Polygraph Media Blog

SXSW Interactive 2012 Observations

Some thoughts following the blur that was SXSW Interactive 2012:

• I very much agree with the sentiment that "nobody won SXSW" this year, but I also don't think you can expect that every year.  Twitter "won" the conference in 2007.  4sq arguably stole the show in 2009.  GroupMe "won" in 2011.  In my mind, the latter won it only because the tech press had to give the title to *someone*.  But also look at the years... in the even years nobody "won" at all per se.  You don't have a  "press-designated" winner every year and this year was no different.
• Location-based services proved again that their primary use case is in places where a lot of people are in the same place at the same time.
• Interesting to me that Facebook, Apple, Twitter, and Square... amongst others... had little/no presence at SXSW.  A few folks wandering around but no "presence".
• Again, the action for startups was in the hallways and backroom meetings, small group VIP events, etc.  The action for enterprise folks remains in the sessions and in the private parties, where basic education takes place.  I don't mean that to sound bad, but it's almost two different shows depending on why you're there.

Looking forward to a great show in 2013!

Thoughts for Corporate Marketing Executives

This post is a long time coming -- as our company has shifted focus a bit to brands, I have been thinking a lot lately about how bigger companies make decisions and draw conclusions about social media and where the will focus attention.  For every person who says that they want to increase Facebook investments (a good idea considering the data), there is a person who says that they also need to increase investments in QR codes or Instagram (a bad idea considering the data).  This coming from a set of customers that is supposedly concerned about Social ROI?

Pardon the generalization, but I've found that corporate middle-manager thinking about marketing is about as paradoxical as it gets.  The world's best companies optimize their operations and their marketing campaigns on data.  The top companies hire the best and brightest from the world's top business schools to analyze outcomes and redirect tactics.  Yet when it comes to marketing and social media, I often hear the most optimistic and laughable things about social media from brand stewards and corporate marketers.  Some of the biggest cheerleaders about social media come from the corporate world.  Their observations are based on personal preferences and usage patterns, and are devoid of persuasive statistics as if numbers are unimportant.  Very few (when pressed for specifics) can tell you that a meaningful business outcome improved dramatically because of using anything other than Facebook and maybe Twitter.

Why is this the case?

1. Individuals want a job in a hot startup & get attention by showing support.
2. Individuals want to stand out from their "moribund" corporate employer that "doesn't innovate".
3. Individuals are not held to a high standard about "data-driven" thinking.
4. The brand's need to "innovate" outweighs the need to develop Social ROI.  Put differently, the brand needs to connect with younger demographics and is willing to accept some inefficient spend to experiment.
5. Agencies and experts dominate thought leadership, and the echo chamber is winning.

The first two make a lot of sense when you consider the divergent interests of individuals and the companies they work for.  A middle manager may be making a great career move by encouraging new technologies -- it may land him/her in a job, an advisory role, a spot among experts in the social media community, VIP invites at events, etc.  Individual branding trumps all in today's world, and that's just a reality of marketing in the present day.

#s 3 and 4 are more management issues -- which may or may not be an accident.  Brands seeking to redefine themselves, especially those that are viewed as being "old fashioned", are desperate to do anything that appears to be innovative.  A handful of experiments may just provide the serendipity needed to do something meaningful and important down the road.  But I find all too often that the middle managers report to senior executives with very little understanding of social media platforms, much less how to use them for marketing purposes.  Sorry, but if you don't use at least Facebook regularly, it's hard to coach middle managers on what success looks like.  So often times, middle managers are really creating the agenda for "social marketing" whatever it means, and ROI is tough to get because 1) they may not be doing the right things, and 2) their managers may not know exactly how to improve the situation.

#5 is a misalignment of incentives.  Over the last decade, agencies have done a particularly crafty job of getting between corporate marketing dollars and technology providers who make things simple.  Agencies have sold social media marketing, management, monitoring, community management, and a wealth of supporting platforms as a cocktail of unnecessarily confusing, yet important set of tools that any "smart" business would utilize.  Of course, managing it all is easier if you just hire the agency. ;-)   A vast majority of thought leaders work for the very agencies that have gotten so adept at selling this complexity to the corporate world.  Oddly enough, the skill sets required to conduct good social media marketing and community management are not terribly complicated.  But because corporate marketing groups don't yet have the talent to develop an internal competency -- intern to executive -- they outsource this.

But to repeat -- the very people selling highly profitable agency retainers to your company are the ones setting the thought leadership agenda.

Now before anyone accuses me otherwise, I am a friend to agencies.  There are a lot of great people in agencies and I have a lot of friends there.  But if you're an exec managing a brand, you have to recognize this dynamic to do your job well.

I suspect that this tech boom cycle will end a lot like the last one.  Companies that provide real value will survive.  The vast majority that don't will not survive.  Brands and bigger companies will gradually bring things in house as they get smarter.  As new technologies mature and get "less cool", investments in them will wane.  Investments in things that truly do move the marketing needle will increase and will disrupt the old way of doing things... much as you're starting to see investments increase in Facebook over existing web sites and e-mail.

But the way to get ahead of the curve today is to rein in middle managers and talk in terms of data -- measurable success.  That is, if you really care.

"Qualified" Candidates

Once you advance beyond the point of being an individual contributor in business, you henceforth have to keep your eyes open to assess people who may be able to join/advance your team.  You should always have a pretty good idea of gaps in your team, and you should always be on the lookout for people who can fill those gaps.  Sometimes those gaps exist at a senior level -- executives, board members, etc.  Other times, those gaps are in specific operational areas.

What makes people "qualified" for roles in our business?  Here are some high level thoughts on how I generally assess whether someone is qualified and fits our team:

1. Converse, listen intently & ask questions -- formal interviews, pitches, etc. are a really terrible way to meet someone.  One party judges the other, which is probably on edge.  This isn't how you'd work together, yet many relationships start this way.  It's a bad idea.  Make it comfortable and as natural as you can.
2. Don't trust education, a resume', or someone's work history at face value -- the best institutions in the world have people who either snuck in or didn't belong.  Similarly, bright people can come from all backgrounds.  Such things tell you there is perhaps a higher/lower probability that the person has a good pedigree, but there are no guarantees.  Which leads me to #3...
3. Find the best in everyone -- just about everyone you will meet is capable of great things.  If you don't know where that is in someone after conversing over an hour, you missed out.  It isn't to say that there will be a match for your business, but I think you're cheating yourself if you spend time talking with someone and you write him/her off immediately because of something that is/is not on their resume' or in their past.
4. Seek insight and creativity -- No matter what you're seeking, creativity and insight will be important as you move forward.  Better candidates will just offer it in the course of a conversation because that's how they're wired.  Just don't expect accuracy -- very few people will know your business or market as much as you do.
5. Assess initiative and hustle -- nothing beats a hard worker who understands what a startup is all about and then is compelled to hustle naturally.  Bonus points here for the self-motivated people out there.

I've interviewed hundreds of people in previous lives and taken oodles of interviewer training.  So maybe it's gotten easier for me over time.  In my opinion, the most qualified people are consistent in these areas -- they can't help but operate at a high level most of the time.  So while it can probably be masked for an interview, it can't be faked for long.

The next step for you as you assess qualified candidates for your startup is to seek proof that "talk" is backed up with substance.  At the end of the day, that's where the rubber hits the road.  Skip this step at your own peril.  Make it part of your decision-making process, and you'll minimize costly hiring mistakes.

Entrepreneur Networking & the Scarcity of Time, Part I

OK - this post has been a long time coming and is likely to offend folks.  But the Seattle Tech Startups e-mail list (to which I still subscribe/lurk) has a great discussion ongoing right now about the topic of how entrepreneurs should use their time/help each other.  At issue is Dave Schappel's blog post. where he proposes an interesting framework for thinking of his own time economically.  I met Dave briefly at a Medina, WA, Christmas Party as I was exiting Microsoft & investigating opportunities that ultimately led to Notice Technologies.  So for those of you who have never met Dave, he's a sharp, sharp guy and a leader in the Seattle community. 

As an early-stage startup guy who is immersed in the hunt, I can 100% empathize with Dave's perspective.  When a startup gets to a certain point, time becomes incredibly valuable and scarce.  Your "idea" comes to fruition on some level, and you all of a sudden find yourself a lot more demanding about the use of your time.  It's a natural evolution -- deployed products, customers, business development activities, hiring, etc. all take up your time and it all hits at the same time.  If you're there, you know what I'm talking about.  If you're not there, well then you are not quite there yet in the life of your startup.

So as such, the things you used to do (i.e. meeting folks speculatively for coffee, "helping" a fellow entrepreneur, attending a networking event, etc.) have to be scrutinized a lot more.  Our business hit the next level about 90 days ago, and trust me -- I've made far more tough choices about my time than I did just 3 months ago.  And the book that I'm finishing inch by inch right now would've never happened had I started the book just a few weeks later.  There used to be time for other things, but my available time for extracurricular activities is shrinking rapidly right now.  I can see it being reduced to UT MBA alumni events, blogging, and maybe advising a startup 5 hours a month.  That's it.

But back to Dave's blog post, here's my interpretation of his point:

    The entrepreneurs you *want* giving you advice/help paradoxically don't have a lot of time for you.  Young entrepreneurs, first-time entrepreneurs, and those who are just starting out *generally* don't understand this dynamic.

Same goes for most service providers and other folks who demand entrepreneurs' time like it's freely available & overflowing, but that's a separate conversation.

But anyway... as venture capital has tumbled and investments have gotten a lot more risk-averse, successful entrepreneurs have become a lot more valuable as mentors and advisors to other startups.  Two of our three advisors at Notice Technologies are successful entrepreneurs whose experiences and ideas are incredibly helpful.  But as we got to the point where we needed help from advisors, we wanted to respect their time by formalizing the relationship.  It has worked very, very well IMO for everyone involved so far.

I liked Dave's points about being available at events (as long as they're events worth attending) and offering time in a way that aligns everyone's interests.  As a serious entrepreneur (at least that's what I'd like to consider myself), that really resonates with me.  But ask me or another entrepreneur for a 10am meeting, and you'd better be comfortable with annihilating his/her morning. ;-)  This is why I like to set up meetings at 7am or 8am -- it's about economizing time & respecting everyone involved more than it is about imposing early mornings on someone else.

In Part 2 of this blog post, I'll share thoughts on how this affects (in a very tangible way) how I use my time & network in Austin.

Quick Hits - February 10, 2022

It's been too long since I've made some random, unsubstantiated observations.  Lucky you.

• I have used Google Buzz for just a few hours, and I'm already convinced it's a game-changer.  Watch out Twitter... and Facebook, you'd better not get too comfortable.
• I really do think I could make a compelling argument for you that Twitter's best bet is for AOL or Yahoo or Microsoft to buy them.  Not that any of that would be inherently bad, but I just don't see Twitter surviving and thriving as an independent business over the next few years.
• Social media "fatigue" really seems to be an increasing trend among younger people who have used things like Facebook for awhile.  I spoke at an event at Texas A&M recently that really reinforced this point.  It will be interesting to see if this is a limited case or something that marketers will have to deal with in coming years.
• I have given up on working with my neighborhood association.  It involves the worst elements of  government, bureaucracy, volunteering, politics, incompetence, ego, and personal fiefdoms -- and very few benefits.
• Lots of people out there are willing to give advice to early-stage entrepreneurs... but if they haven't created an early-stage startup themselves, be careful how much you internalize.  There is nothing like starting a company from its earliest stages, and it's a very, very unique business experience.
• Writing a book while starting a company is hard.  At some point, I'll share the story of how I got this opportunity, how I made it work, and why I'll never do the two things at the same time again.  It's a rewarding life goal achieved, but everything has its costs.
• Facebook is a particularly tough topic for a book, since the platform and/or the rules change about every 3 weeks on average.
• The Austin Technology Incubator has significantly improved its portfolio in my opinion, and is rebuilding its brand around substantive member companies.  You heard it here first.
• I'm increasingly of the opinion that networking for the sake of networking is a really bad idea for early stage entrepreneurs.  I know this goes against conventional wisdom, but I have a good argument.  Later.
• Location-based services are in their v2 with foursquare, Gowalla, and MyTown.  No offense to the good folks in those companies, but I really think the act of "checking in" is too hard and lacks enough of a consumer value proposition for any of those services to "win".  You'll know you see a winner when 1) there is a real compelling reason for consumers to check in, 2) a lot of it is automated in some way, and 3) there are reasons to do so that will appeal to "Joe Public."  These are very much early-adopter technologies today.
• Speaking of location-based services, can Apple really get away with removing apps that surface location-based ads from the App Store?  I know they make their own rules, but that's unreal.
• I love the potential of Google Android.  My wife has one & it's a pretty neat device.  But it isn't quite there right now.  Let's see how it evolves before handing it the future. ;-)
• We're told that the economy picked up quite a bit in Q4 in the US... yet capital efficient startups are still in vogue.  I'm telling ya, this frugality thing is here to stay for a decade or more.
• Finally, I finally yesterday met the first woman I know who likes the iPad branding.  Ultimately, I think after the shock wears off it will be OK.  But gosh, how obvious is it that Apple's branding team is lacking???

Pay to Pitch, Emotions Removed

One of the hot topics among entrepreneurs and venture capitalists over the last few months has been the emerging "pay to pitch" trend across the industry.  I thought I'd take the emotion out of the debate insofar as it is necessary & approach this issue from a purely economic standpoint.

I personally think this whole thing really sucks for entrepreneurs -- startup folks spend a lot of time/resources and sometimes money preparing for a pitch, rehearsing it, and delivering it enough times for it to rock.  That's a barrier to entry in and of itself -- and a lot of people who aren't entrepreneurs either don't realize it or don't care.  That's fine.  But I only disclose my feelings on the matter to get that part of this blog post out of the way... I'm more interested in sharing my critical view on the matter opinions aside.

The "scarcity of time" issue I just mentioned similarly applies to investors.  They have a finite amount of time to devote to their endeavors, working with portfolio companies, learning about industries/markets, selling their fund to institutional and accredited investors, etc.  They are very busy people generally speaking -- and just like investors don't really understand what it takes to prepare for a pitch, respond to due diligence, etc.; entrepreneurs don't understand "a day in the life of the investor."

Add another issue at play here as well -- entrepreneur myopia.  Entrepreneurs tend to think of themselves and their deals as far better and less risky than they really are.  We all suffer from that from time to time -- NOBODY is immune.  It takes a certain amount of ego to get into this business, and a certain amount of unbridled confidence in the face of uncertainty.

In a pure economic sense, pay to pitch is a harsh yet viable means for investors to segment the market & weed out a lot of folks.  If you aren't serious enough or financially viable enough to spend $400 on a pitch that may give you face time with serious, qualified, A-list investors, then maybe you shouldn't.  It isn't a perfect system, but by and large I'd bet that it does help "pre-qualify" more interesting deals... so it's probably a popular thing for investors because it reduces the amount of time spent on the less sophisticated set of entrepreneurs.  And if an investor misses a good deal here or there but has to do a lot less work to see the good deals, so be it.

Now it all begs the question -- how much of an investor's time should be spent sourcing new deals... proactively finding entrepreneurs with great deals... etc.  This is where the whole pay to play doesn't work in my mind.  I would love investors to (on some level) be rewarded for their hustle just like I am as an entrepreneur.  But that's not always how the world works.  VCs differentiate themselves based on a wide range of criteria, and hustle may be 4th or 5th on that list.

Pay to pitch also does not work for me when groups solicit entrepreneurs for huge pitch fees.  Take for example, Alexander Muse's experience where he worked with a group that initially tried to gauge his interest to pitch.  They dangled a carrot... then finally asked for an exorbitant fee for the "privilege" to pitch.  That's flat out wrong in my opinion.  If you're going to set up an event & charge money for access, at least be up front about what you are doing.

OK... that's my two cents on this matter.  Back to work. :-)

The Ten Immutable Laws of the Startup -- 6 through 10

Last week, I posted the first five of ten immutable laws for employees working in early-stage startups.  Here are the rest... enjoy!

6. Thou shalt fit with the team.

Even as a small team, startups tend to have a culture... a worldview that colors how everything is viewed.  Opportunity, other startups, risk, partnerships, product development, testing, etc. is all determined largely by the experiences, successes, and failures of the founders.  If you find that you simply don't agree with the Founders in a small team dynamic *and* they either can't listen or can't be influenced, you're probably better off just leaving and finding something else to do.

7.  Thou shalt be a good steward of the business.

Every startup needs its first employees to (in some way) evangelize the company's raison d'etre... and to clearly communicate the value proposition for the business and/or its products.  Every person on the team has a role to play to share some degree of infectious albeit naive enthusiasm about the company.  If you aren't naturally a cheerleader, that's fine.  Just don't screw up your company's chances by coming off as less than enthusiastic about the business.  There's more to this also -- attending social/networking functions, accepting speaking engagements, volunteering time with non-profit causes, etc.

8.  Thou shalt learn new skills enthusiastically.

Odds are that your early-stage startup doesn't quite have the staff necessary to do everything it needs to do.  Therefore, some critical tasks need to be performed by people who, in larger organizations, would never be given the responsibility because they'd never done it before.  Startups are a great place for someone without a clear idea of what they want to do to try a few things.  Think of it like a buffet as opposed to a fixed menu at a restaurant.  It's an opportunity, not a punishment -- especially for those who view it that way.

9.  Thou shalt hunt waste and inefficiency, and kill it ruthlessly.

Show me an early-stage entrepreneur, and I'll show you someone who knows how to utilize resources.  Startups often run on a shoestring budget -- so any unnecessary expense (if it can be removed without hurting the business materially) is a bad expense.  Everyone on the team should be on the lookout for places where the company can save a little money.  The key here is to know where the draw the line, however.  You'll need a good sense of the bottom line to understand where a cost savings is good and alternatively where it can hurt to be a penny wise and a pound foolish.

10.  Thou shalt work excellently to achieve real progress and with minimal intervention.

Hey, we're all adults.  Nobody needs a babysitter.  Everyone in your early-stage startup should know the goals of the business, and within reason everyone should be able to task themselves with important work if there is no direction due to travel, illness, or other reason that the CEO is not online.  Remember -- you're trying to build a business, not just a cash flow, a pipeline, or a product.  As such, the business will need to scale as its early employees are in tune with the goals of the company and can make decisions on its behalf.  If you don't have the capacity to do this, you'd better pick it up lest a recent college graduate becomes your boss.

The 10 Immutable Laws of the Startup - 1 through 5

I have given some thought lately to a key question for startups - how do you know that a new hire will succeed?  What behaviors and character traits should you seek when adding a few employees to an early stage startup?

Here's a quick summary of the behaviors that I regard as critical for early stage employees.  When someone doesn't do one of these things, he/she sticks out like a sore thumb.  Here goes.

1. Thou shalt work hard.

I think this one is a given -- you have to put in the time.  I am not a stickler on monitoring time or establishing formal office hours, but I certainly think that everyone on a team has to be willing and able to put in the time necessary for a business to maximize its opportunities.  In a practical sense, this means that you have to be accessible, willing to work odd hours and weekends, and you have to pull your share of the workload.

2. Thou shalt be hungry.

One of the main things motivating you has to be in line with the purpose of the startup.  Maybe you're a contrarian at heart.  Maybe you are out to convince the world that you can do something that people don't think you can do.  Maybe you're craving a success.  Maybe you're just greedy and you want to be rich.  I don't care what it is, but there has to be something deep down inside that turns the job in to a cause for an employee to be truly engaged.

3. Thou shalt become indispensable.

Arguably, this is the most important law.  Early stage employees must know or master something that either nobody else can do or nobody else wants to do.  Plain and simple.  Resources are too constrained in a startup to allow employees to hang around if they aren't doing something that is truly necessary for the growth of the business.  But this isn't necessarily the relationship of the Founder -- employees have to find something critical for their own self-preservation.

4. Thou shalt participate as eagerly in the pain as the reward.

New employees who buy in to the concept behind a new startup want to be part of the upside.  Of course -- who wouldn't want to make significant money by making the right bet on the right startup.  There are financial and career gains to be earned out of making an early stage startup successful.  But along with that comes a lot of hard work, long hours, and tasks that you just don't want to do.  Suck it up.  If you don't want to do things that are necessary to grow the business -- whatever they are -- then maybe you should get a cushy job where you aren't pushed out of your comfort zone.

5. Thou shalt not make unreasonable financial demands.

If you really want to be in an early-stage startup, you understand that resources are tight.  Compensation comes in the form of salary but also the ability to influence a business from its earliest stages, some flexibility in your work habits, and some upside via profit sharing or stock options.  These things help to serve as a proxy for a real market salary.  If you want to maximize your income short-term, go for the market salary in a corporate job somewhere.  But if you're willing to undertake the risk, tell your Founders what you are willing to do on the promise of a brighter day.

More to come... have a great Thanksgiving everyone!

How Consulting Helps our Startup, and vice versa

Had we launched a startup and a consulting business at the same time in 2006 or 2007, we may have taken a lot more criticism than we did.  But even in the middle of 2008 -- before the stock market crashed and many people realized that the salad days were over -- I heard a lot of good things about the model.  The "capital efficient" startup model was just starting to take hold and most people thought that we could effectively balance the needs of both businesses.  I mean, it's better than starving right?

It has worked a little better than I originally expected.  Here are a few points about our experience that we've learned over the last 18 months or so:

• Focus is great and perfect for an ideal situation where you are adequately funded and you know exactly what you're building.  Kudos to folks who have that luxury.
• Focus, however, may work against you if your team members need a dynamic work environment.  Our team works best in bursts of 2-3 weeks at a time.  If we worked on one thing all the time, we would be less productive.  I have seen us work hard on something for say a month at a time, and we tend to slow down towards the end.  We get stuck on things that we can't quite solve.  Variety helps us.
• So we aim to have a few software projects and a few consulting arrangements both at the same time.  It turns our startup into a cross-disciplinary group that takes lessons from one project and applies them to the others.  It's helpful far more often than you'd think -- and as a result, we have both better products and we provide better services to clients on the consulting side.

At some point in the not terribly distant future, we will have to focus our energy more directly.  The two businesses will likely divorce one another as the stakes get higher with world-class customers and possibly investors.  But I don't think I'd start a company any other way if I had to do it all over again.  Focus is great if you can afford it, but the serenditpity you get from doing a few things well pays off tremendously.

TechDrawl

Howdy everyone!  I just wanted to take a quick moment to let you know that I am working with the great folks at TechDrawl to profile Austin startups now and then.

Check out the first post on the Austin Technology Incubator, where our company Notice Technologies currently resides.  Enjoy!