Over on the Hombrew blog, we shared news of our follow-on financing for UpCounsel as the legal marketplace for small businesses, raised additional financing from institutional leads Metamorphic and Crosslink.
Ok, that was a totally troll title. What I want to share though is a subtle advantage that people who’ve worked at transformative tech companies have over people who haven’t. It’s not that the average employee from Google, Apple, Facebook, etc is necessarily smarter or more capable than any other person. I mean, maybe they are on average, but I’m not making the case that just because they passed a hiring screen that makes them worthwhile. There are certainly ineffective people who made it into Google and many, many special talents that haven’t yet been part of a rocketship. But there are two learnings that I’ve generally found to be more highly concentrated among those with experience at transformative companies versus those who haven’t. And I think it’s learned/reinforced in those environments, not just magically inherent to the people attracted to these opportunities. It’s like athletes who have been on championship teams pick up positive habits independent of their own skill level. In my observational experience, those who worked at e.g. Google during its early and hypergrowth years are more likely to:
1) Understand what motivates exceptional achievers
2) Know what high performance teams feel like
The telltale signs of *not* having either of these qualities are statements like “how will we be able to hire that engineer. I mean he seems interested but we can’t pay as well as his current job” or “it feels like our company’s pace is pretty good.” Versus beliefs like “this is where that engineer can make the biggest impact” and “we’re doing ok but it feels like a local maxima where performance will be good but we won’t move fast enough to find a key insight.”
Read In The Plex, Steven Levy’s book on the first decade of Google. The first few chapters detail not just the brilliance of Larry and Sergey but how top engineers, people who were in jobs that made them happy, encountered what Google was doing and just felt called to participate, almost irrationally.
I think about this not to toot my own horn (since I worked at Google), but rather in trying to understand what experiences the startups we back at Homebrew should value on their teams. And at what stages. There’s nothing worse than someone who worked at Google and (a) thinks they’re the shit or (b) assumes that every process/approach done at Google was right or right for a startup. That’s absolutely horrible. But it’s necessary to have people within a startup who are pacesetters or know that it’s ok to push harder. It’s why I tell many new grads that fast-growing midstage startups are their best first job in tech. Learn great habits from great people at a special time.
So first I try to understand if founders have not just the aptitude but the attitude to solve a big, urgent and valuable problem. If yes, I’m on the path to funding them. Then as a team is constructed – especially post A Round – how is that culture being driven throughout the organization. If it’s not there that startup will at best plateau and at worst… well, you know.
Ok, not sure I was articulate here, so if there’s confusion or other ways of thinking about this, maybe folks can chime in via comments.
One of my favorite aspects of the tech industry is that behind the noise, the tweets, the press headlines, there’s a depth of operator-founders who build amazing, lasting and valuable companies. My friend Russ Fradin is one of those people and my bet is that most of the folks who read my blog don’t know Russ. He’s currently cofounder/CEO of Dynamic Signal which helps companies involve their employees in enterprise social media – he calls it an “OS for advocacy.”
So there’s a new Lyft feature called Driver Destination which, especially when combined with Lyft Line, focuses a lot on peer-to-peer ride sharing as opposed to an on-demand taxi-like service. My understanding is it matches passengers with drivers already heading in the same direction. The benefit to the driver is ability to earn a few bucks without going much out of their way – they’re not driving a shift for Lyft per se, just heading from Point A to Point B. And the rider pays less than they would for the on-demand service. Brought to mind the college rideshare board where you could get a lift in exchange for gas and tolls.
By many measures Lyft seems to be an impressive startup, growing at a fast rate. The challenge is whether they’re competing in a winner-take-all market where Uber is growing even faster. If you believe that it’s a big enough market for multiple winners, fine. If you believe Uber will lose their lead because of cultural or regulatory issues, fine. Or if you believe Lyft can out-execute Uber, fine. But unsure of those three conditions, I wonder if Lyft, as the second place competitor, could try a different strategy, one which Uber can’t and won’t follow. Maybe Lyft’s ultimate goal is (or should be) to make the peer ride market a near zero margin industry where drivers are motivated by reciprocation and simply covering their own gas/maintenance/car costs rather than auto as profit center? Essentially use their brand (friendlier) and community to move from commercial enterprise to co-op. Ironically, back towards where they started as Zimride.
In this model how would Lyft make money, assuming they were only facilitating a small payment from rider to driver to cover mileage based gas + maintenance? Well, they could charge participants a small monthly subscription fee to participate in the ride share. Or take a few percent transaction fee. Obviously the key here is to maintain enough consistent driver density to cover passengers with a responsiveness comparable to commercial rideshare (although at least some people would tolerate a few minutes longer wait for a cheaper service or to participate in a community they feel proud of). And from a Lyft management and investors standpoint there has to be either confidence (if you win the market, the volume will make up for the lower margins) or desperation (Hail Mary!).
“Changing the battlefield” is a classic underdog strategy. Lyft is well-funded and growing; their market is big and quickly evolving. But ultimately Uber seemingly has the ability to fast-follow any product or strategy innovation implemented by a competitor (UberX for example). So for me at least, it’s interesting to think about what happens if Lyft goes somewhere Uber can’t: It might not be a zero sum game but it could be a zero margin one!
…..and disclosures: I know way more people who work at Uber HQ than Lyft HQ and I believe Uber’s speed of execution, and strategic execution is impressive. Most specifically, Uber’s VP of Ops Ryan Graves is an advisor to Homebrew.
When tech reporters start writing their 2014 wrap-ups, my guess is we’re going to see wages and treatment of service professionals as a highlighted theme, especially in reference to the local/on-demand economy platforms. At Homebrew we’re very interested in these industries, which means Satya and I think about these factors not just as moral questions but with an eye towards investment filter. Several of the companies Homebrew has backed would fall into the marketplace or local services categories, including UpCounsel, Shyp and ManagedByQ. We get excited about marketplaces which have the ability to raise take-home pay through increases in hourly wage, not just utilization. We tend to avoid services that can achieve profitable economic margins only by using PT workers/contractors to avoid taxes or benefits (it’s totally sustainable in our minds to employ these classes of employees in many cases such as to manage supply/demand surges or because some prefer flexible work schedules).
When we invested in Shyp, the founders were pretty set on trying to create stable and respected employment paths for their drivers and warehouse workers. Besides feeling this was consistent with the culture and brand the company intended to build, Kevin and Joshua hypothesized it would be ultimately better for the business to attract and retain motivated employees (lower turnover, lower training costs, more bottom up innovation, higher quality customer service). The majority of companies like Shyp have only two touchpoints with their customers: the app and the associated service professionals. What sense is it having a pixel perfect, beautifully designed app if your IRL customer contact is horrible?
That’s why most recently we were attracted, not skeptical, of ManagedByQ’s desire to pay their Operators full medical coverage (“Operators” are their catch-all term for the assistants, cleaners and other professionals who fulfill some of the responsibilities on the Q platform for customers). As Q scales in NYC and beyond to help be the ‘operating system’ for the modern office, they need to deliver a triangle of trust between Q, Operators and the offices which hire Q to manage cleaning, maintenance, supplies, and so on. I tend to also believe that treating employees well at all levels enforces consistency and trust internally. A company which tells one class of employees “don’t worry, we value you” while screwing others, is one where I’d always keep an eyebrow half-raised. It’s definitely costing Q a bit more than some of the buzzy residential cleaning services are paying their workers but our bet is the Q team is 100% correct in their priorities.
Ultimately whether it’s through regulation or competition I don’t think optimizing for just the lowest possible labor cost at the expense of service and expertise is sustainable for many of these marketplaces or on-demand services. My guess is the first place it shows up is in the app store ratings and NPS scores of those companies who grind workers up, weak economy or strong.
(oh, and Q is hiring a Finance & Administration lead in NYC HQ if anyone you know is interested. Or if you’re a NYC office that wants to vote with your dollars for a great cleaning and maintenance service that shares your values, here’s the Q website).
Recent Pet Peeve: Being asked to make an introduction to someone without being told that other people were being simultaneously asked to make the same intro – ie “carpet bombing” someone with requests. (second pet peeve: people who publish blog posts about their pet peeves. third: people who use the word ‘pet peeve’).
So the scenario goes something like this: Person A wants to get connected to Person B. Person A pings Persons C, D, E, F… individually, noting that they’re connected to Person B and can they make intro. Persons C+ then each ping Person B asking about making intro to Person A. Person B responds with anything from “sure (by the way, several other people have pinged me)” to annoyance to having received multiple emails about the same thing (especially if they’ve already followed up with saying ‘no’ or ‘yes’).
I’m totally cool with parallel processing when something is urgent – if Apple just pulled your app from app store and you’re desperately trying to reach that team, please yes, ping me along with as many others as you need. But for basic, non-time sensitive introductions, it kinda sucks. I get Person A’s motivation: they’re trying to find the connection, copy/paste to a bunch of strong/weak intermediaries, looking for who can help them but in actuality they’re practicing asymmetrical warfare on Person C+ time and social capital. Why?
1. We all spent time pinging the same person with the same request (cumulative cost = everyone you asked * 5-10 minutes per person).
2. The person you wanted a connection to only has so much bandwidth and they used up multiple cycles opening and responding to emails. Additionally I want them to know I value their time and will only approach them with requests I believe are valid and mutually beneficial. Making me the deliverer of a generic message that was also in the hands of several other carriers, commodifies my relationship with them. Look, this is high level wu-tang shit, but I’m trying to communicate a real aspect of human interaction without sounding like a total asshole (half-successful?).
3. The person you wanted to connect with may also see you as a little mental because you’re peppering them with inbounds for something that might not be urgent. Like if you are crushing on a girl you just met and all her friends keep telling her how you told them how much you like her. Creepy.
So please, serialize your requests unless they’re urgent. Or at least disclose to me that you’ve tried to reach this person before without success or are in-motion on some other entry points.
sidenote: to the handful of people I’ve recently asked to not do this to me. No this isn’t about *just* you and yes, I still love you.
There’s been a lot of discussion recently about when disclaimers should accompany blog posts, news articles, etc. Since I’m a totally above-the-board kind of guy, when reading my tweets, please be aware that one or more of the following disclaimers apply:
I invested in the company or am looking to invest in the company (or the company turned down my investment and thus they are morally corrupt liars who deserve to fail).
I am friends with the founder or multiple employees. Basis of friendship may include classmates, former colleagues, awkward social interactions but we’re in the same general friend circle so we need to pretend we’re buds, blood relatives (click here for 23&Me results to see if we’re relatives).
The brand mentioned has sent me something for free and while they didn’t ask for anything particular in return, I found it odd they included a hashtag in the note. Or I’m hoping the brand mentioned will send me something for free. #SellOut.
@HunterWalk is actually a pseudonymous account representing a much larger group of people. While this explains how I fav so often, it also makes this disclosure statement difficult because I’m one degree of separation from 75% of Twitter (and the other 25% are bots).
I may be trying to gain the attention of someone in hope they will retweet me and if they don’t, will deep fav several tweets from their timeline history. If they still don’t react I may simultaneously send them friend requests on the Top 100 social networks. After that, it’s Single White Female.
If I seem to be getting into a Twitter Fight, I may also be in a DM conversation with the same person strategizing how to gain attention. This doesn’t include @rabois. I mean, he and I DM all the time but it’s the only DM stream I have that’s actually nicer and kinder than our public back and forth.
I repeat, I am not Startup L Jackson.
When you see people link to a Techmeme headline in their tweet they’re obviously trying to get that tweet included on the site. I
never rarely do that.
If I’m tweeting with journalists please be aware I classify reporters into three camps: those who I’m friends with and who also happen to be reporters, those who are reporters that I’m friendly with and those who I don’t trust. Always remember that middle bucket is looking for a story. And if you’re a reporter reading this, you’re totally in the first bucket (love ya, cover my companies please).