VCZealots

Twitter Digest: 2012-02-08

Thu, 09 Feb 2012 06:00 GMT

Classic: "Albania, Albania, you border on the Adriatic" – http://t.co/XD6heii9 ->
New & remarkable Atlantic photo series: The Civil War, Part 1 – http://t.co/i4xbCYcr ->
Among the many iconic images in the Coens' Miller's Crossing: Rug Daniels – http://t.co/Gc41AAC8 ->
Contemplating leaving the theme from Miller's Crossing replaying on my fillings on for the rest of 2012. ->
That's what we really needed in U.S. electoral cycle: Someone to get out there and defend the Crusades – http://t.co/Zae8IfoQ /via @Nouriel ->
Favorite thing I read today from a bank person : "You pay your interest in the rears". [But of course you do, Mr Bond.] ->

My CU Bathroom on Boston’s Fox 25 News

Wed, 08 Feb 2012 22:12 GMT

In the “truth is stranger than fiction” category, my CU Boulder bathroom donation (well – the gift I gave to CU Boulder that resulted in me getting to name a bathroom) made the TV news tonight in Boston on Fox 25. There's apparently a new bathroom news cycle because of William Falik's gift to Harvard Law School for the Falik Men’s Room at Harvard Law School. While my bathroom at CU Boulder doesn't have the same elegant name (it's known as RRM 209 in the ATLAS Building, or the Feld Mens Bathroom on Foursquare), I've got a better quote: ”“The Best Ideas Often Come At Inconvenient Times – Don’t Ever Close Your Mind To Them.”

The two minute news clip, along with a Skype interview I did this afternoon, follows. MIT – my offer is still open – don't flush it.

Harvard Law School names restroom after generous alumni: MyFoxBOSTON.com

Twitter Digest: 2012-02-07

Wed, 08 Feb 2012 06:00 GMT

World's 25 best ski towns http://t.co/da3Dn71g /via @SullyCNBC ->
[1202.1448] Financial black swans driven by ultrafast machine ecology http://t.co/jG7vZPwG ->
Screenwriter/director/comedian (Office/Gervais) Stephen Merchant in a Google talk – http://t.co/waUlNJa9 ->
Precisely. IPO to follow. RT @ReformedBroker: @pkedrosky She's the Facebook of broken-into foreclosed home rentals! ->
Woman charged for breaking into foreclosed San Diego homes and renting them out on Craigslist – http://t.co/7HUW6YZH ->
An almost perfect headline. RT @DrVes: Sexually transmitted allergic reaction to Brazil nuts http://t.co/RjUh3Tl2 ->

@Google in Conversation with Stephen Merchant

Tue, 07 Feb 2012 23:01 GMT

@Google in Conversation with Stephen Mechant – YouTube.

Three Magic Numbers

Tue, 07 Feb 2012 07:51 GMT

Every company I'm involved in keeps track of numbers. Daily numbers, weekly numbers, monthly numbers. Ultimately, all the numbers translate into three financial statements – the P&L, Balance Sheet, and Cash Flow Statement. While these numbers are sacrosanct in the accounting and finance professions, they are lagging indicators for most startup companies. Important, but they tell the story of the past, not what is going on right now.

I've formed a view that every young company should be obsessed about three magic numbers. Not two, not five, but three. Before I explain what those numbers are, I need to tell a story of how I got to this point.

My brain works better with numbers than graphs, so over the years I've conditioned most people I work with to send me numbers on a regular basis. Words are good also, but I love numbers. Early in the life of the company I request numbers daily. Some of this is for me; most of it is to try to help the entrepreneurs build some muscles around understanding the data and how to use it.

Recently, I've noticed a cambrian explosion of data among several of the companies I work with. The number of different numbers being tracked daily is massive. When you walk into their office there are screens full of graphs on the wall. Everyone in the company has access to the trends over time across a number of dimensions. These graphs are pretty, the numbers are dynamic, and there are often blinking lights to go along as a bonus.

A few months ago I stood in the middle of the office of a 30 person company and stared at the flat screen TVs hanging from the ceiling showing an array of graphs. I'm sure my mouth was open as I tried to process the data and make sense of it. I knew this particular company well and could reduce the number of different data points to a small set, but I was completely overwhelmed by the visual display. As I systematically looked at each of the graphs, I realized very few of them mattered much, nor where they particularly helpful in understanding what was going on in the business.

At the moment I realized these were no longer magic numbers. Instead, I was looking at wallpaper. Data porn. The entrepreneurial aeron chair equivalent of 2012. Pretty, but a bad allocation of resources. The 30 people in the room might be looking at the graphs. They might be looking at one of the graphs. But they probably weren't seeing anything.

This particular company runs off of three numbers. Daily active users (DAU). Live publishers. Trial publishers. That's it for now. In the future, there will be a daily transaction metric (Daily transaction revenue) that replaces trial clients. But that's probably a quarter or two away.

I then started thinking about each company I'm on the board of. This rule of three applies. For many of the companies, DAU is one of the numbers. In others it's daily orders. Or daily revenue. Or daily activations. Or total publishers. Or new publishers. But in every case I could reduce it to three numbers that I felt were the most important to pay attention to.

The absolute number is what matters. The trend is driven by day over day changes. If during the week (assume the week starts on Sunday) the numbers are 47, 67, 69, 72, 174, 80, 53 this prompts the question “what happened on Thursday to drive the number to 174?” If the next week the numbers are 53, 75, 214, 83, 80, 73, 45 this prompts two questions: “what caused the spike on Tuesday” and “why is the week over week trend downward?” Clearly there is seasonality within the week and there is a new high, but the overall trend going into the weekend is negative.

My brain can focus intensely on three variables like this in a business. Once I add a fourth, I have trouble figuring out the relationship between them. This doesn't mean that the leadership and functional managers shouldn't track and analyze the detailed data. They should. But they should realize that when they show this to everyone in the company, no one knows what to care about.

Instead, my new approach is to focus on three numbers. These three numbers should reflect “what's going on right now in the business” and the trend of the numbers should be a predictor of what's going on. As I think about the companies I'm involved in, I can define these three numbers in 60 seconds – they are almost always painfully obvious. Sometimes I do end up with four and have to make a choice, but I rarely end up with five.

The technology for displaying these three numbers is remarkably simple. They make this thing called a whiteboard that you can write them on. An email can go out to everyone in the company with the three numbers. That's it.

What are your three magic numbers?

Twitter Digest: 2012-02-06

Tue, 07 Feb 2012 06:00 GMT

Yikes. RT @jarsch: Incredible video of a snowmobile almost going over a cliff! http://t.co/zY4LXNLN @pkedrosky would appreciate. ->
.@mortgagereports Oh, you're right. Curse you New Yorker paywall! in reply to mortgagereports ->
Phineas and Ferb in the New Yorker? Oh, you're so busted! http://t.co/3qPU5iEe ->
Photo set: Deep Freeze Spreads Across Europe – http://t.co/sLr9jHXB ->
RT @breakingweather: Raw video of snowboarder surviving an avalanche – http://t.co/VzNU04co /cc @sacca @kentgoldman ->
TED 2012 wants to know my tribe. Ordinarily I pick the tribe of people not in tribes, but not an option. ->
The Marquet report on Ponzi schemes – http://t.co/7HTDTtms ->

Stopping the Brain Drain

Mon, 06 Feb 2012 22:39 GMT

Me on NPR on stopping the finance “brain drain”.

Twitter Digest: 2012-02-05

Mon, 06 Feb 2012 06:00 GMT

Strange Bloomberg Headlines: Huggies Price Cut Shows Why Bond Market Backing Bernanke Considering QE3 – http://t.co/CRH83C57 ->
20 Mule Team Canyon – http://t.co/6bz27lIo ->
Chancellor: ECB ‘saves’ banks as economies sink – http://t.co/N583wxkg ->
Weather Extremes : Where does the Deepest Snow on Earth Accumulate? http://t.co/AgqE2xGq ->

Grinfucking

Sat, 04 Feb 2012 09:39 GMT

I first heard the word “grinfucker” a decade or so ago from a close friend who was a former investment banker. He said, in response to a meeting we were in with a person who was very polite and charming “he's such a grinfucker.” I loved the word and, as I found out later, it described the person perfectly.

I had an encounter with someone on Friday that made me think to myself “that person is a grinfucker” and I vaguely remembered a post on the web from someone about grinfuckers. A quick Google search generated a post from Mark Suster titled Don't be a Grin Fucker. It's excellent - go read it – this blog post will wait patiently for you to come back.

I was at dinner mid-week with another friend talking about a bunch of stuff. During that dinner we started talking about SOPA/PIPA. He has another friend who is one of the SOPA/PIPA advocates. He told me what the person said about it, which was basically “the tech industry misunderstands what we are trying to do – it's only about foreign websites – there is nothing bad in the bills.” I responded to my friend that this person was lying. We talked about that for a while. As I reflect on the conversation, it wasn't simply that the pro-SOPA/PIPA person was lying, he was actually grinfucking our mutual friend. Which, ironically given the specific context, might even be worse than lying.

I try to live my life where I always say 100% what is on my mind. I rarely hold back and, although I try to be polite about it, I'm sure I piss plenty of people off. But I'd rather annoy and piss them off than grinfuck them. And I'd much rather someone be brutally honest with me about whatever they think, especially if they disagree with me or think I'm doing something stupid, since that information is so much more valuable to me than a disingenuous good vibe.

I've started doing something new at the end of most of my public talks. I have always ended by giving out my email address and encouraging people to reach out directly if there is anything they want to discuss. But I've added on the following:

If I said anything you disagree with, think was confusing, stupid, or just plain wrong, please tell me. I won't take offense – don't sugar coat it – just tell me. That's the best way for me to learn and get smarter.

I suppose I could add “please don't grinfuck me by saying how wonderful the talk was as you think in the back of your mind ‘wow – Feld is a real moron – he totally missed the message on the blah thing.'”

I encourage everyone to chew on this. Honest, direct, and clear debate is so much more powerful than bullshit. We are living in a very complex era and the information we are trying to process is extremely confusing and contradictory. If you like or respect someone, don't grinfuck them. And if you don't like or respect them, don't grinfuck them – tell them why and decide how you want to spend your time.

What Makes An Awesome Board Member?

Thu, 02 Feb 2012 10:57 GMT

Over the past two years I've been struggling mightily with the dynamics of “classical VC funded board of directors” and how these boards work. When I hear a VC say “I'm an active board member” it gives me the same nauseous feeling I get when someone says “I'm a value added investor.” I've been on some awesome boards, some terrible boards, and everything in between. Today, I refuse to be on a shitty or dysfunctional board and I'm proud that every board I'm on is one that I'd consider to be effective, although they all operate in different ways.

I've experimented with a bunch of different approaches across a lot of boards and have been thinking hard about this lately. I'm working on a book called Startup Boards with Mahendra Ramsinghani and have done some interviews about this topic lately, including a chaotic one the other day with James Geshwiler on the Frank Peters Show.

My long term friend Matt Blumberg (Return Path CEO) and I were going back and forth about his recently board meeting (which ironically I missed) and he wrote some kind words about me and his other board members (Fred Wilson – USV, Greg Sands – Sutter Hill, Scott Weiss – A16Z, and Scott Petry – Authentic8.) I asked him if he'd write a guest post about what makes an awesome board member. He was willing – it follows.

I’ve written a bunch of posts over the years about how I manage my Board at Return Path. And I think part of having awesome Board members is managing them well – giving transparent information, well organized, with enough lead time before a meeting; running great and engaging meetings; mixing social time with business time; and being a Board member yourself at some other organization so you see the other side of the equation. All those topics are covered in more detail in the following posts: Why I Love My Board, Part II, The Good, The Board, and The Ugly, and Powerpointless.

But by far the best way to make sure you have an awesome board is to start by having awesome Board members. I’ve had about 15 Board members over the years, some far better than others. Here are my top 5 things that make an awesome Board member, and my interview/vetting process for Board members.

Top 5 things that make an awesome Board member:

They are prepared and keep commitments: They show up to all meetings. They show up on time and don’t leave early. They do their homework. The are fully present and don’t do email during meetings.
They speak their minds: They have no fear of bringing up an uncomfortable topic during a meeting, even if it impacts someone in the room. They do not come up to you after a meeting and tell you what they really think. I had a Board member once tell my entire management team that he thought I needed to be better at firing executives more quickly!
They build independent relationships: They get to know each other and see each other outside of your meetings. They get to know individuals on your management team and talk to them on occasion as well. None of this communication goes through you.
They are resource rich: I’ve had some directors who are one-trick or two-trick ponies with their advice. After their third or fourth meeting, they have nothing new to add. Board members should be able to pull from years of experience and adapt that experience to your situations on a flexible and dynamic basis.
They are strategically engaged but operationally distant: This may vary by stage of company and the needs of your own team, but I find that even Board members who are talented operators have a hard time parachuting into any given situation and being super useful. Getting their operational help requires a lot of regular engagement on a specific issue or area. But they must be strategically engaged and understand the fundamental dynamics and drivers of your business – economics, competition, ecosystem, and the like.

My interview/vetting process for Board members:

Take the process as seriously as you take building your executive team – both in terms of your time and in terms of how you think about the overall composition of the Board, not just a given Board member.
Source broadly, get a lot of referrals from disparate sources, reach high.
Interview many people, always face to face and usually multiple times for finalists. Also for finalists, have a few other Board members conduct interviews as well.
Check references thoroughly and across a few different vectors.
Have a finalist or two attend a Board meeting so you and they can examine the fit firsthand. Give the prospective Board member extra time to read materials and offer your time to answer questions before the meeting. You’ll get a good first-hand sense of a lot of the above Top 5 items this way.
Have no fear of rejecting them. Even if you like them. Even if they are a stretch and someone you consider to be a business hero or mentor. Even after you’ve already put them on the Board (and yes, even if they’re a VC). This is your inner circle, and getting this group right is one of the most important things you can do for your company.

I asked my exec team for their own take on what makes an awesome Board member. Here are some quick snippets from them where they didn’t overlap with mine:

Ethical and high integrity in their own jobs and lives
Comes with an opinion
Thinking about what will happen next in the business and getting management to think ahead
Call out your blind spots
Remembering to thank you and calling out what’s right
Role modeling for your expectations of your own management team
Do your prep, show up, be fully engaged, be brilliant/transparent/critical/constructive and creative. Then get out of our way
Offer tough love…Unfettered, constructive guidance – not just what we want to hear

Disclaimer – I run a private company. While I’m sure a lot of these things are true for other types of organizations (public companies, non-profits, associations, etc.), the answers may vary. And even within the realm of private companies, you need to have a Board that fits your style as a CEO and your company’s culture. That said, the formula above has worked well for me, and if nothing else, is somewhat time tested at this point!