Tuesday, October 22, 2013

Looking after business

Last week I had breakfast with 'smart' Larry. Over a bowl of oatmeal he opined that at the end of the day, the role of an investor is to create returns. He went on to note that entrepreneurs, VC's and entrepreneurs easily get confused when caught in turbulent times, or when money flows like a river. He highlited that it's the money, not necessarily company building that is key to investor survival (e.g. building companies, but not showing great realized returns will not get you to the Limited Partner fundraising finish line). As usual, Larry is right.

It's important for entrepreneurs and investors to recognize that it's the making money part of the business that is ultimately key to survival. Often this creates positive alignment between entrepreneurs as well as multiple classes of investors. However, sometimes (e.g. when a company is not doing well) it creates a zero sum situation. When this happens, as is more common than not, the rational expectation is that folk will look after their own interests. If someone acts irrationally, it's usually the entrepreneur, who bends over backwards to take care of employees and investors.

As Tessio said in the Godfather " it was only business"

Tuesday, October 1, 2013

Constrained, shared, and pirated media

One of the great things about the technology industry is that, when a technology paradigm shifts, hard and fast rules for success begats soft and slow companies which can't or won't adust to them. IBM, Yahoo and Microsoft are examples of survivors which are, did, or will reinvent themselves to deal with the PC, social, and mobile paradigms. One of the early rules of the social web was really a short hand equation:

For every person who posts;
Ten will comment
Eighty-nine will silently read

The explosion of Twitter,Vine, and Snapchat turned that equation on its head, and while doing so, created a massive wealth opportunity for a few entrepreneurs and their backers, opened up new categories for innovation, and took a great deal of 'friction' out of the user experience.

A few months ago I read a great post by Andrew Chen on constrained media. He argues that a class of applications which have intentional limits (140 characters, 6 seconds of video or 10 seconds per photo) blows apart the above rule of thumb. These constraints have the glorious attributes of simplifying product management to concentrate on an easy experience, creates its own context, and most importantly to me, makes casual posting acceptable. It's no problem if you don't have the skills to write the great American novel, 140 characters, replete with abbreviations is more than welcome! Tearing down the walls which hindered sharing, engagement and virality are good things.

One area that he did not mention, and it fits within his theme, is the concept of reblogging. Pioneered by Tumblr and fast followers Pinterest and WeHeartIt, these services greatly reduced the friction associated with repurposing (some may say 'borrowing') photos and other IP via one click snipping. It made it incredibly easy for people to express themselves and visually fashion their online identities. While doing so, it created legions of followers, shared media, and engagement.

A holy grail for wealth creation.