A Bit of Yahoo! History: Crocodile Hunter Visits Yahoo!

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This was just posted onto the Yahoo! Alumni group in Facebook. For those of you who don’t feel like joining the Yahoo! Alumni group to watch this video, here it is. This video was created for a Production Conference and was shown at dinner time. Later, it became the main new employee video for many years afterward.

Those were the good ol’ days…(sigh).
NOTE: Sorry about the other player. I uploaded to Videoegg and didn’t realize until later that Videoegg only allows 5 minutes on the video. I’ve uploaded it to my account now but it seems that my server can be slow to load the video. But at least you can watch the full version now.

The Three Faces of My Schizophrenia

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In working as advisor and angel investor to startups, I find that I can be schizophrenic at times. Three faces I wear, when dealing with entrepeneurs:
INVESTOR
Characterized by:
1. Paranoia about losing my money.
2. Saying “sell the company”; starts when my return crosses about 5x my investment, and becomes a yell when my investment hits 10x.
3. Motivated by what my terms say for Notes.
4. Recommending courses of action which generate a lot of cash for the company, which increases value of the company and thus my investment.
ADVISOR
Characterized by:
1. Recommending courses of action which build the company.
2. Seeking the best ways to create product and do business.
3. Balanced view towards generating revenue in the company versus building product, which can be at odds if, for example, we’re talking about advertising and internet users.
4. Might recommend against selling the company given what I have seen when bigger companies absorb smaller companies.
5. Seeks the best employees and resources to do the job. Pushes those resources to build the company bigger and faster to exclusion of other things like sleep.
DAVE SHEN HUMAN BEING
Characterized by:
1. Tends towards recommending humanistic approach to treating employees.
2. Wants to grow employees, sees them as learning over time, nuturing them to be better.
3. Coaches people to balance life, work, and family. Asks what makes people happy and what keeps them motivated, encourages people to find this in the company.
If you’ve been in the startup game for a while, you’ll know that these three faces I wear are often at odds with each other and conflict in goals. For example, how can I counsel people to balance work and life and go home at 5pm to make time for family when as advisor, I want these guys to work 24/7 because the startup needs it, and as investor, I want them to work so freakin’ hard so my money isn’t wasted?
When I start working with someone, one of the first things I tell people is that I can be schizophrenic. They always laugh and sometimes I can see that they don’t get what I mean; the more experienced ones snicker and thank me for being upfront!
It can disconcerting to have a guy like me advising you to do one thing and then tell you to do something else in opposition to what I just said a while ago. It’s because I do wear many different hats, and the forces within me struggle every day to push/pull me in several directions. It’s a challenge to find a balanced answer, and I like the challenge of finding a solution that satisfies all of my three “identities”. I just hope I do not drive any of my entrepreneurs nuts by my triple schizophrenic state…

Ycombinator Demo Day: Summer Class in Mountain View

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I went to my first Ycombinator Demo Day this last Thursday. I wasn’t sure what to expect, except for the fact that a whole bunch of startups created by near-college grads would be presenting their projects. I definitely wasn’t expecting any well-thought out business plans but was hoping to see some really cool stuff.
After the event, much has been written about the companies themselves, and you can read about them at VentureBeat: The Ycombinator List and at TechCrunch: Ycombinator Demo Day: The Summer Class. There has been enough coverage about the companies, so rather than do that I wanted to write about something else regarding the Demo Day.
Usually when you sit through pitches, they can be relatively dry. You see lots of graphs and how big the market opportunity is and it’s usually a more serious and professional presentation.
For Demo Day, I was pleasantly surprised that each presentation had a healthy dose of humor cleverly injected. I found myself chuckling at funny demos, laughing at jokes made at competitors’ expense, and smiling to see them laughing at themselves. During one of the breaks between presentations, I stopped to say hi to Paul Graham (co-founder of Ycombinator) and asked him about whether or not he encouraged humor to be part of the presentations. He said they were actually more humorous during the dry-runs and that he actually pulled them back from being too over the top. I shudder to think what they were like before he pulled them back…!
Sitting through 19 demos for 3+ hours could have been a truly grueling affair. I am glad that the young graduates of this summer’s Ycombinator class threw some humor into their demos and turning a potentially boring, lifeless afternoon into a more lively event.

“The Business Opportunity” and the Epiphany

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I was just recommended this excellent book called The Four Steps to the Epiphany by Steven Blank. It describes a particular problem I’ve encountered with some of the startups I’ve met with.
Some of the entrepreneurs I’ve met with lead with the business opportunity. They say that the market is this big. They have charts and research to back that up. They show millions upon millions, if not billions of dollars spent in this market alone.
Then they present this product that fits into this market. They go on to say that we can attack this market opportunity by building a product to gather all these eyeballs, users, consumers, whatever and then sell this market to advertisers and marketers.
It always worries me when they lead with business opportunity.
Most likely what I discover after is:
1. The entrepreneur is not a model customer of this market. They have come upon this opportunity through research.
2. The entrepreneur has researched business opportunity but has not researched what customers want. While it may be true that marketers spend millions and billions of dollars trying to reach these consumers, the entrepreneur has not asked consumers whether they want the product he is building.
3. I often get a defensive response when I tell them this is an issue.
Which brings me back to The Four Steps to the Epiphany. Author, Steve Blank describes the Customer Development Model, which is an iterative method of figuring out what customers actually want, versus driving a business with financial projections and product development and assumptions that the product will be accepted by consumers. He argues that every successful startup runs by this model, and that running it by traditional product development models brings a huge amount of risk into whether the business will be successful or not.
Reading about the Customer Development Model brought me back to those meetings with entrepreneurs who are trying to build companies using traditional methods. Those meetings left me feeling uncomfortable and ultimately, following my instinct on these matters, I would often let the opportunity go. I am glad to be reading this book, because now it frames my uncomfortable feelings into a way of articulating them better.
As an angel investor, I want to reduce risk whenever possible. I find that when entrepreneurs resonate with the market and are building a product that they are target markets for, then it minimizes risk. This also means that you get extra passion for the product because the entrepreneur wants the product for himself, and you may reduce the need for external research to figure out what customers want, which reduces cost and time which could be used in building the product.
That’s not to say that someone couldn’t be successful if they don’t fully or completely resonate with the product and are the target market. Success is a probability game and when entrepreneurs are themselves the target market and they resonate with the customers, then you stack the odds in your favor by a great deal.

Allocation of Shares at Company Formation

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A new entrepreneur recently asked me about how to allocate shares at the company formation stage. I asked around and here are some highlights on what I found:
In talking with my lawyer and some entrepreneurs, you could start with 10MM total but it’s not uncommon to create more upon formation, like 20 or 30MM. The reason for doing this is to not have to file additional paperwork (and incur legal fees) in creating more shares when you need them.
Also, you don’t usually allocate the whole bunch of shares at the outset. Note that the existence of shares does not mean ownership, but only those you allocate. So if you have 3 founders and each has 1MM shares out of a total pool of unallocated 30MM shares, you have officially created 3MM shares but still hold 27MM in reserve. Thus, the 3 people officially own the company at 33% a piece; the additional 27MM does not come into play until they get allocated.
As for allocating a bunch for additional employees, people have allocated about 10-20% of the total for employees and the options pool. As for sheer number, that could be upwards of 4MM set aside for employees, advisors, and board of directors, which is pretty large for an early stage company.
So if you go with 10MM total shares and you want 20% of total for the options/employee pool and let’s say you have 2 founders who want to own the company at 50/50, then you would have 10 MM shares allocated, 4 MM goes to both founders for 50/50 ownership split at 8MM shares total, and then the rest at 2MM (20%) reserved for hiring key people.
FYI – advisors jumping in at this stage typically get .1% to 1 or even 2-3% as options depending on their level of involvement.
Early employees coming in really early stage could get multiple-100s of thousands of options, which rachets down dramatically as the product gets built and time goes on. Certainly this balances with whether or not they get market rate salary or not.
Still, the message is “don’t be greedy”. Incent your employees to get the job done and reward them. Don’t try to hold on to too much or else you may run into trouble later. Same goes for the financing stage. Be prepared to give up part of the company for monies received, but don’t try to hold on to too much or else you may never get funded. On the flip side, be realistic and don’t give away the farm, which could land you in trouble the other way.

Day 12: iPhone Dies…and Lives Again!

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ACK! In an attempt to get my iPhone syncing with both my Mac and PC, I tried a restore of the software which hosed my iPhone. Ugh! I set it updating over night and then in the morning, it’s just sitting there in the dock, locked up. I try a few things and then the screen shuts off…seemingly permanently.
I hold back the tears welling up in my eyes and pack it up, determined to exchange it for one that worked.
I walk into the Apple Store on University Ave in Palo Alto and tell the guy that my iPhone is way dead. He looks skeptical and we walk to the Genius Bar desk where he tells me about an IMPORTANT UNDOCUMENTED function called REBOOT. You press both the round “return to Main menu” button and the top small Wake/Sleep button together for a few seconds, and the thing reboots itself. Thankfully, this brings it out of its locked-up/dead state!
I boot up my PC (which I have with me) and then sync my iPhone with it, restoring the software and IT LIVES AGAIN!
It’s beyond me why REBOOT isn’t in the user manual. But for now, I am glad to have my iPhone up and working again. Just give me my MMS please and everything will be PERFECTO.

Day 11: iPhone Adventure Continues…

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Living with my iPhone has been a real joy. I think I like about 80-90% of it, but it is not quite there to make me toss my SLVR and Treo 680 just yet.
Some more discoveries:
1. According to the message boards, it seems that others have gotten music/video syncing on one machine and syncing calendar/contacts on a PC. I still haven’t gotten this to work. More experimentation required…
2. Where is copy/cut and paste? Geez.
3. I need arrow keys on the keyboard! Trying to make edits by moving the cursor around with your finger is maddening.
4. Personally I hate the auto-complete. It’s wrong a lot of the time and I have to teach myself to look at it constantly to tell it not to insert a word when I hit space.
5. I LOVE THE AUTO SWITCH FROM WIFI TO THE AT&T NETWORK. When I go in my house, the WIFI automatically connects. When I walk into a Starbucks, I auto-connect to T-Mobile. COOL!
6. Browsing on Safari is so cool. It really makes things easier.
7. Need Notes syncing to Outlook. I don’t understand why this wasn’t built in. So strange.
8. Getting faster on the keyboard.
9. I tried out a few widgets. It’s ok for now, but definitely a problem when offline. Also, loading widgets over the EDGE network is totally slow. Forget any heavy AJAX site like Meebo.
10. Definitely need dedicated iPhone apps. Safari based widgets works for some things, but nothing beats dedicated apps on the device.
11. Need MMS!!!! Emailing photos just doesn’t cut it.
I can’t wait for software updates to make this baby work better!

You Asked Me About Yahoo!…

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In the last few weeks, I’ve been asked what I think of the recent events at Yahoo!. As an once insider, people think I’ve got some inside knowledge and insight into whether the changes are good or not. To be honest, I do still have some connections with Yahoos, but they get more tenuous each passing day. Still, it’s been interesting polling both insiders and outsiders about Yahoo! and its future.
Since the announcement of Jerry Yang becoming CEO (and Sue Decker becoming President) and Terry Semel leaving, I have thought a lot about what this means for Yahoo!. I also went around and talked to ex-Yahoos and current Yahoos about what they think. It’s been an interesting experience hearing what they’ve had to say.
I have found an amazingly wide range of opinions but there seem to be some trends:
1. Those who just joined Yahoo seem more optimistic than those that have been there for a while. Some guesses as to why this is so:
a. They joined at the current state of affairs, so they must be bullish on the company or else why would they have joined up?
b. They must be bullish or else they would quit. This could be real or self-delusional. Who knows. But they must make themselves bullish or else they would lose all psych in their job, which they arrived at not too long ago.
2. Veterans seem to have mixed opinions. Why:
a. They have more experience in the company and know what works and what doesn’t. They’ve been through change before at Yahoo and can be both optimistic and pessimistic.
b. It seems that this is highly dependent on position and location in the company (see next item).
3. Higher level employees unanimously are bullish on the company. This is not strange; they have signed on to be an exec in the new regime and have to like it. Otherwise, they would leave. And politically they can’t express any fears; it would scare the troops. So it’s been hard to pin down what they REALLY think about the new Yahoo.
4. Pockets of bliss exist. In many small, local areas, people are doing really great work and getting lots done. The opposite is also true, that there are also many areas of despair as well. These folks cite all the typical stuff, like growing politics, impossible to get stuff done, no direction from leadership, etc. etc.
What do I think about Jerry being CEO?
I totally think he should have been CEO a long time ago.
I think that in order for someone to run a company effectively, you must have instinctual knowledge about the industry. We would not put a DOW chemical exec in charge of GM. Likewise, for someone to run an Internet company, you must have some great resonance with the Internet and are in tune with what people want and like.
Who out there could qualify for this? Larry and Sergei are two. Filo and Jerry are another two. I actually think Dan Rosensweig could have done it. He used to run ZDNet and thus had a lot of knowledge about the Internet as well as executive experience. Well, we’re not going to get Larry or Sergei, and Dave Filo is still working on engineering issues. So who is left. Jerry Yang.
Can he turn the ship around?
While I think Jerry is the right person, I also think he has an enormous task before him. Think of trying to turn the TItanic by pushing on it with your hands. In certain crazy and inventive situations, I bet you could actually turn the Titanic that way, ie. if you were Superman, you could do it – this is sort of like answering one of those famous interview questions in a Microsoft interview. So I believe that turning the Yahoo ship can be done, but it remains to be seen whether or not there is so much inertia and momentum that it resists turning fast enough.
One possible consequence of turning the Yahoo ship will be some down revenue quarters over the next year, potentially two years, as restructuring plans take hold, removal of waste, taking down sites that shouldn’t be worked on, etc. etc. However, it will be amazing if revenue can be kept growing in the midst of such change.
Only time will tell. My money is definitely on Jerry Yang to bring Yahoo into its next stage of evolution.

Day 3 iPhone iPhrenzy: Figuring Out How I Will Use It

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My original thought regarding the iPhone was to somehow move completely over to the Mac. But I would definitely have to wait until Apple comes out with their much-rumored super-thin MacBook as I need to save my back from lugging laptop weight. I have a Sony T-series which seems to be the best option for lightweight computing so far. However, I will switch if Apple launches a super-thin option.
In any case, I wanted to see if I could remove one device somehow no matter what. Today, I carry a Motorola SLVR with iTunes, and a Treo 680. I do carry my iPod sometimes, but I’m not one of those people who walk around all day with earbuds in my ears, so I’m ok without music.
Comparing the Treo 680 to the iPhone has been interesting. Physically, the iPhone is much more thinner and sleek, and a joy to hold. The Treo 680 is bulky in comparison and seems so yesterday’s technology (it became “yesterday” on Friday when the iPhone launched!). However, I do like it for:
1. I am still faster on the Treo 680 keyboard. I seem to be getting better on the touchscreen keyboard of the iPhone, but the physical keys still are better.
2. I use the Treo 680 for typing out notes and the occasional blog entry. I sometimes use a folding IR keyboard which works really well if I am typing something long. Definitely Apple needs to enable Bluetooth keyboards at some point. That would really make the iPhone useful.
3. I use a program called InfoSafe which keeps all my passwords around securely. I would need to replace this if I were to get rid of my Treo 680.
4. All my silly games are still on the Treo 680. None available yet on the iPhone, but I am sure this will change soon.
So far, what I think about the iPhone:
1. I really like the touchscreen interface! I also love the interactions they put in there for scrolling and resizing.
2. It took me a while to figure out how to set things, which are located in Settings. However, some of it seems kind of dumbed down.
3. It seems to be able to open Word attachments and I haven’t tried PDFs yet. I would definitely love an industrial strength word processing program, spreadsheet, and presentation program as well, although maybe it can open them for viewing at least.
4. No MMS! I use my Motorola SLVR all the time to send occasional shots to family and friends, but can’t do that here! I hope this comes soon.
5. Email is a joy. IMAP for Yahoo! Mail really works well. I wish there was a way to mass delete emails. This could become a problem at some point for my POP accounts and overfilling my iPhone memory. I need to look at the docs to see if there is an auto-delete off the iPhone after some period of time.
6. The browser really ROCKS. It’s probably the main reason I bought it. I can now see web pages in their full glory. The browser on the Treo really blows. I’ve bought books on amazon.com, checked out netvibes, did google searches. It works really well!
7. The keyboard is a bit funky at first due to my right thumb’s touchpoint. For some reason, the pad of my thumb touches down on the screen at a point that is not where my brain expects. I am off by a key! So now I am training my brain to recognize that typing with my right thumb means I have to mentally adjust it slightly to the left in order to hit the right key.
8. No cut/copy and paste! How funny that is. I think this will prevent it from being an office replacement.
9. Syncing was amazingly easy. I love the fact that you didn’t have to screw around with installing conduits and seeing if you got it all right. You just launch iTunes and hit the sync button, and it just does the sync with Outlook. One strange thing. It doesn’t sync my notes into its notebook. How strange. But calendar and contacts come over just fine. I hope they add an update to make this happen. As you have guessed, I am syncing my iPhone with my PC for now for contacts and calendar, and I will load music from my Mac Mini.
10. By the way, I did figure out how to get music and other media synced. Just a few settings in the tabs of the iPhone area of iTunes. But it seems to only let you control syncing via playlists. I will look at this more.
11. WIFI!!!! I locked onto my house network and also to T-Mobile at Starbucks. Very nice! Power drain seems to be ok, and much better than my Treo 680 which probably would have cranked down pretty quick if I had tried to go WIFI continuously with an add-on card.
12. One ridiculous thing: I have all my contacts categorized in Outlook. Those categories have disappeared on the iPhone!
So far, the one limiting factor is MMS for it to replace my Motorola SLVR and being able to type long entries means I will want my Treo 680 around. I think I will carry iPhone around separately for a while and see what updates Apple has for it. It doesn’t work too well as a replacement for a laptop but is more of a hyper-powered mobile phone. Still, I think this device is hugely cool and Palm really missed the boat by not coming out with a Palm version super-thin phone. The Motorola Q and Samsung Blackjack are also nice, but Windows Mobile just kills both those devices.

Caught Up in the iPhone iPhrenzy

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Friday 6/29 finally arrives. The iPhone goes on sale! One of the most hyped up devices ever, I wondered if I was even going to be able to get one on the first day, but I sure as hell was going to try.
Tracking press releases up the big day helped strategize how I was going to get one of these babies. I originally thought I was going to head to a AT&T/Cingular store, but then I realized that you could get one at an Apple store. And how funny: you could only get one per customer at an AT&T/Cingular store, but you could get 2 per customer at an Apple Store. I theorized that they would probably have a lot more available at the Apple store so I made plans to get to the one at Valley Fair well before 6pm.
It was also a good thing; ever try to get anything at a AT&T/Cingular store? They have the worst checkout and queueing system ever. You go there and sometimes you just wait forever, because reps are sometimes trying to sign people up for an hour as people try to figure out what options they need. I can’t believe they haven’t figured this out.
Thanks to Apple for solving their problem. I found out on their website that you upgrade your iTunes and then when you sync your iPhone, it goes through the signup process in iTunes via the web. Wow. Thank god we could circumvent talking to some AT&T/Cingular rep about it!
So Friday turned out to be full of meetings. My last meeting I even cut short a bit, but the entrepreneurs I met with were thankfully sympathetic to my need to get an iPhone. I left around 5pm for Valley Fair and got there around 520p.
I went to the Apple store and found it to be closed! But, there was this huge line that wrapped around the side of the building, and then crossed through a doorway outside the mall. By the time I had gotten there, there were already about 300+ people in line! So I found the end of line and waited like everyone else.
As we’re waiting, a guy comes up and asks us if we want coffee. Leave it to Apple to serve the people in line some Starbucks coffee, iced or hot! I gratefully grab an iced coffee and sip it while playing with my Treo and taking occasional pictures (which I’ll post later).
I wonder about my Treo. In fact, I just bought a new one because my old Treo 680 was having problems. It’s pretty good, but if the iPhone lived up to its hype, I could potentially get rid of my Treo and my Motorola SLVR (with iTunes on it) as well!
6pm finally arrives and the line moves about a foot.
615pm: Somebody walks by the line and gives a loud rebel yell and says, “I GOT ONE WHOO HOO!” All of us look at each other in line and collectively we wish that somebody would mug him on the way to his car.
6:20pm: Two more people come out and give doomsday talk about the fact that there is no way we’re gonna get one. I don’t want to hear this.
6:30pm: I move 20 ft. Seems like we’re getting in the store now.
6:34pm: The line really starts moving now. Anticipation builds in me. I just hope people aren’t sitting around in the store wondering if they should get one or not.
6:45pm: I look behind me and see about 80+ people lined up. The after work crowd must be showing up now.
7:10pm: An Apple guy gives me a brochure about data plans. Unbelievably, data costs less for the iPhone than for my Treo. I love getting ripped off by the phone companies.
7:20pm: I make up to the doorway into the mall. There is a big, tough looking guy who only lets 20 people at a time into the doorway. In a few minutes, I am in the doorway and now walking down the hall to the mall! Yeah!
7:24pm: I drop into the line outside the Apple store. They let one person in for every person that leaves. It’s pretty funny. Every time somebody walks out with the distinctive iPhone bag, they clap and cheer! Ha. That’s what I would feel too if/when I got one.
7:34pm: I’m IN! Standing in this line that goes to the back of the store, an Apple guy asks me if I want to take a look at one. Shit yeah! I play with it and call on it to check out its voice quality. Wow. The hype is REAL. I love it love it love it.
7:40pm: I grab 2 8GB iPhones and pay for them, and I’m walking out of the store now, grinning like a cheshire cat. I swear, getting one of these is like waiting for concert tickets the day they go on sale!
The next morning, I boot up my Mac and download iTunes 7.3. I go through the signup process and notice that I can’t replace the SIM card, or at least I couldn’t find an easy way to do it. I was going to toss in my old SIM card but looks like they won’t let me. OK. So I signup for a new plan and will cancel my old plan later, as well as switch the phone number to it.
As I read the instruction manual, I find they did an incredible job with the syncing capabilities. I can, through iTunes, set it to sync with all the Mac apps, as well as Outlook on the PC! Pretty cool.
After I activate it, I play with the browsing and typing features. I setup email which is a bit weird, but I figure it out. Supposedly you can download the user manual off the website, but I haven’t been able to find it yet.
Web browsing is great. Now I can see web pages pretty much like they’re supposed to be, not all crappy like on my Treo browser. Email is also great. Using IMAP on Yahoo! Mail, it is really great for synchronizing email between client and iPhone. I also attach my DSV email too and will probably get my other email accounts attached too.
The one thing I could not figure out yet is how to get music on it. I try to drag/drop music onto the iPhone icon in iTunes but it doesn’t accept items that way. I’ll have to see how I can selectively add/delete music and videos to the iPhone a bit later.
All in all, this is the coolest device I’ve seen in a long time. A lot more compact than an iPod and certainly thinner than my fat Treo 680. I was afraid that it might be bulky in my pocket, but it definitely is not. Apple certainly has a winner here and it will be fun to see the rest of the industry just *try* to catch up.