Ben Horowitz does not have a hometown advantage with me. But once in a while I will drop by his blog to see what he has been up to recently, like I just did. And I think I just read the most bizarre blog post ever at his blog. What has venture capitalism come to?
There was a phase in my childhood when I used to fantasize about having curly hair. I thought it was just so cool. One of my post Spring Break jokes at college was to rib my white friends, "You getting there! You getting there!" It took me the longest time to see any kind of racial connotation between chicken and watermelons and the black identity. I still don't see the connection. I just so happen to be a huge fan of watermelons. If you grew up in the south of Nepal like I did where summers are hot enough for a siesta culture, you would also take watermelons at face value. They are a treat. They are better than any summer drink I ever had. Talking of siestas, Brad Feld has a most delightful blog post on that.
For the first time I am thinking those who think the VC firm A16Z has raised too much money might be right. They are now investing in bizarre territory. And here's some historical context.
The watermelon is no mango, the king of all fruits, but it sits right up there in the royal court. That has always been my opinion, and I am not changing it. Anything wrong you hear about watermelons has been planted in your brain by the fast buck fast food industry.
Also, how about this for a contemporary context? And to think, I have put out as many blog posts about The Tramp, as I have about Hillary!
Fred Wilson has an impressive track record as a VC. That is public knowledge. I have lost count of how many tech companies I got really, really excited about only to later learn it was a Fred Wilson portfolio company.
The dots I am trying to connect in this post is to propose the thesis that Fred Wilson's blog has been fundamental to his very impressive work as a VC. As in, the great work he has managed to do over the past decade he could not have done without his blog. He has a method about his comments section. That is where he goes fishing.
That thesis springs forth a few questions.
One, is it a required? As in should all VCs aspire to blog? I think yes. There are a lot of a A caliber VCs out there who don't blog daily (or ever) like Fred Wilson does. But what I am saying is if you are starting out as a VC today blogging daily is one of the things you can not afford to not do.
Two, other than fishing expeditions is blogging good for your mind? This is a huge yes. I think blogging is for everybody regardless of industry, regardless of what stage they are at in their careers. Blogging is working out for the mind. That is primarily why I blog, speaking just for myself. It also helps with meaningful networking. If Fred did not have a blog, and I did not have a blog, I doubt we would have met to date, I doubt we would have known each other.
Three, could this thesis be extended to tech entrepreneurs? That is a question up in the air. Because there is no A grade tech entrepreneur (or B grade) who blogs daily. Mark Cuban blogs weekly or every few weeks, but I think of him as a retired entrepreneur, he is more of an angel, and besides, his blog does not have Disqus.
I'd love to see some top tech entrepreneurs blog daily like Fred Wilson does. Is that possible? Advisable? I'd hope so. I wish some A grade people running for office did the same.
To Fred's credit he is a top blogger regardless of his track record as a VC. He goes toe to toe with people who are full time bloggers with nothing else going on on the side. I mean, I think Fred could earn a living simply through blogging. Talk about Plan B, not that he needs one.
Fred Wilson is my favorite solo blogger for a few different reasons. But there came a time when I did not read his blog for months. I felt like I was too sucked into it. I needed my space, I thought. But then my recent thought has been not that I should stay away, but that top entrepreneurs he is not invested in should also read his blog.
Once Fred paid tribute to Ben Horowitz on the other coast by saying he - Fred - simply writes checks. As in, Ben has been an entrepreneur. But in some ways simply writing checks has advantages. Away from action you can get better at vision and insight. Zuck struggles with mobile. Fred's blog talks often about mobile. I don't know of books delivering similar wisdom.
I was just reading this blog post by Ben Horowitz - great blog, by the way - and could not help thinking this guy sounds a lot like Dave McClure, only at a much larger scale. Dave McClure wants to help build your accounting department.
Investment firms aspire to be incubators. It is not like, here's the money, and now go build. The money is good, heck, it is the primary thing. But then there's the advice, the network.
I mean, look at this, this looks like a FoxConn report. As in, we cooked 30 tons of rice today and 12 tons of pork.
Image by http://www.flickr.com/photos/joi/2659065551/ via CrunchBaseIn 2011, we hosted over 600 portfolio presentations to corporate customers and partners at our office in Menlo Park. These presentations resulted in more than 3,000 introductions between portfolio companies and prospective Fortune 500/Global 2000 senior executives.
We’ve built relationships with over 4,000 engineers, designers and product managers, and we’ve made more than 1,300 introductions to our portfolio companies, resulting in 130 hires within the portfolio.
We added over 550 executives to our network in 2011 and made more than 300 executive introductions to our portfolio companies.
We’ve had nearly 400 interactions with media on behalf of our portfolio companies.
Image via WikipediaThis is not me saying Color fell off the cliff. I don't know. I carry a bulky camera, which means I hardly ever have a camera on me. And for me it is about what I see with my eyes. Where I am, what I am looking at, that particular view. That specific frame. The camera I believe is secondary to photography. And I believe most moments should not be captured. If you love butterflies, you don't become a butterfly collector. And there is some quantum mechanics thrown in. If you get too precise with the location of the particle, you miss out on the velocity. The freeze frame quality of picture taking can rob you of the full experience. Put that camera away, please.
Except when you decide you are going to take pictures for hours on end.
But then I was looking at this Lytro picture and a cold shiver ran down my spine. When you click on the sword, the artist disappears - artist, as in martial artist - and when you click on the artist, the sword disappears. That is problematic, to me it is.
I don't know if you have ever visited my blogroll, but it is a mouthful. It is the most elaborate, comprehensive blogroll of any I have visited. And because it is so elaborate and encyclopedic, I have had sections. That has not been good enough, and so I have had at the top a section called A1. Even that became a little too elaborate. So I just made a much shorter list called This Just In. These are people whose every blog post I want to read as soon as they come out, and preferably comment on them as well.
I made the list. It is short. Every single person on the list is the proverbial white male. What's wrong in the picture? It also bothers me that most are VCs. I wish it were mostly entrepreneurs. But the best entrepreneurs don't blog. Some good ones do. And there are some out there who I just have not come across yet. Please suggest names.
Ben: As Kanye says, hip hop is 1/2 what you say and 1/2 how you say it, so I put the tracks up on the blog http://bhorowitz.com Me: @bhorowitz The hip hop quotes make your blog stand out and gets me to keep coming back. Although the posts are also good.
Ben's Blog: Ben Horowitz: In Defense of Standards, Ethics, and Honest Financial Reporting at Hewlett-Packard: my business partner, Marc Andreessen, is on the board of directors of Hewlett-Packard. I note that I have no inside information, and this blog post is based purely on published material. In 2007, I sold Opsware, the company that I founded and ran to Hewlett-Packard for $1.6B. I worked at Hewlett-Packard from 2007 to 2008 as an executive in the software business. Recently, my old company Hewlett-Packard has been in the news—and not in a good way. ....... HP employs over 300,000 people. ..... Jodie Fisher had more access to the CEO and was paid more than 99.9% of HP’s workforce, despite having no traditional qualifications. ...... It is not an easy thing to fire a popular, highly successful CEO.
Something tells me this drama is far from over. The Oracle-HP alliance is now a full blown rivalry. This is about money. Like they say, follow the money. Oracle is now firmly in the hardware business as well, and HP feels eaten up. Oracle can do hardware, but could HP do Oracle-like software?
This is not about people getting along, or not getting along. This is about the money. And Larry Ellison might be dramatic, but he is first and foremost a businessman. His flare ups are market signals. Watch them and you are watching an industry churning.
New York Times: A Double Standard at H.P.: Oracle and H.P. had once been the closest of partners, with the latter selling the industrial-strength hardware that ran Oracle’s industrial-strength software. But that partnership appears to be dissolving. ..... Larry Ellison, Oracle’s flamboyant founder ..... “Hiring him had nothing to do with fighting Oracle,” said Ray Lane, the former Oracle (!) president who is set to become H.P.’s chairman next month. “The board chose Léo because he was the best available athlete.” .... Apotheker was likely to further traumatize the already demoralized H.P. staff. ..... “If you wanted to find someone who represented the diametrical opposite of the H.P. way, it is Léo,” said Jason Maynard, a veteran technology analyst with Wells Fargo Securities. “He is tough as nails and chews glass for breakfast.” ...... the same board that viewed Mr. Hurd’s minor expense account shenanigans as intolerable has chosen as its new C.E.O. someone involved — however tangentially — with the most serious business crime you can commit. ..... the chance to embarrass H.P. and its new C.E.O. is likely to be irresistible to Oracle and Mr. Ellison. Which will mean yet more egg on the faces of the H.P. directors.
What you do, what I do is ultimately about people. I read a quote from you a few weeks back where you are saying show me a web service that has major user engagement and I will show you a way to monetize it. If enough people show up, it will work.
Thank you for the rapid response to my blog post email yesterday. Here are some more details.
There is a concrete mathematical theory called the butterfly effect. A butterfly flapping its wings in the Amazon forest could be the reason a cyclone hit Bangladesh. What happened in Nepal in April 2006 was a political cyclone. I was the butterfly flapping my wings in New York City. In April 2006, over a period of 19 days, about eight million people out of the country's 27 million came out into the streets to shut the country down completely to force a dictator out.
Nepal: Background
Nepal is the poorest country outside of Africa. More than 75% of the countries on the planet are smaller populations than Nepal. So it is not that small a country. There are as many people in Nepal as there are in Iraq. You could have introduced democracy into Iraq the Nepal way and saved a trillion dollars in direct costs and more in indirect costs.
Nepal has been the most popular destination among Peace Corps volunteers for some reason during the half century of that program's existence. I don't really know why because I have not traveled the world.
Nepal is situated between India and China. Those two economies are growing at double digit rates. There are forecasts that show the Chinese economy will be bigger than the American economy by 2020. The democracy work in Nepal has implications for China and hence has larger geopolitical implications disproportionate to Nepal's size, especially when you take into account the Maoists of Nepal, the deadliest ultra left group on the planet since the end of the Cold War, and the Maoists of India, the number one security threat to India, as stated by the Indian government, affecting one third of that country's districts.
9/11 was a flashpoint, just like Pearl Harbor was a flashpoint. You don't want a third flashpoint in Taiwan. The Arab world and Africa and China are the three large chunks where democracy still is not in full play, but China stands out in that I don't think the American political system is what the Chinese need to convert to. The truth lies somewhere in between. America needs total campaign finance reform so it can truly become a one person one vote democracy. And China needs multi-party democracy and federalism and Tibet and Taiwan as states in that federal China. And the fermentations inside of Nepal going on right now in terms of mainstreaming the Maoists have implications for China and India. If Nepal can be turned into a multi-party democracy of state funded parties in the constitution that country is scheduled to write for itself within a year, then we will be on our way.
Iran
Just like Nepal has implications for China, Iran has implications for the entire Arab world. That country for Africa could be Zimbabwe. What is exciting about Iran is what success there could mean for Saudi Arabia and Egypt. When I see people out in the streets in Tehran I get visions of people out in the streets in Cairo.
After success in Nepal, I have witnessed wastes in Bhutan, Tibet, Burma and Iran. I have watched helplessly. The people on the ground have been doing the hard part - coming out into the streets in the face of immense brutality - and the world has been failing them in each case. A democracy movement is science, it can be made to work every single time. But you do have to mutate faster than the virus does. And you do have to take a holistic, global approach. There are basic principles that worked in Nepal that could work anywhere.
There are a few steps that the democracy movement in Iran needs to take, the most important is to shift the goal post. The goal can not be to get the existing regime to hold the presidential election all over again. The goal has to be regime change. The goal can not be to take the brutality lying down. The goal has to be to document every act of brutality to bring the perpetrators to justice once a new, interim government takes over power. The goal can not be to keep coming out into the streets. A democracy movement is supposed to last a few weeks at most, not months and years. You shut the country down completely until the regime gives way to an interim government with the mandate to hold elections to a constituent assembly within a year of taking over power. That assembly would have two years to write a constitution. The democracy movement in Iran needs a leadership change. The current leader has not been able to think outside the box. He is boxed in. He is committed to functioning within the current mullahcracy in place.
My Work
It will be transparent, it will be digital, it will be political. My blog Barackface will be the hub of much of what I do. We are counting on the fact that the world is connected enough by now that everyone and every organization I need to reach out to and communicate with I can do digitally and in a massive way because a blog scales on its own. Social media is magic. And we are counting on the fact that I did this for Nepal, I can do this for Iran all over again.
After there is regime change and an interim government takes over, I will be done, my project complete. I will no longer need to give full time involvement, although I can't imagine not maintaining part time involvement all the way to the country getting itself a new constitution. After so much and such intense emotional involvement you don't just walk away.
You put in 5K of your personal money into this now, like today, like yesterday. Fred Wilson puts in his 5K once he is back from his Italy vacation in less than a week. And you two find me 18 other VCs who will put in 5K each by the end of July. Marc Andreessen 5K, Ben Horowitz 5K, Albert Wenger 5K, Brad Burnham 5K, Vinod Khosla 5K.
I start with 100K. It comes to me at the beginning - not in monthly installments - like you would do with a startup. If I can show success by September 2011 - in 15 months - each of you put in another 2.5K each for a total of 50K as a bonus payment to me. If I can do the whole thing in less than 15 months, the 150K deal still stands.
Tech
You are a VC. I am a tech entrepreneur. Why would we do this? Because ultimately it is all about people. It is about impacting lives. When the Iranians first took to the streets it warmed our hearts as to their use of Twitter as a tool. It is all related.
I am about 15 months away from my green card, and I am about 15 months away from launching my tech startup. My tech startup will be to do with the last mile of the ISP business. And from working on democracy in Iran to working on the startup is not going to feel like a career change to me. I think of democracy as the Big Bang in a country's life. It is a starting point of sorts. Once a country gets its democracy, it is on its way. But democracy alone does not put food on the table. And universal broadband is that magic wand that will help bridge the huge gulf between the West and the Global South. I had to come to America. Others like me don't have to if they can have broadband.
There has been tremendous buzz today about FourSquare's new round of funding. This process has gone for a few, long months now. It has been one drawn out process. There has been drama. There has been intrigue. The sweet spot for me was when after months of talk Yahoo might buy FourSquare, FourSquare instead went ahead and stole a key talent from Yahoo. That's the way you do it.
When there was talk it might get bought, I strongly argued selling FourSquare would be a mistake. I was not saying, do the right thing, don't go after the money. What I was saying was, think about money, big money, do not sell.
I am not the first person to draw FourSquare-Twitter parallels. But I sure am one who gets the parallel. The two have had similar trajectories. At first sight a tweet feels as lightweight as checking in. What the.
Twitter had enormous buzz. It scaled but not as well as I would have liked. It made monetization moves, but much too late for my tastes. And it has done a lousy job of adding new features. FourSquare has scaled well. What is the FourSquare version of the fail whale? I don't know it. And FourSquare has been very impressive in the monetization department. But FourSquare has not impressed me in the features department. And I have to say that out loud because, unlike Twitter, FourSquare has competition. I hope this new round of funding allows FourSquare to cement its lead. I wish Dennis (@dens) and Naveen (@naveen) all the best.
Like Andy Grove said, only the paranoid survive. Checking in is the starting piont of the FourSquare experience. Companies for which that is not true - Yahoo, Facebook, Google, Twitter - are not serious threats, although all of them could use that key feature. Checking in in the mobile space is like the inbox in the email space, it is basic. But that check in as the starting point space has a few different players, and checking in is an activity that leaves much room for imagination. Could FourSquare ride that imagination wave? If it does, it goes IPO in a few years. If it doesn't, it should then go ahead and sell off. I am betting it will ride the wave. We shall see.
FourSquare has a shot at going IPO before MeetUp.com, a more senior tech company in town, senior in terms of years. Unless we get a few solid IPOs, New York City has not really arrived on the tech scene. Until then we should brag about our subway instead.
Dennis not only created the vision for the company, but for the entire product category. Beyond that, he is very clearly the thought leader in the market. This is not at all surprising as he has been working on the problem for a decade and has highly refined his thinking through that period. ...... . He’s the kind of leader that great technical minds will be excited to follow: visionary, righteous, and competent. I am really excited to work with Dennis to help him on his path from being a great leader to a great Chief Executive of an incredibly important company. ...... at Foursquare is growing faster than Twitter did at this stage. ......Dennis and team have identified over a dozen different dimensions of the Foursquare product that must interact with each other in precisely optimal ways to achieve user delight. Years and years of research and sweat equity went into cracking the code, and the results are magical. ....... over 4.6B people have mobile phones and there are 1.7B people on the Internet. Already, over 200M people worldwide have smart phones and that number is headed north fast. ...... , major brands such as The Wall Street Journal, The New York Times, Zagat, Bravo TV, Starbucks, C-SPAN, Marc Jacobs and over 10,000 businesses are currently working with Foursquare to build customer loyalty and drive traffic. Not many companies have their users turn into their sales force, and it’s definitely a good sign that this is happening around Foursquare.
There are only two priorities for a start-up: Winning the market and not running out of cash. Running lean is not an end..... Sometimes running fat is the right thing to do.....Running fat meant that I laid off zero software engineers so that we could keep on investing in our technology, find our product/market fit, and build a lasting technological advantage..... the only thing worse for an entrepreneur than start-up hell (bankruptcy) is start-up purgatory..... Start-up purgatory occurs when you don’t go bankrupt, but you fail to build the No. 1 product in the space.
Ben and his partner Marc Andreessen. They have started and built multiple successful businesses and all I do is write checks...... I have never, not once, been successful with an investment in a company that raised a boatload of money before it found traction and product market fit with its primary product.....The very best investments that I have been involved in established product market fit before raising a lot of money. That's how Geocities did it. That's how Twitter did it. That's how Zynga did it..... they had significant user or customer adoption before ramping up hiring and spend..... it is very hard to be nimble and quick when you have hundreds (or even dozens) of engineers and other employees....Ben explains that Loudcloud raised $350mm in four rounds of financing (including an IPO) in the first 15 months of its life. Marc Andreessen and Ben Horowitz can do that. Most of you can not.
Fred is one of my favorite VCs .... Product market fit isn’t a one-time, discrete point in time that announces itself with trumpet fanfares....Some companies achieve primary product market fit in one big bang. Most don’t, instead getting there through partial fits, a few false alarms, and a big dollop of perseverance..... I show below that Fred himself didn’t realize that Loudcloud had achieved product market fit even though we had...... We had to rebuild completely and would ultimately find product market fit in a different set of markets altogether....... the best markets are usually the ones in which competition is fierce because the opportunity is big...... Twitter (one of Fred’s brilliant investments) ..... Twitter is more exceptional than Loudcloud or Opsware..... Marc had moved on to found Ning and I was the CEO who nearly ran Loudcloud into the wall.
The real answer to this debate is there is no one size fits all. Fat or thin is right depending on what businesscycle the economy is going through, depends on what stage the startup is in, depends on what the eventual size of its market and the startup's share of that market ends up being. There can only be so many Googles, and so many Facebooks. Most startups end up being neither and still succeeding. You can absolutely make the case for fat, but overall it is the lean startup that wins. Fat is few and far between. Some of the fat ones might be some of the biggest winners, but they will still be a numerical minority, a super minority. So if it is about betting, I'd bet on lean. Especially for early stage, definitely go lean. But a startup can start lean and go fat later. There is no one formula.
Loudcloud/Opsware is clearly a fat success story, but that does not make it the norm. The number of lean success stories far outnumber the fat success stories.
Ben and Fred come across as two large size figures in the tech industry who both have much respect for each other. That makes this debate extra interesting. There is this with-all-due-respect deference from both sides. You could argue this whole debate was masterminded by two heavyweights to pay compliments to each other.
Both are right. There is no one formula. The disagreement is in nuances. Ben has done fat well. Fred has done lean well, and many, many times. Can't argue with track records of success. Or maybe you can. Hence the blog posts and counter blog posts.
Ben saying "Twitter is more exceptional than Loudcloud or Opsware" had me chuckling. The statement is so very true.