Should Startups Get "Patent Troll" Insurance?

A patent lawsuit can be a deathblow to a startup – whether a patent troll or legitimate issue to be adjudicated, the cost is not only crippling but the uncertainty of outcome makes their business nearly unfundable to outside investors. Ditto finds themselves subject to two lawsuits – one is clearly a patent troll, the other more complex – but whether they’re in the right or not, it puts them in a very tough position. That’s why they’ve taken to Indiegogo to crowdfund help.

IANAL but I did participate in several lawsuits during my time at Google, including the 2012 notable ruling against Eolas for an “interactive web.” It was such a bullshit patent but many companies – even large ones – just chose to pay the shakedown fee, err license, instead of fight because of the cost and risk in pursuing litigation. Google went to the mat and put lots of time and resources into fighting. Thank goodness they did. One less parasite. But startups can’t afford to do this and are left often with no choice other than close up shop or settle out of court.
What are some ways that startups can deal with this risk while we as an industry work for patent reform? Could you purchase insurance against IP lawsuits? Should large VC firms signal they will protect their startups by helping to chip in money to fight frivolous lawsuits? First Round Capital backed a lawsuit to prove a point. I don’t know if there’s an easy or obvious answer but feels like an industry solution would be better than leaving companies to one-off fight on their own.

Update via former colleague, and now Pinterest legal eagle Mike Yang: Not endorsing them one way or another, but RPX Corp. offers a specific insurance product for patent trolls

Don’t Mess Up Tumblr: Five Lessons Learned from YouTube

When Google purchased YouTube there was lots of skepticism and outright derision. Today analysts estimate its enterprise value is approaching $20 billion. So I guess it all worked out, eh? Being one of the first Googlers to join YouTube after the acquisition taught me a lot about what works, and doesn’t work, when you bring a fast growing community property into a larger entity. There are clearly parallels between our situation in 2007 and what Tumblr will experience with Yahoo. Marissa is a friend from our time together at Google and I’m impressed, but not surprised, by her decisiveness and vision. I don’t know David Karp but we share a number of mutual friends and at a 2012 group dinner he passed me the salt, so we’ve got that. But since neither of them replied to my tweet offering $10k/hr consulting services, here are five Lessons Learned for Not Messing Up Tumblr.
1. Protect Tumblr from “Helpful” Yahoos
YouTube saw a huge influx of meeting requests, collaboration ideas, inbound employee transfer offers, etc. We were the shiny new toy and everyone wanted to play. Much of it was self-interest – some good natured, some more political. But even the useful opportunities still had the risk of hugging us to death. Eric Schmidt, who was an amazing sponsor of YouTube, gave great advice – be very selective about who you bring into the team and just say he gave us permission to turn down the other offers of “help.”
We complemented this by proactively educating key Google groups about YouTube. I, along with others, visited key stakeholders at Google and their team meetings. Especially legal, policy and pr – we wanted them to understand the magic of YouTube. Beyond cat videos and copyright questions, help them to see education, community, homegrown stars – everything that made this 18 month old company worth the $1.6b price tag.
2. Avoid Locality Bias in Product Development
You’re part of Google, there’s corporate pressure (and perceived quick wins) to work with other Google products. Blogger, Orkut, OpenSocial, Google Video, Picasa. Remember those? We were growing so quickly that if YouTube integrated or heavily promoted them, they could probably hit their quarterly growth target just from our marketing efforts. But guess what, in many cases that wasn’t where our growth was coming from. It was coming from Facebook, Twitter, Buzzfeed, Tumblr and the curatorial blogosphere. So that’s where we focused. Be where our users are and grow on the back of those ecosystems. Were some of them Google competitors? Heck, some of them were YOUTUBE competitors but overall the goal was to sew ourselves into the fabric of the web. Boy did I take arrows in the back (I still remember Jeff Huber saving me from a few of them) but at the time, it was the right choice. YouTube’s partnership with Apple to be a default app on the original iPhone not only helped us make the jump to mobile but it ensured that every other carrier wanted YouTube on their phones too. 
3. Stop Short Term Monetization That Won’t Scale
YouTube was just starting to earn revenue via a host of banner ads and one-off branded campaigns. Neither of these were going to be important longterm and many of the programs put money in our pocket, but passed through little benefit to content creators because they sold YouTube inventory. It took a good 18 months but under the right goals and leadership the cross functional team started sunsetting this stuff for more scalable monetization products which put money in content creators’ pockets. 
4. Infrastructure (Tech, Process) on Tumblr Terms
The YouTube engineering and network team was superb – keeping the site live and minimizing operational costs during hypergrowth. Google engineering leadership helped out by connecting them with teams they wanted to speak with, not by ordering them to migrate systems. The goal was to help YouTube architect even more scalable infrastructure without slowing down feature development. I think search index moved over first, then a set of progressive projects around thumbnail serving, streaming, etc. Treat it as a science fair where Tumblr gets to see all of the cool tech available to them. Pair senior engineers from each side to help build trust and overcome the Not Invented Here pride of status quo. 
Business processes were similar. We quickly started using Google OKRs but across release schedules, job ladders, bonus formulas, etc had license to experiment. Great cultures need to figure things out for themselves – it made no sense to immediately take everything Google was doing and force these best practices upon a company as young as YouTube. For example, there was a period where, working with Google HR, we changed our bonus multiplier to starve lower performers and give more of their bonus to higher performers. In addition to believing it was the right model, we also wanted to signal internally that YouTube wasn’t a place you could transfer to and then just coast.
5. Separate Identity, Separate Space
Although YouTube worldwide increasingly colocated staff in Google offices we maintained worldwide headquarters as a standalone building in San Bruno. Coming to an office every day that said YouTube in big letters and was filled w just other folks working on the same goal – incredibly motivating. We would have gotten lost on Google’s main campus. We needed separate space and identity. Not because we were better but because we were different. How could we have a community that believed in us if we didn’t feel like a tribe ourselves. We had a building, we had a heartbeat. 
Best of luck to the Tumblr and Yahoo teams!

Tech Conferences Are Destroying the World. But I Have A Solution.

Tech conferences aren’t about the content, it’s about the conversation. The conversations in the lobby, the hallways, over meals, across seats. The ability to connect with large numbers of people in an informal setting away from the office. In fact, the personal contact is so good that people travel long distances, mainly by airplane, to get a seat: San Francisco, New York, Austin, Paris, London, Hawaii and beyond. If you attend a few of these you’re sure to grow your network and influence. And you know what else? YOU’RE DESTROYING THE WORLD VIA INCREASED CARBON EMISSIONS.

One roundtrip flight from NYC to SF or Europe creates warming effects of roughly 3 tons of carbon emissions per person. Oh, that’s just the equivalent of 10,000 miles driven in a car. No biggie…

So all these folks tweeting about a greener planet and installing Nest thermostats, there’s one thing you could do that might really make a difference: stop flying as much. Seriously, I know that every event is so important  that in the moment it seems like a great idea to attend but you’re creating a shittier world for my daughter. Since I go to some of these myself i guess I’m part of the problem. Besides trying to cut down on unnecessary plane travel, here’s what I’d suggest:

Conference Organized Should Bake Carbon Offset Into the Ticket Price
Carbon offsets are a market-based solution where you can seek to reduce your carbon footprint not by changing your behavior, but by paying to reduce carbon emissions elsewhere. Most of the big tech conferences are pretty inelastic because many attendees are affluent or expensing their tickets. Toss another $100 in there. No one will care.

AllThingsD, TechCrunch, GigaOM, f.ounders, LeWeb, The Lobby, TED, and so on… you game?

Congrats! The Backslappy Nature of Social Media

I’m a nice guy, right? I generally root for people to succeed, even in situations when I’m skeptical of their plans. And a pat on the back – of encouragement, or a job well done – I know that matters. But I’m sorry, I can’t do it any more. The “congrats” tweets. They need to stop. Often, especially after a tech news event, my Twitter feed is filled with these meaningless kudos. Man, I sound like Gabe Rivera, but hear me out. This isn’t about some cold, hard stoicism where we’re all locked in some mortal confrontation and praise equals weakness. No, rather it’s about three simple types of sin – THE FAUXGRATS

The SuckUp Congrats (“@dickc congrats man, you totally nailed the commencement speech”)
Here someone tries to curry favor and attach themselves to a notable figure via public supplicancy. SuckUp pile ons often occur.

The Humblebrag Congrats (“Zuck congrats on 1B users. Man, I remember 07 when we hit 100m #GoodTimes)

The congrats which allows you to place yourself upstream of the event or suggest that you had some contribution to the success. Note one way VCs do this is via the “Congrats . Proud to be an investor! #blessed”

The Undeserved Congrats (“Congrats [company which essentially just went out of business] ! Excited for the next adventure!”)
Hey guess what, I showered this morning. Congratulate me?

Let’s embark together on a Congrats 12 Step Program. First, admit you have a problem. If you go back through my Twitter archives I’m probably guilty of all three. But not recently. You see, I now stop myself if the congrats is meant to aggrandize myself alongside the recipient. And then even if it’s pure, I’ll send an email or post to their Facebook wall. Keep it quiet. On the down low.

Congrats, you made it to the end of this post.

Don’t Let a Minimum Viable Product Minimize Your Minimum Viable Vision

Speaking today at a Wired conference in NYC, WarbyParker cofounder Neil Blumenthal prophesied that “you won’t be able to hire talented people over the next 10 years unless you’re a mission-driven company.” I think he’s right. Some entrepreneurs think “mission-driven” means taking an Uber to a bar at 19th & Valencia, but in actuality it’s what binds teams together during both fruitful and challenging times. 

Too many founders have sacrificed the WHY in the process of speeding up the WHAT and HOW. The Minimum Viable Product approach is not fundamentally at odds with thoughtfully articulating the longterm vision of the company. In many cases the founders bring this with them to the startup – it’s why they selected this path. Other times though, founders are only coached on mission & vision in the context of selling the big picture to investors. If it’s not in your heart, writing on a slide won’t make it true.
If your Minimum Viable Product is the simplest implementation that will add value for your users, your Minimum Viable Vision is the most succinct version of why your company matters and what you hope to become. A MVV isn’t just for your employees or press or VCs. It’s your product true north too. If you don’t know the destination, then it’s hard to ensure your product isn’t just a collection of parts.

Can You Really Trust A Cookie?

Is there a market in reverse engineering cookies in order to present a false identity to a website? Ecommerce sites routinely provide various discounts, and potentially even variable pricing, to individuals based on behavioral analysis. For example, if a site sees you visited six times, browsed, but did not purchase, perhaps they’ll pop up a “$10 off today” coupon.

Got me thinking – could you write a piece of software which for a given site, presents a large number of manufactured cookies, in rapid succession, to try and find which will trigger advantageous pricing? 
Are there other scenarios where manufactured cookies would be helpful? 10 Free Articles Before Hitting Paywall – today you clear your cookies in order to restart, but what about constantly re-presenting that site with a cookie suggesting you’ve only read one article? 
Today cookies are generally trusted for machine-to-machine communication. Should they?

Update via Mark Ayzenshtat:
This kind of technique would not get very far. Sites that stored, e.g., numArticlesRead=1 inside the cookie could easily ensure that it wasn’t tampered with by adding a message authentication code (HMAC) to the cookie state. Or (more work for the site) they could avoid storing anything in the cookie beyond a randomly generated user ID and track the interesting parts (like how many articles you’ve viewed) entirely on the server.

Could Your Username Be Used For Fraud Detection?

If you go to just about any social website and search for user “hunter walk,” there’s a reasonable chance you’ll find me. It just always seemed easiest to employ my real name and its uniqueness meant it was often available. Any site I register with would also see it’s the name in my email address and that my identity corresponded to a number of other sites where there exists proxy data suggesting I’m a good egg (eg in good standing on LinkedIn). So basically I should be trusted on any new site since it’s a very low probability that I’m a fraudster, at least if past behavior is indicative of future. So why does each site start off not knowing a thing about me?

I’m not talking about a Facebook-style federated identify but wondering if there’s a “Username Analysis as a Service” component to fraud prevention, or at least asshole detection. Can a username be valuable in predictive analysis about behavior? For example, do users who purposefully misspell words in their screen name behave better or worse? Are nonsense usernames more likely to be spammers? Can someone who seemingly uses a real name (“Hunter Walk,” “Larry Goodstein,” etc) be trusted because they’re using their name, even though the system doesn’t require it?

Cursory Google search didn’t turn up any academic research on this. Can anyone point me to relevant studies?

Funding Kabuki (aka Creativity in Round Naming)

In the last 48 hours I’ve seen funding solicitations for the following “Pre-A” financings: Advisory Round, Friends & Family, Seed Alpha, Seed Plus, Seed, Accelerator Round, Traction Round. And I’m probably forgetting a few. Boy we’re getting creative in our fundraising narratives…

On one hand it doesn’t really matter, who cares what it’s called – any smart investor is going to look at real metrics of traction and cap table. You can’t fake the numbers. If your startup is raising its third financing to explore yet another pivot, I know it smells, no matter what fancy name you invent.

But at the same time it bothers me a bit – it’s funding kabuki – and I can’t help but see it as a negative signal for where energy is being focused. Making decks, naming rounds.

What if we standardized on funding like the convention of software releases? Round 1.0, Round 2.0, etc. Each advance in version number represents a change in financing terms. A point release (eg R1.1) suggests more money raised at the same – or substantially similar – terms.

Nah, will never happen. Pardon me, I need to review a deck for someone’s Superhero Beta Round.

These Three $50B+ Companies Should Be Fighting Over Foursquare

I’ve identified three companies each worth north of $50B who should be fighting over ownership of Foursquare. Apple, Facebook and Google? Nope. Visa ($110B), Mastercard ($66B) and American Express ($75B).

Your credit card company has a tremendous amount of data on where you, and the world, shops. Not purchases at the SKU level – they largely don’t know what you bought at West Elm or Cheesecake Factory – but they do know that you spend $350 at a furniture store and $75 at a casual food chain. Now extrapolate this over millions of customers. Using covisitation data they could recommend to me other establishments visited by folks with similar spending patterns. “Hunter, because you enjoy West Elm you might also like SF Modern Design located at 1000 State St.” This would be especially helpful when traveling.

But none of these credit card companies are (a) skilled at building consumer facing applications, (b) upstream of purchase decisions and (c) have place level data for retail establishments. Oh but wait, Foursquare has all of those. By combining with Foursquare, the credit card companies could finally justify and preserve their transaction fees (in the face of competition from other payment options) but working to drive demand to the local retailers. Today they do this in very non-scalable ways such as one-off marketing programs such as AmEx Small Business week.

To take it a step further, this would also give a credit card company the ability power loyalty programs at the retailer level using Foursquare check-ins combined with verified purchases to close the discoverytransaction loop.

Is that a Foursquare-powered credit card in your pocket or is your app just happy to see me?

[When buzzing about this on Twitter, Rakesh Agrawal pointed me to a 2012 article where he feels similarly]

Promoted Apps: Could Native Advertising Come to iOS App Store?

The iOS app store will pass $20b annual runrate this year and yet app discovery is still terribly suboptimal. At first I thought it was merely product limitations that Apple would aggressively move to solve – better search, social discovery, improved ratings system. Then I claimed conspiracy theory – that Apple likes having editorial control and thus the ability to play kingmaker via the featured section. Now I’m thinking something else – something that Jobs might have rejected but could provide billions in high margin ad revenues to Apple: native advertising in the form of promoted apps.

Think about it – there’s a fast-growing market in Cost Per Install app promotion around the iOS ecosystem. Apple doesn’t like when it succeeds – partly because of grey-area techniques, but maybe also because they don’t want anyone to meaningfully create alternative promotional mechanisms before they roll out Promoted Apps. AppGratis wasn’t too bad but too good?

What could it look like? Some promotional slots within the leaderboards, on search, on browse. A cost per install auction system. Makes a lot more sense to me than iAd.

Anyone have good reasons why Apple shouldn’t pursue this opportunity?