Monthly Archives: February 2014

Twitter IRL: How Online Behavior Changes Us

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Situation: a bunch of venture dudes shouting one-line quips while the speaker tries to get through their presentation. My first reaction was “shhhh.” My second was, “none of these are good jokes.” My third was, “OMG, this is Twitter In Real Life!” That’s not a criticism of Twitter – although I have self-selected into a feed that’s “venture dude” heavy – but rather an observation about how online behavior can change offline norms.

Jenna Wortham, of the NYTimes, wrote about Twitter’s increasing evolution towards noisy performance art and while I don’t agree fully with her opinion, the mechanics of “say something funny/faux insightful, get fav’ed” is inarguably a norm within my community. Live in that cycle long enough and of course your behaviors are going to be modified. Translated into meatspace you get a noisy cacophony where listening becomes more about finding your moment to slyly interject rather than being present. Maybe having everyone Tweeting on their smartphones in public is the lesser of two evils. At least it keeps them quiet.

An Untitled Post About Having Money, Not Having Money and The Number

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$19 billion. That’s a lot of money, right? A week ago if you mentioned that figure in Silicon Valley without context you might get a variety of responses. “Is that the public market cap of LinkedIn?” [No, that would be $23 billion] “Jeff Bezos’ net worth?” [Nope, that was $33 billion, at least last November] “Iceland’s GDP?” [Maybe, but 2012 was ~$14b] But this week if you mention $19b in the 415, 650 or 408 area codes you have a very good chance of someone offering an opinion of Facebook’s Whatsapp acquisition.

Nick Bilton, writing for the New York Times, uses the purchase and its unfathomable sums to discuss The Number. As in, how much money do you need? The Number is nothing new. Wall St Bankers frequently gossip about their numbers. And there was even a book on retirement savings a while back which helped you calculate The Number you needed to live comfortably in your golden years. It feels like Nick, running with a very high class crowd (he alludes to dining with folks who already are worth over $100m), wants to discuss the impact of seeing so much created around us, but he never quite gets there in this column. The result is something, well, flat and a bit trope-y around tech entrepreneurs and VCs having silly high Numbers (especially compared to Nick’s own which he suggests is laughed at by peers). Nick’s one of my favorite columnists but this Disruptions just didn’t land for me (most are very insightful and provocative).

Why did I have such a strong “blah” reaction? Probably from my own conflicted motivations with regards to having a Number. Growing up middle class in an upper middle class/upper class town simultaneously desensitized me to money while also making me quite attuned to the fact it can accrue randomly and not always to good people. Money also didn’t stop divorces, cancer or estrangement from visiting any of the big houses down the road. Afterschool and summer jobs gave me some financial flexibility beyond my allowance and the only time I really felt ashamed for not “having” was in college when, one particular semester, I stole food from the cash cafe on campus rather than tell my friends I could only do the prepaid dining plan at the meal hall. First World Problems but shame none-the-less.

When it comes to The Number you can be a floor person or a ceiling person. Focusing on floor means understanding what’s the minimum you need to earn/save to be happy. Anything over that is gravy and your job is to keep the floor at a reasonable level. Ceiling means you’re always imagining what you could do with more money and working to get there. I try hard to be a floor person and through luck + pluck, we’ve been able to save a solid nut. American Dream achievement unlocked: I did better than my parents did.

But instead of talking about The Number, I wish we spoke more openly about wealth disparity. Between tech and other sectors sure but even within tech. You have a group of friends. Then some get rich. I mean really rich. And you get married, buy houses, start families. All of a sudden the splurge of spending $200 for a dinner turns into $20,000 for a vacation and not everyone can do that. I’ve seen friendships start and end simply because of what money allows or prevents people from doing. If we want to insist tech is a meritocracy then are the people with more money better than me? Did they work harder? Take more risks? Deserve their money?

For me these questions make more provocative and real brunch chats than the one Nick experienced. I hope we can have them and not perpetuate a culture that pushes these topics to Secret.

Raven + Lily: Empowering Women Through Design

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“Empowering women through design” is core value Raven + Lily uses to guide their business. I was introduced to R+L and their Ops Director Cameron Crake via our mutual friend Katy Roth down in Austin, TX. Their mission resonated with me so asked a few questions about how technology and social media have helped them grow. Here are Cameron’s thoughts:
Q: Tell us the story behind Raven + Lily, and how you got involved?
Raven + Lily is a socially conscious lifestyle brand dedicated to empowering women through design. We work with groups of at-risk women around the world to make our collections of apparel, jewelry, and accessories. The women we work with come from various at-risk backgrounds- some are HIV+, some formerly trafficked, some from extreme poverty. Our company started several years ago when our founders, Kirsten Dickerson and Sophia Lin, noticed that non-profits were training these women in design skills. They were learning to sew and make jewelry, but they lacked market access and design input. So Raven + Lily was born.
I joined the team a couple months after R+L became a company as their first hire. I had just moved back to the US from living in Uganda working with an artisan group, and was thrilled to find a brand here in Austin that so perfectly aligned with the kind of work I wanted to continue doing.
Q: I’m sure lots of technology vendors pitch you about their new products. What’s the most effective way for a startup to sell into a business like yours? What information helps you make a purchase decision?
We are a startup ourselves, so cost of new technology is always a big factor for us. Being able to pay on a month to month basis is always helpful, since staying on budget is so important. Free trial periods are always the best case scenario, so we can make sure the technology is actually a good fit for our business and team. We want to make sure that the expense is going to be worth it before we invest. We like to actually experience how the new technology will save time or money or add value to our business before we put resources into it.
Q: How have you approached social media for R+L?
We want our followers to get a good look at what is happening behind the scenes at our company and feel connected to our brand. We like to give them previews of upcoming products, show them how we are wearing our pieces, and also give them an inside scoop on special deals. We run discounts and contests every few weeks through Facebook, Twitter, Pinterest, and Instagram.
Q: If an entrepreneur’s product was going to solve one problem for you, what would it be?
There are a lot of great apps out there that our company utilizes for different purposes…. We have a system for taking wholesale orders at trade shows, a POS system for our new store, an e-commerce platform, and an inventory management system. The problem we keep encountering is that many of them don’t sync. I would love to see some kind of technology that could sync all our systems together. The cost of both time and money to learn and implement a new system can be so consuming. As our business grows and we have needs for new apps, it would be so helpful to have someone develop a way for all these new technologies to communicate to each other and work more effectively for the businesses.

Mobile App Notifications Are Horrible. Is There a Better Way?

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“Install app. Permit app notifications to see how useful. Two days later turn off app notifications #EveryDamnAppTheseDays“

This evening tweet seemed to resonate with folks who are also fed up with the state of app notifications. Steven Sinofsky, ex of MSFT & now a16z Board Partner, suggested “Folks seem to be over using notifications/defaulting to sorta noisy. Maybe defaults for platform should impose limits per app?” I’m not sure a hard limit makes sense given the diversity of use cases, so replied “two hopes. 1) smarter personalized notifications via urban airship type tools 2) disable notifications = neg app store ranking signal.” Josh Elman, who has plenty of experience from his Facebook, Twitter and now VC days, also shared that “we experimented with this at Facebook but it just became a brtual game where apps pushed the max available.”

Now I don’t fully blame app developers for the current state. They’re using one of the only blunt instruments they have to drive repeat usage and engagement. The platform owners – especially Apple – don’t give them much to work with in terms of analytics or other feedback loops. Urban Airship seems to be doing some interesting work in this general area, but I don’t know if many other startups exploring mobile app notification frameworks. Do you?

If you’re working on this area, it’s one I’d like to pursue via our Homebrew seed fund, so feel free to reach out via Hunter [at] Homebrew dot co. Let’s build something and then I’m sure Steven and Josh will give us a $25m A round…. 🙂

Beware the Reasonable Plan

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After a pitch I’m sometimes left with the feeling “well, that was a perfectly reasonable plan to build a business.” That sentiment always almost results in a pass. Why? Because the reality is I fear a reasonable plan. A perfectly reasonable plan usually represents a low risk path towards a forecastable outcome. An outlandish plan offered by founders with twinkles in their eyes is much more appealing to venture economics where I’m seeking large multiples on an initial investment.

Same thing when an entrepreneur tells me the rate of interest on a convertible note (aside, notes definitely decreasing these days. YC SAFE and priced rounds increasing). A venture investor who cares about the rate of interest on your note is a warning sign. 6% on my $600k investment after 18 months is a loss. Don’t even make me think you are considering not raising more money and paying off my note.

Please show me more unreasonable plans and tell me why you’re the only team with a shot of making it happen.

The Godfather of Peanut Butter: How One Sandwich Shop Turned Into a Nutty Empire

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I’m a liberal arts guy – not just in spirit but also education, having studied History at Vassar College. During those four years I was introduced to many new ideas, including one by classmate Lee Zalben: peanut butter can solve all problems. Lee put his hypothesis to test in 1998 via Peanut Butter & Co, a small retail shop which has turned into a multiplatform success. One which still goes best with a glass of milk. Here’s a short interview I did with Lee. 

Q: So Peanut Butter & Co started first as a NYC retail shop right? Did you always plan to do ecommerce as well? Tell us a little about its growth.

I opened the Peanut Butter & Co. sandwich shop in 1998, and the menu consisted entirely of peanut butter sandwiches, snacks, and desserts.  Customers started coming in with Tupperware containers, asking to take home some of our peanut butter, so we started putting it in jars for them to take home.  Tourists from out of town who had bought our peanut butter during their visit to NYC started calling us when their jars became empty, and we realized we needed to figure out a way to keep them supplied, so we added e-commerce to our website www.ilovepeanutbutter.com.  That was in 1999 – we were in fact one of the first food companies to offer e-commerce to consumers.  The sandwich shop and e-commerce are a very small part of our business now however – most of our sales come of grocery stores, supermarkets, and specialty and natural food stores.

Q: You’ve really created a community of, well, peanut butter lovers. How have you used social media to unite, inspire and converse with your fans?

While we’ve run ads on television and in magazines in the past, social media is our primary tool for communicating with our customers.  We’ve invested a tremendous amount of resources in developing our social network through a wide variety of channels including Facebook, Twitter, Instagram, Pinterest, Tumblr, and most recently YouTube.  Our focus online is to create engaging content that entertains, inspires, and educates our fans and followers.

Q: Do your customers create content around their love of peanut butter or do you need to do all the content creation?

We find that sharing great content creates even greater conversations, and every day we are amazed at the incredible array of recipes, videos, stories, and photos that our fans create on their own and share with us.

Q: The business started in 1998. How has the technology you’ve used changed over the last 15 years? What have been some of the most important improvements?

From a marketing perspective, the creation of social media has been the largest technological change, but the evolution of how people use social media is just as important as its emergence.

From a productivity standpoint, smartphones and mobile email have allowed me to stay connected with my business no matter where I’m at, and Skype and other VOIP services allow me to be totally engaged in every part of the world.  We’ve been experimenting with some cloud-based CRM, Project Management, and Intranet tools, but haven’t really found the right mix of features for us yet.  It’s a fast-changing space and we’d love to find an all-in-one integrated solution.

Q: Looking ahead, what technologies are you most excited about – either instore for retail or online with your retailers, community, etc

Everyone is talking about “big data” these days, and I’m excited about the new kinds of insights it can bring to our marketing efforts.  That said, I’ve yet to see a platform that can deliver valuable, actionable insights at a cost that a small business can afford.  Again, it’s a fast-changing space so I’m hopeful that some of the companies that are in limited free/beta mode will offer deeper insights at reasonable rates in the near future.

peanut butter

From Exit to Cocoa Bean: How The Plaxo Founders Started Dandelion Chocolate

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A few years back while walking Valencia St here in SF Caroline and I noticed Dandelion Chocolate, a new factory/store which focuses on bean-to-bar production – that means they take care to manage the whole supply chain. Dandelion’s founders previously started the internet company Plaxo, so I was particularly interested to learn how they were incorporating technology into their business. In founder Todd Masonis’ words:

Q: So, the chocolate business? Tell me the founding story of Dandelion Chocolate.
It all started with a love of chocolate. Prior to Dandelion, my friend, Cameron Ring, and I co-founded an Internet company, Plaxo. We sold the company in 2008 to Comcast and were taking some much-needed time off. We were hanging around the HipChat guys, helping them with their company. They had a vacant garage and for fun, Cam and I started experimenting with roasting cacao. We’ve always loved chocolate and it was a challenge make it from scratch. Before long, we had a small chocolate factory running from the HipChat garage.
It’s really fun to make chocolate — you have to source interesting beans from crazy places, build your own machines, and develop whole new processes. When we shared our chocolate with friends and family, they were surprised by the unique and distinct flavors of each bean. While still in the garage, we started winning awards and getting wholesale orders. That’s when we decided we should do something with this.
We also now know, what we didn’t know then, that it’s a really exciting time for chocolate. What happened to coffee, microbrew, and wine, is all happening to chocolate right now. There’s a new American craft chocolate movement where guys in garages all over the country (and now, world) are roasting up specialty beans. In ten years this shift is going to be painfully obvious, but we just stumbled into things right as they were about to take off.
Q: How did your technology background help shape the way you approached DC?
I think it helped tremendously. For one, having a mindset of keeping things lean — and solving the problems you actually have — let us take things one step at a time. The first step was to make sure we could make an incredible product. In our case, that means single-origin bars made with only two ingredients with each origin tasting unique, distinct, and delicious. Second, we wanted to prove the market, but that’s been straightforward. We’ve always been production-limited: our wholesale customer waitlist currently exceeds our actual customer list and we always run at max capacity. Now it’s just a matter of scaling the hard parts, without compromising flavor. This is a process that takes a very long time, but has allowed for a purity of vision and a simple business model.
The tech background also helps in unexpected ways, like even with roasting. The traditional French chocolate makers will say you need at least 30 years to learn how to roast and make a great chocolate bar. But we knew about A/B testing and optimizing metrics, and search spaces and fitness functions. So we applied a very rigorous methodology that got us to testable, repeatable, great flavor much faster.
On the flipside, one unexpected surprise in the non-tech world was all the permitting and regulations. One permit for our factory took over a year and half — and there was nothing contentious, that’s just the speed of government. If every time you wanted to start a website you had to go to city hall and have a bureaucrat sign a piece of paper, there would be no tech industry.
Q: What technology tools do you use at Dandelion and why? (point of sale, back office, etc)
Things are much better now, but when we started a few years ago, there were very few good tools. We were spoiled by having had dashboards, analytics, and data warehousing at Plaxo, so we ended up building our own dashboards for each part of the business. Over time, we’ve been able to swap out parts of our home-grown solution piece-by-piece with better tools. So we’re sort of just left with high-level dashboards and glue code to keep it all together.
The great tools we use are: square (POS), stichlabs (order tracking, invoices), shipstation (shipping), wordpress (blog and basic auth), xero (accounting), intuit online payroll, freshdesk (customer support). All the tools play nicely together, so every transaction/action is seamless. And we have high-level dashboards anyone at the company can look at, e.g. in the kitchen we have an iPad where the pastry team tracks every brownie and cookie sold.
Q: There are many startups who want to serve the local retail market – any advice to founders in that space?
I think there’s still a ton of opportunity here. We were forced to build our own tools, but are very happy with other companies filling this void. Most of the magic comes from the glue code though — when every tool interoperates, it makes for a clean experience. For instance, when someone orders online, it goes straight into our accounting software and a shipping label pops out of the shipping printer. The demand dashboard updates and the fulfillment team gets a notification. Each application is being attacked in it’s own niche way (which is great), but most small companies don’t have the knowhow to glue everything together, so I think that’s one place that is currently underserved.
hunter’s note: SMB SaaS & other retail tools are a focus of our Homebrew seed venture fund

My Investor Role Models

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A year into seed stage investing via Homebrew, I’ve realized what my VC role models have in common: self-awareness. They seem to know what their strengths are, which blind spots they need to correct for, and then not worry about what they aren’t. If 20 years from now it’s been proven that I was a great technology investor, it won’t be because I mimicked the best but rather found my own path.

Fred Wilson’s latest post was a perfect example. Fred is someone I’ve admired for years and been lucky enough to spend time with on several occasions (even getting banned by LinkedIn together). As Fred writes in “The Pre-Product Phase” ->

“I’ve pretty much given up investing in products that aren’t ready for public use. It has not really worked out for me. I really enjoy investing in a business where the product is out in the wild, getting used, and everything else has to be figured out. I am good at that. But I am not good at investing in the figuring out the product stage. My track record proves that conclusively….

Everyone has their strengths and weaknesses. My weakness is the pre-product phase. I thought I’d make that clear to everyone. It will save us all a lot of time and energy.”

As a venture capitalist my time is finite – even more so than my capital. If you don’t know who you are – and who you’re not – I have no idea how you can be effective. And you’ll probably waste entrepreneur’s time and your investor’s dollars.

The Strand: How an 86-Year Old Bookstore Uses Technology

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Strand Bookstore in NYC is one of the largest independent bookstores in the US. Bookstores are a generally challenged retail sector as ecommerce and ebooks have resulted in many local shops closing their doors. Yet the Strand is still strong, adapting with their customers and utilizing social media to connect with their community. Lilly Wyden from the Strand shares how: 

Q: The Strand is a pretty famous bookstore. Can you share a bit of history and your role?

The Strand is an 86 year old independent bookstore and family business. Founded in 1927, the Strand’s first home was on 4th Avenue in Greenwich Village, in an area then called Book Row. It was a place where writers, readers, and publishers gathered – where books were loved and book lovers could congregate. There were 48 bookstores and today the Strand is the sole survivor. In a strange, small world, I now live in the exact location of that very first Strand.  It’s beshert.

While my title is Product Marketing Manager, I’m also the de facto Business Development, Public Relations and Product Manager. Such is the life at a scrappy small business. It’s great. My job is to determine and seek out opportunities that will enhance our customer’s experience – primarily online but offline as well.  Through developing partnerships, launching new and iterative products, and sourcing creative sales channels, my goal is to ensure the Strand shopper is a satisfied one.

Q: Independent bookstores have really been hurt by the move to online shopping, e-readers and big box retailers. How has The Strand weathered this change?

This is a loaded question, albeit a totally fair one. For one, partnerships have been really great for us. Just last year alone, we partnered with kate spade, Club Monaco and Memorial Sloan-Kettering Cancer Center. It’s through these partnerships that we can engage with our customers, show them we are experimental but enterprising, and also expand our reach.

In this same vein, I’d like to think Strand has really set itself apart via creative content and messaging. Our owner Fred is 85 and he came up with the idea to have a table in the very front of the store called “Real Books Cheaper than E-Books.” It is a huge hit. Likewise in December, we had our best sales day in the history of the store and I tweeted out “Bookstores are not dead.” It went viral – almost 2,000 RT’s and likes. Customers love that we don’t hold back and sometimes are a little crude. Modest we are not.  As Steve Jobs said, “it’s more fun to be a pirate than to join the navy.”

Q: What are some ways that technology has helped The Strand become a modern retailer?

Most people don’t know that we are in the business of books by the foot and personal collections.  What that means is we create custom-curated libraries and collections of books, for individuals and corporate accounts. We have done hotels, restaurants, beach houses, movie sets, and even retail stores (Warby Parker’s shop is one). Next time you’re watching TV and you see some books in the background, look closely, because those books are very strategically placed. And there is a really good chance they came from the Strand.

So to answer your question, technology has enabled the Strand to show, maybe even remind customers what we offer beyond just selling a new bestseller off of a table. Most of these books by the foot customers begin their orders via our website. On a similar note, if you run a search on Google for say, rare books, Strand will come up at the top (organic and unpaid!) and customers will learn we have an entire floor dedicated to rare books. It can be easy to get lost in the Strand and not see it all, so technology has helped us bridge that gap.

Q: One assumes The Strand has a smart and literate customer community. How has this shaped your social media strategy?

Our customers are whip smart, as are our booksellers. Our social media strategy is such that the voice you hear online – whether it’s our e-commerce site, Twitter, or our email blasts – should be one and the same with what you hear in our brick and mortar store. Social media is a bridge, to start a conversation and follow up on one. The content we push via social is quirky, sometimes provocative, hopefully a little funny. It’s important to us that we show our customers, via social or otherwise, that we’re not a drone or bot or algorithm telling you which books you might like. We are real people, real humans who have actually read those “you might also like” book recommendations.

Q: If you could invent one new or better piece of technology to help The Strand, what would it be?

I wish there was a better way to source customer feedback. An unimposing, unintrusive way for customers to tell us what they liked or hated, wanted to see more of, wish they’d seen less of, about their shopping experience. Ideally right after checkout, online and in-store. Not a paper or email survey and definitely not a manager with a clipboard and interview questions. I’m not talking in terms of product-market fit, just simply feedback and suggestions. Our customer comes first and we want to make them happy but we need a better way to hear from them.

“Never Heard of It, Must Not Be Big” Has Never Been More Wrong

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“Eh, never heard of it. Must not be a big opportunity.” I remember the days when you could say this about a consumer website and usually be correct. Oh because it was only 15 years ago. Sure you had lots of niche businesses throwing of good amounts of cash, but if you were an investor in Silicon Valley looking for a multibillion dollar outcome, there was an informal checklist you went through:

a) Have I heard of it? [with “you” usually = 30-50 year old white male]

b) Have my associates, wife or kids heard of it? [solving the 20s, kids and women’s market]

c) What are the Comscore numbers? [solving the US traffic #s. kinda]

No, No, Small = pass. Or if you found out it was big but only outside the US? “Well, they’ll have trouble making money.”

Fast forward a bit and gloriously “never heard of it” isn’t anywhere close to being a negative signal. Why? Because early adopters are no longer monolithic and many demographics now have enough population online to support services which appeal primarily to them. A teenager recently gave me the blunt description of how Snapchat conquered his high school: “It spread from the Slutty Girls to the Soccer Girls to the Math Girls to the Boys.”

And international is no longer a black hole of monetization but leading the way on many new models, such as in-app purchase.

And social + mobile platforms have created such a growth acceleration opportunity that smoldering businesses can turn into full blown bonfires faster than ever. 

In 2000 “never heard of it” meant pass. In 2014, if there’s something I’ve never heard of, my heart quickens as I go to download the app, visit the URL, buy the hardware, etc