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
Career Advice

Career Advice: What’s your Superpower?

Superman logo

When people ask me about joining startups, I always ask them what their superpower is.  What is that thing that you can be counted on to do better than anyone else on the team?  It could be that you’re willing to stay up for 3 straight days and grind out a deadline.  It could be that you are the best writer and are super creative.  Maybe you can raise money for the startup through connections or experience.  Maybe you can prototype fast, even if your production code is mediocre.  Maybe you can help recruit new employees to the team because of your contacts and enthusiasm.  Maybe you know how to buy traffic cheaply and run the spreadsheets to never make a mistake.  Maybe you’re great in presentations and speaking.

If you have a superpower, and you know what it is, a start up team might find you useful.  If you don’t have a superpower, then you have to create one.  Maybe you’ll work for free.  Maybe you’ll be the first who’s willing to take the risk of believing in their crazy idea.

Even if you’re in a small company or a big one, it’s important to develop a superpower or two.  Then people know what to come to you for.

.

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
Analysis

The Advisor Compensation Gap

I’m getting the feeling that there is a significant gap between what a good Advisor is worth to your start up, and what the going compensation rate for them is in Silicon Valley.  An Advisor typically gets .1% – .4% of a start up, vesting over 2-3 years, with 100% acceleration on change of control.  But they can add more than 10X that value to your company by doing just one of many things including: introducing you to a key teammate like a VP Engineering, giving you credibility where you had none, keeping you from wasting 6 months pursuing a wrong strategy, improving your pitch to investors by 10%, telling you business metrics that would’ve taken a year to discover on your own, or keeping you from signing a contract giving someone a “first right of refusal.”  Good Advisors often do several of these things, adding huge value, but not getting compensated for it.   

Off the top of my head, I can think of five possible reasons this gap persists. 

1) Advisors tolerate the gap because they have fun

2) Advisors tolerate the gap because they believe they will learning something valuable 

3) Entrepreneurs won’t pay more because Advisor performance is too variable.  Maybe the entrepreneur actually IS paying for the value overall because they give .1% – 4% to many Advisors, and only one Advisor makes the difference. 

4)  Perhaps there is no perceived cost to the Advisor for giving a few hours per month.  There really is both a cost and an opportunity cost, but the point is the perception of that cost may be too low due to underlying math, which says “What’s two hours out of 720 hours per month? Nothing, really.”

5) Perhaps Advisors tolerate it because it’s the going rate, and everyone has gotten used to it.  Kind of like how everyone has become used to 2.5% management fees for hedge funds. 

The other way to look at it might be to conclude there is no real gap.  Maybe I’m imagining it.  Perhaps we would feel this same gap for anyone in a startup if we looked closely at their situation… like the Office Manager, or the Director of Sales, or the interface designer. 

So I wonder what would happen if we created a website that auctioned off Advisor time?  Would the average compensation go up or down?  What should a rational Board of Directors be willing to pay for their CEO to get advice from a guy like Philip Rosedale about their startup?  Or from Caterina Fake about their Website design?

_

Standard
Social Gaming

WonderHill announces funding from CRV and Shasta

We finally announced WonderHill,  our social casual games company!   And we announced that Saar Gur, of Charles River Ventures, and Tod Francis of Shasta Ventures, invested a total of $7 million in the company.  Those guys are truly great, and we are very lucky to have them as investors.  Get to them if you can!  Here’s the WonderHill preview site.  Here is some of the press:

TechCrunch

VentureBeat

Virtual Goods News

We also announced that Nick Rush joined WonderHill as Chief Creative Officer.  He is the former Chief Creative Officer at Pogo, and the former VP Product at iWin.  But that doesn’t really tell the story about Nick.  He’s just a fantastic person to work with.  Humble, clear, driven to quality, and he makes us laugh a lot.  I wish I were me — to get to go to work everyday with these guys and have investors like this!   

Standard
Analysis

Talent or Luck?

einstein-tongue-luck-or-talent

There’s a lot of discussion about “bad luck” and “good luck” around here. My mom, who was visiting from Boston last week even asked me, “Do you believe in luck?”

My answer is that our concept of “luck” is fundamentally time-based. In other words, given enough time (or iterations), luck, or randomness, melts away, and each of us tends to our talent level.

For example, you can look at a guy like Matt Cohler.  He joined LinkedIn when he first got to Silicon Valley around 2003. Luck? Maybe. Then he joined Facebook. Luck? Hmm… Now he’s an equal Partner at Benchmark. At this point, it’s getting hard to claim luck as the explanitory variable for his success.

Were you unlucky not to raise money before the crash? Were you unlucky when your co-founder went wacko? Were you unlucky not to sell your company when it was soooo close? Maybe, but there may also be a pattern that a third party could easily discern.

I can point to 30+ lucky things that happened to me in the last 10 years that have allowed me to be where I am (where ever that is…). When people ask me about it, I tell them it’s mostly luck. And that’s true for each individual event. However, the full truth is that if you back away and look at a person’s career over 10-15 years, those thirty lucky things happen because of their processes and decision making.

For instance, those thirty lucky things happened because my team and I always work hard enough to have multiple options for every key success factor such as revenue sources, where to lease real estate, who to raise money from, who to hire for a key position, who to partner with, methods for trimming costs, etc. These thirty lucky things happened because I had reasonable judgment on who the good people were. They happened because I chose to move to San Francisco instead of staying in Boston. They happened because I stayed in the game long enough to survive 300 bad things so the 30 good ones could fall on me. Etc. My processes and judgment were such that over time, I am where I am. Over the same period, some people have soared higher, some lower.

It often feels like luck plays a huge role. But as time goes on, there is no such thing as luck.

Standard