Author Archives: dshen

Guitar Hero III, Physical Therapy for Video Game Ailments

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I just bought Guitar Hero III for my XBox 360. Wow, I was supremely impressed especially as a user interface person, having worked on physical products back in my Apple and frogdesign days.
The controller really gives the feeling of being a true head banger rocker with distortion guitar (since it’s shaped like a guitar). You hit keys which simulate the fingering on strings, and then you strum on this switch. I am barely through the tutorial now but can’t wait to get into Rock and Roll All Nite and Barracuda.
It’s an interesting device from the perspective of an user interface person. How novel is it to create controllers which mimic real life devices – we already have driving games where you can buy a whole steering wheel console plus accelerator pedals. The experience is that more enhanced when we change out the generic controller for something whose physical makeup enhances the whole playing experience. I love the fact that there are games like Rock Band out, and the impossible to get Wii with its wireless controller that you can use to simulate all sorts of real life objects.
One thing stood out. As I went through the tutorial, I felt some pain in my left thumb. Gripping the guitar and trying to hit the buttons was cramping it up! I had to constantly take breaks and stretch it out. Wow, I need training to play Guitar Hero III!
I went to my physical therapist last night for my usual triathlon fixup and remarked to him that Guitar Hero III was bugging my thumb. He then told me that he has seen an increase in patients with injuries caused by the Nintendo Wii, especially bowling and tennis!
How funny that people are now trying sports in the virtual sense, and getting injured because of that. Couch potatoes now have similar ailments as real athletes!

The Early Adopter’s Dilemma

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I’ve been cleaning house and I just found this in one of my closets:

Sometime around year 2000, this service came into being by Motient, who used one of the first RIM Blackberrys to allow users to connect to Yahoo! Messenger IM via this device. It also allowed me to read/write Yahoo! Mail.
I bought one as soon as it came out. It was fantastic. We Yahoos depended on IM so much in our work day and I was now connected wherever I was. It was at a time when SMS wasn’t so prevalent in the US and there was no connection between a computer based IM product and a device. So now I could be pinged on Yahoo! IM anytime and anywhere! This percursor to SMS was a fantastic breakthrough in showing how being connected in real time could be an incredibly useful thing.
But alas, about a year or so later, Motient closed down and the money I paid for the device and steep monthly charges were all down the tube. It would be many years before SMS really gained traction in the US enough to where enough people would be contact-able via SMS, and this would have supplanted the Motient product and service.
It’s the dilemma of the early adopter. You see a real cool product and/or service from a brand new company, and you see enough value in it to actually buy one and use it. It’s so useful, so typically expensive, and so freakin’ cool; all of these factors drive the early adopter to get one simply to have one before everyone else does. But the risk of having the company, product, or service close down is super-high.
I bought an iPhone on the first day it came out. But it could have been a dud. Luckily it was not. I also bought an Apple TV and sweated through about 8+ months of whether Apple would close down that product line or not, despite its incredibly utility. Thankfully, that product has been rejuvenated as well.
Last winter, I bought myself an Amazon Kindle. It’s definitely on that high risk list of products that could just disappear by the end of the year if its business model doesn’t prove out. I’ve grown to love it thoroughly but keep wondering if Amazon will just close it down at some point.
Sony is probably the worst early adopter product creator. They keep products going for years and years before they really should be shut down. Their strategy is to brute force a new technology into the marketplace and sometimes it works and sometimes it doesn’t. At least you might enjoy it for a few years though, as it dies a slow, unpopular death.
It’s the dilemma of an early adopter. You can’t resist taking the leap of getting one but you also take the risk of wasting tons of money if it shuts down. All that to be the first one on the block and maintain that early adopter mystique…

Holding Someone’s Hands

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It’s a shame.
Every week I encounter entrepreneurs. Given that I look at early stage internet deals, a high percentage of them are first timers. And practically all of them have nobody to help them or walk them through the details of creating a new company and funding it.
It’s a real shame.
I would be the first to say that I’m no expert on this. But I try to help as many people as possible. Yes, it takes a lot of time but I’m willing to give that time out, even if it’s for goodwill and I only get a positive relationship out of it. I just hate seeing people either stumble around on their own or worse, get bad or imperfect advice.
Investors give you advice, but sometimes they aren’t entrepreneurs and can’t really know what it’s like to build product and a company. Or you wonder if the advice they’re giving you has their interests wrapped up in there, especially where funding is concerned.
Other entrepreneurs give you advice, but many of them are bitter with past experiences of investors and tend towards telling you how to do things in investor unfriendly ways. Or they have ways of doing things that they like and these may or may not apply to your situation.
Lawyers are supposed to give you advice, but they are only giving you advice that protects you, which is very company friendly. Also, many of them don’t understand the different phases of a company’s life cycle; they may have only done big corporate financings and have not done early stage. As your experience grows, the things that are important are different based on the size and stage of the company. It’s frequently up to the entrepreneur to educate the lawyer on how they want to do things, with the lawyer supporting. But you can’t educate your lawyer until you educate yourself. Oh, by the way, you have to pay lawyers to talk to them….
I’m probably one of the few people around who are schizophrenic and can wear both an entrepreneur and an investor hat; my model of advising and investing has helped me understand both sides of the equation. I also try to lay it all out and talk as broadly as I can about the implications of as many things on the table, both company and investor friendly and unfriendly. On topics in which I do not have experience, I say so and try to point them in the right direction.
Yes, my experience base is relatively low, but I am still willing to spend that time with entrepreneurs, because it sure seems like no one else is willing to. In general, I find mentorship to be severely lacking in the hustle/bustle of Silicon Valley…

Airline Security and the Gadget Freak

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Last week I passed through airline security at SFO and had an unpleasant surprise. They were making people take out EVERYTHING electronic. Cables, iPods, mobile phones, everything – in addition to your laptop. As I put my stuff on the security table and sliding towards the x-ray machine, I hurriedly took out as much as possible and prayed as I put my things through the x-ray that I would make it through. On the other side of the x-ray, I was gathered my things and was not required to go through extra screening. I also realized that I had forgotten to take out my iPod and cables but they let me through.
I thought that maybe it was because we were at Threat Level Orange (whatever that means – I guess Orange must be close to Red which I would assume is the highest threat level so Orange must be pretty high) and it was Martin Luther King’s Day weekend so I thought that perhaps they were doing a bit more security. But it seems like it’s a permanent policy now. This week I also had to take out everything.
Once again I feverishly dug out everything in my bag that was electronic, but of course in my haste I forgot a few things like my digital camera and Kindle cable but managed to make it through.
So I wonder about this policy. They say you need to take out everything, but twice I did not. I was entirely willing although not immensely overjoyed at the prospect of taking everything out, but at least they should say what they mean. If they say they want everything out but let you pass anyways when you don’t have everything out, then what’s the point?
This also has implications for the gadget freak traveler guy like me. I have more gadgets on me now than ever before. It’s my life. But yet traveling so much, it seems like it’s going to become a huge hassle to bring all my gadgets. Reduction is a possibility; I could consolidate some things, but not others. On the other hand, I did buy some Eagle Creek zippered packing bags in which I put a lot of my electronics and support cables. I was able to just take out that bag and put it in a tray for inspection. Faster, but still not ideal.
It’s like that cartoon I saw in some magazine once. They have a shot of two guys who stripped down naked to walk through airline security. The caption underneath read, “It’s just easier this way.”

Talking Entrepreneurs Out of Only Going for Users

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Occasionally I come across an entrepreneur who insists that his current strategy is to go for users and not worry about revenue now. It always makes me cringe. Then I try to talk them out of that strategy and find a more balanced strategy of getting users and revenue at the same time. Why do I feel this way?
In the past, the “get users now worry about revenue later” strategy has been successfully employed, so it’s not totally without merit. Yes it’s true; if you have tons of users then at the very least you can monetize the eyeballs via advertising. But certainly if many users find your product/service useful, that’s evidence that they would probably pay to use some version of your service at some point.
In examining how this strategy does work, I’ve come up with these cases:
You hit on a killer app early and you have hockey stick growth in users.
Somehow you’ve hit on a killer app early and you’ve got users up the wazoo. You see exponential growth and you can increase your valuation by waiting a bit longer to really cement your negotiation position when fund raising. In any case, operations can last that long because the speed at which your users are growing is so fast that it is obvious you can survive cash-wise until you reach your goal, before you need to figure out your revenue strategy.
You can last expenses-wise long enough to grow users to a point to be valuable.
You’ve built a service and found it valuable to users, and now you want to wait to build up users before figuring out a firm revenue plan. Expenses to run the site are low enough that don’t eat into your funds. Whatever money you’ve raised now, you can extend that budget for a very long time (try 1-5 years). Or maybe you’re rich or you are married to a rich spouse and don’t need the money coming in from the company to survive.
You’ve got the initial backing of a big fund.
I’ve seen cases where if you get seed money from a big fund, like Sequoia, then it gives you a bit of comfort that there will be someone there to infuse you with cash if you get the huge amount of users but don’t have revenue. Often their terms enable them to get first right to fund you when it comes time for the next funding round. But also realize that they can spend $100k-$500K on a company and not bat an eyelash if they lose it all; they’ve got billions under management and can afford to give you seed cash knowing that they might lose it.
If I see an entrepreneur that fall into these categories, then I usually shut up on this issue. But most people are definitely not, especially when they are in the early stage of their startup.
That’s why I try to talk entrepreneurs out of going just for users. I want them to think about revenue right from the beginning. Even if it’s incomplete or risky, at least they are thinking about it now versus getting into a budget crunch and then realizing they should figure out revenue when they’re almost out of cash. And who knows, they may actually hit on something that brings them revenue to survive or even do better than that. But you’ll never know unless you try as soon as possible.
I’ve also seen entrepreneurs argue they have a funding plan along with their business/product plan. They will build the product and user base, survive until their current cash runs low, and then they will go for their Series A funding and everything will work out great. The problem with this plan is that there is no backup; it pre-supposes everything will go as planned with no hiccups. This is a highly risky supposition to go on.
One problem is that you think you’ve got something great, but those pesky users don’t behave like you want them to. They might actually NOT come in droves to your wonderful product! Or they come slower than you think.
Another problem could be that engineering your incredible product might take longer than you think. Or you launch but find out you need to do more.
The last problem is that convincing people to give you tons of money can be easy or hard. I’ve seen a company close Series A in a month and a half, and I’ve seen companies still out there after a year trying to raise money. You can’t plan for how venture funds and investors are going to react to your plan and progress, even if it seems great. Even if you court someone, the terms negotation and the due diligence process could take months.
Mitigating the risk of all these bad things happening could just simply be…to think about revenue from the beginning. In that way, you can get cash coming in as soon as possible in case you need to survive longer than your plan dictates as you can never predict if you’ll need to or not.

Filtering and Referrals

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One thing I’ve noticed about the startup funding eco-system is that everybody is out to get your money. Unfortunately, that means that you get both people with the good ideas and people with the not-so-good ideas. And it always seems that the people with the not-so-good ideas outpace the people with good ideas by a factor of 100 or more.
A while back I stopped going to the Tech Meetups and entrepreneur gatherings because whenever I handed out my business card and people notice the word “Ventures” in my company name, the emails don’t stop. I get pitched by everyone. I even got pitched the other day on Facebook. At some point, I may need to remove my business name from Facebook!
It’s too much. The deluge of emails coming in is too much to deal with. I hear it’s the same at venture funds; they too are getting too many pitches and are trying to make sense of it all while not losing the opportunity to find that next big thing amongst all the not-so-good things.
Over this last year, I’ve pretty much switched to the referral model. It means that I never go to tech gatherings but only field introductions from people I know. It’s slowed the pace of pitches considerably while filtering them in a much better way. After all, somebody you know isn’t going to send crap your way; you have a personal stake in that referral being worthwhile and not a waste of time and don’t want to jeopardize the relationship. If an entrepreneur is able to convince someone else that they’re good/cool/savvy enough to be intro-ed to me, then I’d love to talk to them.
The same goes with venture funds. As I’ve gone out there and networked with them, I’m finding that we angels can play a great role in filtering for them as well. We can be a great first line of defense for them, sending only those that we feel good about to them and doing some of the leg work in finding hidden deals through our networks, which are often hidden and hard for outsiders to break into. I’ve also gotten referrals from venture funds on deals that were too small for them to handle, and also those that I’ve helped them check out. It works really well in both directions.
As the venture fund world evolves, I can see the relationship between venture funds and angels is going to grow tighter and more useful for both parties over time.

Got My Amazon Kindle!

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Prior to Christmas, Amazon announced their new Kindle e-book and I just had to have one! It was very frustrating to wait and extra 3 weeks from the initial announced arrival date, but was ecstatic when it did.

The box and packaging was very cool. It resembles a book and opened like one!

I was afraid it would be a bulky monster, but was pleasantly surprised to find that it was a nice size and razor thin.

It has this interesting LCD menu selector up the right hand side, controlled by a roller/click wheel. Somehow they made it a silver color instead of black. Popup menus are the standard, with selection controlled by the silver cursor and roller/click wheel.

Here’s me holding it in its faux leather cover. I’ve lived with it now for many weeks, traveling to the east coast and back and think it’s a wonderful device, especially for a book lover/voracious reader such as myself!
Some comments:
1. Reading is tough in low light. The background begins to grey out, reducing contrast with words which are black. Is there no contrast control? I can’t find one.
2. Pictures are inconsistent in books and magazines. Time magazine I cancelled due to no pictures. But I got pictures in a book, Paradox of Choice.
3. Paradox of Choice’s pictures were hard to see detail. How about a zoom?
4. I find myself reading faster than normal, or perhaps the screenfuls are not representative of physical pages and how much they contain. So I feel that flipping pages, or screenfuls, seems to happen more often than physical page flips.
5. Web browsing is really bad. Why not port Firefox to this device?
6. Why not email client at some point? It’s got a full keyboard already. But maybe cost is prohibitive if people were using this device not to buy books but to download email, as the network must have some bundled, expected kbyte estimate per user.
7. Love the instant download through their WhisperNet. Very cool and much better than connecting to a PC every time. Shopping is great through it and love the instant download to the device!
8. Library is early but needs more books! I finished The Lost Fleet: Dauntless and it has two more books in its series and I can’t order Kindle versions! Likewise, I need to get in the habit of checking my Kindle for releases of new books. I just bought Star Wars: Darth Bane: The Rule of Two and Star Trek Excelsior: Forged in Fire in physical form, realized I should have checked my Kindle first and found the Star Trek book but not the Star Wars book. Frustrating!
9. Originally I thought to get rid of my physical magazine subscriptions but I can’t. Don’t know if the Kindle versions have pictures or is faithful to the original. As I mentioned before, I cancelled my Time magazine subscription already due to it just being text only.
10. I’m spoiled by the iPhone! I want to flip pages by swiping on the screen itself and have to keep remembering to hit the button on the side.
11. The leather cover is cool, but why doesn’t it have a secure way to fastening to the Kindle? If you’re not careful, it will fall out of the cover.
12. No PDF support? It would seem to me that would be a natural extension to convert PDFs to their Kindle format.
13. I bought a Theasaurus but can’t seem to figure out how to search it. Weird. Time to call support.
14. I wonder if there is a way for that screen technology to display color images. It has 4 levels of grey right now but would be nice if I could see full color pictures.
15. No note taker?
16. The clippings and annotation technology are really cool. I really like being able to clip pages for my own use later. The other day I emailed some clipped text passages to someone. Very useful and helps to not type the whole passage.
All in all, I’m really enjoying it. I am cruising through books and really like the fact I’m not carrying around physical books, and ordering books is a joy and it satisfies my desire for instant gratification because the book just shows up on my Kindle.

Investor Fatigue?

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The last half of 2007 saw for me an acceleration of deal flow. I’ve spent numerous hours with a host of startups. I’ve passed on a few, gotten further with others. Most I’ve not gotten involved with, and the remaining few I’ve stuck with them through the process and told them verbally that I was committed, as long as other things fall into place.
Some of these deals have taken a long time to close on investment, or finalize my involvement. I find that as the weeks become months, that I am feeling a bit of fatigue on these deals.
I have heard this happening to other entrepreneurs where if they take too long, their investors just lose interest and don’t want to do the deal any more, or just move on to other projects which are taking up their time. Now that I am toe-ing the edge of this fatigue on deals, I can relate to how these investors feel.
As an investor, I told myself I would not be flaky. When I say I am committed, I want to be just that and not be wishy-washy. I do not want to frustrate entrepreneurs and make them do extra work in chasing down investors who can’t figure out if they want to do the deal or not but just stay in that grey zone; I want them to finish the fund raising part of their company building and move back into building the product and business. I have heard too many stories about investors who can’t seem to just make a decision to say yes or no and don’t want to be like that.
But now I feel some fatigue setting in, and start to ponder not just the fatigue aspects but also the reasons why it’s taking so long.
We investors tend to like to pool our due diligence process by watching the reactions and analyses of other investors. So if an entrepreneur can’t get the commitment of prominent investors in a short amount of time, then perhaps that is saying something about the project itself. Perhaps something is amiss; perhaps the entrepreneur’s pitching skills need work, or the pitch itself needs re-work, or the business plan itself. Add to that other projects demanding my attention – I cannot help but feel that fatigue may actually pull myself out of commitment on certain projects due to my own wavering interest, but also the real reasons why it’s taking so long to close on an investment round.
Now that I am experiencing this time lengthening process firsthand, coupled with my own fatigue on projects, I offer this advice to entrepreneurs, which is to close on investment as soon as possible, doing whatever it takes to prepare, make a great pitch, and herd the investments to a close date.
It’s a bit like dating; if I go out with a girl many times and it doesn’t seem to go anywhere, shouldn’t I stop wasting time and move on to someone with whom a great relationship would develop?

Betaworks in New Office 12-20-07

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I just got involved with a new venture called betaworks out of NYC. It’s a new business creation platform which hopes to serve the east coast market for socially driven early stage internet startups, with close ties to the west coast. We just moved into our official first location with Daylife:



I’m excited to be part of this team. We’ve brought together a group of people with wide variety of experiences and are working through our operational details now.