Analysis, Cool Stuff, Ooga Labs

Growth Frameworks

With each of the Ooga Labs portfolio companies, Stan and I spend a half day to give the whole team the basics on thinking about growth.  Then, over many weeks and months, we will work on specifics.

We have also occasionally been ask to hold closed-door “Growth Days” for some of the top VC’s in Silicon Valley, like Andressen Horowitz and KPCB, where they invite their portfolio companies to get a Growth overview and spend one on one time with us working through specific ideas they have.

We also have given keynotes at the Growth Hacker Conference, but we have never let those talks be broadcast.  We have given one interview on Growth Hacker TV.

When we open our conference NFX, we also typically share some of the ideas and frameworks we have for thinking about growth.  This Techcrunch article summarizes a bit of this.

Part of the information and thinking we share with these companies we put in this presentation that Loic Lemur asked us to give at LeWeb Paris 2013.  Here’s the video.

Standard
Ooga Labs

NFX Palo Alto — Network Effects Mini-Conference

NFX logo blue medium

In May 2013, we held our first NFX conference.  It brought together 120 of the top CEO, VP Product and CTO’s of the top marketplaces and networks.  It was held in the Network Effects Club House in Palo Alto, CA.   People even came from Boston, LA, NYC, Europe and Asia for the half-day event.  It was invitation-only, and completely off the record.

NFX Stan and James Club House

It took us only four weeks to pull together from start to finish, because we had help from friends Josh Elman at Greylock,  Mike Maples and Ann Miura-Ko at Floodgate., Todd Lutwak at AH, Saar Gur at CRV, Jeremy Levine, Ethan Kurzweil and Sunil Ragaraj at Bessemer Venture Partners,  Alfred Lin, at Sequoia,  Michiel Kotting at Accel, and of course  Sunil Rajaraman the CEO of Scripted.

We had 14 speakers on stage with short presentations including Todd Lutwak from eBay and Andressen Horowitz, who perhaps knows more than anyone on the planet about online marketplaces. Manish Chandra from Poshmark — it was the second time Manish had spoken in public about his now-often-cloned fashion marketplace.  Gary Swart of ODesk.  Seth Sternberg of Meebo now Google.  Aaron Hirschhorn of DogVacay.  Chris Hulls of LIfe360.  Of course the two Ooga guys spoke.  I opened and spoke about Marketplaces and Networks and Stan Chudnovsky spoke about Growth.  Josh Elman spoke and Sunil Rajaraman from Scripted spoke.

It was a torrent of product-centric, tactical lessons about growth for marketplaces and networks.

In the audience, in between the speakers, we had people who could easily have been on stage speaking… telling jokes.  People like DJ Patil from Greylock and RelateIQ, Rob Goldman from Facebook, Oren Jacob from ToyTalk, Ron Hirson from BOKU and Docusign, David Hornik from August Capital (who introduced Stan and me in 2000), etc.  Not telling jokes were people like our friends Ev Williams from Blogger and Twitter and Medium, Drew Houston from Dropbox, Nirav Tolia from NextDoor.

We had wine when people arrived at the door at 1 pm, a long intermission to connect and talk, and food and wine afterwards into the evening.  Needless to say we had  a blast.  We thank everyone for coming, and we hope to do it again sometime!

Standard
Analysis, Cool companies, Ooga Labs

Networks and Marketplaces

Marketplace image

Over the last 13 years, Stan and I have found ourselves drawn to focus on businesses that have network effects.  It started intuitively, then became explicit in 2003. Since then, we’ve started or advised over 25 companies whose core business was either 1) building a network of people who wanted to communicate, or 2) a network of buyers and sellers who wanted to transact.  Some of these companies have both.

There are others who have admitted a similar affection for these businesses, including David Sze and Reid Hoffman of Greylock, Fred Wilson of Union Square, Bill Gurley and Matt Cohler of Benchmark, Jeremy Levine of Bessemer.  And no wonder.  If you look at the biggest tech returns of the last 15 years, many of them were either marketplaces or networks, and if you consider companies that became worth more than $10B, nearly all of them fall in this category.  We’ve done a detailed analysis of this ourselves, and recently, James Slavet, also of Greylock, published similar findings.

So why isn’t everyone focused on these?  Increasingly, they are, of course.  But the fact remains, they’re f**king hard to pull off.  There’s a lot of art/luck in them, and that’s hard to predict and thus hard to invest in.  Over the years, we’ve watched/stumbled into/invented many tactics to manufacture a two sided network, to A/B test your way to virility, to foster liquidity and tipping points, to buy your network inexpensively, to iterate until you find the right subject matter or value proposition, build the right retention and feedback loops, etc.  These lessons can be applied today to increase the chance of successfully creating a functioning marketplace or network, or both.

The first step is even realizing you are attempting to develop a business that fits in this cohort of companies, and that there are now lessons to learn from prior successes.

Standard
Ooga Labs, Operations & Product Development

No Politics

We see politics in startups as a disease – once it takes hold, it can spread through the company until it kills.   So we have a No Politics rule.  There are really just two things we do to prevent the disease of politics.

First, don’t hire people who are political by nature.  You can usually spot them in an interview by asking what they liked or disliked about people they worked with in their prior jobs.  You can also spot them by testing how “attracted to drama” they are.  By drama, I don’t mean theater, I mean the basic interpersonal push and pull between people and their perceived interests that characterized junior high school and high school, e.g. “Did you here what she said about him??”  People who are attracted to that sort of thing will create that in their work lives as a way of entertaining themselves. One person I worked with years ago, who dislikes politics, said about another colleague in a shock of realization, “For him, if he goes a day without playing politics, it’s a wasted day.”  Some people are wired to create politics around them, and, in fact, some national cultures seem more wired to create politics than others.  Watch for it.

Second, “expose to daylight” any comment or idea that seems like it’s political.  Here’s what I mean.  The fundamental particle of politics is the simple act of saying different things to different people.  If my VP of Engineering is saying something to me that he won’t tell directly to the Director of Sales, then we have a moment of politics, and the antidote is to have the VP say it directly to the Director of Sales.

In my experience, there are typically three main reasons people don’t say something directly to one person that they will say to another.  1) I’m scared of his/her reaction.  2) It’s not going to do any good, anyway.  3) It doesn’t help me, and it may hurt me if I say something.

To overcome the fears people naturally have to be honest with each other, you have to show people that it turns out OK when they expose these ideas to sunlight.  And you have to do it over and over again, because it’s so easy for us to fall out of genuine, open communication.  Thus, having No Politics starts at the top of your organization.  Look for CEO’s who force daylight through the organization.

Some might say that you can’t get rid of politics entirely for the simple fact we all engage in politics at least a little bit (because we all have our points of view, our fears, and our ambitions).  And that’s true.  But I believe you should make No Politics your policy.  It makes a big difference in how effective and enjoyable your work environment is.

Standard
Ooga Labs, Operations & Product Development

Going Fast Part II: Culture & Personnel

[See the first post in this seriescheetah-running and an explanation about where these notes come from]

Notes on Culture & Personnel for Going Fast in start ups:

Get cultural DNA for speed. Make sure the people in your company want to go fast and know how to go fast.  Make it a major part of your interview process and visible culture.  Web 2.0 folks generally get it, but others don’t and they need to be cycled out.  Can you pair fast people with not-fast people and teach the not-fast people how to go fast?  No.  You can’t.  In short, get the right people.

Every engineer ships production code their first day at work. As part of building up the cultural DNA about quickly writing code and pushing it out for users to use,  you should set it up so every engineer writes and pushes live some code to the production servers on their first day of work.  If the site breaks in some way, shame on you for not having it set up avoid that.

Make shipping a fetish.  Make shipping product fast to the right customer the obsession.

Fast is not sloppy. Make sure your team knows the difference.

The best thing to do is the easiest thing to do. But do it right.  That’s speed.

Don’t own the product, own the goal. At Google, teams choose a goal to own, not a feature to own, or even a product to own.  What product solution ends up achieving a goal evolves much more in a business than the goal itself, so the goal is the better target, and gives the team more opportunity for creativity and speed.

Make decisions. Make sure you’re making decisions, not pseudo-decisions or delaying decisions.  Commit to it as a team, and have the team demand it from management.

Ship Fair or Good. Don’t ship Poor, but don’t ship Very Good or Excellent.  And when the Fair-Good is shipped, management is not allowed to send an email out noting the bugs or criticizing it. Get your team to embrace “Good Enough.”  I [heart] good enough. “That which is worth doing is worth doing poorly.”

Standard
Analysis, Ooga Labs

We must do both.

multi-color

The book “Built to Last” is excellent. Here’s an excerpt.
“…a key aspect of highly visionary companies: They do not oppress themselves with what we call the ‘Tyranny of the OR.’ The ‘tyranny of the OR’ pushes people to believe that things must be either A OR B, but not both. “OR” thinkers say:

· ‘You can have low cost OR high quality.’
· ‘You can have creative autonomy OR consistency and control.’
· ‘You can make progress by methodical planning OR by opportunistic groping.’
· ‘You can create wealth for your shareholders OR do good for the world.’
· ‘You can be idealistic (values-driven) OR pragmatic (profit-driven).’

Visionary companies liberate themselves with the ‘Genius of the AND’ – the ability to embrace both extremes of a number of dimensions at the same time. Instead of choosing between A OR B, they figure out a way to have both A AND B.

– purpose beyond profit AND pragmatic pursuit of profit

– a relatively fixed core ideology AND vigorous change and movement

– conservatism around the core AND bold, committing, risky moves

– clear vision and sense of direction AND opportunistic groping and experimentation

– audacious goals AND incremental evolutionary progress

– selection of managers steeped in the core AND selection of managers that induce change

– ideological control AND operational autonomy

– extremely tight culture AND ability to change, move, adapt

– investment for the long-term AND demands for short- term performance

– philosophical, visionary, futuristic AND superb daily execution, ‘nuts and bolts’

– organization aligned with a core ideology AND organization adapted to its environment

We’re not talking about mere balance here. ‘Balance’ implies going to the midpoint, fifty-fifty, half and half. A visionary company doesn’t seek balance between short-term and long-term, for example. It seeks to do very well in the short-term and very well in the long- term. A visionary company doesn’t simply balance between idealism and profitability; it seeks to be highly idealistic and highly profitable. A visionary company doesn’t simply balance between preserving a tightly held core ideology and stimulating vigorous change and movement; it does both to an extreme. In short, a highly visionary company doesn’t want to blend yin and yang into gray, indistinguishable circle that is neither highly yin nor highly yang; it aims to be distinctly yin and distinctly yang – both at the same time, all the time.

As F. Scott Fitzgerald pointed out, ‘The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.’ This is exactly what the visionary companies are able to do.”

Standard
Ooga Labs

Kent Lindstrom, former CEO of Friendster, Joins Ooga

We’re very happy Kent is here! Here’s the Wall Street Journal coverage. Stan was an Adviser to Friendster while Kent was turning that company around between 2006 and 2008, so we saw Kent’s steady leadership and good judgment up close. During his tenure, Kent recruited a brand new team to rebuild the product, solved Friendster’s significant (and well documented) technical challenges, and refocused the company on the Asian market. In that way, Friendster became the #1 social network in Asia, and the 7th largest website in the world. That turnaround was backed by Kleiner Perkins and Benchmark Capital. As the company regained traction, Lindstrom helped raise more than $30 million to fund growth and recruit the head of Google Asia-Pacific to be Friendster’s new CEO. The chart below says it all.

Kent Lindstrom Friendster Growth

Kent Lindstrom Friendster Growth

At Ooga, Kent will create a company addressing opportunities in the ‘local’ space, an area currently targeted by consumer Internet businesses like Craigslist, Yelp and Google Latitude.

So welcome to Kent!  And if you’re a CEO or engineer needing a home, and you fit with the Ooga way of doing things, Ooga may be for you.

Standard