As a seed stage investor I’m often looking at an incomplete picture when trying to assess an opportunity. Inevitably there will be a question where the data I’m seeking isn’t something the company has yet calculated/tested, or haven’t thought to research or maybe even not as important to their business as I’m suggesting it might be. For founders, these blank spaces are great moments to stray from your standard pitch and really connect with an investor. They’re also pitfalls where I’ve seen some entrepreneurs mess up and hurt their credibility. So here are some ideas of what to tell VCs when you’re missing the data they want to see:

• Don’t Bullshit: Good investors usually succeed because they’re able to read people well. Also, since they’ve seen so many pitches, they have lots of data to call you on your bluff. For example, let’s say you’ve got a SMB SaaS business. I might ask, what does your customer acquisition costs look like compared to [Market Leader]. You probably know your acquisition costs to date but if you don’t know the competitor’s #s, don’t try to stammer out some random guess. What’s a reasonable response? Engage me and drive towards getting the data. “You know, I’ve heard a few different numbers but have had a really hard time confirming. What have you heard or can you suggest any people who might be able to check the deck we’ve collected?”
• “I’ll Get Back to You”: If you haven’t run the test, don’t have the data handy or need to crunch the logs in order to tease out a piece of information, that’s totally cool. Obviously if it’s a primary KPI I’d love for it to be top of mind, but if it’s not, don’t waste 10 minutes looking through your inbox for the email with the stat or open the command line to check when the cron job is running next. Just tell me you’ll get back to me and then do so in a timely manner with some context.
• Educate Me: There are certainly many things you know about your business that I don’t. If I’m asking for a piece of information which isn’t very central to the way you think about your company or I could be asking a better question, I’d love to learn why. Excellent chance to help me get inside of your mind.
• Lay Out The Framework: At a high level you can probably reduce your business to a formula. If I’m asking about X, just show me where X fits into your overall formula and we can go from there. For example, there was a recent pitch where, during a very successful alpha, 100% of customer acquisition came from word of mouth marketing. The company’s cost of customer acquisition was currently zero! That’s awesome but when I asked about these costs as they scaled their business, the founders insisted their product was so good that this cost would remain at zero because that’s what the data has shown them so far. I disagreed. Now I could be wrong – and if I was, likely passed on an amazing opportunity – but what I would have loved to hear: “The industry average is $X per customer, so we’re obviously way below that. We think that at scale we’ll be able to maintain an advantage so our model has us at 1/2 $X over the next two years but we ran a sensitivity analysis and even if we end up spending $X as well, our margins are still competitive and we can still hit our 2014 milestones with a few months of runway left before raising the A round.”

Investors, entrepreneurs – does this ring true for you?

Today Facebook announced the ability to add contributors to a photo album, allowing groups to curate together. As happens whenever Google/Facebook/Apple/etc add a feature, some speculated this was a Very Bad Thing for existing photo album apps. Now I’m biased because my friend Brenden founded Cluster, which recently shipped their v1, but let me tell you why I think Facebook’s move is No Big Deal yet for startups in this space.

It’s all about utilities vs experiences. Products like Facebook, which are already very complex for users, can expand the utilities they offer, sometimes with success, but find it very challenging to build new experiences – broader and deeper than just a set of features. Think of a utility as a single-action feature, while an experience is a set of features which together are greater than the sum of their parts.

Here’s an example: the photo apps which in their attempts to fast-follow Instagram assumed that #filters were just a feature. When was the last time you used a filter in Facebook Camera or Twitter? Instagram built a standalone, smooth, dedicated experience and that’s why no competitor adding filters changed their growth. Now compare that to the ability to attach a photo to a tweet? That wasn’t an experience, that was just a utility, so when Twitter added that native capability from mobile, hosting services saw a decrease of person photo sharing (hold aside animated gifs and memes)/

Think back to 2010 when Facebook shipped the ability to post your current location to your newsfeed. Turns out the check-in is an experience, which is why Foursquare keeps growing. Location passively added as metadata to a photo, etc – that’s a utility, which is why geo on Facebook is mostly metadata instead of an experience of its own.

So back to present day: If Cluster (and others) can create an experience around group albums that consistently performs the way users expect it to – remember, on mobile especially simplicity is key – then they shouldn’t worry about Facebook. In fact, the best case scenario is that Facebook’s entry here chills both entrepreneurs and the venture market to pursuing group albums.

So Brenden + team still have the challenge ahead of them to build something people love, but best thing to do is largely ignore whatever the large companies do and focus on honing their experience.

Previously wrote about raising our Homebrew seed fund. Was chatting with an entrepreneur this morning who is currently raising their A Round. We were talking about the similarities between raising multiple rounds and raising multiple funds.

Seed Round or Fund 1: often raised on reputation, performance history and story

A Round or Fund 2: raised on momentum and market feedback (since you raise Fund 2 before Fund 1 is mature enough to really show full results)

B Round or Fund 3: basically results to date all that matter. At this point you’re a real company or a real VC.

The VC Funding Dance plays out with a new fund every 2-3 years, while an entrepreneur might raise a round every 12-20 months. Time scales are a bit different but narrative arc, pretty similar.

A bunch of “lunches with venture capitalists” are being auctioned off to support Presidio Knolls School in San Francisco. The auction ends this Tuesday, August 27th and great investors such as SV Angel’s David Lee, Greylock’s Josh Elman and Bessemer’s Ethan Kurzweil are participating.

Lunch with me is going for $650 but I want to sweeten the pot and see if we can raise more money for a good cause. So I’m adding two additional prize levels to unlock.

If the bidding hits minimum $750, the winner will get not just lunch but a limited edition “Google Goes Gaga” t-shirt from Lady Gaga’s visit in 2011. These shirts were only available to a portion of in-person Googler attendees. My-my-my-my Poker Face!!!!!

If the bidding hits minimum $1000, you get the lunch, the Gaga shirt and a piece of pre-IPO Google memorabilia: a Google 04 sweatshirt. This is high quality people – the letters are sewn on. At the time there were probably fewer than 1,500 Google employees and these were given out on the January 2004 company ski trip. The trip was only open to west coast Googlers, so maybe only a few hundred of these produced? Who knows!!!!

Remember to BID BEFORE IT’S TOO LATE….

“Why are you creating a VC company?” That was from Cody Brown, founder of Scroll Kit, in response to my post yesterday about the “Why” questions we ask founders when discussing investments. We answer the “Why” for Homebrew on our site, but don’t get into our personal stories. Cody, here’s that part:

My mom’s an artist, dad did business. I spent the earlier part of my life trying to figure out if I was left brain or right brain. It wasn’t until I started to go deep into tech that I realized the answer could be “both.” Then I committed to only work on projects which I wanted on my tombstone. A morbid way of saying that my profession needed to reflect who I was as much as “son,” “friend,” “brother,” “husband” or “father.”

With that in mind I was fortunate to join three great teams at Second Life, Google AdSense and YouTube. With each I was able to be part of a phase that utilized and challenged my abilities. Google’s a great company which treats employees very, very well – it would have been easy to stay there for another 10+ years and be in a position to retire early but I knew that I didn’t want “Google” to be the last project chiseled on my tombstone. Still, it’s hard to leave something you love. And then we had a kid in 2012.

I didn’t know how becoming a father would change my priorities – not that I could ever coast at Google, but it was a place where I’d built up a reputation and knew how to navigate. Perhaps staying there for the rest of my career would become appealing in order to provide stability. The first few months of my daughter’s life were a blur and learning how to become a family was enough to keep my wandering mind occupied. What happened next surprised me.

Instead of believing Google would be best for me, I started to think it was exactly the wrong place. This had nothing to do with Google – as employees, press and the stock market attests, Google has been kicking butt – and everything to do with the type of dad I wanted to become. Being able to teach her the value of chasing her passions, leaning into her fears, trying new things and being entrepreneurial were among my top priorities. How would I do this from Google, where she’d be visiting me in one of many offices, in one of many buildings? Was my message to her “daddy was very lucky to find a great company when it was small and then stayed there for 20 years?”

Eric Schmidt famously counseled Sheryl Sandberg to grab that seat on the rocketship, but I wanted my daughter to learn about building rocketships, not finding her seat. This isn’t meant to demean Eric’s advice. It’s more a personal statement – my father stayed with a big company for 20 years. He taught me many things but entrepreneurial risk-taking wasn’t one of them. I wanted my behavior to match my words.

It was around the same time that Satya and I started devising what became Homebrew. I’m now able to surround my daughter with great entrepreneurs. When she comes to our offices in SOMA I can tell her “this exists because daddy and one of daddy’s friends took a risk.” And since we intend for Homebrew to be around for many years, I’m hoping to convey that lesson to her as a toddler, kid, teen and young adult.

And so I don’t forget, through ups and downs, wins and losses, fund #1 or fund #10, I got a tattoo of the Homebrew logo on my right shoulder. Visually it reminds me of the sun rising over a bridge which leads to new adventures, the unknown. It’s a perpetual beginning. And so when I look at my daughter, when I look at myself or when I look at any member of the Homebrew community, I’m reminded of the Why.

Over the past 48 hours, movie enthusiasts stormed my front door with pitchforks, demanding my head. I responded to the first 100 comments to my post about rethinking the movie theater experience, but was then overwhelmed by another 300, not to mention the tweets. So. many. tweets. To catch folks up:

• On Saturday I jotted a quick blog post about how for some movies, I’d love a theater experience that was separate from the traditional viewing experience and catered to people who wanted to talk, multitask, use the internet while watching.
• I expected a few “awesomes” and a few “horribles” from the people who normally read my blog. Instead it got picked up by several sites and RTed with commentary by some film lovers and creative professionals. The result was 20k+ pageviews and strong feelings that were pretty unexpected in their intensity. I received a number of private messages – from friends, strangers and industry executives – in support but clearly those were dwarfed.
• There were three categories of commentary, which I’ll summarize below as part of trying to understand the reaction.

1. This Shouldn’t Exist, You’ll Ruin My Movie Experience

To be honest, two days later, I still don’t understand this comment. I’m suggesting a separate theater within a multiplex that has an alternative viewing atmosphere for certain types of movies. If anything, this would get the rude people out of your theater and into mine. The traditional viewing experience – dark theater, no cell phone, no talking, no getting up in the middle of the movie, etc – I agree with that. I think I’d watch the majority of my movies that way too. So I don’t understand how a different, opt-in experiment ruins your experience. My best guess is that it became a flashpoint for frustration with behaviors people currently experience when they go to the movies, assuming I was the type of person who thinks it’s ok for me to do whatever I want in a theater.

Some folks made secondary arguments: that permitting this in some theaters would create new social norms in the existing ones. That it would be one less theater screen to exhibit films the traditional way despite there being thousands and thousands of screens already. Those are pretty nuanced assumptions.

Other folks told me to stay home and watch by myself where I can fully control the environment. The rise in home systems suggests this is a very popular option but it’s not a substitute for (a) first run movies that are (b) watched in a theater setting with a (c) critical mass of people. There’s a social, communal event that I still desire, not just to bend the way the world works to my will.

2. You Are Disrespectful to the Movie Industry

Let me start with a statement: I love movies and greatly value the creative professionals who work on them. I subscribed to Film Threat as a kid, am not embarrassed to go to the theater by myself, and frequently support film projects on Kickstarter (eg: Graffiti Rock, Dungeons & Dragons: A Documentary).

So what happened – why did this post become about my hatred of movies instead my love of them? Two reasons:

1. My post crossed over to an audience that doesn’t know me
2. I wrote too glibly and put a portion of my foot in my mouth

First, the crossover. As I said in the intro, I expected my normal blog readership to weigh in and tell me whether this was a good idea. These folks mostly have context for who I am beyond this single post. If they think I’m wrong, they tell me, but generally don’t consider me the antichrist. However with social media, you can sometimes crossover to an audience unfamiliar with you. On Twitter, there was almost no mention of my post from the 500+ people I follow, but my @ tab was filled with people I didn’t know, wishing horrible things would befall me. On the internet, a statement becomes contextless, curated and summarized. So to thousands of people I became “an asshole investor taking a dump on the altar of film.”

With regards to the glibness – I didn’t make clear that I value the creative and physical sweat of making movies. And my very suggestion – one which I still stand by (more on that at the bottom) – broke movies into two classes of films: those ‘worth’ paying attention to and those ‘not worthy’ of my full attention. Some folks assumed that I would want to multitask during their favorite films – Chinatown being one example (saw it, loved it, would not want to watch it in a social theater). So I wish I was more clear about respecting the medium.

That said, I’ve always felt voting with your wallet is the best way to support the creative arts. Get painters, musicians, actors, filmmakers, etc PAID. My sentiment was “boy there are some films that I don’t watch today, which I’d love to pay for if they gave me a different way to view them.” I saw it no different than the windowing choice consumers make on theatrical vs VOD vs cable etc. Especially given the tentpole, highly commercial movies I was using as examples – with merch tie-ins, etc – I don’t think you can separate art + commerce.

3. You Literally Represent Everything Wrong With The World

Both with and without proper context my idea became a lightning rod for three larger issues:

• Arts Being Commercialized: Sequels, 3D, tentpole movies, declining theater audience in the US, Spielberg/Lucas predicting the ‘implosion‘ of the movie industry — my experimental suggestion was another hack at an institution many people value and hold dear.
• Attention Spans Shortening, Technology Controlling Our Lives: “If you can’t pay attention for two hours I feel sorry for you” – I heard this a lot. I’ve experimented with different types of attention modification, even going to a week long silent meditation retreat. For many the movie theater is a sanctuary where they can withdraw from connectivity and immerse themselves in an alternate reality. My suggestion was a pin to that bubble.
• Technology Community Wants The World to Cater to Them: Especially in the posts which emphasized I am a Venture Capitalist, this was indicative of asshole techies being at best, out of touch with the rest of the world, and at worst, making the world more exclusionary. Not my intent. I believe the tech community actually needs to often get its head out of its ass and realize there are some things we think are problems that aren’t generally considered by others to be priorities.

I don’t expect this follow-up post to be read by nearly the # of people who read the original but the resulting reaction caused me to pause and consider my words. I’m sure some will still say “you just wrote another 1,000 words proving you’re an asshole.” So be it.

As for my idea about a separate, social, connected viewing experience – maybe something which feels like the modern day equivalent of the participatory midnight movie Rocky Horror showing – I still want to try it out. Maybe I’ll hate it. Maybe enough people won’t like it to make it commercially viable, but I’m really interested. So I’m looking for a place in San Francisco. Maybe sell tickets as a charitable donation to a film preservation society or digital divide organization like Ghetto Film School. Like most experiments, you don’t know until you try…..

Update 8/5: Wrote a response to the unexpected interest & negativity to my proposal

Update 8/8: Thanks to actor Elijah Wood for explaining why he disagrees with this idea; also to Anil Dash who takes a broader look at the feedback this post has received in the context of cultural norms.

Update 8/10: Thanks to @mike_ftw for hosting an extended chat on his podcast Let’s Make Mistakes. 

In my 20s I went to a lot of movies. Now, not so much. Over the past two years becoming a parent has been the main cause but really my lack of interest in the theater experience started way before that. Some people dislike going to the movies because of price or crowds, but for me it was more of a lifestyle decision. Increasingly I wanted my media experiences plugged in and with the ability to multitask. Look up the cast list online, tweet out a comment, talk to others while watching or just work on something else while Superman played in the background. Of course these activities are discouraged and/or impossible in a movie theater.

But why? Instead of driving people like me away from the theater, why not just segregate us into environments which meet our needs. I’d love to watch Pacific Rim in a theater with a bit more light, wifi, electricity outlets and a second screen experience. Don’t tell me I’d miss major plot points while scrolling on my ipad – it’s a movie about robots vs monsters. I can follow along just fine.

If you took a theater or two in a multiplex and showed the types of films which lend themselves to this experience I bet you’d sell tickets. Maybe even improve attendance during the day since I could bang out emails with a 50 foot screen in front of me. My epic out of office message could read “away from desk – watching Iron Man 3.”