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?

bronies

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.

bronies

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.

There Be Dragons: Ultima Online’s Lawsuit Connected to Today’s 1099 Workers

Kevin Roose recently covered the “contract-worker problem” – namely, the increasingly number of startups who have focused on keeping labor arm’s length as 1099 Contractors vs W2 Employees. And the IRS looking into whether this status is legitimate.

Because #ImOld, I remembered a similar situation years ago which had large implications for community-oriented online products who were relying upon “volunteers” to onboard new users, manage some traditional support functions, etc. A group of Ultima Online volunteers sued Origin/ElectronicArts, claiming they were really employees and owed back pay. That lawsuit hinged on questions around fixed schedules, training, performance monitoring and work similar to what other paid employees were doing at the company. The lawsuit had a chilling effect on other game companies (I was at Second Life at the time so paid attention as we launched a volunteer greeter role to interact with n00bs).

As Roose’s article notes, startups are also realizing that grinding your contractors down to minimum viable wages doesn’t necessarily attract and retain the best professionals. Homebrew companies such as Shyp have, from Day One, sought to create a great work environment for their contractors and part-timers. After all, in many cases these people are the ones who touch your customers.

kids_playing

“We’re Passing But Please Stay In Touch” -> Building a Relationship with a VC Even if They Don’t Invest in You

It sucks to hear “no” and as an early stage investor, the law of numbers means I have to say it regularly. Sometimes I deliver it quickly, sometimes it’s after deliberation. But I try to always do it honestly with feedback because we can also be on the receiving end of a “no” and want the same courtesy. My “no’s” often include an offer to stay in touch or reach out if I can ever be of help. It’s not a throw-away line meant to make me seem ‘founder friendly’ but really a desire to maintain a relationship.

My assumption is that this offer is may initially be treated with (a) dismissal or (b) skepticism by a few founders and it makes sense why. Partly the need to be ‘on to the next one’ – don’t spend your time chasing after the no’s when you just need to hear yes once or twice from someone else. Or don’t throw good time after bad since many investors will put on a smile but appropriately prioritize any needs you have below the companies in their portfolio. And some of it is just human nature – “No? Eff you, I’m going to show all of you that we’re right.” But just as I’ll stay in touch with founders who may have turned us down, trying to find an opportunity to turn a loss into a delayed win, I’ve seen some entrepreneurs do a great job of converting an initial NO into a relationship. Here are some examples:

Adding Me To Your “Friends of…” Update Emails

Many founders send our periodic “friends of…” emails with updates on the product, business, team. Perfectly acceptable – and IMO not spammy – to add any investor to this list proactively with whom you had a good rapport. If you want to be super-safe, add them and forward last update with a note that just says “hey, enjoyed getting to know you. Would love to stay in touch and so adding you to our email list. If you’d prefer to not receive these, just let me know.” Note – this is different than being signed up for your general public facing mailing list. [Update: here's a nice example of an investor update email]

Connect With Me on LinkedIn or Your Social Network of Choice

If we got pretty far down the mutual evaluation process, I’m happy to have you traverse my graph and occasionally ask me if an intro to XYZ would be ok. The best way to do this is (a) provide context for why you want to meet someone and (b) understand if I decline to make the intro based on any number of factors.

Refer Other Smart Founders/Intros My Way

If we’ve had a good interaction – despite it not resulting in an investment – the best thing you can do is consider me on your short list to introduce other entrepreneurs who are looking for funding. In fact, the first few times this happened – from founders we passed on, or where there was mutual recognition of lack of fit – was f’in amazing. It was one of the best feelings I’ve had in the first 18 months of Homebrew. You go to bat for me and I’ll go to bat for you. Not because I want to create some transactional quid pro quo relationship but because it’s the strongest signal of your character and judgment. Makes me want to reciprocate by keeping you top of mind for additional fundraising, folks who might want to work for you, etc.

Give Me Feedback on the Process

This happened only once but man, it was appreciated and classy -> after a few discussions with a founding team, we decided to pass with some detailed notes for them. The CEO processed the info (including some follow up clarifying questions) and then also gave us some feedback (positive and negative) on our process. What a gift for us. Totally unexpected but thoughtful. Framed helpfully, not spitefully. My immediate thought was, wow, this guy is going to be a great leader.

Founders, investors – any other ways you’ve build relationships after the No?

Homebrew Invests in Chain and True Accord

Happy to share two recent funding announcements we published on the Homebrew blog (Homebrew being the seed stage venture fund my partner Satya and I started last year). In both cases we played supporting roles and were thrilled to help back strong founders, teams and businesses.

Chain is a secure blockchain infrastructure for developers.

True Accord is more effective and kinder debt collection.

Hey Buddy, Can You Spare a Vote? My SXSW Panels.

As many know, SXSW uses a group voting process to help influence what panels are selected for their event. There are four panels that I’m part of for 2015’s event and if you had a moment to click on over and vote for our submissions, it would be great. And also groovy to see everyone in Austin!

1. Building Gender Balanced Startups

Everyone in tech wants more gender balance in the startup ecosystem, but the practical challenges to implementing that goal are complex, and involve many players—from the incubation/hackathon culture, to the VC community, to the startup founders and execs who must hire and manage a (hopefully) gender-balanced team. Join a leading venture capitalist, female tech leader, and reporter as they discuss the problems they’ve encountered—and offer solid advice for building a more inclusive (and therefore successful) startup industry. – See more at: http://panelpicker.sxsw.com/vote/40327#sthash.dktxr411.dpuf

2. How Your Startup Can Win The New VC And M&A Game

The tech startup world has changed dramatically in recent years with the rise of crowdfunding, a changing venture capital industry, and changes in the M&A market. Venture capital has seen the growth of many angels and smaller funds, new corporate venture firms, as well as the concentration of a small number of large funds. We’ll talk about how entrepreneurs can best build their companies, raise funding and prepare (optimize) for a massive exit in this new environment. To build successful companies, entrepreneurs need to think about these larger strategic issues and how they affect each other. We’ll also talk about the mechanics of how to develop relationships with potential acquirers and how to negotiate with acquirers. The panel includes experts in startups, venture capital, corporate development and M&A. They are at the forefront of new ways of investing in startups and conducting M&A transactions. – See more at: http://panelpicker.sxsw.com/vote/40604#sthash.cZ5Egx23.dpuf

3. Product Leads:Dictators, Democracy & the Good King

Who makes the final decision for product? Weak product leaders let consensus rule. There’s a town in Chiapas, Mexico where no law can change without unanimous agreement -anthropologists study it because nothing ever changes. Like the Mahabarata and Plato point out, the best form of government during an intense growth period is under a Good King. This is the only way product can move fast. It requires you to make fast decisions, be inclusive on ideas and brainstorm, but be very decisive to deliver speed of change.

Hear from industry leaders Paul Berry, Hunter Walk, Justin Santamaria & Shiva Rajaraman on what this means for launching and growing a successful product, today.

Amazon pushes new code every 11 seconds. How often do you push live? The speed of change may matter more than anything else. People move from liking to loving products not just because of how the product is right now but because of a because of the belief in where the product is going.

- See more at: http://panelpicker.sxsw.com/vote/41935#sthash.OwlWwKu4.dpuf

4. Unlocking the Promise of Local

For the last decade, local has been considered the next frontier for startups. But for all the promise, the landscape is littered with startups that have tried to crack local and spectacularly failed (Kozmo, Webvan, etc). Hundreds of millions of dollars of venture capital has evaporated in this space.

But finally, after years of struggle, startups across local are starting to get significant traction. And the remarkable success of Uber shows how incredible the opportunity is.

Hear from startups that are breaking out across local: in apartments (CEO, ApartmentList), local services (President, Thumbtack), food (CEO, Sprig), and shipping (Investor, Shyp).

Panelists will discuss:
-Why is local so hard?
-Why are companies starting to break out now?
-What are the keys to unlocking local?
-Will all of local be “Uberized”?
-How are the tech giants — Google, Amazon, eBay, Apple — going to play in local?

- See more at: http://panelpicker.sxsw.com/vote/34835#sthash.ehHBoWdy.dpuf