human beings letting young people all over the world who feel disconnected from other human beings form friendships.

I once heard a father describe how his son played World of Warcraft. He said this to me, which formed an impression, “My son leaves World of Warcraft to play other video games with his friends. But then they always come back to World of Warcraft to talk about it with their friends. WoW is their home base.”

So WoW in a way is his son’s social network.

I imagine MMOV this way.

You start out watching video. And this might be humans but it might also be animation. It might feel like TV or might feel like an animated video game or maybe there is no difference? You start watching with friends, peers or strangers – who might become friends or peers in the future (think that’s weird? check your Twitter stream. It’s filled with people like this. Aren’t all online communities like this?).

You watch the first “episode” together. Then you discuss it with those in the room with you. They are watching it synchronously. It is your job to get them watch the next video based on plot or character development you want to see. Which way do you go next? The audience decides.

And the show develops like this. No linearity. Only the evolution through a video game board with other players trying to agree how the story unfolds. Maybe for a fee you get to choose your own direction without the crowd?

Don’t like how Homeland has become a total farce like 24? Chart a different path. Don’t like that a characters in Downton Abbey gets killed or another might get banished from employment? Chart a different course.

In an online world, why wouldn’t we?

Television today is being charted by those who grew up in a one-way world of: we decide, we write, we broadcast. Doesn’t that sound like the websites of yore that implored us to read their stories?

We have too much evidence from the text-based Internet that this model doesn’t hold in an online world.

Think Zork. It’s how things were. Then think World of Warcraft. It’s how things will be. It’s why we use Twitter, Facebook, Instagram. To be part of a conversation. And even if it’s only very occasionally that you want to chime in, it’s why UGC works. 1/9/90.

And read this MG Siegler piece on TechCrunch. He’s one step ahead of the rest of the market. And he’s spot on with this analysis about how Apple will enter the TV market. Spoiler – video games.

Online Events
Finally, I’m fascinated with the future of live events. We’ve only just scratched the surface. As you now know 8 million people tuned in to watch Felix Baumgartner jump from 24 miles above the Earth in a Red Bull capsule.

It will always be a milestone in the Internet, YouTube, Twitter, Mobile world etched in my memory. And that of my two boys.

Like many of you we were laying around watching NFL football games. And also paying attention to the Twitter. Watching only is so one-way. With our second screen we suddenly have … participation.

And that’s where I first saw it. I know many of you knew the Felix was going to jump. I hadn’t been paying attention.

But Twitter cried out that I MUST! Tune in. NOW. As only Twitter can dictate.

So on my iPhone I clicked on a link and saw Felix going up. WTF? What is that guy doing?

I called my boys over. We sat transfixed to my iPhone. Was he really jumping from outer space? Is this real? Is this really live? Did I just click on a button and watch a man prepared to jump from that little capsule watching real-time streaming from my mobile device that I only knew about because random people (some of whom I’ve never met in real life) demanded that I do so on Twitter?

I was sincerely amazed by all of those things. And we watched. And watched. And watched. And the NFL seemed so uninteresting at that moment. I’ll never remember who was playing or who won (probably not the Eagles).

But along with 8 million people globally we shared a moment. And then another 32 million people (at least) watched on YouTube afterward.

That fascinates me. Twitter. YouTube. Mobile. Live. Watch this space. It’s going to form a larger part of our future.

Oh. And it won’t be brought to you by Comcast. That interests me, too.

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Beware of Ballers on a Budget

Posted on February 9, 2013 by Mark Suster — No Comments ↓

The other day I was at a Mercedes dealership.

Unfortunately my wife was hit head on in December by a woman who lost control of her car. It was time to get a new car and my wife’s requirements were:

The safest thing on the road
As many air bags as possible

I researched the pricing of the car at TrueCar – not because we’re an investor – but because it gives you complete price transparency over what other people in your area paid for a car. It surprises me that anybody would buy a car without this data because as most people know MSRP on cars is mostly an irrelevant data point used for marketing purposes. “Invoice price” is an equally meaningless marketing tool.

But I digress.

I was sitting with the financing guy who was trying to upsell me everything from pre-paying service to prepaying dent repair coverage, etc. My partner Steven Dietz is an expert on cars (and auto startups having funded DealerTrack, TrueCar, Digital Airstrike, Uparts and others) and I called him and he said, “Decline everything. That’s where the dealer makes all their margin – upselling you at close.”

Anyway.

I was chatting with the finance guy and he was cycling through all the things he wanted to bait-and-switch me to and he asked if I wanted a lease in stead of a purchase. I told him I didn’t because we planned to keep the car for more than 3 years so it was more advantageous to buy. I still drive the same car I bought for cash in 2005.

I asked him what percentage of cars on his lot were done as leases. He told me that more than 50% of the cars that moved off his lot were leases.

Whoa. Why so many on leases?

“This is LA. Many people who buy here can’t afford the cars they want but with a lease they can have a nicer car. They want to be ballers. But they’re ballers on a budget.”

We laughed.

Ballers on a budget!

It got me thinking about the tech industry. I think the last few years have produced a few too many with “ballers on a budget” and I think some “aspiring ballers” draw the wrong conclusion.

I have written about this before in my post on Conference Hos. These are people at every conference. Always on stage. Back stage. At the parties. Instagramming their pictures from London. Dublin. Korea. Mexico. Panels. Talking about changing the world. But they haven’t actually done it.

The problem I have always had with this is that it is very ego centric. It’s taking company resources – usually funded by angels or VCs – for personal gain. While back at the office the other 98% of the staff actually have to build stuff. Sell stuff. Work on budgets, submit RFPs, answer customers support calls, work the bug-tracking software, and trying to meet the next sprint release schedule.

The feeling it engenders back at the office can be corrosive. Because often these Conference Hos bring back their latest idea from the hot tub cocktail session with their favorite tech superstar. And the stay-at-home staff is left trying to implement the idea while the CEO is off at the next big conference.

But they haven’t made it yet. Their businesses may be bleeding cash. Struggling to be relevant. They’re not ballers. They are posers. Pretending they have had a big breakthrough but their actions and statements belie the truth.

Not ballers. Ballers on a budget. The ones who lease expensive cars to look like they have made it while they rack up credit card bills.

I never lived beyond my means and it’s always a warning sign for me when evaluating companies and entrepreneurs. I like more understated types. Who are out to prove things rather than be showy.

And beneath it all I worry more about the perception that ballers on a budget set for others. The people who really are working hard at their startups with no money to pay real salaries and sharing a cramped office. And as they look at their Twitter or Instagram feed imagining that they should have “made it” like the people they see popping champagne at the parties.

Note to said entrepreneurs – you’re not missing anything. Your 8-year-old Toyota is just fine. Your 2am coding session is more important than their 2am cocktails on the redeye back from Japan where they have no customers.

In LA we have a culture where people drive fancy cars but live in small apartments and where credit card balances are larger than bank balances. That makes no sense. In the tech world we are breeding a bit of a culture where we have entrepreneurs who are “conference famous” but have small revenues and red ink.

And neither of these cultures is a good thing.

**************

Back story on photo. A few years ago I headed out to China for a few weeks on a tech tour. I timed it to be there with my pals Dave McClure and Christine Lu. I came across this kick-starter page from baller-in-training Trevor Owens. It really made me laugh and I loved his hustle.

For me this is the antithesis of baller on a budget. He was being open and saying, “I really want to go on this trip but due to my age and lack of resources I could use some help. I don’t want to run up a big credit card bill I can’t afford.”

Trevor made it on the trip as you can see from this KickStarter page where he raised his money.

We spent a lot of time together on the trip. In conferences, in bars, at late-night food, touring the sites in China. We had lots of debates about the tech world and about career development. Trevor for those who know his is an intense and focused dude. And he has an edge. And I like it.

I’ll bet that Trevor is on the right track in life. No glam. Hard work. Cost focused. Kind of like Dave McClure.

Ballers. Both.

p.s. next time you see Dave McClure make sure to ask him about his male foot massage in China. I can’t remember laughing that hard in a long, long time. Thanks, Mike Su, for reminding me!

Posted in Entrepreneur Advice — No Comments ↓

Announcing a Deal I’ve Wanted to Talk About for a Year

Posted on February 7, 2013 by Mark Suster — No Comments ↓

Let me not bury the lede. I’m super excited to announce that GRP Partners led the investment in Ethan Anderson’s new company MyTime (link has LA-based merchants but will give you a good feel for the product).

I am taking the lead from GRP and we also invested alongside a number of friends including Dave McClure, Dave Tisch, Ben Smith (Merchant Circle), Brian Lee (ShoeDazzle, LegalZoom), Jason Calacanis, Evan Rifkin, Jennifer Lum, Jay Weintraub and a whole host of other angels.

I first met Ethan in 2005. I was preparing to move back to the US from London after 11 years abroad. BuildOnline (the company I founded) has just announcement plans to be more aggressive in growing in the US. And we wanted a head of global marketing.

Because I am true to the hiring practices I preach, I wanted a strong exec who would “punch above their weightclass” by taking a job they hadn’t yet done but would hugely aspire to and thus work harder to out perform.

For Ethan it came down to two companies – BuildOnline or Google. “No choice at all!” I proclaimed to Ethan, “Google is at $400 / share. How much upside is left there?”

But I went back to the office and talked with Stuart Lander & David Lapter and said, “no prizes for guessing which job Ethan’s going to take.”

So Ethan went to work as a product manager at Google Video.

When Ethan was considering leaving Google we talked about it. He had an idea for a startup that would help consumers better book service jobs and would take on Service Magic, which he believed had a business model that could be disrupted.

The company was called Red Beacon. I acted as the occasional mentor, advisor and coach to Ethan. I was standing with him when he won the TechCrunch 50 award. RedBeacon was the 3rd winner (year 1: Yammer, year 2: Mint.com) – not bad company. In the same year they won Business Insider’s Startup competition. Nice sweep!

RedBeacon went on to sell to HomeDepot in what was considered a very successful acquisition on all sides.

But Ethan had left by the time of the acquisition. He had had a good run as CEO of RedBeacon but aspired to work on his next project.

When he left I called him immediately. As you know I believe in Lines, not Dots. And I had been telling my partners for a couple of years that I thought Ethan was one of the more talented entrepreneurs I had come across in San Francisco.

I told Ethan on the spot that I wanted to be the lead investor in his new company. We generally have a policy to only fund entrepreneurs once the first version of a product has shipped or it near to shipping. We like to be able to see the concept. So I asked Ethan to build his product first and then we would fund.

He did.

He was seeking $500k. I asked him if he would consider raising $3m in stead and we would put up most of the funds.

Why?

Because I knew that Ethan was on to a powerful idea and one in which he had developed huge competence and domain knowledge in. And because I wanted Ethan to be able to attract a great team, build & iterate a product, test it with initial customers and refine his strategy before having to take the wrappers off of his company.

I wanted them to have a market lead before others could try and build what Ethan was working on. And I certainly didn’t want him having to trapse up-and-down Sand Hill Road informing every VC of his next idea.

Ethan had pointed out to me that merchants were being barraged by “deal site” wanting to drive customers in the door but they didn’t have great tools to manage their customers. I told him that this had been a big theme for me for some time.

He then pointed out that for service-based businesses every slot that went unfilled the provider had very high fixed costs and very low marginal costs and people ought to be willing to sell low-demand or last-minute expiring times at a discount while selling premium times at full price or even a surge price.

In industry this is known as “yield management” and of course it needs to exist.

But more importantly Ethan developed the belief over time that consumers really needed a service that would allow them to book across many different service businesses from one convenient location.

And the convenience began over time to sink in more than anything.

What do we like about OpenTable? We like that it is 1000x better than having to call restaurants on the phone, be put on hold or call during normal business hours to book appointments.

And in a world where we increasingly log in to personal web time at late hours or on our mobile phones that’s no longer good enough.

So the focus became about creating the convenience of consumer booking all service-based businesses such as: hair appointments, dental, trainers, chiropractors, massage therapists, oil changes, pool cleaners – whatever. With a benefit to both consumers and merchants. It’s more convenient for both sides.

Ethan recruited a great team of people to help build this proposition including Lisa Robinson running marketing and Rahul Thathoo as CTO who have been working tirelessly for the past year.

The next major decision for us was whether to launch in one major city or many at once. Ethan’s experience with RedBeacon led him to believe that merchant density would really matter and I agreed. So the team set out to solve the “chicken or the egg” problem by onboarding > 1,000 high-quality merchants across 50 service categories while going deep in two micro-areas within LA as our test market.

We will stay in LA and then Southern California before branching out into our 2nd & 3rd markets. I could tell you what’s next but then I’d have to kill you

They decided early to only book very high quality vendors so they build a system that could pull in Yelp & CitySearch reviews and they set the standard that it had to be highly rated. If you’re going to offer convenience as your biggest selling proposition you need to make it easy not only to book an appointment and pay for it but also to research which vendor to select based on reputation.

And the team felt so strongly about this quality vendor focus that they decided to offer all consumers a full money-back guarantee if they are unhappy with any vendor’s service. MyTime personally vets each merchant.

Finally they set out to tackle the difficult problem of “data normalization.” Basically if you want to figure out how much you want to pay for a hair stylist or a massage you need to be sure that you’re comparing apples-to-apples and merchants tend not to have standard units that they sell. MyTime aims to be the first industry-wide platform to help create consistency across the SKUs in services businesses.

Ethan took great inspiration in this from Alex Rampell of TrialPay (an advisor to the company) who had written about this concept of “Service as a SKU.”

When merchants sign up MyTime then helps them with marketing activities through marketing automation tools they’ve build across SEM, social, and email. The goal is not only to help local service-based merchants find new business but also to help them be more efficient in booking existing customers which should help with loyalty.

So there you have it. It’s nice to finally not be in stealth mode!

I think it’s a beautifully designed site and product. And the magic is that there is so much complexity in the way the product has to work behind the scene (and the merchant onboarding process) but the experience for users feels effortless.

I’m super proud of Ethan, Lisa, Rahul and the whole team at MyTime. And while there is much hard work to be done I look forward to seeing how the next few years evolve.

Posted in Startup Advice — No Comments ↓

How to Configure Your Startup Team

Posted on February 6, 2013 by Mark Suster — No Comments ↓

I am fond of quoting that about 70% of my investment decision of an early-stage company is the team. My rationale is simple: everything goes wrong and only great teams can respond to competitors, markets, funding environments, staff departures, PR disasters and the like.

Final startup grind from msuster

How you build out your team in the first few years can have a huge impact on the trajectory of your company.

So I naturally spend much time with the companies in which I invest helping them:

recruit
figure out roles
measure performance / quality of team
identify gaps
debate the right structure

and so forth.

There are no “right” answers – just opinions. And the folks at Startup Grind have been kind enough to invite me to present this morning in Mountain View on the topic.

Quick summary:

Be careful not to have too many co-founders. it’s the most expensive dilution you’ll ever face. And you need to be careful about giving up control to cofounders as much as VCs
I don’t think VCs care as much about co-founders & economics as people think. I think they care that there is a deep bench of talent. But not anal if one founder who shares equity graciously with early employees who are treated as “co-founders”
My idea startup team is heaving on tech personnel but also has strong product management. PM’s are underrated in Silicon Valley these days. For the wrong reasons. PMs are a vital part of a tech startup. Engineering is critical but it is not everything. Without strong PMs you build crappy products that nobody needs or that real people can’t use
Early-stage companies shouldn’t: outsource core product development, have consulting firms build it for them to speed up time-to-market, shouldn’t hire too many business people until product is complete and early product/market fit tested
Don’t hire a homogenous team. You need a diverse set of skills to succeed
Don’t listen to VCs who tell you to bring in the big guns early. Some push hard for super experienced execs to join. If they join super early it is often a disaster. I’d take people who “punch above their weightclass” any day of the week. When you scale you bring in the heavyweights
Your first sales people should be consultative sellers who can fuel evangelical sales. Don’t hire “relationship management” sales people too early
Tech teams are comprised of three distinct managements skills: people, process & technology. Know the difference. Some people are good at all. But that’s rare. More often than not you need experts in each who work well together.
Resist the temptation to build a group of “C Level” execs in an early stage business. I especially think “president” and “coo” are bad titles for early-stage businesses. Give everybody functional roles. Have them manage their area. If you need a COO then perhaps you’re not a CEO? Maybe you’d make a better part-time Chairman and let the COO run the business?
Hire admin / office management after you raise a reasonable size VC round. It will pay huge dividends in avoiding the CEO tied up in admin and allow him / her to focus on bigger picture items.
Equally – a great VP Finance can be leveraged well to take on finance, legal, HR and much of the operational tasks. Will prove INVALUABLE to reduce time CEO spends at: board meeting prep, fund raising and ultimately M&A discussions.
Be careful about board construction. Limit the number of VCs. Equally limit the number of management. Can always appoint other startup CEOs to the board to take founder seats (which you control) and/or bring in industry experts as independents.

It’s all in this deck in a prettier format. Ok, well not that pretty since I do my own slides and often at 1am. But my slides are linked above and you can also download from SlideShare.

Since it is sometimes hard to get the full context from a conference presentation, I have included blog posts links on the topics in which I have written fuller posts in the presentation itself.

I’d love to hear your view on the presentation. What you agree / disagree with. And what your views / tips for early-stage startup teams are.

Posted in Startup Advice — No Comments ↓

Why You Shouldn’t Launch Your Startup at a Major Tech Event

Posted on February 2, 2013 by Mark Suster — No Comments ↓

It’s February now. That means a slew of companies will be preparing to launch their new products or announcing their companies at the annual SXSW conference in Austin, Texas.

I get asked often how to best launch at SXSW. What strategies to use, how to get attention, how to become “hot.” I get asked many PR questions which is why I started this stream of posts on PR at Startups.

So this post is about how to best craft a strategy to launch at SXSW but you could substitute most major conferences like CES if you want.

Exec Summary
Don’t bother.

The Details
To be clear. I’m not advocating that you shouldn’t present at tech startup events like Launch, TechCrunch 50, DEMO or similar. These are tech launch events designed to see new startups unveiled. I’m talking about big, garden-variety, industry-wide, schmooze fests.

SXSW is where Twitter broke out in 2007. It’s where FourSquare first broke out. And ever since then every year we are subjected to the tech press corps writing the annual, “What will the hot company at SXSW be?” followed by the compulsory post-show “Who won at SXSW?”

Trust me these articles are coming. Why? Because to write stories every journalist needs an “angle” meaning a storyline or narrative that they form their story around. The most obvious narrative leading into an event that launched two smashing tech darlings is, “what will be the next big thing?”

And then subsequently many well intentioned but young, naive and impressionable startups will blow thousands of dollars wastefully trying to recreate the magic. They will fail.

To be clear I’m not saying don’t attend SXSW, just not to blow your marketing budget trying to stand out. In fact, I’m a very big proponent of SXSW as I wrote about here.

Why It’s a Waste
There will be tens of thousands of people there. They will be there mostly to network, go to parties and hang out. They are not there to “discover the next cool SXSW app.” You are a shitty little startup. You have $10,000 to spend. Actually, you don’t. But you’re planning to do so anyways.

Your great idea – suggested by your PR firm – is to book out some dive bar and invite guests, rent a room at the Four Seasons and throw a party, take over a grilled cheese stand across from the main venue. None of this matters. Don’t do it.

Your crappy $10,000 will pale in comparison to the budgets of the big tech & media companies. So anything you do will feel small in comparison. Your efforts to corral your tight-knit tech followers will work for 5 minutes but even they will feel the pull to be at the really cool tech party where “everybody will be” that starts at midnight.

In short, there’s too much noise, no signal. You can’t stand out. You’re shouting in a crowd. It is the peak moment of ADD for everybody in the tech industry and the tech press. It is “Spring Break for Geeks.”

So go. Be a part of the fun. Attend the cocktail parties. Meet your favorite tech entrepreneurs, bloggers, VCs or whoever that will be hanging out and talking to randoms at 3am at a taco stand or more likely a fried chicken waffle stand. Network. Be loose. Save your time, energy & budget for building relationships with people with whom you can follow up later. If you’re trying to launch your company or your next new product you won’t achieve any of these things.

Why Twitter & FourSquare Succeeded
Ok, Suster. You think you know it all? Then why did Twitter & FourSquare break out? Surely we should try to emulate their spectacular rise.

No, you shouldn’t.

Twitter was launched in “a moment.” Prior to Twitter there was no easy, public way to ask which party was the best at SXSW or where were your friends? Before Twitter there was no easy way to “conference brag” or “travel brag” or share food porn. So it filled a gap. A need. A moment in time. The iPhone will still fairly new and smart phones were just coming to the fore.

So SXSW needed Twitter. And Twitter needed SXSW. And all of the attendees needed the validation that they were the cool kids at the cool party and to tell the world of non-SXSW people that they were missing out.

And in the wake of that spectacular success FourSquare repeated the magic. How? Because by the next year Twitter had gotten really noisy. The masses were now on. It wasn’t an efficient tool for telling people which bar you were at or where you were eating lunch. And FourSquare was. It was the first “check-in app” that allowed you to know exact location. And it was purpose built for that so it wasn’t mixed up with random other messages / Tweets.

But public broadcasting and location activation are done.

And so, too, is that SXSW moment.

If you were at TechCrunch 40 in the early days and you won: Mint, Yammer, RedBeacon – you were an instant darling. I challenge you to tell me who won the last three years. TechCrunch 25/40/50 was a moment, too.

How to Best do SXSW
So how should you take advantage of this wonderful show? How should you get the most bang for the buck?

I wrote this in a post so my best suggestion is just to read How to Get the Most out of SXSW, which is really about how to get the most out of any major event. For those not interested in linking through – here are the summary titles without the details of that post.

1. Be very targeted in which events you attend
2. Do the leg work before the event
3. If you sit on a panel, make sure you don’t suck
4. Focus more on networking at events than attending presentations
5. Stay out late, sleep in
6. Schedule dinners
7. Don’t get too wasted
8. Don’t assume people remember you
9. Have a “wing man”
10. Follow up with people right after the event

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