Archive for March, 2010
Yesterday Formspring announced its $2.5m Series A. Led by Baseline Ventures and FreeStyle Capital, the round included a who’s who of other angel investors including Ron Conway’s SV Angels, Maples Investments, Chris Sacca’s Lowercase Capital, Kevin Rose, Travis Kalanick, Dave Morin and Scott Dorsey.
And Polaris.
Though a departure from the typical VC model (we were a relatively small “follower” in the round, taking a very small ownership position in the company and not taking a board seat), we are thrilled to be involved with Formspring.
Formspring is a “social Q & A site” that makes it very simple for people to invite their friends/followers to ask them questions. Just as the “check-in” is becoming a particular form of social network activity, so too is the “social q &a.” As sometimes happens in the consumer web, formspring seems to be simply addressing a strong consumer impulse.
Since launching last Thanksgiving, Formspring has had a meteoric rise to 50M monthly uniques and is seeing a torrent of activity on Twitter and Facebook. After writing this last sentence, I did a search for “Formspring” on Twitter, and saw 500 results generated in under a minute. Yes, 500!
What is particularly exciting to my partners and me is that Formspring directly addresses a problem we have been thinking about for a couple years now: helping people come up with things to publish or post. This was the original thesis behind our seed investment in Plinky, but after several months founder Jason Shellen pivoted and has since been focused on Brizzly. Enter Formspring.
If you are running out of things to post about, don’t sweat it — sign up for Formspring and let your audience do the work by asking you questions. Leave your creative juices on the couch, sit back, and answer!
Inside Facebook has very interesting coverage of Levi’s Facebook advertising strategy around its “Fader Fort” event at SXSW. One of the takeaways: there are benefits to doing Facebook advertising in short but intense bursts.
Typically, display ad campaigns are designed to maximize reach and frequency. But advertising around a social graph introduces a new dynamic. If a number of your friends have recently interacted with a brand’s FB app, those actions are more likely to show up in your news feed, which will drive more viral growth of the app. So, it makes sense to deeply penetrate particular social graphs in a short period of time as opposed to hitting a broader demographic with consistency over time.
Brands like Levi’s are getting increasingly sophisticated in understanding social graph dynamics and developing new advertising strategies for the new media known as Facebook, and it is worth watching them closely to learn the latest tricks of the trade.
The meteoric rise and billion dollar valuation of Zynga has made social games the hot new thing. So we should all be rushing to fund the next Zynga, right?
Wrong.
The biggest deal about Zynga’s runaway success, for me at least, isn’t that a social games company can be a huge business. It’s that game mechancis are now cool. Seems like every Consumer Internet entrepreneur I talk to these days is applying game mechanics to make apps outside the game category more engaging and more viral. And I think this is a great thing. Game mechanics are designed to help people have a fun and engaging experience; what consumer app doesn’t aim to offer a fun and engaging experience?
Great entrepreneurs tend to be great salesmen. They have vision and passion and are able to communicate it.
While this is a great asset most of the time, on occasion entrepreneurs forget that they need to check their sales pitch at the door when it comes to working with their board and investors. Sometimes consciously, often times unconsciously, entrepreneurs have been know to “pitch” their boards instead of informing and collaborating with them. This is a big mistake, for at least two reasons.
The first reason is that the entrepreneur is isolating him/herself on an island when it comes to dealing with challenges and problems. While the prospect of sharing bad news with investors can be unpleasant, the reality is that, whether we like to admit it or not, VCs hear bad news all the time — it is part of the startup process and part of the VC job description. Any VC worth his or her salt should respond to bad news, provided it is shared in a timely fashion, by helping the entrepreneur figure out the best way to respond rather than dwelling on what went wrong. In my experience, entrepreneurs feel relieved to have company in their problem set as opposed to feeling left all alone to deal with it.
A second reason why entrepreneurs should lose the habit of pitching their investors is that it will quickly lead to losing their credibility, which is toxic to a constructive entrepreneur/VC partnership. Early stage ventures are filled with ambiguity. Entrepreneurs and their investors need to make quick decisions based on information that is far from complete. This necessitates relying to a very substantial degree on the entrepreneurs’ interpretation of the situation and prospects. When an entrepreneur loses credibility and the board’s trust that he is interpreting and communicating things in a reasonably accurate light, the result will be constant questioning of his/her judgment. Which is not a happy place for either the entrepreneur or the investor.
We all say this and hear this routinely: “money is cheap, you want an investor who is really going to add value.”
Yeah, sure, of course. But just how should you to expect your VC to “add value?”
There are lots of different examples from recruiting to making introductions to helping with strategy.
But I think an important question entrepreneurs should ask themselves, and ascertain of VCs they are considering working with, is what is their general attitude toward the role of a VC investor. In particular, there is a huge difference between investor-directors who consider it their job to give an entrepreneur instructions as opposed to those who view their role as helping entrepreneurs make good decisions. I just read a great post, called “Startup Therapy.” Here is an excerpt:
Therapists don’t tell you what to do. Rather, they ask probing questions that get you to discover for yourself what is true for you, your situation, and what you want. You’re smart. You’ll make good decisions. But you also get bogged down in daily minutiae and putting out fires, meanwhile missing the big picture.
That’s where this article comes in: To splash cold water on your face, forcing you to face reality and continue to defend or change the important choices inside your business.
I really liked this passage, because it made me think about what I’ve seen great board members do. They don’t tell you what to do, they ask great questions.
So next time you are picking which VC to work with, ask entrepreneurs who have worked with him/her whether he/she asked good, probing questions that “splashed cold water on your face,” or whether he/she told you what do to.
Congrats and kudos to the team at Thing Labs, our portfolio company that is the creator of Brizzly, on launching today a few exciting new products.
First is the Brizzly Guide, which expands on the trend explanations already shown in Brizzly by giving each topic its own Guide page. Guide pages are permanent sources for up-to-date information on topics people are talking about. You can access these pages even after a topic is no longer showing in Brizzly’s top 10 and you don’t need to be a Brizzly user to see these pages. With some work and a little luck, Brizzly Guide pages will, we hope, become important sources of real-time content across a huge range of topics.
On a related note, Thing Labs is announcing today that they have acquired WikiRank, the visualization web app based on Wikipedia data, from the great folks over at Small Batch, Inc. WikiRank will be integrated into the Brizzly Guide.
Lastly, I am excited to report the arrival today of Brizzly for iPhone. Brizzly for iPhone is a free app, available for download in the iTunes App Store. To help develop the right experience, Thing Labs acquired one of their favorite iPhone applications, Birdfeed, and worked hand in hand with the developer to add new features and release it as the new Brizzly for iPhone.
So what are you waiting for? Go Brizzly!
