Master of 500 Hats

Gordon Gekko 2.0: Flipping is GOOD. (aka Memo to Jason Fried: Sorry, You're Fucking Wrong.)

[clarification: i was a private angel investor in Mint's A round back in early 2007, when i was also doing some marketing consulting for the company. i was not directly involved in the Founders Fund investment in Mint's C round a few months ago. the comments below are primarily drawn from my personal experience with the company before i joined Founders Fund]

[disclosure: the views expressed below are my own, and do not in any way represent the official position or perspective of either Mint.com or Founders Fund.]

Dear Jason Fried:

Sorry, You're Fucking Wrong.

    Flipping is GOOD.

Let me explain...

In a poorly-researched post titled "The Next Generation Bends Over" (cute) penned a few weeks ago by Jason Fried, founder/CEO of 37 Signals, the author attempts to make the case that:

1) VCs behind Mint.com forced founder/CEO Aaron Patzer into $170M acquisition by Intuit

2) it's a growing trend "indicative of VC-induced cancer that’s infecting our industry and killing off the next generation"

3) young entrepreneurs should be more bold, audacious, go all-in on their vision, in order to "kick the ass" of the collective incumbents / dominant players

In order, these assertions are:

1) Fucking Wrong, and Irresponsible Conjecture & Hyperbole

2) Completely Wrong, and in fact Exactly the Opposite trend is going on, and finally

3) Wrong in most cases & crap advice for young entrepreneurs.

I'll now address each point specifically, and explain why Jason Fried -- although in his own right, an accomplished entrepreneur, whose products i use and respect -- is full of shit in this particular instance.

The VCs behind Mint.com Did NOT Force a Sale. Do Your Damn Homework Before You Speak.

First & foremost, while i respect Jason's opinion and right to post whatever the fuck he feels like, his article was -- by his own admission -- not based on any fact-checking.  At the beginning of his post, Jason states "i don't know the full back story, but i bet this sale was encouraged by a Mint investor."  IMHO, this is just incredibly irresponsible: you're a *very* visible figure ripping other folks on mere conjecture.

Perhaps you might want to contact one of these investors -- who, like me, are all publicly listed in Mint's entry on Crunchbase -- and ASK one of them, before you blow such a wild assertion out of your ass? You probably know several of them, and certainly through your connections it would be fairly easy to reach one of them to confirm or deny your suspicion. While i don't expect folks who aren't breaking-news bloggers to follow basic journalistic principles, making such an accusation without the tiniest shred of evidence is lazy at best, and borderline slanderous at worst.

Or, if you're simply too damn lazy to do some basic research, maybe you could just ask any experienced entrepreneur or venture investor why in the hell would it make any fucking sense for Series B investor Benchmark to encourage a sale that's likely only 4-5x its investment, or Series C investors who just put money in 30 days ago?  or do you somehow think the seed or A round investors were controlling Aaron's actions with a car battery attached to his balls? if you had any knowledge of Aaron whatsoever, you would know that he is one confident sonuvabitch who RARELY lets anyone force him into doing anything.

In short, your logic here is not only faulty, it's piss-poor and reveals your absolute ignorance of what goes on in the venture world.  Sure, you're absolutely correct there are some VCs that might force an entrepreneur's hand -- however, in most cases IT'S IN EXACTLY THE OPPOSITE SCENARIO of what you suggest. They usually want the entrepreneur to stay in the game, NOT sell, and aim for a larger / later win -- typically by FORGOING an acquisition and instead taking a round of capital -- which, in fact, was exactly what Twitter did when you were hypocritically whining about them last week.

Although there may indeed be examples of VCs forcing an entrepreneur to sell to get liquidity to investors, it's not at all typical and usually the opposite of institutional investor motivations.

The "Growing Trend" in Internet deals is towards More & Smaller Acquisitions.  But it's not because of VCs, or the Financial Crisis, or Sarbanes-Oxley.  It's because the Web is Maturing, and Internet Platform Giants are outsourcing / buying Innovation.

The second point that Fried asserts is that this is somehow a growing trend, and that VCs are changing the industry, "killing off the next generation" of entrepreneurs by forcing premature acquisitions. Again, nothing could be further from the truth... and in fact, the EXACT opposite is the notable trend going on in the industry right now.

First it should be noted that M&A have always outnumbered IPOs, but regardless IPOs basically shut down in tech after 2001 due to the dot-com blowup.  Subsequently, many armchair analysts have stated that Sarbanes-Oxley legislation has made it more expensive to go public. Others have noted the financial crisis ending as a reason for more acquisitions.  Still other conspiracy-theorists like Jason think VCs seeking liquidity for investments are at fault.

While any of these may be contributing factors, the more basic trend is this: there are now tens, if not hundreds, of large online platform companies with millions of users and positive cashflow.  In addition to Google, Yahoo, & Microsoft, there are also eBay, Apple, Amazon, News Corp, Facebook, AOL, CBS Interactive, ComCast, IAC, etc, etc, etc. There are tens of companies that can pull the trigger on a <$500M deal, and 100s that can do a <$100M deal.

What's fundamentally different in the last ten years is that most big companies didn't have a need or facility for acquiring web startups.  They didn't understand them, and couldn't figure out how to integrate them into their business.  However, as the Internet has matured, ALMOST EVERY company is now a web company, and the Internet is both a primary and low-cost distribution channel.  It is now very easy to integrate a web-based acquisition [at least from a technical standpoint... might be more challenging re: politics & fiefdoms].  And since most innovation doesn't happen at big companies, it's almost guaranteed that we'll see more acquisitions of small startups to help grow larger company platform strategies. 

In fact, as more platform companies compete for deals, you'll likely see deal size go down as they try and acquire products & talent ever earlier in the startup lifecycle.  There's no need to wait for companies to become $1billion-dollar powerhouses -- it's much more capital efficient to acquire them after they've proven out basic technology & gotten a little elbow in their customer adoption.  Why buy it for $500M a few years later, if you can buy it for $50M now?  I'm sure this was part of Intuit's thinking about Mint... as soon as they saw the Series C deal go down, they realized if they waited another 2-3 years, the pricetag might go up even further.  So they cut a deal now.

This particular trend is what is scaring the shit out of big VCs right now.  Both lower capital costs for startups and lower average exits for acquisitions are screwing up large VC firm strategy.  Fred Wilson and others have written about this, & experienced investors like Alan Patricof have downsized funds to under $100M to make them more manageable in this "small-ball" environment.

While this trend may negatively affect some VCs, it's actually a very positive trend for angel investors and smaller VC funds, and it's an especially GOOD trend for entrepreneurs.  This creates a great market environment for small investment / small exit deals that are exactly what Web 2.0 entrepreneurs are serving up. In other words: the Future is Bright, Time to Buy Sunglasses.

Why Flipping is GOOD, & Why Young Entrepreneurs Should Probably Sell Their Startup Sooner than Later.

Finally, i'll make an intentionally controversial stmt:

 Young Entrepreneurs Should Sell Out Early (and not Late or Never)

Why?  For the same reason Why Dogs Lick Their Balls -- BECAUSE THEY CAN.

Look, i'm not trying to get anyone to sell their grand vision short.  If you've got a great business to build, by all means give it your all and run it forever.  However, for most entrepreneurs it's not going to be the only business they do in their lives.  And for the young entrepreneur -- particularly those under 30 who've never done it before -- the single best thing you can do to ensure your future success is TO GET A DEAL DONE. It's heroic and glamorous to "go all in", but realize that many times that means you may come away with NOTHING.  Playing well sometimes means you take a single or a double instead of getting thrown out trying to steal home.  And sometimes it means just taking 4 balls and getting on base.  However you play the game, swinging for the fences every damn time may work for Babe Ruth and Albert Pujols, but i'm personally more a fan of Ichiro Suzuki and Billy Beane. Small-ball and MoneyBall can be just as beautiful as a homerun.

it almost doesn't matter how large or small it is (altho firesale acquisitions don't count), the ability for an entrepreneur to have future success is typically judged by historical metrics.  and since most startups FAIL, the fact that you can take a startup to ANY size exit proves you can beat the odds, and that you may have the ability to do it again.  Once you have a deal under your belt -- whether it's a $3M deal, a $30M deal, or a $300M deal, you are bankable.  People will bet on you again. Investors, Partners, Employees, Reporters, etc will all believe you can do it (sometimes to their detriment, because again the odds are most startups fail -- even those by previously-successful entrepreneurs).

In addition, contrary to all these haterz who paint acquisitions as a bad deal or a sell-out, i actually think it's a great thing -- imagine being able to take 3-5 years to build a product, develop it to some level of usefulness, grow customers, build revenue, and then sell to a larger organization that decides it could use that innovation to help their business where it sees new opportunities.  Isn't that awesome?  Isn't that a vision fulfilled?  How about the fact that you can perhaps after a few years go back out & do that again?  Why is it that no one seems to think switching jobs every 3-5 years is a bad thing, but somehow think that selling your business to someone who really wants it and will grow it isn't terrific?

More Transactions Grow The Market. Startup Ecosystem Efficiency Raises All Boats.

Lastly, here's the thing i really want to stress, more than peeing all over Jason's post: more transactions of any kind or size help improve overall startup ecosystem health.

Fact is, startups operate in a financial system that is inefficient, illiquid, and challenging to manage.

Venture Capital exists because startups are generally deemed too risky for debt capital, or for traditional financing. This item is often overlooked by entrepreneurs (and investors) who view the VC field as glamorous and confident, when it fact it is mostly ignorant and risk-averse.  VCs like to maintain asymmetric information advantages over their competitors, and sometimes even over entrepreneurs.  Keeping competing VCs, and even sometimes their own LPs & entrepreneurs in the dark about value and pricing is sometimes in their best interest -- it KEEPS PRICES DOWN.  However, infrequent financing round / transactions and lack of objective pricing actually don't serve the interests of entrepreneurs.  As with most markets, liquidity and transparency provide the enabling mechanisms to grow the market larger and to reward market participants more richly.

This is a non-obvious point. 

More & smaller transactions in the market actually improve ecosystem efficiency, and provide better pricing transparency.  In the long-run, it benefits all system participants for small transactions to occur, because it makes the overall market more knowledgeable -- this in turn, reduces risk and encourages greater investment... which also encourages greater [overall] returns.

In summary, the benefits of selling startups early -- or simply when a transaction is available -- may be a smart strategy for both entrepreneurs and VCs to help improve the market, and reward themselves at the same time.  It may not be the best strategy for Bill Gates, Steve Jobs, Mark Zuckerberg, or other titans of industry, but it might be a reasonable strategy for 1st-time entrepreneurs under 30 looking to establish their careers & ensure that future endeavors are more likely.

And Jason: now that i've ripped you a new one, i'd like to apologize for all the harsh commentary and say that altho i disagree with you on this issue, i still think you're an amazing entrepreneur, and i still use your products. Happy to buy you a beer and shoot the shit anytime.

Hit it Gordon:

Your SOLUTION is Not My PROBLEM

QUICK !!!

i'm a VC. you're an entrepreneur. 

we're in an elevator, and you've got 30 seconds.

GO.

ok, if your pitch began with "we're building an X for Y", then guess what 

YOU FAIL.

yeah, i know in an earlier presentation i said "we're X for Y" works well for short-hand notation. 

but the problem is... it's not my problem. it's your solution. 

and the solution isn't your solution, it's my problem.  

more specifically: 

your SOLUTION is to SOLVE MY PROBLEM

or i can say that another way:

IT IS NOT HELPFUL TO YOUR CAUSE TO DO AN ELEVATOR PITCH WHERE YOU SHOVE YOUR SOLUTION DOWN MY GODDAMN THROAT. OVER and OVER and OVER.

got that?

      let me explain...

several months back at Startup Weekend San Francisco, as is my usual wont, i was being a real dick.

we had just finished doing the typical mind-numbing bullshit VC panel on what's trendy / what's hot. (which was of course, incredibly insightful and useful... NOT).  next, the attendees -- all 300 of them -- were asked to get up and do a quick pitch on the startup idea they wanted to do over the weekend. the concept here was that other people might hear the idea & want to join forces. now, not to say there aren't some flaws with listening to 300 people do a quick pitch in a crowded room with terrible acoustics, but beyond that auditory imposition, there was one other big problem:

almost all of those pitches SUCKED ASS.  

big time.

after about the 4th or 5th one, i just couldn't stand it any longer. i was NOT going to sit thru an hour-and-a-half of shitty elevator pitches.

N. F. W.

so i grabbed the mike from the next open-mouthed entrepreneur and said:

"Ok folks... if there's ONE thing i can help you with tonight, it's how to pitch.  it's very simple, and i can teach you in about 5 minutes."

"Here's the secret: PITCH THE PROBLEM, NOT THE SOLUTION."

"That's it. done! that's all there is... just tell me the problem FIRST, not the SOLUTION.  the reason is, i may not be able to understand what your solution does, but if you connect emotionally with me on what the problem is -- and i hopefully i also have the problem, or know someone who does -- then i'll give you PERMISSION to tell me more about how you're going to solve the problem."

after that, i handed the mike back to the entrepreneur... and you can guess what they did.

yoo betcha.  

they pitched their solution.  

and i interrupted them, RUDELY & WITHOUT MERCY.  

i grabbed the mike back and said:

"THAT WAS NOT A PROBLEM.  

THAT WAS YOUR SOLUTION. 

            DO IT *AGAIN*."

and they tried their best, and barely got through the problem statement.  then they handed the mike to the next entrepreneur.  and guess what happened?  yep, AGAIN, they pitched their SOLUTION.

and i again, i rudely stopped them, grabbed the mike back, and said again "Nope. that was another SOLUTION.  tell me what the PROBLEM is that you're solving... i guarantee you, the PROBLEM is NOT that the world doesn't have enough RSS readers out there." again, they barely got thru stating problem.

this happened for another 4-5 entrepreneurs.  they would pitch their SOLUTION.  i would then be a dick, yell for them to stop, have them start over, and state the PROBLEM first.  after about 10-15 minutes of this insanity, i think i scared the shit out of them, and perhaps only to stop me from berating them publicly in front of several hundred people, they FINALLY started pitching the PROBLEM.

slowly, excruciatingly, over the course of the next half-hour, the pitches gradually got better.  they didn't necessarily get good, mind you... but they didn't completely suck balls.  they were at least easier to understand, and by end of evening most pitches were understandable, if perhaps still crappy.

and i made a name for myself as perhaps the biggest asshole VC of the northern california area.

but that aside, i made three hundred people NEVER forget the point i was trying to make, and hopefully at least 5-10% of them will have a slightly better pitch the next time they get stuck in an elevator with a VC.

if so, then it will have been worth me being such a complete dick.

remember folks: pitch the PROBLEM first, connect with your audience emotionally around the problem, and then -- and ONLY then -- offer your solution as the remedy to that problem.

DMC Metamorphosis :)

I feel like i've hit a turning point in my life.  Something has happened in the past 6 months, in the past 3 years since leaving Simply Hired & PayPal.  I'm not sure when it all clicked, but i've been fortunate to have a lot of wonderful things come my way lately.

Those things include but are not limited to:

• working with / investing in great startups like Mint (thx Aaron), SlideShare (thx Rashmi & Jon), TeachStreet (thx Dave), and many others
• running conferences like Startonomics SF (thx Debbie), Graphing Social Patterns (thx Gina & Tim), and Web 2.0 Expo SF (thx Brady & Jen)
• creating the now-infamous Stanford Facebook class (thx BJ, Yee, Jia, many others & our students!)
• coming up with Startup Metrics for Pirates AARRR! (thx Hiten, Andrew, Eric, *SO* many others) 
• getting Startup2Startup rolling last year (thx Leonard, Brian, Kat, Saar, & MANY friends/sponsors)
• joining FoundersFund this year (thx Sean Parker for giving me a shot)
• launching FF Angel LLC and investing in some great startups (thx FF, also Jeff Clavier & many other angels & VCs for great advice)
• retooling fbFund & creating the fbFund REV incubator program (thx Cat & folks at FB, Accel & FF, many others)
• kicking off GeeksOnaPlane Asia trip (thx Christine, George, lots others)
• putting Finance4Founders together & ready to rollout (thx Dan & others)

while this may seem like a laundry list, the one common thread in all of the above projects has been the amazing help of my friends & colleagues.  there is no way i could have accomplished any of these efforts without the patience, tolerance, brilliance, and sheer hard work of my home boys & girls.  you folks really do rock.  (and i know how much of a pain in the butt i am to work with!)

seriously: how lucky am i, to be blessed with so many incredible people in my life, who have given me so much, created such tremendous opportunities... while i remain the lazy, ADD, easily-distracted, crazy sonuvabitch i've always been, who barely manages to make rent each month. i mean, it's nothing short of a miracle that i can find my ass with both hands in the morning, and yet somehow after so many years in the valley i have found a nice little groove. how cool is that.

these days i actually wake up early & excited to do the work i'm doing, happy as a newborn puppy to spend time working on projects with people i like, and i keep pinching myself to make sure this shit doesn't disappear tomorrow.  well even if it did, i would treasure the moments thus far...

lastly, i must acknowledge the folks at home who help me find purpose and reason amidst all this insanity... thank you to my wife and our two beautiful kids.  you are the light of my life, and your smiles & laughter are precious beyond the treasure and measure of mortal men.  

truly, i am a very lucky person.  thank you to everyone :)

The Faces, the *FACES*... it's *ALL* about the Motherf**king FACES! (+ Avatars, Icons, & Big Butts.)

DISCLAIMER: i've never really had any professional training in user interface design... and i'm sure that's obvious from my blog fonts & colors. However, i started designing & developing applications over 25 years ago, back in high-school when i developed some payroll reports one summer for my mom's company.  Since 1991 or so, around when Object Builder and Visual Basic came out, most apps i've built or worked with have been in windows-based or browser-based graphical UI environments. And for the last 5-8 years or so, most startups & applications i've been involved and investing in are based on social networks & platforms. So whether or not i have any fucking clue what i'm doing, let's just say i've seen my fair share of designing visual user interfaces & interacting with social platforms.

I Like Big Butt(ons)

If there's one thing i've learned from all that geeking around, it's that UI typically works best when it's butt-simple.  As a famous PayPal colleague of mine once stated succinctly: 

"Users are Stupid... give them something to click on."

Wise words.  You'll do well not to forget them, Young Jedi.

However it's not always enough to simply give people underlined text links to click on... rather, it's important to have strong associated visual cues that encourage users to take action.  Sometimes that can be as simple as just creating a beveled, slightly rounded, 3D-looking button with a color offset and some text that identifies a Call-To-Action (CTA).  Many people have become trained thru years of working with operating systems to click on things that look like buttons.  particularly BIG buttons.  particularly BIG buttons with pictures or icons.  they are almost irresistible.  Go on.  Click it!  you know you want to!

But -- and i do mean butt -- even big buttons with big graphics aren't always going to capture user attention. What has gradually happened over the past 10 years is that online consumer interfaces have started to zero in on basic human behaviors, recognition systems, and patterns. many of those offline interactions start with the simplest of human interactions -- looking at someone's face.

In fact, you could argue that much of the online experience these days is less about reading text, and a lot more about looking at faces, icons, and other visual representations of people.

"The FACES, You Idiot... It's ALL About The F**KING FACES!"

About 2-3 weeks ago, i was meeting with a startup about some new widget workflow they were creating.  The company shall remain nameless, but they were trying to develop a new UI around people exploring other people.  However, the interface was still mostly comprised of text explanations and directives.  Although it was being built as a social platform, they were missing the social part.  

And of course this cuts right to the heart of the matter.  

As the startup founder and i were discussing alternatives, i happened to check my inbox (because i think it had been at least 2-3 minutes since my last fix), and i noticed a new LinkedIn Network Updates email -- who got a new job, who made a new connection, etc.  And i thought it was curious that there weren't any visual images in the email.

Now believe me, i am a HUGE FAN of LinkedIn, and i'm friends of a lot of folks over there.  And they are making a LOT of money, and are very likely to be an IPO candidate way before Facebook.  But i *do* think they have done some things fundamentally wrong over the years, and possibly the prime evidence of that is their very late adoption of user photos almost 4 years after launching and the overall sparse use of faces within a social networking platform.  LinkedIn is about *professional* social networking, but i don't think being professional means you have to be boring or not engaged.  in any case, LinkedIn is doing just fine but i'd strongly suggest they are missing out by not making their platform more visual, more social, more viral, more engaged, and more group-oriented.  but perhaps that's a longer discussion for another post.  i'm still hoping they get there soon.

there was at least one other example of FAIL that i can't remember that pushed me over the edge, and i finally had to scream and just tweet out:

for many folks, the state of the art in consumer internet development is to design big beautiful fonts and flash animations and green-blue web 2.0 colors.  and for Google (at least until recently with Wave), the most advanced design elements they seem to come up with were still almostly exclusively text-driven.  

IMHO, the two popular companies that have actually done the best job with user interface design optimization are YouTube and Facebook.  and of those two, the one that has CLEARLY done the best job around UI for social platforms has been Facebook. 

YouTube iterated furiously over the years to optimize UI elements & buttons, and while not always a success from a monetization standpoint, sheer usage & adoption has been nothing short of astonishing.  Obviously they were doing something right.  there was an incredible amount of iterative development, and an emphasis on UI element overlays on videos, and embeds on other sites, all of which led to massive distribution, engagement, retention, etc.  the thing i thought was always smart about YouTube was that the interface was largely about browse-selecting one image from among several options. it was mostly a picture-driven UI.  and guess what?  many of those pictures are of people's faces.

Facebook -- hey, wonder whether *they* thought much about Faces? -- was started almost exclusively as a collection game around visual images.  as it grew & morphed, the profile pages & pictures remained hugely important, however the subsequent innovations around NewsFeed -- again, extremely visual, lots of faces -- and also the overall Facebook Platform, and associated user invitation dialogs, all created interesting & engaging ways for users to click around, into, and on top of interesting visual data (usually faces).  they continue to find interesting ways to personalize the user experience, and i don't see them slowing down at all.

that said, i do think there hasn't been much innovation around the user invitation dialogs, and that this is a place where i think a lot of interesting work could be done to a) select LESS # of people, b) who i CARE about more, c) make the faces BIGGER, and d) constrained by the CONTEXT of the current conversation keywords.  altho the dialog below is about faces, it's still too many for me.

interestingly, Google Wave takes a MUCH different approach and utilizes a very graphic / picture-rich environment, and a relatively complex UI.  while i haven't played with it yet, it does look pretty cool. still, i wonder if this isn't about 3 years late in the making... Google seems to be bragging about how the product has been in the making since 2007 or even 2004, but that seems like a bit of FAIL there... i mean, that's either an engineering fail for taking several years to get a product out the door (which still isn't live yet), or a management fail for not pushing them to get it done sooner.  anyway, i guess i shouldn't shit on their innovation even if it's a little johnny-come-lately, but i would have to say it seems more like a reaction to the recent News feed & activity stream innovation that's been happening at Facebook & Twitter than original thinking.  but maybe i'm being too harsh.  what i will say is that gmail / gTalk already has some useful features based on simply associating faces with email & IM conversations.  however, i'll also say that when i used to work with Jawed Karim at PayPal, before he went off to create YouTube he was showing me a visual IM client way back in 2004.  perhaps the interesting & minimalist elements of Wave are derived from this very basic association... and if so then i'll be eager to see what they've put together when it ships.  in any case, it's clear that Wave is emphasizing faces in a way that has never before been done at Google.

Twitter is another company that i might suggest has done some basic things right with face representations, altho the UI is rather spartan (unless you're using a Twitter client of one sort or other).  and before Twitter, i thought MyBlogLog had done some interesting things with faces as well.

As i almost always suggest, the reference presentation for many of these ideas is something called "Putting the Fun in Functional" by Amy Jo Kim, Shufflebrain.  AJ does a great job of explaining why the basic human psychology around collection behavior are well-suited for "collecting faces", and how this makes it easier for people to take the actions you want them to.

Fun in Functional 2009

View more OpenOffice presentations from amyjokim.

Brad Feld (& others) recently picked up my tweet and wrote his own piece on "all about the faces", however i think in that post he was discussing a somewhat different subject around whether faces or avatar icons work better in certain social environments.  i think he also comes to the conclusion that faces are important, altho i also think warm, fuzzy, familiar avatar icons can also function in positive, user-engaging ways just like faces can.

anyway, this post has now gone on quite long enough, but the primary point i was trying to make is that many consumer internet applications can improve their UI & conversion by simply:

1) Keeping the overall UI simple

2) Use big, high-contrast 3D buttons with simple call-to-action text 

3) Use large graphics & icons, and in particular use hi-quality zoomed-in faces

and of course, all of this should be done with rapid, iterative, a/b testing to measure results.

alright this really hasn't hit all the points i wanted to cover yet, but i'll stop here.

at some point in the future i'd like to talk more about how to improve invitation UI dialogs by filtering the available people & friends to focus on smaller subsets with larger facial representations.  in other words, less people, who i care more about, with bigger pictures. 

or then again, maybe just a big-ass picture of someone's butt would work just as well.

Sir Mix Alot- Baby Got Back

Startup Metrics for Pirates: FOWA/Miami (Feb 2009)

so i'm just re-arranging deck chairs here, i know... but there's at least 1 or 2 new slides. and a lot more funky colors, for those of you who enjoy my kidnapper-ransomnote fonts & unique style of raping the viewer's attention.  Also moved the embed of the original Startup Metrics for Pirates video (from Ignite Seattle / Summer 2007) after slide 23.

With no further ado, my talk from the Future of Web Apps (Miami, Feb 2009):

Startup Metrics for Pirates (FOWA/Miami, Feb 2009)

View more presentations from Dave McClure. (tags: revenue referral)

Hard Out Here for a [Web 2.0] Pimp.

ya know it's hard out here for a pimp
when he tryin' to get his money for the rent.
for the cadillacs and gas money spent
cuz' a whole lot of bitches talkin' shit.

well for what it's worth, i did make rent this month, G.

but lemme tell you, it ain't easy being a Web 2.0 P-I-M-P.

Image via Wikipedia

...especially in these Good Times we got going on around here.  banks going belly up, people losing their homes & jobs... damn.  people so fucking scared they voted a brother into the white [sic] house.  i guess that's progress, but now we got our asses in both hands worrying about credit card debt, mortgage foreclosures, and wondering whether we gonna get PAID.  better go slap the shit out my startups and make sure they come up with the Cash-Money, G.  damn straight. 

now listen up bitches:

Most of the time, entrepreneurs think about 2 types of users:

• Visitors ("Johns")

• Image via Wikipedia

  Contributors ("HOs")

Simply put, there are "HOs" who contribute content to your site (they give you their stuff, or "put out").  The rest of the people on your site are the "Johns" who visit & view the content... and might even pay you some cash money (if it's good shit).

However, typically a 3rd & very important audience is forgotten about, which is quite likely even more important than either of the two above.  this is the group of people who promote & distribute existing content / refer new users, altho they might not ever contribute any original content themselves:

• Distributors ("Pimps")

Image via Wikipedia

These folks help share, digg, tweet, email, & embed your content, promote it to new audiences, and bring users back to your site.  They are the "Pimps" who distribute your content.  And most likely, they are WAAAAAAyyyy more important (relatively speaking) than the Johns or the Hos.

(disclaimer & note to self: i'm pretty sure at this point i have now lost most of my female audience, and/or anyone with any shred of class or civilized sensibility.  for those of you still with me, i hope you find the rest of this post worth the crass language & white-trash upbringing i am helpless to remove from my discourse)

See, most folks probably design their site audiences like this:

1) first, let's get people to contribute content, so i'll emphasize THEIR needs and orient the site & features around CONTRIBUTORS (HOs).

2) next, i need to make sure people who are just average VISITORS (Johns) can view the site well, so i'll build lots of ways to use & experience that content.  and hopefully they're share some of it too, and maybe we'll "go viral"!

3) lastly, some of those folks who are contributors will probably help DISTRIBUTE content too, so i'll give them a few tools to help do that, but they should already be motivated to help distribute so we don't need to worry too much.  WRONG, WRONG, WRONG.

Now, there are already several errors in assumption/prioritization here:

Image by skinnie minnie via Flickr

• people who DISTRIBUTE are not necessarily the same people who CONTRIBUTE (translation: "PIMPs ain't HOs")
• even for those who do both, it's possible the higher-value action is to DISTRIBUTE, and yet most UI design emphasizes CONTRIBUTE features & actions higher.  but Contributors need Distributors and/or Affiliates to help bring in Visitors. ("HOs need PIMPs to get JOHNs")
• most of your VISITORS ain't gonna do shit except check out your content for free, jerk off on something they like, then skip town before paying you one goddamn cent.  ("window shopping is free & easy, except in Amsterdam... but PIMPS help make sure JOHNs pay up de HOs")

thus, the way most people manage audience looks like this:

1. HOs
2. Johns
3. Pimps

however, the order you should REALLY use is THIS:

1. Pimps
2. Johns
3. HOs

that's right folks.  The Internet works just like the Ghet-to. 

Pimps go FIRST, bee-atch. 

and if you don't like it, then Step OFF!...

cuz I'll beat your ass with my Pimp Cane and Cup and one mouse click tied behind my back.

we now return you to your regularly schedule Sesame Ghetto Street programming:

Ghetto Sesame Street

Great Entrepreneurs are PASSIONATE about Customers & Products, NOT about being Great Entrepreneurs.

yeah, that's a super long-ass headline, i know... it's a personal soundbite from a Stanford BASES E-Challenge panel discussion i participated in earlier tonight over on campus.  probably plenty of other people have said something similar previously, but i'll at least claim some original thought.

(note: i've been on blog vacation way too damn long... since before i left for Japan in December really.  sometimes if you're not feeling it, you just need to take a break.  hopefully i'm back now)

here's my point -- Silicon Valley is WAAAY too infatuated with the ELEGANT IDEALISM of Entrepreneurship (or the GOLLUM GREED of making a shitload of CASH) , rather than the GRITTY REALITY of running a CRAPPY little startup business that will likely GO NOWHERE... which if you've ever been through it, is a tough, painful, low-probability motherfuck of an adventure, aka tragedy.  it ain't no merry go round folks (well it is, but not the way you think... probably rollercoaster is a better way to describe it).

now please don't get me wrong.... i'm not here to shit all over your enthusiasm for building a startup.  nor am i saying there is anything bad about wanting to make money, or wanting to be your own boss, or to valiantly attempt to defy the odds and create the next Google or whatever. 

but i DO hope some of you young-ass whippersnappers get your heads out of your collective asses and get a little more practical about what you're likely to encounter should you decide to do your own startup.  and a little more real about what you may face at the end of a rough hand of poker.

to wit: the first time i tried to do my own business, it took 7 years of hard work, below market pay, near bankruptcy (2 or 3 times), broken friendships, damaged relationships, credit card debt up to my ears, ridiculous stress, several missed opportunities for big paydays as a grunt at Microsoft, Intel, Netscape, or Yahoo, all in exchange for a piddly-ass half-million acquisition that barely got me enough cash to put a down payment on a small condo in SF.  sure it was a good lesson in learning how to [NOT] run a business, but it was a HARD goddamn lesson.  and one i'm pretty sure i never want to repeat. the fact that i still wanted to try and go back out and do another startup AFTER that first effort is prime evidence that i'm either crazy, stupid, or both.

another thing i said tonight is running a startup for the first time is a lot like being a teenager driving a car at high speed -- in fact many high schoolers learning to drive are required to watch a movie about fatal car accidents / drunk driving consequences (WARNING: don't click thru if graphic images disturb you).  those movies are sobering in every sense of the word, and they do serve a useful purpose -- to provide negative incentives against doing something stupid that could result in severe harm to you or others. 

well most people in venture capital or business school won't tell you this, but first-time entrepreneurs are just as friggin' dangerous as drunk teenagers behind the wheel of a speeding automobile.  mostly to themselves, but possibly also to their employees, customers, investors, or family.  now every once in awhile, one of them actually manages to make it across the finish line with flying colors... and unfortunately their success may justify VCs throwing their cash away on not just that 1% but also the other 99% who may end up mangled along the side of the road.  but that's how it goes -- VC is a hit [and run] business.  you just gotta hope you're the Super Model 1% and not the other Wham Bam Thank You Ma'am 99%.  Good luck, sucker.

(um dave: wtf does this have to do with your headline dude?  hold on buddy, i'm getting there...)

ok, so i have i put the Fear O' God in ya yet?  good.

now, if you're still with me at this point, you must be serious about being an entrepreneur.  only crazy, ignorant, passionate people would still be reading this, thinking that startups are worth all this hassle.

so when i say "PASSIONATE", what i really mean is PASSIONATE about SOLVING A PROBLEM, and PASSIONATE about BUILDING A GREAT PRODUCT or SOLUTION.  it does NOT mean you're infatuated with the idea of being an entrepreneur or a great leader (yeah, bullshit... i know you're still in L-O-V-E LOVE with yourself, but maybe after i've kicked you in the startup balls a few times you'll be less likely to engage in this mental masturbation without a little reality check). 

hopefully, being PASSIONATE means you are driven to make someone's life better by understanding their PROBLEM, and perhaps helping create a great SOLUTION to that problem, and possibly even making a buck by actually DELIVERING it to them (... at the cost of $.99 or less, we hope). 

ok, enough of this drivel.... get back to work. 

BUILD something, dammit.

Best of DMC / Master of 500 Hats: The "Greatest Hats" Album

Finally got around to organizing some of my older / favorite blog posts... here you go:

Best of DMC / Master of 500 Hats blog: The "Greatest Hats" posts

(see http://500hats.typepad.com/greatest_hats/)

Well whaddya know... Yes, We CAN.

thank you america.  now, let's get to work.

Barack Obama: American Stories, American Solutions

a Story of Hope & Change, from the 44th President of the United States of America:

Help Make His Story, Our Story.

Help Make History.