Continuations

Customer Support is the New Marketing (or Not)

Wed, 28 Jul 2010 11:02:43 -0400

Rob Kalin from Etsy has referred to customer support as marketing and Etsy has significantly enhanced its customers support team to cut down response time dramatically. Danny Meyer in his book Setting the Table and the actual operations of his restaurants also makes helping the customer central to the experience. I believe this to be especially important in an age where a customer whose problem is not addressed can tweet and blog about it as I am about to do with regard to my recent experience with Netgear.

In 2006 I purchased a ReadyNAS NV+ that has served as my home media storage and TimeMachine backup since. Recently it started behaving strangely by suddenly losing power without the log files showing anything. I started a thread in the ReadyNAS forums and someone provided a terrific diagnosis of the problem. As it turns out, I need a new power supply unit (PSU) — my ReadyNAS model belong to a group with known PSU problems.

So yesterday I call Netgear customer support to order a replacement PSU. At first things were going just fine. I get a human quickly after navigating the phone tree and she understand the basic issue. But then she said that in order to process my request she needs to register my ReadyNAS. I provided her with the serial number off the back of the device and was told that it is “not a recognized serial number” and so she could not register it.

Instead, I had to take a photograph of the Serial Number and email that to a customer service address which would have a 2 week turnaround time!

It was clear that she could do nothing else for me at this point and so I went home, took a picture and emailed it in. Amazingly, there was not even an automatic reply saying they had received it (and yes, I checked my spam folder).

So now I am in customer service limbo. This is all the more amazing since I told the rep that I was completely prepared to pay for the PSU. After all, the device is over 4 years old and I really don’t expect the PSU to be covered by warranty. I will provide an update on how this goes, but so far Netgear is losing a terrific opportunity …

[Update: Just checked the forums again and the newest reply points out the part number for the PSU, so hopefully I will be able to buy directly]

Inception

Tue, 27 Jul 2010 08:28:04 -0400

Saw Inception on Sunday evening and loved it despite (because?) some its glaring flaws. It is a spectacular mashup of some of my favorite movie elements: philosophy, action, heist, stunning imagery and more action- all on a huge IMAX screen (the way movies are meant to be seen).

The philosophy element is about some of the deep unresolved questions around consciousness, free will and our potentially tenuous grasp on reality. The action element is well action including fist fights, car chases, skiing, you name it. The heist element is wonderfully satisfying because it involves planting something rather than stealing it and (spoiler alert) is pulled off successfully against great odds (lots of echoes of traditional and newer capers here). And finally there is Nolan’s signature element of amazing imagery. My personal favorites were Paris folding in on itself and dreamers floating in a zero-gravity hotel room.

Now as I mentioned there were also some glaring flaws mostly relating to internal consistency and character development (or more precisely lack thereof). But I am happily willing to overlook these or even consider them to come with the territory. I would definitely go see a sequel - this could be the Oceans 11-13 of mind benders.

Privacy, Secrecy and Reputation, Oh My!

Mon, 26 Jul 2010 10:36:41 -0400

I love the duality of the Jeffrey Rosen piece about the End of Forgetting in the NY Times Sunday magazine with the release of the Afghanistan files via Wikileaks. Citizens and governments are faced with a fundamental challenge to privacy and secrecy. This is not a change in degree, like the advent of photo copiers compared to hand-cranked ink paper (yup, old enough to have used that!). It is a completely different world and many individuals and almost all institutions are in denial about how radical a transformation is ahead of us.

I believe that embracing transparency is a far better approach than any system (legal or technical) for trying to control the information once it it out. The overhead and unintended consequences of those systems would be tremendous. Imagine a world in which you could send a take-down notice to anyone for content that you may deem no longer appropriate. Everything would grind to a halt. Or imagine a world in which information on one of your machines can be deleted automatically by a third party without your consent. The potential for abuse would be horrendous.

I believe that over time the net result of a transparent world will be a real premium on authenticity and direct communication. If you are a person, company or institution that is actually doing more good than bad and you are communicating that directly to the world, then it will be difficult for others to try to “override” your image. This comes with one crucial proviso: it assumes we continue to have net neutrality! Without it, others might manipulate the flow of information in a way that could in fact drown out your own communication.

P.S. If you don’t have have domain yet, at which you control entirely what you communicate, now would be a good time to get one!

Portland, Oregon

Thu, 22 Jul 2010 11:22:13 -0400

I am on the road in Portland, Oregon for OSCON. It is interesting that OSCON is here again after being in Silicon Valley in 2009. In 2009, I happened to sit down at lunch next to a development officer for the city of Portland who said he was attending because he wanted to make sure they could bring the conference back to Portland! There already are some interesting startups based here, such as JanRain and Jive, which just announced a $30 million funding round, and the city is clearly attracting more folks interested in startups (e.g. Alex Payne moved here after leaving Twitter). The city also seems much hipper than I had remembered it from spending some time here over a decade ago. For instance, last night I stayed at the very cool (almost too cool for me) Jupiter Hotel and caught a show by Admiral Radley at the Doug Fir Lounge. Now off to OSCON!

Applying Engineering to Business: Binding Constraints

Wed, 21 Jul 2010 12:01:01 -0400

Fred has been posting a wonderful series of MBA Mondays posts that I recommend to everyone who wants to know more about the business side of startups. If you come from the engineering side, it may also help to think about business using engineering principles. My favorite one is the idea of a “single binding constraint.”

When the execution of a program runs into a hardware constraint, it tends to be a single binding constraint: the program is either CPU-bound, memory-bound or IO-bound but generally not two or three at the same time. The same tends to be true for organizations. At any particular point in the life of a startup, there is most likely a single binding constraint on growth. For most startups this is the lack of product-market fit. If you haven’t solved that, investing heavily in a sales force is the equivalent of adding RAM when your program is CPU-bound.

Once you have cracked one binding constraint a new one is likely to emerge. For instance, with product-market fit in place, your single binding constraint might shift to sales, or to engineering or to customer support. A key job of the founder/CEO/board is to identify the single binding constraint for the startup at any given time and focus on overcoming it. I have found this way of thinking to be incredibly powerful. There tends to be so much going on in a startup that it is all too easy to want to attack many different constraints all at once. At that point it is critical to remind oneself that only one of those constraints is likely to be binding, in the sense that it is truly impeding growth.

The Case of the Missing Google Notes

Tue, 20 Jul 2010 08:50:05 -0400

So I am finally midstream in migrating off Exchange and onto Google. Email - check (gmail). Contacts - check (google contacts). Calendar - check (gcal). Notes - what no Google notes? Huh? I may be overlooking something obvious here, but it doesn’t seem as if Google has a direct equivalent of notes.

Now as it happens, I use notes a lot. For instance, I keep a running list of ideas for blog posts as a note. I have notes for each portfolio company. There are notes for travel destinations. In general I put anything there for which a traditional document would be total overkill. I love that my notes are fully local (eg edit in subway) but also synched to the cloud, so it doesn’t matter if I drop my device — all those little thoughts are well protected.

I am looking for suggestions for alternatives that meet the same criteria: notes that are super easy and fast to use, stored locally on device, and synched to the cloud. Must run on Android and Blackberry support would be really sweet. One of my goals with switching to all Google is to be able to try out many devices easily and simultaneously! Would be quite ironic if notes (the easiest to build) were the hardest to get. Will try out Evernote for sure but would appreciate other recommendations.

Admitting Mistakes

Mon, 19 Jul 2010 09:31:30 -0400

A quality that I find hugely important but increasingly rare in people is the willingness to admit mistakes. Growing up I wasn’t really part of a culture in which mistakes are openly discussed and used as an opportunity to learn. For a long time, my own approach was therefore one of just moving on or trying to fix things without admitting to any mistakes (often compounding the initial mistake in the process).

But as I started to manage people I came to realize that if you want them to try things and take risks you can’t have a culture that hides mistakes. Every mistake is an opportunity to learn and you don’t want to throw those away. So if you want that kind of culture you have to start with yourself and admit your mistakes. In a business setting a simple “I got this wrong” or a more emphatic “I screwed this up” is so direct and helpful that often it doesn’t even require an apology (unless someone got harmed).

I certainly wish we had more of that in our public/political world as well which seems full of attacking others for their (alleged) mistakes without ever mentioning one’s own. I occasionally struggle getting this right at home (where more emotions tend to be involved) and writing this post will hopefully serve as a good reminder to myself.

Android versus Apple (Flash, App Inventor)

Tue, 13 Jul 2010 20:03:54 -0400

Yesterday evening I wanted to bone up on the racing rules in sailing after having had a close encounter while rounding the leward mark last Thursday (which elicited quite a blue streak from the skipper of the other boat). I really wanted to see some animations of different situations that one might encounter to test my understanding of the rules. After a quick search I wound up on the UK Halsey site, only to remember that I was on an iPad and none of the animations would work because they are in Flash. Apple is definitely on the wrong side of this! Globally there must be millions of hours invested in educational content that is in Flash, much like these sailing simulations. Yes - at some point it could (and maybe even should) be rewritten in something else, but until then, I can’t wait for an Android tablet.

Speaking of Android, I love Google’s move to make Android programming accessible to everyone. I will get my kids onto the App Inventor ASAP and will likely get them Android phones (now that they are going away to sports events by themselves having phones actually makes sense). This will be a stark contrast to their iPod touches on which they are consumers only. With App Inventor, they can create mini apps in a way that they are familiar with from programming Lego Mindstorm Robots. There are some good questions over at Read Write Web about where App Inventor will go, but it is the principle that matters. Google is trying to make it easy to program Android, betting that there will be a huge number of devices and very large number of people who want to develop for them, whereas Apple is taking a very restrictive approach, even removing Scratch from the app store!

Apple is still in an excellent position but at least for our household I currently see more Android than Apple in the (mobile) future.

Time for (Web) Reminders of the Wars?

Mon, 12 Jul 2010 10:01:33 -0400

As in the past 8 years, we went to see the Scarsdale Memorial Day parade earlier this year. Attendance was incredibly low. I remarked to Susan then that this is a direct function of virtually no one in Scarsdale having a family member in the military. As far as I can tell, we have essentially “outsourced” fighting the wars in Afghanistan and Iraq to the poorer parts of the States. I was reminded of this on 4th of July, where around here everything was idyllic and not a single conversation I had that day as much as referenced the two ongoing wars. Then I quickly forget again myself because there are no visible signs around here. Sure, the New York Times has been running a bunch of cover stories about Afghanistan but first, I don’t look at the cover of the NYT much anymore and second, even when I do the tech stories of the day quickly draw my attention instead. I am wondering how people would react if (tech and other) web sites were to start running a small permanent strip at the top with a duration and casualty update for the wars - maybe combined with a link to let folks donate to support veterans. This kind of reminder strikes me as important for all of us, whether or not we support(ed) the wars. As it stands now - it just seems way too easy to ignore.

Some Career Advice

Thu, 08 Jul 2010 08:55:32 -0400

Following our recent recruiting effort to find Christina and Gary I have been spending a fair bit of time meeting with people we encountered in the process who wanted career advice. Here are some of the points I have found myself talking about repeatedly.

First: many people think they want to be an entrepreneur but few actually are. The best way to tell is to look at the things you have already done. If you have never taken the initiative to create something from scratch (and even if that something is just a new club at school) you are probably not well suited to being an entrpreneur.

Second: finding a job at a great startup requires a lot of initiative. The best startup jobs are never advertised so you need to be highly proactive.

Third: if you join a startup but not as a co-founder then it is best to join one that already either has clear traction and/or is venture backed. The risk-reward ratio is worst for non-founders in pre-traction/pre-funding situations.

Fourth: Consulting and Investment Banking are generally not good preparations for being either an entrepreneur or joining a startup. Most large companies are only marginally better. If you want to be an entrepreneur or work at a startup, get out of that consulting, banking or big company job as fast as you can!

Fifth: You can’t expect the first startup you join to be a huge success and have you be set for life! Expect to work at a string of startups instead. Therefore you have to value the benefits of being at a startup, such as being able to get things done without a bureaucracy.

Sixth: Being a generalist is tough because even startups look for some degree of specialization as soon as they get to be more than a handful of people.

Seventh: Networking and general purpose informational meetings are great, but you should always have an agenda and concrete questions. Otherwise the meeting winds up not being a good use of anybody’s time.

Nothing terribly new here at all but find myself surprised how many people appear confused on what I consider basic pointers.

Some Useful Perspective

Wed, 07 Jul 2010 08:36:02 -0400

Yes it is officially hot in New York City these days. I don’t know if I can stand this when I am older, but for now I quite enjoy the huge seasonal differences. They are a reminder that much as we may obsess about things that happen at work or at home, there are much bigger forces surrounding us (we all live on a rock traveling through space). This is a useful bit of perspective. One of the books that is part of my summer reading adds to this view: 13 Things that Don’t Make Sense: The Most Baffling Scientific Mysteries of Our Time ( http://www.amazon.com/gp/aw/d.html?qid=1278504607&a=0307278816&sr=8-1 ). I have only read the first chapter so far and it is already well worth the price of the book: a concise summary of the dark matter and dark energy dilemma that also serves as an illustration of the strangeness of scientific progress (think Kuhn). It feels good to take a moment off to marvel at the wonder that is all around us before diving back into the details of our lives (and the sauna that is New York City).

A Run In With Bacteria

Tue, 06 Jul 2010 07:14:50 -0400

I love to blog about all the awesome things that the Internet is bringing and how that creates great investment opportunities. But once in a while I have first hand experiences that remind me how much innovation could/should/will (?) occur in other areas. Last week was one of those. One of our kids suddenly had areas of skin the size of quarters essentially dissolve. The pediatrician thought that it was some kind of bacterial infection. But here is where the interesting part starts.

In order to determine what exactly it was the doctor swabbed some skin and then the lab had to culture the bacteria. This turns out to be a surprisingly longish process. Even the fastest available diagnostic, a rough cut to determine if it is MRSA takes two hours (that test came back negative but is apparently not super accurate). The more definitive determination that it was Staph Aureus took over 24 hours and the so-called sensitivities (figuring out which antibiotic works best) apparently require several days. Waiting several days was not an option which meant that the doctor prescribed an especially strong and broad antibiotic.

Now a medical Tricorder may be asking a bit much, but given that we have instant Strep and E.Coli tests available, getting a quick, fast and accurate reading on other bacteria would seem like a realistic opportunity. Based on our experience last week I sure hope someone is working on this! In the meantime, I am happy to report that the antibiotic appears to be working.

Foursquare Financing

Wed, 30 Jun 2010 09:27:17 -0400

Yesterday saw the “wire transfer heard ‘round the world,” as Bryce put it in a tweet. Foursquare did indeed close a Series B financing as has by now been widely reported. My job of writing a blog post about this has been made very easy: Dennis wrote a terrific announcement on the foursquare blog, Ben Horowitz from “A16Z” does a great job in his post of describing why all the investors are excited about Foursquare; and my partner Fred provides a refreshing perspective on the process.

The only thing I want to add is that I was hugely impressed by how much progress foursquare made during this time period. Whether it was negotiating a lease, forming new partnerships or recruiting some amazingly talented people, it appeared as if the company barely took a breather — in a situation that might have completely paralyzed others. That’s a great testament to the strength and conviction of the team.

All of us at USV are thrilled to continue supporting Dennis, Naveen, Harry, Evan, Alex and the rest of team foursquare on their exciting journey.

Supreme Court in High Gear

Tue, 29 Jun 2010 10:05:39 -0400

The Supreme Court handed down a bunch of rulings yesterday. The two that I find most interesting relate to patents and guns. Both rulings are disappointing, as I am against software patents and for stricter gun control. But they are also not as terrible as I feared they might be. As far as I can tell, on both counts the Supreme Court handed down fairly narrow rulings. The initial analysis over at Groklaw of the Bilski decision (patents) suggests there are plenty of openings in this ruling for potentially stricter limits on software patents. Similarly, the Chicago gun decision appears to still keep it possible for cities to attempt to regulate gun ownership (just not ban it outright). Unfortunately, this means that companies will continue to get sued over frivolous software patents and cities will continue to be sued over gun control ordinances. But the silver lining here is that this lower courts still have room to move and for new cases to make their way back to the Supreme Court. Let’s hope that at some point we will have a different Supreme Court too!

Some Thoughts on the Super Angel Funding Discussion

Mon, 28 Jun 2010 09:59:06 -0400

Paul Kedrosky has kicked off an interesting debate by suggesting we will see a “super-angel crash.” Paul’s initial post resulted in a bunch of strong disagreement in tweets and comments, enough to cause an update to the initial post. While the update says many nice things about “super angels” and a bunch of negative ones about “incumbent vcs,” it ends on the same note by reiterating that we are seeing too much of a good thing.

From a social perspective I believe that overfunding of startups (which is what Paul argues is happening) is actually a good thing. Even if a bunch of super angels wind up not succeeding, there will be a lasting benefit to society from training many more entrepreneurs and people who know how to work at a startup.

From an individual super-angel perspective, I have no doubt that there will be some that will not succeed. Even lame-old rational economics would suggest this. Whenever a new set of investment opportunities emerges, capital should flow in until the marginal investments have essentially no return. But since funds have highly variable outcomes, for the marginal players to have zero return on average requires some of them to do really poorly. Now add to that the fact that investors tend not to be rational and are likely to rush in even past the point of marginal returns being zero and you have a fairly strong case for a future “super-angel crash.”

I don’t think, however, that this is likely to impact the authentic super-angel innovators (I won’t attempt a list as I will surely forget and upset someone), but rather the folks who are coming late to this party. These are funds that most of us haven’t even heard of but are nonetheless putting money out as if it were going out of style. And it includes yet another wave of corporate incubators and strategic investment vehicles that rolls around at roughly the same time.

There is another reason that I feel fairly confident in this prediction: I have been late to the party myself. Towards the tail end of the first bubble (late 1999, early 2000), I and two partners raised $25 million when none of us had any meaningful investment experience. By being somewhat disciplined and very lucky we managed to lose only some of that money, but we lost money for investors nonetheless. The same will likely be true for many folks forming super-angel funds too late.

Concentric Circles of Angel Investors

Fri, 25 Jun 2010 11:17:22 -0400

First time entrepreneurs who are just getting going frequently ask me about how to find angel investors. I usually tell them about my theory of “concentric circles” of angel investors.

The innermost circle are people who know you and love you and will give you money no matter what (even if you were opening an ice cream store on the South Pole). These are the friends and family angel investors.
The next circle out are people who care deeply about the thing itself that you are doing. So if you are starting an online fashion company this might be a successful fashion designer.
The circle beyond that are professional angels/super angels.
And finally the circle beyond that is everyone else.

The gist of my theory is that each time you go further out from one circle to the next it gets 10x harder to convince someone to give you money. I am beginning to think though that there are now so many professional or at least semi-professional angels that maybe the second and third circle out should be in different order.

Big Victory for Google and UGC in General

Thu, 24 Jun 2010 10:17:51 -0400

Yesterday, a judge granted YouTube’s Motion for Summary Judgment in the Viacom v. YouTube litigation. This is a major victory for all user generated content (UGC) companies because it strongly affirms the DMCA safe harbor. Congrats to David Drummond and the legal team at Google. Given that Google has been defending Internet freedom on a number of fronts it must feel good for them to score this victory. Great coverage can be found over at the EFF.

With this decision it is even more important than ever before that any web company that has UGC — and that includes just having forums! — make sure to register with the Copyright office ($105). In addition to registering you also need to include appropriate DMCA language in the terms of service with a reference to the designated agent registered with the Copyright office. I am often surprised to find that startups that have extensive UGC components are not familiar with this.

UI/UX: Form Laziness Nuisances

Wed, 23 Jun 2010 10:17:59 -0400

I complained about one pet peeve on Monday (stock certificates for startups) and can’t help myself with another one today: programs that complain about user inputs that are easily fixable. Yesterday I copied a bunch of email addresses from Jobscore and pasted them into the bcc field of an email in Outlook. The emails were comma separated. Outlook didn’t like that — and popped up a dialog saying something was wrong, including suggesting that I replace commas with semicolons. I copied the emails into TextEdit and did a find and replace, but only after first tweeting that I really would expect Outlook to do this for me.

This is just one example of a whole class of problems in which developers did not take the time to make a form accept a likely range of inputs, but instead insist on a specific format. Phone number input fields that don’t allow dashes or dots in the numbers are a perfect example. It is trivial to allow these and discard them after the fact. Another one is that almost all payment input forms ask users about the type of credit card. That is of course completely redundant information because the first four digits of the card number encode that information!

While I am at complaining about user interface annoyances here is another one: browsers not letting you tab into a list box. When filling out a form, I really like not having to move the mouse pointer and just use the keyboard instead. But Firefox and Safari both tend to skip over lists instead of popping them open and letting me use the keyboard to move to the right entry.

Payment Innovation and Net Neutrality

Tue, 22 Jun 2010 09:24:26 -0400

One of the key arguments for net neutrality is that it fosters independent and rapid innovation at both the transport and application layers. It is instructive to look at a different type of network to see what happens to innovation in the absence of net neutrality. Visa and Mastercard have built dominant positions in payment networks by tightly controlling all aspects of the network, such as what devices can be connected to it and who can issue and process cards. The result has been dramatic. Both have amazing profit margins, but payment innovation in the US has been minimal. The only way a new entrant could get going is by building an entire new network. That is not just a (nearly) prohibitive cost to the new entrant, but also socially wasteful — something akin to having two Internets (imagine the amount of duplication in routers and cabling). Now contrast that with the government mandating that if you operate a payment network, you need to accept transactions from anyone meeting some set of defined standards, such as say having a bank charter (using that as an example to show that this doesn’t necessarily require an additional government bureaucracy). Now someone could innovate regionally with much lower capital requirements, for instance by establishing a payment solution based on Bluetooth and mobile apps.

Can We Please Get Rid of Stock Certificates For Startups?

Mon, 21 Jun 2010 05:56:59 -0400

It is 2010 and while we don’t have jetpacks, it doesn’t seem too much to ask to not have to deal with paper stock certificates. Yet most early stage deals that I see still wind up sending out physical paper certificates. While it may seem like a convenient way to push out the expense of keeping track of certificates to holders, that is not really the case. Whenever a transaction takes place that requires the certificates, such as a secondary sale or an exit, there are people who can’t find theirs (not surprising, this is often 5-10 years later). That causes delays, stress and legal work at the time of the transaction. Generally, people don’t want to punish their early stage investors for having lost or misplaced the certificates and so the solution winds up being that investors sign an affidavit of loss. I believe it would a be net cheaper and more convenient for everyone if company counsel just maintained a stock register without issuing certs. If a company gets sufficiently large — in terms of revenues and number of owners — that job can be handed over to a custody service. Would love to know if there are any compelling reasons for carrying on with paper certificates!