Thoughts On Bringing Your Employees Into Startup Board Meetings

One of my blogging rules of thumb: if confronted with the same question several times in a short period of time, turn it into a post. So since several Homebrew founders have recently asked about bringing employees into Board meetings, here’s my answer (sans the crazy gesticulating you get from me in-person). As background, Satya and I are believers in the value of Boards post seed funding because it gives founders what we think of as ‘leadership momentum.’

  • In general you want to keep Board meetings limited to Directors, official Observers and your lawyer (in Silicon Valley most lawyers will attend your Board meeting and serve as secretary without charging). Even when you invite others in, remember to leave time at the end for a Directors-only wrap up in case there’s any administrative matters that need to be approved (such as employee stock grants).
  • Bringing in team members to demo, speak to a specific issue or other reason is fine. Do this spur of the moment only on extreme occasions – better to add to the agenda and let the person know in advance. I’m definitely an advocate of giving people the chance to talk about their work. Nothing can be more frustrating than having your work represented by someone else since you weren’t allowed in the room. This is a corrosive element at large companies that doesn’t need to be part of startups.
  • Make sure the invited attendee doesn’t over-prepare. People want to do a good job and especially if they haven’t attended one before a Board meetings can sometimes be thought of as a BOARD MEETING!!!! A chance to shine or impress investors. We stress to founders that seed stage Board meetings are about dashboards and discussions. Not fancy slides, not decision making, not pontificating (by founders or investors!).
  • Timebox the specific topic and once done, restore the room to its original composition.
  • Founders should prep the Board as to what they want to impart upon the employee. Use us to deliver a message – usually a supportive one – but be specific on what you want the outcome to look like. That said, I don’t believe in surprise attacks. Don’t say “Tim has been slacking off, I need you to ream him at the Board meeting.” If you’re having a problem with Tim, and you’ve already conveyed this to him without improvement, I’m happy to 1:1 with him if necessary but a Board meeting is not the right setting. I am happy to emphasize the importance of a deadline or goal to an employee – turn it into something constructive and make sure sense of urgency/commitment is high. [again, we're talking early stage companies]
  • Don’t get in the habit of inviting exec(s) into the Board room consistently just to make them feel included. This is a trap for two reasons. Firstly, your normal operating environment should be created to solve this inclusion. Inviting someone into a Board meeting as a looksee isn’t a solution. Instead look at what’s going on in your day-to-day that’s making someone feel distant from decision making. And how to share the Board materials/feedback/discussion with the entire team. Second, once you hit your A round of financing, your Board room dynamics will change and you’ll have to disinvite these employees. Although it’s logical to you it can still feel like a slight – “what, I was ‘in’ and now I’m ‘out?'” (sidenote: this happened to me as an employee once).

Ok, I think that’s most of my standard response to this question. Thoughts?

Let’s Meet: How to Prevent Big Companies from Wasting Your Startup’s Time

“Big companies most effective asymmetric warfare tactic against startups: requesting endless meeting.” That was the tweet which started a funny back and forth of corporate-speak that Pando’s Michael Carney summarized in Shit Big Companies Say. My original quip was prompted by a lunch with a friend who works at a BigCo CorpDev and often meets with startups. She’s awesome – very smart, understands BigCo very well – but seemed surprise when I suggested she was probably underestimating the time impact of these meetings on startups. “But usually it’s just a 45 minute or hour chat and we don’t ask them to prepare anything,” she said. Hmm, that’s kinda like sitting down in a restaurant and assuming the amount of time you spent is all that goes into making a meal, forgetting the total time it took to gather, prep, cook and serve.

It’s usually innocuous. BigCo isn’t trying to harm the startup. There’s actual interest from a product manager, executive or other stakeholder to speak with the company and understand whether there might be a relationship to create. But while it’s true 100% of consummated partnerships started with a meeting, it’s also true 100% of discussions which went nowhere started with a meeting. As a startup, figuring out how and when to engage is essential to not losing focus and driving the process towards a desired outcome. Some thoughts:

  • Don’t Take the Meeting Unless You Know What You Want Out of It: You don’t actually have to meet with BigCo, especially if they won’t tell you what the goal/agenda is, who will be in the room, etc. Just stay heads down and keep building.
  • Make Sure Right People Are in the Room: If you’re meeting with Facebook, it’s not about insisting Zuck attend but you want an informed decision maker in the room – a lead engineer, product manager, business or operations manager. Someone who isn’t just summarizing what you said and relaying back to the team but someone who you can engage in a discussion of where your market in going. If you get stonewalled on this request, ask what data/information can you provide in advance to make it worth this person’s time to attend. Or attempt the end around – get in touch with this person via a mutual friend and say you were invited to come present to someone at Facebook but would really like this person to be there too. You may off the person who contacted you in the first place, but if it’s just “hey, I asked a mutual friend for advice and that friend reached out on my behalf” then it’s less risky.
  • Unless You Know Goal & Prepare for It, Make the Meeting Less Formal: Don’t half-ass it but don’t over-ass (?) it unless you are trying to produce a specific outcome. That’s to say, if it’s just an intro meeting, don’t spend that week asking your design lead to make pretty slides and your eng lead to get a demo ready. Waste. Of. Time. Turn it into a meal or walk n’ talk instead to remove the ‘presentation’ aspect. That said, if you’re trying to accomplish something in particular, don’t just storyboard the meeting, start to think about follow-up and the cadence after. Use the momentum of a meeting to push push push. Don’t let them say “thanks for coming in” and just walk away.

and lastly….

  • Turn Every Meeting Into a Recruiting Opportunity: Get the contact info of everyone in the room. You never know when you might want to reach out to them to join your company.

The Five Most Important Decisions of My Life Thus Far

I visit each morning to type “birthday!” onto friend’s profiles as appropriate. Earlier today I also noticed a post from a friend celebrating his 5th wedding anniversary. “One of the best decisions I ever made” was a partial description of the nuptials. Made me think – what are the most important decisions I’ve made in my life thus far?

1. The decision to have a child

Prior to marriage, my wife and I had discussed our views on family. We clearly both wanted children but as we got down to business later, I dragged my heels. What if I wasn’t a good dad? Could I be successful in my work and my family – where would I get the time to do both as well as I wanted? It also so happened that conception was initially more difficult due to my lazy sperm. But I knew I was just afraid and that fear wasn’t fair to Caroline or, ultimately, to myself. So we went forward with an IVF and very quickly found ourselves with a great little kid that makes every day more meaningful and interesting.

2. The decision to marry Caroline

I was a  serial monogamist but always found my relationships hitting walls – sometimes at three months, sometimes six, etc. The furthest I’d gotten before was ~15 months. With Caroline there was never a wall, never a hesitation. Relationships in my mind aren’t about finding the perfect person randomly. It’s about finding a special person at the right time in both of your lives. We’ve been together for 14 years and married for 10 of those.

3. The decision to *not* stay on Conan O’Brien

I don’t spend a lot of time thinking about my career path, especially the “what ifs” – I love what I’ve had the chance to work on and where I’ve ended up. BUT the most dramatic split in my career tree involved not trying to stay with the Conan O’Brien show, where I’d been working my senior year of college. Note – I’m not saying it was right or wrong to have left – this isn’t ‘best’ decisions, it’s most important decisions. Staying with Conan could have unlocked an equally interesting path fulfilling creative pursuits but it almost certainly wouldn’t have led my into tech, google/youtube, homebrew, etc.

4. The decision to restart therapy in 2011

I was pretty confused the second half of 2011. No longer running product at YouTube, a pregnant wife, physical pain from some repetitive strain injuries in my arms/hands. Blah. I’d tried therapy earlier in my life and it was helpful for a particular phase. So I returned to it with a new psychiatrist and he helped my find lots of clarity. It’s something I continue to pursue because I’ve found it to be like training – you stay with it, through ups and downs, for maximum results.

5. The decision to go to Baghdad in 2009

It would have been easy to turn down the chance to visit Baghdad in 2009. There was a war going on. None of my family members were particularly enthusiastic about it. Work was busy and this would be a week away. But I went. And it was amazing. It’s become a reference point for me about how saying “yes” to things always leads to better, more interesting possibilities than no. And how there’s a positive momentum you build when you lean in, when you take risks.

So there you go. I wonder how these might change looking back five, 10, 50 years from now….

“Your Site Has a Cadence:” The Best Blog Post from 2012 You Never Read

Eugene Wei is either great himself or has a solid nose for greatness or maybe both. He’s done product stints at Amazon and Hulu before ending up at current Flipboard gig. His personal blog, Remains of the Day, is reliably interesting but there’s a post from 2012 that I revisit quite often. It’s called “Your site has a self-describing cadence” and is about flow, specifically repeat visitation. What causes people to come back to your product and at what intervals. Notifications, alerts, emails, etc are all tactics. Eugene’s post is more subtle.

This morning I was talking with an exec at YouTube about where the site stands today in a competitive media landscape. When pundits poke at YouTube for weaknesses it’s usually about stability of partner ecosystem and monetization. For me those are kinda red herrings. Google has a checkbook. If they ever want to “solve” monetization they can via brute force while ad products and sales channels mature. No, for me the great challenge YouTube continues to face is its inability to build a meaningful cadence with the figurative 80% of its audience. 20% of viewers are hardcore true believers who check in multiple times a day when their favorite creators have posted new videos or to join the discussion threads. But the mainstream user struggles to “visit” YouTube. Sure they hit the homepage and search. Sure they hit the watch page via a tweet or embed, and then fall down the Related Videos rabbit hole. Goodbye 60 minutes of your life! But they don’t come to the site religiously at specific intervals to do much of anything. YouTube isn’t a place they reliably start their day, check quickly at lunch time, and surf to (or thumb) while waiting in line or drinking tea.

Look, to some extent we should all be so lucky as to have YouTube’s *problems* – the scenario I describe above still results in One Billion MAUs and it’s my assertion that YouTube still has the best shot of any tech product to one day convert every human with internet access to a 30 day active. Look, if you have internet access and I can’t get you to watch one music video a month, something is wrong. But given all that, I look at it as a failure from my days on the YouTube product team to have not solved ‘cadence’ and a struggle of the team after me that they went so hard after a personalized feed and didn’t do more to evolve why and when people visit YouTube

What would I want to see on my YouTube Homepage aka why would I visit YouTube frequently?

  • The Water Cooler – what videos are making headlines today and why? Context can be provided by tweets or snippets/links from sites where they’re embedded. Back in my day the engineers wrote a cool db query which looked for YouTube embed links getting major traffic from a list of high pagerank news and entertainment sites. We essentially saw the web curating daily YouTube playlists. This and many other tactics exist to get a small number of fresh videos at regular intervals which are being hosted on YouTube but talked about primarily outside of the site.
  • Personalized Recommendations (But Not Like Today) – YouTube has always biased towards relevancy, not recency. For example, let’s say that I’m a Guns n’ Roses fan (I am!). It has always felt more likely that YouTube would suggest I watch Welcome to the Jungle than a more random but freshly filmed cover of that song by some kid with a banjo. Now it’s true, the official music video is the more relevant answer (not to mention awesome) but it’s, what, 25 years old? I’ve seen it a thousand times. I’m happy perhaps to watch it now, but I’d be equally happy to watch it a month from now. When you show it to me on the homepage, I totally lose any sense of urgency that I need to return multiple times a day to make sure I don’t miss great stuff. Instead do something like this – preserve state and say “Hunter, since the last time you visited YouTube 67,000 videos have been uploaded. Here are the four we think you’ll enjoy.” Coming back multiple times a day while the algorithm is playing recent needle finder in the giant YouTube haystack? THAT feels like cadence.
  • My Subscriptions – yes, encourage me to subscribe to YouTube channels but this in and of itself is not a cadence because it’s largely people uploading videos at random intervals. Sure the best YouTube stars have managed to figure this out – eg upload a new video every day at same time – but the majority of other channels just toss stuff up there whenever, too much or too little for me to figure out. So yes, get me to create a direct relationship with the brands and personalities I care about but you can’t rely on this alone to drive cadence, and that’s probably the largest misunderstanding IMO of recent YouTube strategies.
  • What My Friends/The People I Follow Are Watching – YouTube would be better if I could sync my Twitter account and let YT show me tweets from the people I follow which contain a YouTube link. I don’t even know any more whether this is Twitter ToS complaint (is it? If you show/embed the whole tweet? Or do you still need to show entire feed, not just tweets with video links)? But any, wherever the graph comes from – and I don’t believe it needs to just be (cough, cough) G+, social is not about discovering great content necessarily but about creating discussions around content. Oh that’s cool, I didn’t know my friend Steve liked Judas Priest also. Or, WTF my friend Steve likes Judas Priest? Interest graph has never fully equaled social graph so let’s not force it, but use this as a smaller bucket of content to help me reliably know what I’m going to get when I visit the YouTube homepage.

So there you are, cadence. It’s an incredibly powerful and under-leveraged word when we talk about product usage. Thanks Eugene for emphasizing that and hoping we can see YouTube’s cadence solidify in its next phase of life.

Maker’s Schedule, Manager’s Schedule, Investor’s Schedule

You know it’s a really good blog post when the engineers are sending it to the product managers instead of the other way around. PG’s Maker’s Schedule, Manager’s Schedule was one that rocketed around YouTube teams when it was originally published summer of 2009. The basic gist is that productive teams should contain large blocks of no meeting, no interruption time so that makers can work without having to context shift. Google would periodically ask product managers to “refactor” schedules – drop or modify unnecessary standing meetings, cull non-essential people from the room. Over 10+ years in product management I became more skilled at finding the efficient frontier.

When I moved over to the investing side with Homebrew that all kind of fell apart. I lacked the muscle memory and experience to always make the highest ROI decisions about how to spend my time. Even more challenging was that my “bad” choices weren’t actually bad – they were still positive discussions with smart teams, future founders, industry execs. And so I’ve spent time over the past 18 months tuning my calendar and priorities towards the outcomes I feel are most important: assist the companies we’ve invested in, pursue new investments, scale our own operations. At a high level this was recounted in an earlier blog post around “how a VC spends their time.”

Since my calendar is the one variable that I actually have control over in this job – even if it doesn’t always feel like it – it reflects the ultimate truth. Sure I write “exercise” 7-9am on Wednesday and Friday. But then I schedule right over it. I try experiments – such as only 30 minute meetings – knowing that one out of every five times it won’t be sufficient, but that the other four times it was perfect (and I wouldn’t be able to tell you which in advance was the outlier).

I’ve also asked some VCs I admire about their strategies for “Investor’s Schedule” – here are some of their replies. In reading them one thing that struck me is how much their “Investor’s Schedule” is tied to their personality in general. Like, I could have matched each of these strategies to them without knowing the association up front. It’s very much like I believe about great investors in general: you run your own playbook, not a mimicked version of someone else’s.

Brad Feld – Foundry Group

1. I try not to schedule any meetings until 11am. This gives me plenty of morning time to do my thing which includes writing and running.
2. I never schedule meetings on the weekends unless absolutely necessary. I use the weekends to catch up, but also to write.
3. I schedule every phone call – each is for 30 minutes. Some last five minutes, many last 10 minutes, and a few last 30 minutes. That gives me a lot of breathing room throughout the day. It also means that I rarely get a random phone call.
4. I take a week completely off the grid every quarter and disappear. No phone, no email. Total decompression.
5. I try to answer all emails with “one touch” – I get the email, I respond to the email, I archive the email. If it’s a task I need to do, it goes on my task list.
1. I spend 5am to 7am every weekday by myself reading and writing and thinking

2. Once I get to the office, I am in meetings back to back to back all day and can’t do any of that during the day
3. I’m not an evenings/nights type of person. when the sun goes down, i’m done unless it’s a business dinner which i do some of.

The one way I help maximize productivity of “real” work is that I have sessions (often at a favorite coffee shop) where I turn off WiFi and give myself homework that I have to complete before I grant myself WiFi privileges – so no email checking, Internet browsing, etc. until the tasks are done. I’ll often go through a bunch of investment memos or company presentations or write a blog post or memo or complete some analysis in batch form this way. It allows me to get to high productivity at a particular task and then do as much of that task as possible in batch form. In fact, right now I’m on a 10 hour flight (so WiFi isn’t even an option!) batch-processing “thoughtful” email responses – thoughtful meaning emails that take more than a couple of lines or relate to logistics, etc. Like this one (hopefully)!

So those are three Investor’s Schedules – any other VCs want to chime in with their tips?


Copy-Remix-Profit: How YouTube & Shapeways Are Inventing the Future of Copyright

You know that vacation montage video you uploaded to YouTube – the one where you combined all those pics of your friends with the Foo Fighters song you love? Congrats, it’s awesome! But besides the Foos there’s one other group you need to thank for its existence – YouTube’s rights management team. For it’s not Dave Grohl’s love of amateur video that’s allowing you to use their music in your creation. Nor is it necessarily fair use. No it’s YouTube having pioneered the model of “micro licensing,” where they’re able to identify the copyrighted content, monetize it on behalf of the owner, who de facto permits you to use their IP. This innovation, and the scale at which YouTube is able to deliver, may be the most underappreciated innovation of YouTube, one which solves copyright questions via dollars and shared incentives, not legal wrangling.

Everything is going digital, a format which by its very nature lends itself to creative manipulation. When we designed the virtual world Second Life, much of the focus was creating an object model which allowed different types of permissions. Creators of objects – whether they be clothes, cars, furniture or, well, anything – need to be able to both protect their exclusivity but also allow for free copy and modification, if that’s what they desired. Similarly Creative Commons has tried to acknowledge and support new frameworks for remix culture and today sites like Flickr and Wattpad embrace this more nuanced understanding of copyright, putting creators in control of their work. But YouTube dwarfs all of these previous efforts in both scale and value of the copyrights they’re dealing with given the economics of music/video licensing. (Note – it’s a good time for me to note that (a) IANAL and (b) I understand that what YouTube has set up isn’t a change to the copyright/fairuse/DMCA process but actually a business relationship outside of these laws. Some folks may assert that it’s much more important to get case law changed – because it applies to everyone – rather than have wealthy companies build systems outside of the legal framework).

Why do I love what YouTube has created? Because it allows for tens of millions (hundreds of millions?) of videos to be made better by combining different pieces of content. Because it’s elegant in acknowledging that content has commercial value and if you use someone elses, they deserve to be compensated. And because it creates a subversive new normal – a generation grows up assuming you can just remix things. And if this applies to videos and music, why can’t it apply to other things. Like ponies.

Like ponies? 3D fabrication company Shapeways has a very novel collaboration with toy company Hasbro where fans can modify, print and sell their own versions of iconic (and now hipster) toy My Little Pony. As 3D models became mainstream there’s going to be increased desire for fans to intimately personalize and remix the icons they care about. Applause to Hasbro for starting to think about the economic model behind that. It’ll help them – and others – structure the rights deals they need to support more ventures like this.

My guess is that the biggest changes to copyright come not from the American legal system but from entrepreneurs, technologists and capitalists who see opportunity and a way to grow their markets rather than fight over a fixed pie.


Piggy Rounds Part II: Why Some Large VC Funds Are Doing More Seed Deals

In May, I speculated several large VCs were changing their strategies after seeing more large seed checks from funds that usually enter at A or B rounds. These “piggy rounds” usually left little room for other institutional investors, in contrast to traditional seed rounds which may include several funds collaborating. My particular POV is that piggy rounds, just like party rounds, are risky choices for most founders (and have my own obvious bias in this statement). Four months later, wanted to update the “piggy round” hypothesis with some additional data around large fund motivations.

1) Large Funds Are Chasing Potential Outliers Earlier

The large funds – and by large I mean $250m+ who usually enter at A or B rounds – that have been most active in piggy rounds are doing so to chase potential outliers earlier. By “outliers” I mean companies they perceive as having the potential to scale very quickly in a success case. Often these funds are attempting to build out a reputation or gain exposure to a new vertical. For example, let’s say that a fund isn’t especially well-known for their consumer investments. Accordingly, if a consumer startup hits escape velocity, this fund likely won’t have a shot at winning the A round. So by necessity they’re willing to write a larger check earlier at seed, even if there’s a reasonable probability the investment goes to zero (the ole’ ‘you can only lose 1x your investment but the upside is unlimited’). Semantically, these funds might say they’re not doing seed rounds, instead taking the company ‘straight to A,’ but the motivation and implications are the same.

If you’re one of these funds, it’s probably the right strategy in the nearterm, although I think greatest risk is that you’re ‘winning’ these deals but end up applying your later-stage POV to these early stage companies. For entrepreneurs, you’re removing a degree of optionality very early in your existence since large funds have outcome goals that might be more restrictive than the full set open to a company backed by angel/seed investors. And for seed funds like ours, it definitely drives valuations up somewhat since large multistage funds tend to be ownership percentage sensitive more so than price sensitive.

2) Larger Funds Buying Up Early to Outbid Other Funds Later

Ok, this is really inside baseball but kind of canny and I’m starting to see more of it. Here the later stage fund writes a substantial ($~500k) check quickly into the seed round, not necessarily being the only/lead funder, but definitely different than the ~$50-100k exploratory seed checks we saw from these guys in 2011-2012.

So what’s the goal? To be in a position to outbid competitors come the A Round by offering a very high valuation. Their earlier ownership stake allows the fund to dollar cost average into a more realistic total valuation. Previously the $50-100k checks were about information/relationship first mover advantage but this strategy is about cost leverage.

How This Impacts Homebrew

We believe our fundamental strategy is strong – being partners of conviction for a startup, focused on leading seed financings and leaning in proactively where we can help. That said, we will likely increase the size of our second fund slightly in anticipation of “lead checks” being more often ~$700-$1m (as part of $1-$2.5m rounds). Also while we often collaborate with multistage funds in seed rounds, we are most focused on helping the founders end up with the best partners for their particular situation. We haven’t – and won’t – chase valuations and round size increases, especially when we believe they’re being set by an investor with motivations that may differ from ours and the founders.