Betaday09 11-17-09

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This last Thursday betaworks had our annual Betaday, where we gather our entrepreneurs, investors, and other luminaries and prominent folks from the industry to meet and greet and have lively discussion on issues facing us today.


It was held at the Hiro Ballroom at the Maritime Hotel. Swank mood lighting and hipster chill bar decor was found everywhere:



..as was the latest footwear fashions:

Before the festivities:


John Borthwick giving the opening remarks to full house:



Gary Vaynerchuk on how social distribution is changing media:



Is the Web page dead?



The death and rebirth of search:

Stowe Boyd moderating niche membership and birth of mass amplification:


A lively discussion on crowdsourcing:





Another fun packed, informative day with betaworks!

Leading the Investment Round

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Just recently, someone asked me what it meant to “lead an investment round”. This was my reply:
1. The lead is generally the one with most to lose, or the most money in. It’s not always like this, but usually. Sometimes it ends up being the person who cares the most about the terms.
2. The lead negotiates the terms for the round.
3. The lead may or may not share the negotiation with the other investors. It depends on the situation. For example, a venture fund may not include angels’ opinions in negotiating. OTOH I’ve invested with one fund where they did include all us angels in the negotiation.
4. The lead is committed to the round and will most likely put in money first. Other investors will typically follow the lead’s move to sign the docs and transfer money into the startup’s account. So it’s a tremendous vote of confidence for investors who may be conservative or shaky.
5. The lead generally pays the lawyer fees associated with the negotiation unless it’s specifically called out in the terms that the startup will pay all the lawyer fees (ie. negotiation + financing). The lawyer fees typically aren’t shared amongst others like angels. There are exceptions like two big VCs may share some costs if they are working on the negotiation together from the investor side.
6. There is liability associated with being the official lead. For example, there have been rare cases where other investors have sued the lead investor where they may feel the terms weren’t negotiated well and there is some bad financial result because of it. So you should be aware of this and be concerned about it if you lead.
7. The lead generally sits on the board of directors since being on the Board of Directors since it allows them to watch their money most closely, and having the most to lose they usually want to do this. Not all financings have investor representation on the board, especially at early stage. Once you get professional investors involved it will most certainly be the case.
8. Only experienced people should lead. Someone who has done this many times is much better than someone who hasn’t. Experience gives you an edge in what to negotiate for and what to give on, and what really doesn’t matter. Otherwise you may not know what you’re doing. Even someone with a lawyer backing them up may not be enough; a lawyer will always argue for you first and so you have to know when that is appropriate and when it is not, meaning how investor friendly or company friendly do you want the terms to be and how to get there.

Talking People Out of Being Entrepreneurs

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In the last few months, there have been a number of people whom I’ve tried to talk out of being entrepreneurs. I tell them it’s really a test to see if, after hearing about how hard it is, whether or not they actually still want to do it.
There are many who are newcomers to entrepreneurism. I think this is great. But I think most of the newcomers underestimate what it takes to start a company and make it successful.
So I let it all out. I tell them how it requires some serious soul searching about what kind of person they are. You have to be natural risk taker. You must be willing to throw all caution to the wind, because you never know what’s going to happen. You must be willing to throw away all levels of comfort in hopes of some huge gain later on. Are you OK with leaving your current job and its consistent pay, health insurance, and sense of direction in your life for a lot lower pay and the chaos that accompanies typical startups?
I talk about the time commitment. I talk about my early Yahoo days when there were just a bunch of us, and we worked our tail off for years. I talk about the long hours we spent building Yahoo back in the day, the stress, the do-everything-yourself mentality and the chaos of not knowing what’s coming next. I tell them about the fact that relationships have broken up due to training for Ironman, which even at its peak, doesn’t equate to time commitment spent at a startup and for a longer period of time. I go through the inevitable ups and downs that come with relationships and families of entrepreneurs; it’s not an easy place to be when your work and family demands collide.
I make them take a hard look at themselves, and I also gauge their reaction to what I say. I can see it in their eyes and in their replies if they are unwilling to give it up. My intuition is running high in sensitivity as I sense whether or not they have what it takes to go the extra distance to be a successful entrepreneur.
Don’t get me wrong; I am not judging what’s good or bad, but only what’s appropriate. I am not making a judgement call on whether you’re a good or bad person if you have or do not have what it takes to be an entrepreneur. For some people, it’s just not the right path to take. Yes it’s disappointing, but I think we need to be realistic that entrepreneurism isn’t for everyone. Or perhaps your life stage is now not the right time for a startup – for example, having a family and/or dependents, and/or a lifestyle which requires steady income may not make it appropriate for you to jump into a startup.
This is really important. We investors are betting on you to take our money and build something big with it. We are looking for those who are willing to do anything it takes to make something successful so that we all win, and that means sometimes driving yourself into the dirt and dealing with the stress of knowing that your bank account is about to run out and that if you don’t do something fast/creative/better, you’ll not be able to feed yourself or have a roof over your head anymore. This kind of passion/adaptability/drive for building a great company is what we’re looking for.
If you’re going to quit as soon as the risk is too high for your own personal livelihood, then it’s best that we just don’t start. It’s not positive for either of us. Find an occupation that allows you to live the life you want, at the stage you’re at now and be happy about that. Don’t try to start a company on the assumption that you’re going to just have the same kind of life you did when you worked at a bigger company.
One of the big problems I’ve seen over the last 3 years of angel investing and with entrepreneurs is that they will raise money and then compensation goes to near market levels for the people in the startup. They think that they can be in a startup and have their old lifestyle not be threatened. The reality is that startups are not a place where lifestyle can be guaranteed. This ranges from the “working lean and mean” philosophy (how can you pay yourselves market rates and still be lean?) to execution speed (you can’t work at speeds seen in large organizations; you’ll get crushed by other startups) to just the simple fact that the risk of failure is tremendous (you don’t get the comfort of stability in a startup that you would get at a larger more established company; that’s the price you pay for constant salary versus the chaos of a startup).
So if you pass my test, which is, after my whole tirade about the risks of startups and the downsides of what it’s like to be an entrepreneur, you are still fired up about being one, then more power to you. Let’s take this conversation further. But I am getting better at spotting hesitation, fear, and reluctance after hearing my speech. So let’s not kid ourselves in being somebody we’re not.
It’s sexy being an entrepreneur. The rewards are great. The upsides are what everyone sees, and nobody sees the downsides. Dealing with the downsides is where the rubber meets the road and where you’ll be tested sorely on whether or not you are a great entrepreneur. But if you’re not entrepreneur material, you’re not and that’s that, whether it’s your personality, life stage, or otherwise. You’re not a bad person; it’s just not for you and we should all just realize this, and not fool ourselves into thinking otherwise.

What the Heck Do All Those Terms Mean?

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I was just talking to a new entrepreneur about a term sheet and I realized that trying to understand all those dang terms on a term sheet was super tough because of all the legalese there, and also it’s hard to know the implications of terms if you haven’t experienced them first hand. It took me 2+ years of investing to get to some basic understanding of the terms and I’m still not even close to being an expert at it.
Searching on Google, I found some excellent posts from Brad Feld that explains some of the basic terms in a more easily understood way. Here are links to them:
Information and Registration Rights
Anti-Dilution
Redemption Rights
Liquidation Preference
Drag Along Rights
Protective Provisions

The Rise of Small Business on the Net

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A few years back I worked on a tiny startup that was attempting to jump on the affiliate marketing/blogging bandwagon. It was all the rage that people were making $100Ks per year just writing articles and doing a good job on driving traffic and purchases to marketers. It was a site about how geeks were cool because they were buying cool products, and so we would write about these really cool products and then drive affiliate traffic to places where you could buy them.
Our venture didn’t get that far, but so many others’ did. And the list is growing.
As everyone working on projects on the Net knows, the cost of building a business has dropped dramatically over the years. It started with blogging software which would could install on our own servers or use the hosted versions. Now, you can go out and find shareware for just about anything; stuff that would have cost a big company millions of dollars and a team of 100 to build in the past could now be found and deployed for a tiny fraction of that cost.
It’s also easier to deploy web applications now. Previously you had to be a computer scientist to do so; now just about anyone can figure out how to deploy it, or using hosted versions just fill out a signup form and point your domain at it and you’re off and running.
So now, just about anyone can throw up a website which has some advanced functionality. And people are doing it too. In the startup world, we see the internet has gotten super crowded over the last few years. Very few truly unique business/product ideas have emerged, and many are just clones of each other. Or once someone puts up a good idea, the clones emerge quickly because it’s so easy and fast to put up a website. Thus, it’s now less about the idea but rather how many customers you can grab and whether you can monetize that traffic to balance out your burn.
Thankfully, the internet crowd is enormous. Grabbing a small slice of that traffic and monetizing it effectively can mean a sustainable business that pays its employees a decent salary. In the past, we called these businesses microbusinesses or lifestyle businesses where a single person could make a decent living managing a website. However, in today’s world, I call this phenomenon the rise of small business on the net.
Many startups we encounter have plans that we know can reach this stage. With great execution and effort, we can easily see many businesses growing to great small businesses. They will have revenue from several $100Ks a year to small millions. They have a small teams and all of them are well compensated for their work. All the employees will have great lives supported by this business.
The effort is comparable to opening up a storefront on your favorite street. In the old days, you’d go find a great physical location with lots of foot traffic. You go get a small business loan from your local bank and open up shop. Then you go and acquire customers and build your business from there. In today’s world, you can do it on the internet without a physical location and tap into customers from around the globe.
From an investor’s standpoint, we’re finding that this creates a number of problems. Our model is dependent on finding those startups which will go big, much bigger than small business size, and find a way to return our investment with large gain through some mechanism like M&A or IPO. However, the ease at which startups can reach small business stage makes our job harder; we’re seeing many businesses reach a certain level of growth and then breaking through that level is tough due to how easy it is for competitors to enter your market, and how hard it is to acquire the attention of users.
Some of us are thinking about change in the way we support some startups. I find parallels in the area of restaurant investing, where the investment is all about cash return and not ownership. What kind of restaurant would go IPO? Highly unlikely. But could we make 10-20% on our investment? Infinitely possible.
I wonder about how the structure of deals we do for internet startups might mimic restaurant investing. Instead of caring so much about ownership, perhaps we should find a way to get a healthy return on capital invested through cash flow, if the startup monetizes efficiently and does it well.
The problem with traditional investing in startups here is that these small businesses may never attract an acquirer and certainly the chance of an IPO is even more remote. Driving these small businesses to activities to return an investors’ capital in that manner may take a healthy sustainable operation and turn it into something unsustainable and problematic as it reinvents itself to attract an M&A event or IPO. That seems dumb; the business is thriving and its employees well paid and happy – why destroy this?
I think the world of investing should think more about the rise of small business on the net. Many more businesses each day are showing up that are great sustainable operations supporting employees and their customers. They are never going to be superstar Googlesque success stories and we should not attempt to turn them into one. In today’s crappy economy, the world needs more small businesses to show up to employ the masses and make them money. We as investors should find a way to invest in and help these companies to grow, and just be comfortable in the fact that they will never be Google but still can help us make a healthy return on our money.

Second Chances

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I was just reading 10 Huge Successes Built On Second Ideas and it motivated me to write this post, as I’ve been thinking a lot about the fact that entrepreneurs often end up in a place very different from where they started. It’s gonna be a bit random, but here’s what I’ve been thinking about:
1. How we pick startups to fund.
Time and time again I hear seasoned investors talk about betting on smart people because smart people will adapt and twist and turn to make their journey worthwhile. It is less about what they’re building, although that is what brought them to the investor in the first place. Rather, the bet is that the person is good enough to figure something big out of whatever it is they pitched you.
I guess it’s just me, but I place more emphasis on the idea than others, as there are many smart people working on stuff that doesn’t have a chance, and is almost certain to require…a second chance.
The problem I see is that money only goes so far, and second chances don’t come by easily. Most people don’t raise enough money to allow them to twist and turn later; they only have enough to get them to barely a market trial of their initial idea. That’s why I push entrepreneurs to raise at least 2 years of capital now, while their attraction is hot. Trying to raise more money later on mediocre to poor metrics is next to impossible in today’s market. Otherwise, the entrepreneur will have to (usually painfully) adjust burn to last them further into the future or…just die.
2. Helping startups change/enhance what they’re doing now.
I was talking to a venture capitalist the other day who said that you had to bet on entrepreneurs who knew what to do whatever the situation, and that if you had to help them then this was a sign of trouble. I find this to be somewhat not true, as I’ve built my business on sitting with entrepreneurs and helping them shape their products. I’ve found out that even smart entrepreneurs appreciate you throwing them ideas and opportunities that they can use, especially when they are in a bind. Finding smart people is fine, but everyone needs help once in a while and it’s the smart ones that know they need help and accept it.
It’s happened a few times now, where startups are now figuring out what to do next. One has changed completely, and others are in the process of reinventing/rethinking what they started working on because it hasn’t worked out as well as they thought it would. I find the more I insert myself in this process, whether I ply coach-like skills to help give them some process in reinvention, or I’m throwing a constant stream of ideas at them until something sticks, the faster they will get on a new and potentially better path before their money runs out.
3. Raising money is a tough process for second chances.
This is tough for a variety of reasons.
a. Dealing with existing investors can be difficult. Already you have some invested in your company. But yet, now you’re out there raising more money to continue – if your metrics are mediocre, then this could mean a sideways or down round to keep working on your current idea, and you must take into account the fact that your investors already own a piece of your company, and now more money is coming in and ownership and control issues arise. They best condition would have been if they invested into a note without a cap, which I would never do, because then you have total control over what happens to them.
b. Raising money on mediocre metrics is next to impossible. If you’ve gotten to a point a year in and your growth is not so great with little or no revenue, it’s next to impossible to get another set of investors to bet on your idea in today’s economic climate. They often assume that your idea and/or team isn’t right.
c. If you’re working on a totally new idea that may be great, but you and new investors still have to account for the fact that there are existing investors already, and what kinds of ownership and control issues exist and how they will change. Potentially it could also mean some questions will arise as to why your previous idea tanked and if whatever those reasons were make you look bad, then it will be hard to raise more money.
4. Mentally it’s hard.
Yeah it’s tough as hell. You’re all gung-ho on your initial idea, you’ve got your investors and everyone around you excited about where you started and now you gotta change. That sucks! And you often beat your head on the table trying to figure out how and where to go next.
As many smart people I’ve met, they have often shown that they are often not equipped to continue on these projects in the face of adversity. This is both situational and internal.
Situational means that they may have real life needs for capital, like a family to support. I say situational because dependent on their life stage, the situational needs may be completely different like, for example, during when the time they were just coming out of college.
Internal refers to elements of one’s psyche to enable them to deal with the harsh realities of entrepreneurism and what it often takes to build a business. So being smart is one great metric, but it’s not enough by itself. You need to be creative, adaptable, able to withstand change and adversity and find solutions in chaos. Many people can’t do this. Over the last few years, I’ve noticed that many people think they can just start a company and it’ll be an easy ride to Google style riches. Time and time again it’s proven wrong to me, having been through it at Yahoo and watching countless startups now.
All I can say is second chances (or twisting/turning/adapting from their initial idea) are tough. I am one for doing a little upfront planning for having enough time to twist/turn/adapt as far as second or maybe even a third chance, since it happens very often. Raise enough money early in the process and create a plan to go for 2 years, assuming no revenue or progress. Be prepared for it mentally, celebrate when your initial plan pans out, and buckle down the hatches when you have to shift.

My Take on Current Top Internet Trends

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I just read this post, ReadWriteWeb: Top 5 Web Trends of 2009: The Real-Time Web where they are doing a series of posts related to what they think are the top trends affecting the Web in 2009. The top five trends are listed at the end of the post, which are:
1. Structured Data
2. The Real-Time Web
3. Personalization
4. Mobile Web & Augmented Reality
5. Internet of Things
All of them are interesting, some are broad, some specific, some directly relevant to me and some relevant but in a removed sense.
Then this last week in NYC at my visit to betaworks, we also talked about burning topics in today’s Internet. As I brainstormed trends, I could not help but be drawn to those trends which are directly affecting me personally.
I list what I came up with here. Instead of trying to be like ReadWriteWeb and focus on worldly, pontificat-ible trends, I thought I would list only those that were directly relevant to myself:
1. Crowd participation is so easy, but we debate on whether or not democratic-ness to that degree is good. We worry about open markets vs. government intervention with respect to our economy. We argue about free speech versus letting everyone have a say, from destructive fringe groups to just those who are angrily spouting about an issue. In the pre-internet world, it was a lot more difficult to be heard; now everyone can hear you and what is said has wide ranging effects, especially on the naive.
2. There is so much news and content, but how can we know what is real and what is fake? Trust is a big issue now with respect to this information. How can we educate ourselves to be smarter in a world where it is extremely hard to tell what’s real and what’s not?
During the last elections, there was so much spin out there that you couldn’t tell who was good or bad. With the internet, it’s easy to just find points of view that mirror your own; once you read this content, it becomes validated and reinforced in our brains. But often this information is incomplete – we consumers simply don’t have time to surf around and find all the points of view on an issue in order to make an informed decision. We just create an opinion and find support for that opinion. This can be very dangerous as we just don’t have the will, patience, or even intelligence to fully understand an issue and attach ourselves to the easiest path.
3. The velocity and quantity of information has increased so much, but can we consume it? Have our brains and senses evolved enough to be able to consume, process, and act on it? Information overload has been exponentially increasing over the years and I don’t think there are enough ways to help us filter and understand, as well as driving to us what is truly important and relevant.
4. In a world where everything is free, how can we make a living on fame, usage, etc? A lot has been written regarding freemium and why we give things away. They can be viable business strategies, but ultimately the people working on these projects need to be paid. It’s hard to eat badges that you earn on a gaming site.
5. What is the fate of old media in a new media world and the fate of the businesses that once existed and thrived in the old world, like in the areas of journalists, music artists, and movies? I am active consumer of all media and I for one would like to continue consuming and enjoying it. However, if we do not compensate those creators, they’re going to stop doing it. I think the world will suffer mightily if that happens. I wonder all the time about these so-called new business models that need to be developed in a world of piracy, declining prices, and change.
6. We struggle with the openness of our own information versus privacy. What are the implications of a world where everything you do is posted and never deleted, and is searchable and findable?
I already actively manage whatever I post or tweet. I am a big believer of the fact that the world is a stage and I am an actor on that stage with the people around me as my audience. When I do something, those actions are interpreted across a wide variety of levels related to how people feel about me. So I think about the short and long term effects of these pieces of personal information I make public, since I know that it will be there for all time. This also goes for my posting of information regarding others, and the short and long term ramifications of that undelete-able information now public.
7. Has the internet business world topped out so much that me-too products are the only things that pop up now? As an angel investor, how do I ferret out those opportunities that are truly unique and world changing? Every pitch I’ve heard lately has competitors and they’re all fighting for the same users. Intelligence and ideas are a commodity now, so what are those other elements that startups need to get to gain an advantage: contacts? luck? distribution? the right partners?
8. Given that me-too products proliferate, I believe this heralds the rise of the small business on the net. When affiliate marketing proved it possible to generate tons of money off a well-written blog, micro and lifestyle businesses came into being. However, I think that has extended to me-too products now where you can capture a small slice of the market and if you’re smart, you can make enough money to support yourself. This unfortunately makes angel investing a ton harder. Many ventures can easily become great small businesses on the Internet; but for an investor where our money gets trapped in a decent small business, it doesn’t work so well.
9. Related to 8, and those of us working in this industry have known this for years, putting up a product is so easy and cheap now. What are the resulting implications when non-programmers can put up a complete solution without having a team of programmers?
10. This was one that just came up: marketers now can own distribution channels for their brands. This is directly relevant to the book I am writing on online display advertising and also to the changing ways advertising affects the revenue potential of my startups. It’s an area I am watching closely.
Which trends are directly relevant to you? What concerns you the most about the way the internet is moving and changing our lives?

More About the World Domination Plan

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In the last few meetings with entrepreneurs, I’ve noticed I’ve been consistently asking about whether they have a world domination plan. But I think my request is being misinterpreted; of course, I have not helped since I haven’t clarified what I’m looking for either.
I am reminded of when I ran User Experience at Yahoo and when we interviewed people, we would give them a test. This usually was an hour to create a new design for Yahoo Profiles. We would give them some paper, pencils or pens, and then leave them alone for an hour. After an hour, we’d come back and see what they came up with.
It’s pretty amazing the variance of output that we’d see. Some people would have maybe one piece of paper done. Others would have a whole tornado of paper and sketches on them and on the white boards on the walls. The way people “fail” this test if they came up with just one answer and were adamant about that being the only perfect answer. That’s not the point; the point is that it’s pretty impossible to come up with a fantastic solution in one hour. We gave them the test to illustrate their design process. If they had a great process and could walk us through their thinking, then we knew they could get a fantastic solution if given enough time. Those with a poor process would typically come up with just one answer and settle on that, thinking it was final.
This is the same for when I ask for the world domination plan. It would be nice to get “the answer” but I think it’s pretty unrealistic given the twists and turns that startups go through. Some give me “the answer”, which is fine if it’s in the context of something they’re thinking about. Sometimes, though, there is a certainty in their belief that is scary to me; it almost shows an inflexibility in their thinking that they are shooting for this solution and you sense that they’re going to bulldog their way to this answer even if it is the wrong answer.
It’s also pretty amazing to see how many entrepreneurs don’t even think about it. I ask them and there is a blank look on their faces. This is a problem. While that doesn’t mean a decent business couldn’t be built out of their idea, it could mean that it only grows to a certain point and then…that’s it. Great for the employees of the company who get paid every day, great for the founders who work at the company and own lots of it and also get paid, but not so great for us investors whose money is locked in the equity of the company.
As an investor, I would much prefer that you have the frame of mind that you WILL take over the world in whatever area you’re operating in and you’re always thinking about how that would happen. I don’t want to see a blank face like it was a new concept. I just want to hear that you are thinking about it either all the time or at least it’s floating in the back of your brain most of the time.
Because it’s then that us investors know that we have the best chance of getting our money back and hopefully making some on top of it. Smaller companies can be great companies, but many reach some midpoint where they may not be acquired because their potential seems limited and acquirers are also looking for big opportunities. Thus, our exit potential is also limited. When you’re on a trajectory through luck and planning to world domination, then your options are much greater because everyone chases you and wants your world dominating characteristics added to their own. You could even go IPO – but not if you’re not big enough.
World dominating companies are the ones we want to be involved in and it starts with the right mindset. Remember it’s not “the answer” that I’m looking for, but rather that right frame of mind and that you’re noodling on it day and night as you’re building your company.

The Hierarchy of Attributes for a Product Person

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Often I wonder what makes a great “product person”. There are definitely those “product manager” type attributes like project management skills, group management skills, business development experience, and the like. These are important, but I want to talk more about those fuzzy skills that give a person a sensitivity towards what makes a great product out in the marketplace.
So perhaps the “product person” I talk about is not just about the product manager or those we choose to lead product teams. I am talking about anyone who seems to have that innate sensitivity and instinct towards creating a great product.
I thought about this for a while and thought it could expressed as a hierarchy like a pyramid:

In describing the levels in numerical order, the bottom-most levels deal with the self. The next level expands thinking to include others. And the top most levels deal with actually being able to do something about it.
The levels are:
1. Can only express a like or dislike for something, but cannot articulate why, or very vaguely.
2. Can explain clearly why they like or dislike something.
3. Can explain clearly why others like or dislike something.
4. Can create something for yourself, that is expression of likes, and/or fixes dislikes.
5. Can create something for others, that is expression of likes and/or fixes dislikes.
I talk about a person’s product sensitivity as likes or dislikes in the sense for what they would like or dislike in product. In this case, a great product is a product that many people likes a lot about, and dislikes very little about it. So in other words, a great product is one we love, want, or even need. My definition of a great product person is someone who has risen to the top of the pyramid and not only express likes or dislikes for himself and for others, but one that can take those likes and dislikes and create something that not only he loves, but everyone else does too.
The pyramid is an illustration of how rare great product people are. A lot more people inhabit the lower portions of the pyramid and pretty much everyone can tell you whether they like or hate something. But they can’t necessarily explain why.
Then as you move up the pyramid, you also need to be able to release your own ego and expand your sensitivity to others. This is very difficult as most people are very self-centered and tend to like solving problems for themselves. In fact, it’s a lot easier to solve problems for yourself since you know yourself pretty well and can keep at it until you like something a lot, and your dislikes disappear. However, doing this for other people is much much harder.
In design, we are taught design processes which tease out what others like and dislike and we have methodologies to discover them, and to figure out what to do about them. These processes can help create great products, even though the people involved may not be superior product people.
But, I believe the best product people have an instinctive connection to what makes a great product and often does not require additional processes and methodologies to do so. These processes and methodologies certainly enhance a great product person’s ability to create something great, so many great product people smartly employ these techniques to fine tune their creations.
I offer up this hierarchical pyramid of product people attributes as a potential way of evaluating whether or not someone truly is a great product person or not. I think that it could be a way to structure questions to ask a potential hire by giving them an example of a product to evaluate, and see how far up the pyramid they get in terms of sensitivities. Then you can figure out whether or not the person is great enough a product person for you to hire.

Are You Evil or Are You Just Lucky?

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Last night I attended the Startup2Startup"s CeWebrity DeathMatch: Jason Calacanis vs Guy Kawasaki on "Is Apple Becoming Big Brother?" and it was a hoot. Watching Guy and Jason rag on each other was pretty hilarious and Dave McClure did a great job keeping the action going all night.
After the main feature, Startup2Startup dinners have a discussion at our dinner tables around a topic, which, tonight, was based on the concept of being evil and whether it was necessary or not. One question that circulated around the table was whether or not doing evil things in our lives was justifiable or not. In a funny way, I was glad that we did not get around to me answering this question because I really didn’t have an evil example in my work past to give.
How can that be? Well I’ll tell you. I thought back through my work history and could not think of a single evil event I’ve ever done. Not in business, not in politics of corporation, not in management. Now perhaps some of my former team may think of evil things I’ve done, especially like during layoffs, but that wasn’t really self orchestrated but rather forced on me by the corporation.
I’ve always tried to live my life to a higher moral standard and in dealing with people as human beings. I’ve never been great at lying, and thus corporate politics totally are out of my realm and I have seen many instances where I would have been totally outclassed in dealing with manipulation and backstabbing of others. I’m also not very talkative during meetings, which I believe has sunk my career because I’ve always let others take the limelight and not myself. The unfortunate by product of this is that if you don’t say something in meetings, people tend to view you as having nothing to contribute and thus are not worthy of attending further meetings or advancement in the company.
This, my readers, is the reason why I got about as high as I could up the corporate ladder and then could go no further. Because I’m an honest guy, don’t play corporate politics well, and just do my job well, that’s unfortunately not a formula for success in organizations.
I thought back to this lack of evil and wondered how I came to be at this point in my life. And I came on one big factor which has carried me to this day – that is LUCK.
In looking back to people I’ve worked for, the companies I’ve been at, the people who took a chance on me when I was just a dumb out of college guy, and then somehow being buddies with right two guys at Stanford leading to me joining the right internet startup at the right time – these coincidences were incredible instances in chance.
Looking back at this path I’ve taken through my career, I could have just taken the wrong step in a multitude of places and gone off totally into another place. But yet I ended up here.
Intelligence had an effect? Perhaps, but a lot of smart people do some smart things, or what they think is smart and don’t get anywhere. And I’m not particularly a genius either. I don’t think I went around and did anything special but just happened on these people as I walked through life. So that couldn’t be it.
While a lot of people poo-poo luck, I’m a big believer in it. The big problem is, how the heck do you find luck? I also think that some people are naturally lucky, and there are people who seem to have no luck at all. To that end, I have some suggestions as to how to increase your luck:
1. If you’re a lucky person, you’ve made it!
2. If you’re totally unlucky, I don’t think you’ll instantly be lucky. However, there could be hope for you. Read on.
3. Hang out with lucky people. Don’t you hate it when some of these people always seem to have great things happen to them and it doesn’t seem like they do anything? These are the people you need to find and become BFFs with. The downside is that lucky people want to also increase their luck, so they will try to find luckier people to hang out with. So you may not be successful in becoming BFFs with these people because they may spot your lucklessness.
4. Get rid of unlucky people around you. These people will be a drag on your life. Don’t hang out with them. Something bad that happens to them may also happen to you despite your luckiness. Increase your luck by hanging out with lucky people.
5. Generally, lucky people are happy, and unlucky people are not. I think that your general outlook in life can help add lucky points to your life, or at least fake it.
6. Don’t go putting yourself in risky situations. Why walk around in the middle of the night wearing expensive jewelry in the bad part of town? Duh. Reduce the chance that your unluckiness might manifest itself. Or don’t use up your lucky quotient for the day by doing inherently risky and stupid things.
7. Place yourself in situations where you can shine. So instead of walking around in the middle of the night wearing expensive jewelry in the bad part of town, go to Startup2Startup and meet some smart people, maybe some VC who takes a liking to you and funds you.
As an entrepreneur or investor, I cannot under emphasize the importance of luck. Meeting the right founder at the right time, being in the marketplace and finding some product that consumers love and it takes off, finding the right business partner who ultimately buys your company, or discovering that in a crowded marketplace that you backed the right entrepreneur (like me joining Yahoo, instead of Excite, Infoseek, or Lycos).
Luck is one of those unexplainable forces in the universe. All I can say is do things to increase your luck as one of those things you can do to help you be successful in life or business….and be very wary of when your luck runs out.