Month: December 2016
It’s Sunday and it’s -8 degrees in Boulder. Egads. As I sat in my warm office catching up on email from the week, I sent links to our Foundry Group videos to a friend that had never seen them. I realized two things: (1) I’m still annoyed with Ryan for accidentally deleting our Youtube account and resetting the counters on both videos from > 100,000 views to 0 views and (2) A bunch of people in my world have probably never seen these videos.
So – for your viewing pleasure, here are me and my partners making fun of ourselves. As a special bonus, check out my singing and dance movies. And Seth – well – enough said.
If you see Jason in the next few weeks, tell him that it’s time to make Video #3 so we can get Lindel in the mix. Maybe the next one will be called “I’m an LP.”
I had a great digital sabbath today. I was wiped out from the week so I slept until 10am, had breakfast, and then crawled back into bed with Amy until 2pm.
I spent the afternoon on the couch reading March by John Lewis, Andrew Aydin, and Nate Powell. It’s a comic book trilogy that is the story of the Civil Right Movement through Congressman Lewis’ eyes.
While I’m reading very little current news right now, I am reading a lot of American history. I’m in a Civil Rights phase that started with Devil in the Grove. I’m sure some of my recent work with Defy Ventures had caused me to dig in deeper into this segment of American history. I know that my reaction to the recent election is reinforcing this.
I was born in December 1965 so the Voting Rights Act had already passed. While I was born in Arkansas I grew up in Dallas, Texas so I was somewhat disconnected from the dynamics of race in the deep south and instead got to experience a different dimension of it since there is generally a Texas version of most things.
I’ve always been confused by the labels Hispanic and Latino and, after living in Boston from 1983 – 1994 and getting a dose of a totally different version of race dynamics than I’d had in Dallas, I realized my upbringing in fashionable far North Dallas was a comfortably privileged one.
Reading a book like March in 2016 helps me realize how far we’ve come as a country, but at the same time reminds me how much more we can and need to do.
While Amy loves poetry, I struggle with it. I find that I generally skim it and don’t really absorb it, unless I read it aloud and slowly. Yesterday, as I was listening to Jerry Colonna read a poem as part of something I did with him and a bunch of other Boulder entrepreneurs and I thought of a poetry book I read recently that I loved.
It’s Odes by Sharon Olds. Since it was poetry, and I knew I wanted to read it slowly, I bought it in hardcover instead of Kindle. I decided to read it in the bathroom so it would take me a while. Like a lot of guys I know, I enjoy sitting on my throne for 15 minutes reading – it’s a quiet place for me. So, I put Odes on the shelf in my master bathroom and read a few poems each time I emptied myself.
Sharon Olds deserves her Pulitzer Prize. She’s awesome. I think I noticed this book in the New York Times Book Review when I talked about all the dirty, sexy, human body part, and object odes she had written. My curiosity got the best of me and it was well worth it.
Who can resist a book that starts with an Ode to the Hymen. While there are plenty of other body part odes, we also get Ode of Broken Loyalty, Wind Ode, Ode to my Whiteness, Ode to the Condom, and an Ode to the Last Thirty-Eight Trees in New York City Visible from This Window.
I typically read two to three odes on each trip to the bathroom, but every now and then found myself finished with my business with the desire to read one more. Sexist Ode. San Francisco Bay Dawn Ode. Sick Couch Ode. Toxic Shock Ode. Ode to My Fat. My Mother’s Flashlight Ode. Merkin Ode.
There are seven sections. I have no idea how Olds segments these sections – there was no rhyme or reason from my frame of reference. Trilobite Ode. O of Multiple O’s. Donner Party Mother Ode.
It ended with ABRACADABRA Ode which I thought was brilliant.
Henceforth, I will read poetry on the toilet. Any good recommendations?
I had lunch recently with a founder. We were talking about current and future board configuration for his company and he said “Up until this point, all my board seats were simply for sale. Whenever a new investor showed up, they wanted – and got – a board seat.”
I loved the phrase “board seat for sale.” It’s exactly the opposite of how I think about how to configure a board of directors, but I recognize that it’s a default case for many VCs and, subsequently for many entrepreneurs and companies.
It’s a bad default that needs to be reset.
I wrote about this a lot in my book Startup Boards: Getting the Most Out of Your Board of Directors.
In the past few years there have been some interesting changes. In pre-seed and seed stage companies, there’s been a trend against having board of directors. Instead, there is no formal board, or no formalism around the board, so it’s just a free for all between the collection of early investors (angels and pre-seed/seed VCs) and the founders. This can be fine, but often isn’t when there are challenging issues that involve founders, financing, execution, or conflicts. And, when things stall out, figuring out what to do is often harder for the founders because of the communication dynamics – or non-communication dynamics – that ensue.
Post seed boards tend to be founder and investor-centric. This is the norm that I’ve seen over the past 20 years. With each round, the new lead investor gets a board seat and all of the other significant investors get either a board seat or an observer seat. The board quickly ends up becoming VC heavy and the board room expands to have a bunch of investors in it since they all have observation rights. Having been in plenty of board meetings with over 20 people in the room, I can assure you that these meetings are ineffective at best and often trend toward useless.
One approach to this is the pre-board meeting, where only the board members meet with the CEO prior to the board meeting (similar to an executive session of the board.) This is an effective way to deal with part of the problem, but it then makes the board meeting, in the words of a good friend and fellow VC, kabuki theater.
I prefer dealing with reality. I have a deeply held belief that as long as I support the CEO, I work for her. Yes, I do have some formal governance responsibilities as a board member which I take seriously and am deliberate around them. But most of my activity with a company is in support of the CEO. When I find myself in a position where I don’t support the CEO, it’s my job to do something about that, which does not mean “fire the CEO.” Instead, I have to confront what is going on, first with myself, then with the CEO, and finally with the rest of the board, in an effort to get back to a good and aligned place with the CEO.
As a result, especially for early stage and high growth companies, I think the CEO and founders should be deliberate about the board configuration. I like to have outside directors on the board early as it helps the CEO and founders learn how to recruit and engage non-investor directors. The CEO can learn how to build and manage the board and get value out of board members beyond the classical dynamics around an investor board member.
Most of all, I hate the notion of board seats for sale. I get that many investors want board seats as part of their investment. I appreciate that some now have strategies of never taking board seats. But too few VCs think hard about what the right board configuration is at the point in time that a company is doing a new financing. I think that’s a miss on the part of VCs and I encourage CEOs to think harder about this.
During Boulder Startup Week 2016, Dave Mayer of Technical Integrity moderated a panel on Mental Health and Wellbeing that I was on with Sarah Jane Coffey and Tom Higley. It ended up going 90 minutes and I remember it being powerful for me and the audience. Dave recently put it up on Youtube and wrote a blog post about it. His leadoff in his post sets things up nicely.
“During my relatively short six-year journey through the startup landscape- I’ve been through ugly founder breakups, I’ve lost plenty of money, lost way too much time, and I ended up in the hospital from exhaustion from too many 100 hour weeks. That’s just the tip of the iceberg when it comes to the reality of building new companies. I know of suicides, families being torn apart and of course several cases of debilitating depression.”
If this is a topic that is interesting, relevant, or important to you, I hope you enjoy our rambling session on it at Naropa during BSW 2016. Thanks Dave for organizing and hosting. And thanks to Sarah Jane and Tom for being vulnerable and brave enough to talk publicly about this stuff.
December is a tough time of year for a lot of people. While the holidays are awesome for some, they are really hard for others.
I know a lot of people around me who are anxious, upset, stressed, or some other version of “not in a good place.” Some of it is the holidays, some is the end of the year, some is the outcome of the US election, and some is other things.
This morning I woke up to two good articles on mental health. I’m quoted widely, along with some of my personal story, in the Fortune Magazine article by Laura Entis titled Entrepreneurs Take on Depression. As a bookend, I was told in the article Mental health and relationships ‘key to happiness’ that a new London School of Economics study has determined that “good mental health and having a partner make people happier than doubling their income.”
Yesterday my partners and I had our quarterly offsite. A big part of it is what we now call a “partner check in” where we answer the question “How am I?” This answer can cover any dimension – personal, interpersonal, professional. It can be 1:1 with someone else, it can be with 1:2, or 1:3. It can cover one’s relationship with a spouse, kids, or family. It can be something in our head, heart, body, or soul. It can be very specific – an interaction dynamic with a CEO or founder – or something general, abstract, or even mysterious.
I wore a shirt with my favorite Helen Frankenthaler quote to remind me of our rules around our partner check in (and my approach to life in general.)
I’m in a good place so I was able to listen more than talk yesterday, which is probably a relief to my partners.
Even though some aspects of 2016 have been awesome, we all have agreed that we are ready to put 2016 in the books and move on to 2017. As we each talked about “How am I?” we recalled a number of traumatic, stressful, and anxiety producing events in the past year. We are all getting older so more health issues are appearing in our extended network of friends, so learning how to deal with them is becoming more important. Modulating the macro, especially post election, has become a more central theme for each of us.
There were a lot of specific things discussed that aren’t appropriate for me to write about, but the discussion reinforced with me how powerful the EQ of each of my partners is and my thankfulness that we have a level of emotional intimacy that we comfortably refer to as both business love and personal love.
For me, it cycles back to relationships. My relationship with my wife Amy grounds and centers me. My relationship with my partners allows me to be myself and spend time in an organization that provides me with continuous love, even against a backdrop of the endless stress, conflict, challenges, and struggle of entrepreneurship. While my extended family, which goes beyond just my parents and my brother (and now includes the spouses and kids of my partners), has its moments (like all families), it’s a source of profound joy for me much of the time.
December used to be very difficult for me. For many years, I fought the transition to the new year, was generally exhausted at the end of the year, and just wanted to hide. I described myself as a “cranky jewish kid who felt left out by Christmas.” At the end of 2012 I slipped into a deep depression that lasted six months. I learned a lot from that experience, and view it as my fundamental transition into middle age.
While I still don’t engage in Christmas, I now treasure the last few weeks of the year, as I reflect on the past year and get ready for the year to come. But, if you are feeling some December blues, or even depression, don’t fight it. Instead, do something for yourself. Be reflective. Let the emotions exist. And be encouraged that, like me, you can get to a better place, but it can take time.
I’m doing a Lunch & Learn with Defy Ventures on Friday 12/16 from 11:30am – 1:30pm. I’ve just joined the board of Defy Ventures and think it’s an extraordinary organization. If you are interested and around Boulder on Friday, please join us.
As we get to the end of 2016, I’m in many conversations about 2016 performance and 2017 budgets. While 2016 isn’t over yet, most SaaS companies know how things are going to end up within a few percentage points. As a result, their focus on 2017 is an extrapolation from how they have been doing in 2016, typically building on month over month activity.
Since there are plenty of variables, the conversations are generally quantitative. In the midst of one last week, I said “why aren’t we talking about increasing conversions and lowering churn?” This was in response to a CFO who had modeled conversion rate and churn at a fixed percentage each month throughout the year.
The CEO responded by defending the CFO, who he’d worked with on the model. The CEO said “we are going to model conservatively, but we think we have lots of room for upside.”
I’ve been in this particular type of conversation 5,371 times over the past 20 years. I’m still nice, but I’m no longer patient with it.
I said, “If we don’t have a plan for increasing conversions and lowering churn, by June when we are on or slightly off plan, we’ll be happy, will have forgotten this conversation, and will not be doing anything to execute on the upside. Let’s stop the budget discussion ten minutes before the end of our scheduled time and talk about ways we can increase conversions and decrease churn.”
If you are wondering why I’m repeating the phrase “increase conversions and decrease churn” I point you at the John Lilly New York Times Corner Office article On The Role of Simplicity and Messaging.
We talked for more than ten minutes on the topic of increasing conversions and decreasing churn. We spent most of it on increasing conversions and tabled a discussion on decreasing churn for the next budget call (which was to finalize the budget). In either case, the modeling for the year was to include both an increase in conversion month over month (modest) and a decrease in churn month over month (also modest). There was acknowledgement that if we didn’t have a change in the number, no one would focus on it.
We came up with a very simple operant conditioning loop framework. We used a binary measurement for each new user – they are either healthy or unhealthy.
On day one, every user is healthy since they just signed up.
On day two, there is a specific attribute measured for each member of the cohort. In this company’s case, let’s call it “create a record in the system.” Any user that creates a record is heathy and goes to day 3. Any user that doesn’t is unhealthy and gets an operant conditioning action, which in this case is an email with instructions on how to create a record. The user stays at the day two level, but they are now in category b. On day three, if they still haven’t created a record, they get a phone call from customer care asking if they’d like some help creating a record.
I’m keeping the examples “create a record” super simple so you can follow along. But until a user creates a record, they stay at day two. We have a category c option, category d option, and category e option. If by category e they still haven’t created a record, they drop out of the funnel.
On day three, another attribute is measured. If a user has achieved the attribute, they go to day four. If they don’t, they get the operant conditioning action, stay at day three, and are now in category b. The loop continues.
The free trial period for this company is 14 days long. There are several operant conditioning actions that can extend it by a week or two weeks. For example, if someone is on their 13th day of the trial but is only on the 7th day of the process, they automatically get another week on the trial.
Recognize that these are not drip campaigns or email triggers. Instead, it’s a very deliberate operant conditioning process. And, as part of any system that involves operant conditioning, there are a significant set of measures by cohort and across the system so the operant condition elements can be A/B tested and modified as we get more data.
Now, this might seem complicated on the surface, but it turns out to be more complicated to explain than it is to work out on a whiteboard. Putting the system in place varies based on the underlying tech you are using, but it’s not that difficult if you approach it with a clear framework.
The goal is deep and immediate engagement by new users. So many companies talk about increasing the number of prospects at the top of the funnel, but they spend remarkably little time making sure actions are taking – on a daily basis – to make sure these prospects convert into paid users.
We have many rapidly growing SaaS companies in our portfolio. Over the past decade, I’ve observed too many companies see their growth rates decelerate, or even stall, because they didn’t focus enough on increasing conversion and decreasing churn, which henceforth I will refer to as ICDC.
2017 is the year for ICDC in my world.
At Foundry Group, we always look for companies that we think build magic into their products. Occipital has been one of those companies. Three years ago, they launched Structure Sensor, which pioneered bringing dense 3D sensing to mobile devices (and it’s only just now that are we seeing some of the world’s biggest tech companies catching up by launching similar technology to consumers).
Since that launch three years ago, the team at Occipital has been quietly at work on their next product. Today, they’re announcing Bridge.
Bridge is a headset for iPhone. But it’s different than much of what we’ve experienced so far in mobile VR. Once again, Occipital is a pioneer by launching a headset that brings not just one, but two of the most anticipated experiential mediums to developers well before anyone else.
Bridge uses Occipital’s Structure Sensor to add inside-out positional tracking to mobile VR. That means you can actually walk around, not just look around. They’re also bringing obstacle avoidance, a feature that automatically brings real world objects into view as users are exploring virtual worlds.
More significantly, however, is that Bridge brings immersive mixed reality to a mobile headset.. Using Structure Sensor to both map the user’s environment, as well as to track user movement against it, Bridge lets virtual content reside in the real world as if it were really there. We believe it is breathtaking to experience.
To see Bridge for yourself, head over to https://bridge.occipital.com.