STARTups

I'm working on a new startup I'm pretty excited about. More coming soon. Wanting this one to be successful, it got me thinking about other startups I've been involved with and why they weren't successful. I've always wanted my own successful business. My first business was to take all my mom’s magazines and arrange them in a magazine library and then try to charge my family to come read them. A friend and I used to pick figs and sell them with ice shavings on the street. I don't want to work for other people. I want to create something good that actually solves a problem. Businesses to me have always been that place where you either put up or shut up. Business plans are relatively easy, ideas are a commodity. It's the execution that really matters, and where I think I've failed the most. Most of all, no matter how you look at it, if someone is working for some other independent actor just to make a living it is a form of oppression. Not injustice or malice or something, but a very personal oppression. I can feel the new liberty that would come from running my own thing. And I want it. Here are some companies I've worked on. The common theme I think is not so much a lack of good ideas so much as an inability to execute compared to the market scale and competitors.

ZipBird.com - The idea for this came when a friend missed the Plain White-Tees come to town. He wondered why something on the web couldn't track his interests and text him or call him when they were nearby. The site lets people create pages, upload dates, and then other users can sign-up to be reminded within a radius of their zip code. This was in June of 2006. Biz Stone and crew launched Twitter in July 2006.

Fortunately, our concept shares little in common with Twitter. As information, and the points that we can access it, continues to grow (to the extent it can take up our entire lives if we want), filtering this information so users get what they want will become more and more valuable. No one's (yet) built the right way to taper content just enough so that you are neither barraged with unwanted content, nor left out of touch with stuff you really like, there's literally no mainstream solution for this out there. Something needs to automatically connect users' core preferences with all content aggregators across users' mobile devices. This, in my view, comes down to the user interface more than anything (and some other more secret components). There is one application that literally blocks parts of Twitter feeds, but this does nothing to ensure you're informed of what you want how you want, and it's also a very clunky approach. It reminds me of one of those cones around a dog's neck, like an obedience device. No solution out there also fully connects all the forms of content on the web with mobile devices, in a proactive way. If you think I'm being a little vague, you're right, and for a reason.

NQ Systems - I worked as an intern at this company that was truly ahead of its time. The idea was, why should you have to wait in crowded restaurants for a table to open up, or worse yet, lug around a giant walkie-talkie to be paged when they could just call you on your phone? This company is brilliant. They built their own telephony system at a time when VoIP was still pretty nascent- really hard stuff. Developed working relationships with big name brands. OpenTable and others have since incorporated cell paging. It's a hit.

QMania.com - I never worked with this company, but a good friend did. The idea is online coupons. The idea kind of speaks for itself. Just imagine what you could do in this space with smart phones, real-time updates, group discounts and promos etc. The company was founded in early 2007. GroupOn was just on a Fall 2010 cover of Fortune as the fastest online company ever to hit $500M in revenue. LivingSocial is blowing up.

Plategro - This was a site I tinkered on about a year and a half ago. The idea was a mentoring based social network. Mentorships can be one of the most valuable things in the world for just about everyone, including businesses. Take a look at TechStars for instance. But it's such a crapshoot connecting with the right people. Why not create a place where everyone could post their interests, availability, and if it's a good match, have a mentorship or speed mentorship? This ran into a classic scaling problem right away- what comes first, the mentors or mentees? How do you develop trust and brand integrity? How do you attract and vet talented mentors and protégées? All of these can theoretically be overcome. But I didn't put enough into it. The idea remains TBD.

MyLastLecture - A place where each user could only submit one video or one entry (they'd have to replace the old one if they wanted to add another) about the most valuable thing they've learned. I love deep introspective, meaningful talks. It's so hard to filter for this though in the sea of mindless crap on UGC content-aggregators like YouTube. I saw value in creating a serious forum for people to provide their sort of living, evolving message to the world.

Shorty - This summer I pitched an idea that would distribute short code access to any user so that physical locations could include mobile or web plugins. SparQcode.com is killing this right now.

GroupSmack.com - This started with my work giving me a free pedometer. I think a promising model, but it is really scale-dependent with no go-to revenue model.

*** ShowKicker.com *** - I dont' have time to write about this because I'm too busy working on it. But this idea is 1) long, long overdue 2) could make so many people/customers happier, better off, and wealthier and 3) has multiple revenue models, the core one is not scale dependent and is the most legit model I've ever worked on BY FAR.

So, anyway, my bottom line is execution. If a startup fails and there are no customers, does anyone care? No. It’s about doing.

Props

This weekend I was getting my ass handed to me on a hill during a race, when I came across a wheeled competitor. He had a bike escort cheering him on as he grinded up this hill, teeth gritted, arms shaking. Now this was a LONG hill and we were near the end, long after any momentum he had was gone. All he had to get him up was one crank at a time of his arms.

I must say it was a really inspriring moment and I felt a little more willpower. My hat is off to these badasses.

In the end, there's only family

Just pokin' around

Facebook just announced their new messaging system, which is impressive. It integrates SMPT, SMS and IM into the regular Fbook message system to create the first ever "social inbox". Facebook develops truly elegant, robust features and boasts the most widely used API on the face of the planet, both for commercial endeavors, as well as those of the less ambitious kind. I think this will become very popular and only increase their market share in the socially targeted ad space. It also allows them to test approaches to find traction in the undeveloped market of SMS commercial content, something that has absolutely huge upside, but remains an essentially open market. However, it's success will not be due to any significant new tech or product innovation on their part. It will be because of Facebook's user scale and penetration into the mid to late adopters market. My Gmail account can already email, chat, text (you have been able to do this since the advent of the email gateway) and recently, even call people. So technically speaking, Google is on the leading edge here, and with their VoIP, still ahead. But Facebook, by maintaining a minimalistic design conducive to developing brand trust and maximum accesibility, has by far the more consumer friendly iteration. And they certainly play the PR more effectively. This should be no surprise, it's in their DNA. It's not as though Facebook invented the social network, or even the Facebook, a staple of universities across the country up until a few years ago. Their strength is a team with a gift for building simple, clean, engaging UIs that make all others' seem unnecessarily complex and cheesy by comparison. Myspace feels like the used car salesman of social networks, assualting the user with pop-ups and pushy promos; Facebook is the new Volkswagen dealer, it's just good, effective engineering (and to complete the analogy, LinkedIn is clearly the Beamer dealer of the bunch, eschewing 'friends' for 'connections'.) The bottom line is that no other potential provider of integrated messaging has the scale or brand of Facebook, because of their UI. Fbook messaging should be a solid double, broadening their revenue channel significantly while challenging the established market, but it lacks the true innovation to be a home run.

What % of businesses fail because of an inability to generate a worthy idea and execute it, versus tax rates? Would be good study.

The Age of Anxiety

People are losing less and less appreciation for the everyday, for the moments that make up their very lives, constantly aware of the supposed opportunity cost of their present circumstance courtesy of the constant array of social and emotional signals from an ever proliferating cast of the usual digital suspects. You can see the boredom, the sense of embarressment for their own common banal lives, right in their eyes. The sad part is that the lived life is the one thing that can never be replicated, reviewed, rebroadcast, rendered- that all the video and media in the world can't begin to replace the real moment, with people, things, emotions, attention and care. This makes me hesitate for a moment as to whether I would temporally prefer the Wild West or the Wide Web.

Haha, as an addendum, apparently Microsoft agrees with me. At least somewhat. I'm not sure I get the argument that because phones have become so intrusive, you should buy another phone, but I get the point.

Ingredients for round two of economic growth policies:

1) Increase the H-1B visa-limit ten to twenty fold. These are non-immigrant visas that allow employers to essentially cherry pick the best and brightest from across the world, especially in engineering. The limit is currently a ridiculously low 6,500 per year. These highly skilled positons are critical to developing private sector employment and growth.

2) Repurpose $5B from unspent TARP funds and start a revolving government venture fund to seed startup investments. The government could invest anywhere from $10K to $1M in promising businesses and take a flat 25% equity stake. 10 experienced fund managers could be recruited as SES (Senior Executive Service; the highest level of career government employees, who are eligible for bonuses for good performance) to serve on a board to approve applications and provide oversight. Future cash flow from those that succeed would pay down the deficit. The fact of the matter is we live in an information and service-based economy. Unemployment insurance, State aid and new highway spending help with cyclical unemployment, but structural employment is best created with new, sustainable, innovative companies.

3) Enact a larger follow-on investment in next generation transportation. The stimulus bill had a measly $10B for high speed rail. Follow-on with another $50B to buy a lot more cars, build more tracks, and connect major population centers. Through the multiplier effect and contracting a lot of this out, these funds' employment effects could be amplified and drive permanent private sector employment. The U.S. is falling behind in the efficiency with which it can move goods and people, prerequisites for sustainable growth in a global economy. (*Postscript: the White House just announced a $50B transportation package to stimulate the economy.)

4) Revamp, rebrand, and rerelease the Public-Private Investment Program rolled out last year. This program is designed to increase the market for banks' bad mortgage backed securities, as well as mortgage related loans. (More details here - http://www.financialstability.gov/roadtostability/
publicprivatefund.html). Unfortunately, a specific design has stalled and the program has been delayed. The terms and capital levels should be reevaluated in order to make them sweeter for private partners, and then fund managers hired to scale this up and start the auctions.

5) Tax credits/rebates based on purchases. The idea here is to combined tax cuts with smart purchases that will increase aggregate demand. I.e., invest in clean energy or buy an electric hybrid and get cash back, or hire people who are unemployed and get a payroll tax holiday. This would create a strong incentive for both immediate spending, and immediate hiring, while developing new markets. This would essentially build off the phenomenally succesful Cash for Clunkers model. That was one of the most impressive government-private policy team-ups in recent memory and I'm surprised how quickly it has faded from policymakers' collective memory.

6) Reform the Payroll/FICA Tax to increase aggregate demand. Lower income individuals have a higher marginal propensity to consume than the wealthy. Poorer people also pay a larger share of their income in payroll taxes than the rich. In fact, some 75% of Americans pay more in payroll taxes than in income. FICA should be exempted for the first $20,000 of income (thus increasing spending the most) and the current cap on FICA should be raised from $106K to more like $250K. Warren Buffet has had a wager going for years for any executive who can prove they pay more in payroll taxes than their secretary. So far, no takers.

Reverse Time Inconsistency

Recently approval ratings of Barack Obama (whether President or Candidate) have dipped into the negative terrain for the first time since polling has been conducted. Much has been made about this in policy circles and the media, and as usual I think there is way too much trying to be read into the tea leaves. Sometimes a storm comes through and the wind tussles the leaves. Then everything carries on as usual. The tree still stands, the storm comes and goes. As the President said, however less metaphorically, "I have my own pollsters. It's not like I don't have pollsters." In other words, he has been perfectly aware at every decision point, at every sensitive political juncture, of the polling costs and benefits. And the President's pollsters practice the calculus of surveying with a degree of art and complexity without compare. They could provide a range of estimates for what decision ABC will do for the voting proclivities of 80 year olds with a mild head cold this week who live in Duluth and prefer to watch Cold Case instead of Law and Order. The issue just may be that weekly, or quarterly, or even annual polling may not be the correct timeframe (or tool) to measure the President’s accomplishments, or weigh his likelihood for reelection in two years. This comes from the economic principle of time inconsistency.

Wikipedia (I have always wanted to start a sentence this way) defines time inconsistency as:

In economics, dynamic inconsistency, or time inconsistency, describes a situation where a decision-maker's preferences change over time in such a way that what is preferred at one point in time is inconsistent with what is preferred at another point in time...One common way in which selves may differ in their preferences is they may be modeled as all holding the view that now has especially high value compared to any future time. As a result the present self will care too much about herself and not enough about her future selves.

And this concept applies to essentially all of the President's accomplishments. Except in reverse. Rather than the President offering us tax cuts for a year that may benefit him in the short term, but create still more debt in the long term, he has done the complete reverse- sacrificed his short term political approval rating for long term policy investments that will likely yield approval rating dividends over the years to come. Rather than giving us candy now that will make us like him for the immediate future (but perhaps resent him later when we get a stomach ache) he has made us take our medicine. The benefits won't accrue for some time, but when they do, we will realize what foresight he had.

It will take years for financial regulatory reform to go through the rulemaking process. For specific capital reserves to be decided and set aside. For derivatives to see the light of day. Economic crises happen every 10 years or so historically, so preventing or mitigating future ones is on a time scale wholly irrelevant to the election cycle. Public exchanges from the recently enacted health reform law (of private plans mind you) will not even be launched until 2014. Then it will inevitably experience some growing pains. Millions of people may not see the benefit for several years. The deficit effects won't really come on strong until 2020. EPA's efforts to begin regulating greenhouse gas emissions in 2011 will likely take years to refine and get through legal challenges. Vehicle corporate average fuel economy improvements (which haven't been increased since Jimmy Carter) will require us to buy cars with a $1000 greater sticker price. But they'll save us $3,000in gas, and untold environmental costs, over the next 5 years. All of the costs (in money and time and anxiety and burden) occur now. The benefits are in the future, a future which people, even rationally acting ones, heavily discount. So it is no wonder the President's approval ratings are dropping. But rather than be a signal of distress, I think it might just be a measure of what real political fortitude looks like.

The public may doubt Barack Obama now. But if the President achieves no more major policy victories (say in Energy/Climate, Immigration or Social Security) I think he will still be one of the most popular former Presidents in American history. Yes, up there with the likes of his political hero Lincoln. I mean, we've already run this experiment. Social security and Medicare are two of the most beloved and untouchable programs in government. But in their day too they were subject to the short term vagaries and tremors of confidence that polls are so astute at capturing. If politicians had only listened to the polls in the 1960s we probably wouldn't even have them. Sometimes, leadership means making people do what is best for them, even if it hurts in the present.