I Just Saw the Coolest Company!

I am still jazzed about the meeting I had yesterday with this incredibly exciting company I spent the afternoon with yesterday. The company is called Sun Catalytix. And what is even more exciting is it is a Polaris portfolio company. I typically try to avoid shameless portfolio promotion, but in this case it is just too cool not to blog about.

In a nutshell, an MIT scientist has invented a way to replicate the photosynthesis process, and to create fuel out of sun + water, which, last I checked, were the two most plentiful resources on the planet. And they are everywhere. Imagine being able to generate power virtually anywhere you have sun and water. No batteries, no grid, no nuthin.

Polaris seed-funded the scientist, Professor Daniel Nocera, together with some of his grad students, and my partners Amir Nashat and Bob Metcalfe have been working with them to get a company started. Yesterday we got an update — we saw bubbling water (which results from the splitting of water into hydrogen and oxygen), a handful of very impressive hires, and what feels like an opportunity truly to “change the world.”

Not that blogs, facebook games, twitter and online advertising aren’t worthy things, but… this was cool, really cool.

Founder Frankensteins

I’ve written before about the dangers of “over-executive-ing” early stage startups, particularly during the early phases when entrepreneurship is much more needed than executiveship.

But the flip side is also true: as a startup approaches the moment of product-market fit, bringing in execution-oriented, market-facing, though still entrepreneurial, “business” talent is really helpful and important.

In my experience great young, technical founders often find this a worrisome prospect, imagining all the ways a business guy could spell ruin for their startup.  I call this the “Frankenstein problem.”  Founders imagine this horrible Frankenstein business guy — the fast talking, gum-chewing, slicked-back hair executive guy who wears fancy clothes, has his own assistant, and sits at his desk giving orders but rarely actually does anything productive himself.  While belittling this image by calling it Frankenstein, I also am the first to say that VCs often DO urge founders to hire a business guy who ends up being exactly the wrong type for an early stage startup culture.  I’ve learned this the hard way — about 7 years ago I recruited a fancy, big salaried Chief Revenue Officers to one of my portfolio companies who more or less fit the Frankenstein description above to a “T.”  Needless to say, he didn’t last long.

But, I’d still argue that the risk of hiring the wrong person, while real, is very often less than NOT hiring someone and substantially underachieving the company’s potential. I still haven’t figured out the best remedy to the Frankenstein problem, but am hoping the success seen by some great founders who brought in great business “guys” (Facebook, Twitter) will help debunk this myth.  In the meantime, the best I’ve been able to come up with is “Just do it.”

Starting Social vs. Retrofitting Social

One of the fun things about life in startup land is when a new wave of technology shows up such that startups who “get it” have an unfair advantage against incumbents who don’t.

Just like the first wave of Internet winners had this unfair advantage against the mainstream media companies who tried, unsuccessfully, to launch major web destinations, I would argue that the Social Web is a similar seachange on the net which will give rise to a slew of startups that will disrupt incumbents across a number of online verticals. Clearly we are already seeing it in with games, but, mark my word, it is coming fast in a number of different areas, both consumer and enterprise.

Whether it be games, dating, jobs, music, travel, consumer electronics, education, you name it, I am a big believer that companies that are built from scratch to leverage the social web will have an unfair advantage against legacy incumbents trying to retrofit social. I don’t think that works.

Game on!

Comscore, Calacanis, Quantcast etc.

Unless you’ve been asleep or unconscious the last few days, you no doubt have been following the brouhaha kicked off by Jason Calacanis’s angry rant against Comscore and its business practices. The Silicon Alley Insider joined the fray with a post entitled “Comscore’s Bogus Logic For Its Blackmail Fee: We Don’t Make That Much Money” (guess which side they came out on?), as did  TechCrunch, GigaOm, Comscore investor Fred Wilson in a comment, Scott Rafer, and many others.

I am somewhat reluctant to enter this fray. As the saying goes, “when skunks get in a pissing match everyone comes out stinking.”  But, stink or not, I have some thoughts to share.

First, a disclosure: Polaris is a large investor in Quantcast, so I most assuredly DO have a dog in this fight. That said, the Quantcast folks know way more than me about this and don’t need me to promote their case. So I won’t.  And, for that matter, Quantcast’s fortunes really don’t depend on beating Comscore, since their business doesn’t require making money from audience measurement. But, I do have a couple things to add to the debate.

First, regarding Calacanis’s basic point, that Comscore grossly understates the audience metrics for non-customers while offering more accurate reporting for sites who pay them: I am not a web publisher, so have no first-hand knowledge.  But, Polaris does have a substantial number of portoflio companies who have experienced this  squeeze directly, much to their dismay and frustration. In fact, our portfolio companies’ strong  resentment over having to pay Comscore to get favorable audience metrics was one of the reasons we were attracted to Quantcast in the first place.  ’Nuff said on that.

Second, Quantcast CEO Konrad Feldman has proposed what seems to me a pretty simple way for us all to get to the underlying merits of the debate. Rather than mudslinging, how about looking at the data? Specifically, why don’t Comscore and Quantcast publish an IAB compliant traffic report for every media property they cover that shows overall audience; detection of double tagged content; the amount of traffic that can be attributed to robots or are the result of auto-refresh. Then allow any publisher who chooses to make this data publicly available so everyone can take a look.

Call me crazy, but it seems to me the online advertising business as a whole would be well served to get the facts  out and let everyone draw their own conclusion.

Seeking Conflict

The other day I was sharing with one of my portfolio CEOs some constructively critical feedback about one of his team members, prompting the CEO to ask me to share this directly with the individual himself.  He added the very refreshing explanation: “We’ve gone to great lengths to develop a culture where people receive and are expected to improve based on critical feedback.”   Many CEOs and VCs I know who are decades beyond this entrepreneur in age and experience still haven’t mastered this simple but really critical management principle.

If handled correctly, criticism and conflict can be not just constructive but very valuable.

In truth, this is something that has taken me a fair amount of time to get comfortable with myself and is something I still need more work on. For most of us, conflict and confrontation just isn’t fun.

Just over the past  couple of weeks I had two situations that highlighted the value of constructive conflict.

In one instance, a portfolio CEO was sharing his key objectives for 2010 with the board, which were largely customer and revenue oriented.  From my perspective, I thought it was more important for this company to establish key distribution partnerships than to hit short term revenue targets, and so I thought they were prioritizing the wrong objectives.  We went back and forth a fair amount on this. I purposely forced the issue to push the CEO to really clarify whether he agreed or disagreed with my view that establishing our distribution model was the number one strategic priority.  While it felt a little tense at the time, we both later concluded that it was a very constructive exchange which helped get both of us on the same page regarding the company’s priorities.

In another instance, I was having a 1:1 meeting with one of my portfolio entrepreneurs and shared my view of what I thought the two paths for the company were.  To his credit, the entrepreneur told me quite directly that he disagreed and didn’t want to pursue either of these.  While we still disagree, I think we both d0 agree that it is much healthier to have this disagreement out in the open rather than lurking unspoken under the surface.  The result of having this fairly blunt disagreement was that we both were led to think more clearly about the specific assumptions that led us to our differing views. I don’t know for sure yet, but where I think this is leading is that we will have some really tangible things to watch over the next several months to inform our decision on the best path forward.

As a  recent post  by GigaOm states:

Cognitive, or good conflict, helps companies eliminate groupthink and open up strategic possibilities. That’s because cognitive conflict is characterized by healthy debates about “what” to do and “why” to do it; it thus generates multiple strategic choices and allows us to weigh options. It also helps us think more clearly and broadly about our competition. And from a biological standpoint, it stimulates the parasympathetic nervous system, creating a positive emotional state which in turn supercharges our brains. Indeed, cognitive conflict has been shown to increase firm performance and shareholder wealth.

So, next time someone accuses you of being harsh or confrontational, just tell ‘em you are “stimulating their parasympathetic nervous system to supercharge their brain.”

When the Whole Web is a Facebook Fan Page

Last night we had a truly epic evening at Dogpatch Labs, hosting the Facebook Connect team, 13 startups presenting on their implementations of Connect, and about 100 other guests.

Epic not just because of the great content, but also because of the unbelievable obstacles we encountered. Notwithstanding a power outage necessitating a move to a Four Seasons conference room, and a crash by the bus that was supposed to take us there, miraculously everyone maintained good spirits and the night went on. For some great photos of the event, check out Dogpatch Labs resident Art Chang’s blog.

Across the 13 presentations and the Q&A with the Facebook gang, it was a rich evening of learnings and best practices, among them the following:

• You shouldn’t think of connect as a sign-in tool, it’s much more;
• Yes, with Connect you do lose some of your “control” over the user, but you gain a whole lot too;
• You need to be very sensitive to the user’s motivations when you think about sharing functionality; while some contexts have users very motivated to share (e.g., winning a contest or some other accomplishment), in others they are very motivated NOT to share (joining a dating site; looking for a new job);
• Iterate, iterate, iterate, and measure, measure, measure.

But beyond specific tactical learnings like these, a much broader point became clear to me: with Connect, Facebook is making it much less important, both for themselves and for businesses seeking to leverage Connect, whether they serve their content  in Facebook itself or on a Connect-enabled site.  More specifically, for businesses looking to leverage Facebook to build affinity, voice and engagement with their market, Connect enables them to think of their own websites as fan pages.  I am not sure exactly where this is going to take us, but it sure is clear that the business of marketing your business on the web is going to be transformed by Connect.

Yet another reason why the next few years on the web are going to be fascinating.

Facebook: Sure it is huge, but it has really high engagement metrics

I’ve been listening over the last couple of years as media and advertising types turned their noses up at Facebook as an advertising platform. “They don’t have a clue how to monetize that traffic” was the common refrain.

People started to pay attention, of course, as Facebook’s traffic soared past 350 million users. Even mediocre monetization when multiplied across a site of that scale gets BIG.

But there’s more. According to comScore, the average Facebook user views a whopping 662 pages per month.  By way of comparison, MySpace comes in at 261, Twitter at 67, and LinkedIn at 55 — all of which are substantially higher than your average large website.

With that reach and engagement, you can bet that Facebook is going to build one helluva advertising business off its own inventory, not even considering the off site ad juggernaut Facebook Connect will give rise to.

Blogging and Microblogging

Over the last year or so as I have been Tweeting and Facebooking more and more, I noticed that I was spending less and less time blogging. My urge to publish was being satisfied by sending out more status updates than my friends really cared to see.

But gradually I began to realize that I was neglecting an important part of my professional life.  Before, a good chunk of my blog posts were short and sweet “just read this” or “just heard that” posts, which are easily covered in a status update.  But another chunk of my posts were at least a little more substantive, requiring some thought and more than 140 words to convey.  And the practice of publishing this type of post was something I really valued. I found that the desire to have something at least remotely interesting to say once in a while pushed me to both read more and to think critically more. And, the process of writing in and of itself pushed me to crystallize my thoughts more fully.  By lapsing into a prolific Twitterer but infrequent blogger, I was missing a fair amount of stuff I really liked and valued.

So, I am now making an effort to save a little more time for things that properly are blog posts as opposed to status updates.

Oh yeah, also because Ryan keeps telling me to get traffic to my blog I actually need to post stuff.

The Product Guy Myth

Lots of us consumer internet VCs like to spout off about the importance of a great “product guy” (which, by the way, is meant to include gals).  I am as much of a “product guy” bigot as anyone I know. And for good reason: for my money, the strength of a founding team’s product chops is the single biggest determinant of an early stage consumer web business’s success.

That said, every once in a while we product guy bigots need to be reminded that sometimes great product guys come in unexpected packages.  Sure, the Stanford grad who was a rising PM star at Google is one flavor, but sometimes entrepreneurs with no formal product training at all are great product oriented entrepreneurs.

I was reminded of this just a couple days ago. I met with a social web startup founded by a young entrepreneur whose only experience was a late night food company he started (and made quite successful) during college.  Virtually no web experience or formal product training. When I heard about the guy I wasn’t exactly blown away. But then I spent a couple hours with him yesterday and got an extensive tour of his current product and view into his vision for future products.  And I was blown away.  It was a great product, fantastically well conceived and implemented.

Which led me to conclude the guy is as good a product guy as they get.

Just another reminder to be open minded.

Are You HypoManic?

Last night I was having dinner with a great young entrepreneur who was explaining to me that he has self-diagnosed himself as hypomanic (perhaps not clinically but certainly descriptively), and that he believes most good entrpereneurs actually are hypomanic, too.  While in part jest, when he walked me through the symptoms of hypomania we both had a good chuckle thinking how many of these symptoms we see in ourselves and in many entrepreneurs we know.

If you look at Wikipedia’s definition of hypomanic, I am sure you’ll think of lots of successful entrepreneurs you know, if not yourself! According to that definition, a Hypomanic episode occurs when you have an elevated mood plus 3 of the following “symptoms:”

• pressured speech; rapid talking
• inflated self-esteem or grandiosity;
• decreased need for sleep;
• flight of ideas or the subjective experience that thoughts are racing;
• easy distractibility and attention-deficit (superficially similar to attention deficit hyperactivity disorder);
• increase in psychomotor agitation; and
• involvement in pleasurable activities that may have a high potential for negative psycho-social or physical consequences (e.g., the person engages in unrestrained buying sprees, sexual indiscretions, or foolish business investments)

Are you HypoManic?