Launch means Birth: Parent your Infant
Thanks to Ohours and the time I’ve had between startups, I’ve been meeting with many, many founders who seek insights into youth media, the restaurant space, or the movie industry.
Clearly the flavor of the latest Internet epoch (circa 2009-present) is the platform. Today I met with a company that has not launched, has no users, but does have the requisite API. At one level, I understand. Our industry is deeply interconnected. Platforms have greatly lowered the cost of entry for startups and certainly Facebook Connect and Oauth have made it faster to launch dozens of services.
But what might be lost in this rush to be a platform is a startup’s birth and obsession with that other constituency that is even more important than developers: USERS.
My former colleague Nate Westheimer wrote an excellent and under-read post on the importance of the first 100 users and if you are launching a service you should read it. Paul Graham has written extensively on the importance of obsessing over building something people really want.
Your startup is an infant at launch. You have to nurture it and care for it round the clock. It’s not self-sustaining. One developer told me,
I know what you mean. Sometimes I feel like my code just pukes on me.
Funny.
Startups need to narrow your focus to making your infant love you by giving the early members tons and tons of love. For every Twitter or Instagram (insane growth rates), there are dozens (Foursquare among them) of companies that took considerably longer to engender a robust following.
- Carefully select your first users.
- Develop real relationships with them.
- Figure out what works and doesn’t work
- Start to spread the word
- Don’t lose site of these users
As your userbase grows and reaches adolescence (1mm-5mm active monthlies), then maybe it’s time to give that startup some room to grow and be more independent. Maybe that’s the time to roll out the API.
Look at it this way: FourSquare is very hot and has 7mm users+. They held a huge hack day at General Assembly and many people hackers (looked like 100+ to me showed up). I’m told by numerous developers that they have a great API.
Still, how many apps have you added to FourSquare?
If Foursquare, is struggling at 7mm to get huge app traction then early stage startups should not expect to create a developer community or momentum. Spend your energy focused on your the equivalent of your infant, toddler, and child — your first 100, 10,000 and 100,000 users.
4 NYC startups, 3 Valley Firms = a New New York
It’s official: New York City is an Internet product town.
When Silicon Alley emerged in the mid-90s the idea that top tier West Coast venture firms would invest in New York City companies was as likely as Michael Arrington cracking a smile.
While Andressen Horowitz, which joined Union Square Ventures in funding Foursquare, has decades before they can catch up to the Sequoia or Kleiner Perkins track records, most internet pros would give them blue-chip status. Ditto for Vinod Khosla (See Khosla invests in Hunch, and ZocDoC) who is an ex-KP partner and was already a tech hall of famer in the 90s. Now word comes that Accel has joined Insight in SquareSpace.
During the Web 1.0 era, enormous investing lead to very little long-term value creation. Only Doubleclick lived to be a multi-billion dollar acquisition and that was after it was taken private at a fraction of its share price. iVillage managed to get a $600mm exit after trading for below cash through the early part of this century, but by comparison to the great Internet companies’ market caps, that’s a pittance. In any event, NBC probably overpaid. There were others (Tacoda and 24/7 come to mind), but for the most part venture investing in New York was futile and many, many first-time entrepreneurs left the industry.
The iconic internet companies that remain, Amazon (Kleiner), Ebay (Benchmark), Yahoo (Sequoia), Google (Sequoia and Kleiner) were funded and created on the West Coast. For a long time, under the genius leadership of Bob Pittman who was a kind of Jim Clarke of the media industry, AOL thrived, but then it too failed to see the emergence of the Web as the platform of choice and, eventually, was crushed by a combination of Yahoo, Google, and cable companies. Even the second tier of internet Hall of Famers — Facebook (Accel, Greylock), MySpace (Richard Rosenblatt), and YouTube (Sequoia) were California-based.
Historically, the West Coast VCs simply didn’t fund East Coast companies. Those were the rules. When the dotcom bubble burst, NYC was written off as terrible place to do business because Wall Street would always have the best engineering talent, Manhattan was too expensive, and (my favorite) the city life itself was too much of a distraction.
But then something happened about 6 or 7 years ago. The west coast style of investing started finding New York City based champions. It started with Fred Wilson reinventing his career at a fast and furious pace at USV. With Brad Burnham, he launched a small fund and immediately broke through with the sale of Delicious to Yahoo. Then they invested very early in Twitter, Zynga, Etsy, Tumblr, Boxee and now Foursquare. Meanwhile, John Borthwick and Andy Weissman were cooking up Betaworks to reestablish the incubator as a viable business model and they immediately hit it with Summize. John was early to tout the twitter ecosystem and they partnered up with RRE, who until Betaworks was considered reasonably old school. No longer. All of these firms are product-first investors. They chase the large user base.
That is a prominent investing thesis in Silicon Valley and, soon, the DNA started to cross-pollinate. Betaworks found kindred spirits in Jeff Clavier, AlphaTech, and Chris Sacca. Caterina Fake ended up in New York.
But the biggest change was the arrival of the first generation of Internet kids who wanted to be entrepreneurs. Sam Lessin (Drop.io), David Karp (Tumblr), Dennis Crowley (FourSquare), Michael Galpert (Aviary), Nate Westheimer (AnyClip), Andrew Kortina (Venmo), and the Blip.tv crew decided to live in New York.
It was unusual. Even Mark Zuckerberg had moved to Silicon Valley. This crop of entrepreneurs obsess about product. They don’t know what companies are going public and have not rushed to hire people before their IPO.
The 1.0 crowd focused on business models and public markets. We did stupid things like build cool offices, hire expensive PR firms, and try to drum up short-term revenue gimmicks. Ours was a prospectus-oriented strategy — designed for investment bankers, not the Internet consumer. That is how bubbles are created. When it became about the money, Silicon Alley, Silicon Valley (and the larger internet industry) was temporarily derailed. The most egregious sign of this banker-first mentality was Enron. Their implosion lead regulators to make changes.
Ironically, an unintended consequence of Sarbanes-Oxley was that it shut down the public markets to startups. Internet entrepreneurs stopped thinking about getting rich quickly. Instead, they built popular, useful, scaleable products.
Look, there have been no liquidity events for Boxee, GiltGroup, Tumblr, FourSquare or Bit.ly. Only time will tell if any of these companies can enter the Internet Hall of Fame. But New York has changed. It’s a product town.
Just ask the rock star vcs: Vinod, Mark, and Jim Breyer.
AnyClip One Year Later
A year ago, I flew to Israel to make some sweeping changes at AnyClip.
For starters, gone was the two year old company name PopTok along with 4 executives and a bunch of others who had been a part of the very family-oriented culture here. I’ll never forget that morning. Tough way to start a trip.
The next day my co-founder Nate Westheimer arrived and the mood abruptly changed. He was full of compassion for the team but determined to set a new course. We began work that day and when, after 10 more days, Nate departed Israel with the team full of enthusiasm and vitality. AnyClip was on its way.
Without question, AnyClip is the most exhilarating, challenging, and complex startup that I have ever managed. We set a BHAG (Big Hairy Audacious Goal) to index the world’s entire film catalog. We dream that one day we will see and share any moment from any film.
Some of my most respected mentors told me that it was a naive, almost foolish vision. Pick your poison they claimed: it’s legally impossible, altogether too expensive, and technically overwhelming. To top it off, we would face the complexity of building a cohesive team with 2/3 of the employees separated by 7000 miles, 7 hours, and only sharing a 4 day work week (Israel is open Sunday and closed Friday).
Well, we’re still here.
We went to TechCrunch 50 with a prototype that was completed 4 months after Nate arrived in Israel and emerged a finalist. AnyClip is engaged in meaningful negotiations with almost every major studio. We have completed two still unannounced deals with major indies and are in final redlines with a handful of others. We launched our live product in March and passed 75k users in our first month — this before we have meaningful video content. Our traffic goals are ambitious: grow an order of magnitude every year for the next 3 years. 100 MM users by the end of 2013. Difficult? Sure. But not impossible — this is the movie business. We work here because we believe in the magic.
Credit for our early success reaches far and wide. The PopTok team never wavered in their enthusiasm. Morale could have plummeted and people could have gone through the motions. Instead, they worked their asses off to launch a new product from scratch. In particular my management team of Amit Kahn and Maor Gillerman kept the team together and focused. We were fortunate to add Eyal Gersht in time for the release of the prototype and eventually the product. But AnyClip is really a team effort and this includes Guy/Dima/Moti//Efrat/Avia/Kfir/Itai/Miriam/Or/Itai/Tania/Yulia and now Sagie. They are complemented by dozens of metadata creators too numerous to mention here.
In America, the Aaron Cohens (Chris and Fisher), Gabi (our hardcore, overworked designer) Greg, and my right hand Jenaveve have formed an amazing culture. We just finished a month in my apartment between office spaces and didn’t miss a beat despite Ry and Georgia wanting to play as with me, them, or their friends from 4pm on. Our itinerant office life now moves to Times Square for the summer and our downtown crowd sucked it up and moved in yesterday. We’re a block from Red Lobster.
Meanwhile we are professionally represented by Hollywood pros who understand their town. The High View Media crew (Rich Goldberg, Rob Jacobson, and Phil Schuman) together with Brad Sorensen (Indie Man) have provided me with an education and a chance to make this work. We’re following the Yellow Brick Road. And we’re aided by Fandango founder and former CEO Art Levitt who has made an enormous, positive impact on the company as an outside director. He’s a true mentor and he believes.
The most credit goes to our founding investors Erel Margalit from Jerusalem Venture Partners and Mickey Schulhof from GTI. They wooed me for 3 months prior to my arrival at Poptok. By then I had some visibility into the challenges of this turnaround. It would have been very easy for them to give up on this investment. Last Spring, the economy was a disaster and venture capitalists were pruning portfolios. Nate and I articulated the vision for AnyClip and on that alone they doubled down. It was a big risk, particularly given the fact that Nate and I were outsiders pitching a completely new company.
And that’s what I love about my investors — particularly JVP. The venture business is hit driven and the partners here know AnyClip could be huge. I always tell VCs we could return your fund. But investors prefer to pay up for more certainty. I get that. So we’ll see.
Finally, I want to single out Nate. He has lead a multi-national team and built the foundation of what we hope will become the standard for sharing film moments. Simply put, without Nate’s vision and leadership, we would not be here.
Startups have risks. Our job as entrepreneurs is often risk mitigation. AnyClip’s challenges are intensely daunting. We must navigate Hollywood, author incredibly complex search algorithms, scale a massive metadata creation factory, and release AnyClip products on many platforms. I should confess I have lost a little sleep this year.
But any moment from any film ever made. Are you kidding me? Now it’s our holy grail. Feels appropriate to have penned this post in Jerusalem.
The Faith Continuum
Exceptional entrepreneurs and venture capitalists have similar DNA. 15 years ago, I read a book by Jerry Kaplan called GO about a failed pen-based computing system. It starred a young venture capitalist named John Doerr who I recall being brazen and fearless. This was the early rennaissance and Doerr was the young Leonardo before anybody really knew who he was.
I spent the day with two of Nate’s colleagues at Flybridge Capital today: Jeff Bussgang and David Aronoff. Jeff was gracious enough to offer Nate and I a free strategic whiteboard session. The interplay showed that we occupied different positions on the AnyClip faith continuum. I was the most optimistic, and then each of the other players occupied a different place on the line.
I remember my first day of entrepreneurial faith. It happened in 1995 when I read the book Road Warriors by Dan Burstein and David Kline. Told the story of something called the information superhighway. They predicted everything would change. I believed them. This was my moment of faith.
Since then, I’ve had many such moments of faith. “Companies will need Websites — Concrete Media, Teens will need their own communities — Bolt, The world needs a service where your profile is created by others WikiYou.” I was lucky enough to run Greg Barton’s brilliantly conceived MenuPages — Every Menu in a given city. All of these had levels of success or fell flat on their face for a variety of reasons. None of them would have worked without faith.
But faith is not binary.You can be in different places on it at different times. Faith hinges on your beliefs, moods, accomplishments and failures. You and your company are what you believe and you do. That’s all there is. the belief part matters greatly. Without that, you never leave the starting line. Worse -you don’t continue on.
There are probably a dozen reasons to question AnyClip’s ability to succeed. I think about them every day. But in the end, I believe in any moment from any film ever made. I believe what we are doing is great for the film industry, artists, AnyClip employees/shareholders and every film lover in the world. I believe AnyClip can be a utility and even, dare I say it, a verb. This faith sustains me. It doesn’t mean we will succeed, but without it we would have never begun.
