I'm going to talk about something obvious, but it's also something that I see popping up again and again.
(I should make the caveat first that as a first-time entrepreneur - at least in the venture-backed, not-a-lemonade-stand sense - I don't claim to be an expert on this. This is merely by observations as an outsider that is, in some sense, slowly becoming an insider.)
When entrepreneurs start their businesses, in their head they've likely got a number of different benchmarks that represent levels of success. It's an important exercise. Whether it's users or a product-sufficiency, these benchmarks allow the entrepreneur and team a way to simultaneously keep focused on a smaller, actionable goals while also looking and moving towards a big picture. The best ones I've seen are achievable in a short-term plan with supreme focus and dedication, forming a highway towards larger goals.
One goal I've never understood is the goal of venture financing.
Venture financing as a means to achieve goals makes fine sense, of course. Almost none of the serious goals I've set at numberFire would have been achievable without financing to form a team to develop the ideas and products that have become the core of the business. We were extremely careful however to view the financing as a vehicle towards those goals, not a goal in and of itself.
The danger in viewing the raise as a goal itself implies a level of satisfaction with checking off the box on your list, with the subsequent danger of relaxation and contentment with the situation. This is dangerous. It's dangerous to consider the acceptance of VC backing as a goal because it's actually the opposite: your clock starts ticking.
In my experience with numberFire, we had set January 1, 2012 as our drop-dead date; if we couldn't close on seed-stage financing, we would have to recede to part-time because we simply didn't have the personal resources in the bank to stick it out further. We ended up closing our round that December - a few false starts mixed in there for extra drama - and the temptation at that time was to celebrate. We didn't. Instead we viewed it as we rightly should: we avoided a personal deadline that we created, but we created a different, professional deadline altogether, one borne of outcome expectation that was contingent in the financing.
Moving out from my specific case, I see and sense a lot of situations where companies raise money when they don't have to, needlessly diluting down their equity for reasons of security or simply wanting to get a raise done to show they could, checking a box on their list. This mindset concurrent with a resistance to early cash-flow positivity often confuses me, as if some of them are less concerned with running an actual business as opposed to the mythical story they've created in their minds, their personal story of glory and success.
We've worked very hard at numberFire to keep our burn ridiculously low, guard the cap table like Henrik Lundqvist, and keep focused on cash-flow positivity. The former two should be obvious goals; the latter only makes sense if you can do so without sacrificing your velocity for growth. In our case, we see a long, beautiful horizon in which cash-flow positivity gives us the equivalent of infinite runway and the fantastic circumstance of only going after a Series A when we need it, on our timeline exclusively.
Too many entrepreneurs, at least at the early stage, appear in my mind to be far too focused on the narrative that is their company and not the company itself. Raise money as a means to achieve goals, not as a goal itself.
On Quora, I read a lot of answers from Yishan Wong, whom you might better know as the CEO of Reddit. If you're familiar with Quora, you know that depending on the topic, a user has a little tagline that typically indicates that person's credentials to answer a question in that space. Yishan often has a tagline that reads “Quantity has a quality all of it's own”, an interesting take that spurred to do some philosophical thinking in the shower this morning.
As an aside, if you're running a startup and you're not thinking about your company while you shower, it's time to go.
The concept of quantity is a fundamental component to running a successful startup. Every investor you'll ever talk to is concerned with quantities: how many users you have, your growth rates, and so forth - as they should be. Quantity is a very simple way to measure success.
Unfortunately, too many companies in my opinion are willing to sacrifice quality in order to reach quantity goals, under the supposition that staying with a high level of quality would make it impossible to reach the same goal. I'll go through a few different examples of where I think this is obvious.
Bleacher Report
B/R is a incredibly divisive entity in the sport world. They do a lot of things well: they've dominated SEO, they do a great job of anticipating and predicting content trends, and they have a nearly unbeatable model - monetize the efforts of unpaid labor. They were started under the thesis that the incumbents were too slow and took the wrong approach to reporting - people wanted short, accessible, quick. It was the correct thesis, which is why you see a lot less actual reporting on ESPN and a lot more Stephen A. Smith on your television.
However, they're widelymocked - amongst the people who do care - for that factory-like approach to reporting, invariably resulting in incredibly low quality articles that are written by amateurs. They're renowned for article after article of senseless lists and downright laughable opinions, an online version of Skip Bayless where no opinion is too ridiculous to be used as troll bait for page views. Of course, not every article is like that, and certainly they're putting a lot of effort into changing that perception. I do thing the criticism is very valid and despite it being a lot less flagrant than it was historically, a lot of the quality problems still persist throughout their site.
They're also one of the very few companies I can name offhand that were largely content plays that had a significant out - namely $200M to Turner. People don't mock things that aren't successful.
Huffington Post
I am sure Huffington Post now is very, very different than what it was when it started. Ariana Huffington is known and respected for her political knowledge; I don't believe she'd be particularly enthused by a slideshow ranking the contestants on “The Voice”. Like B/R, HuffPo was a venture-backed company; without being privy to any of their board meetings, I cannot speculate to how much pressure there was to expand beyond politics and higher-brow content into the site as it is today.
The concept of an intelligent alternative to something like The Drudge Report is still necessary, and I don't think that HuffPo achieves this goal at all anymore. Or maybe they do, except that it's impossible to get at that content when it is buried in the murk alongside all of the bulk filler content designed for a much different, much less literary audience.
Putting on my UX hat, the amount of tools for sharing and other non-content on a single article page is truly mind boggling. For all of it's warts, at least B/R looks nice! Just on first glance - and using this article picked at random - about 5% of the screen's real estate is devoted to the actual article; the rest is devoted to sharing mechanisms, reactions, tags, calls to action to follow a topic and the author, comments, related articles and ads. In fact, the actual article doesn't itself start until an amazing 800 pixels have passed. That is downright awful.
Of course, this is the idealist in me speaking. Do I think having the ability to share content with your friends is important for growth? Absolutely. I don't however think it needs to be as cynical as they're presenting it. I don't think the user experience needs to degrade that badly. But like B/R, HuffPo had a successful exit, this time to AOL.
Our Experience
I'm beginning to feel like a hater, just bagging on other sites. I don't want that to be the take away, so instead I'll turn it to what we're trying to do. We're not a pure content play in the same way they are, but content for us is an important part of our strategy, as it allows for an entry point into our analytics. No one wants to come in and see a giant data table, cumbersome and intimidating - so instead we have an algorithm that spits our chunks of insights that we spin into articles.
Here is an article written today, translating a statistic we have internally called NEP (Net Efficiency/Play) into a power ranking of players by position in the NFL. As you can see, we also have sharing mechanisms, tagging, and related articles - but we're also going out of way to not have the content be a secondary feature on the page. We want the content to be highlighted. We also, obviously, want the content to be of an incredibly high quality - no opinion, no “check out this funny GIF” - just insightful analysis derived from the statistical modeling of sports. 538, not Drudge Report.
The problem is that it's growing, but not at the rate that it could be. What if we were much more obtrusive with sharing? What if we decided to have an instant popup modal to share on Facebook, like ESPN does with Grantland? What if we decided to bury everyone with sharing and reaction functionality - how would that affect time on site? What if we abolished our policy against slideshows - how would that affect page views? Would anyone care, other than perhaps me in my crusade against them?
I sometimes attempt to extrapolate this into different sectors. Take a cable network like A&E or TLC; both were founded with high-brow conceits and now both scrape the bottom of the barrel with reality TV. It makes me wonder how the initial founders of those networks feel when they flip to that channel.
On the other hand, I eat Chiptole and listen to crappy pop music; clearly I care about some things very much and other things less. So does that make my feelings about product quality invalid, under the argument that other people may be perfectly happy with a product like HuffPo, in the same way I'm happy with Chipotle instead of eating at Minetta Tavern?
I hate writing so many questions, but all you have is questions when you just don't know the answers.
Parting Thoughts
I guess the more holistic question is: do the ends justify the means? At what point do you reach such a high quantity that you can tell yourself that on the function of having a large population reading your content, you are creating quality material? Does the move to lower quality content implicitly mean it is impossible to sustain high quality? Is it even impossible to have a very high editorial standards and become big, big enough to have an out that is interesting to venture capital? And if so, who sets those standards, and how do you guard against the “hipsterism” of those standards, where your standards are so much higher than what the average market consumer might dictate?
Forgot about personally not knowing the answers to this, I don't know if there are answers to any of this. But it's something I spend a lot of time thinking about and if I'm being honest, a lot of time debating about as well. I happen to have very high standards for quality - that's why I started numberFire in the first place; I thought it was ridiculous the qualitative way that sports was being analyzed and discussed. But I'm equally cognizant that we were venture-backed under the potential of a big company and certainly it's in my own best interest to build the biggest company possible, to affect the sports industry to the largest extent that I can. So, all we can do is walk the line the best we can, and see what happens.
Adjust, adjust, adjust. And maybe I'll just have to get more comfortable with what's good for the business and not necessarily what's accessible to my taste - after all, maybe quantity does have a quality of it's own.
Disclosure
numberFire shares some of our editorial content with Bleacher Report, and I personally like everyone I've ever met there very much. Any of the opinions expressed here are clearly my own and don't represent everyone at my company.
I've thought a lot recently about the composition of teams and how predictive certain features or personality archetypes are in determining the future success of a company. I know that one of the investors in our seed round, Correlation Ventures, does a lot of work in this space and it's endlessly fascinating to me. While obviously I don't have the luxury of seeing multiple sets of teams come into my office every day, I think that just being around the community and seeing how teams work together has given me a fairly good insight into the kind of factors that determine success or failure.
I've generally boiled them down to three general concepts. If you as a founder have these characteristics or if they are culturally indicative of your team, I think you've got a great shot at making it..as long as you have a great product, of course.
1. Zack Morris
Anyone who is currently between the ages of 25-33 can tell you all about Zack Morris; he is the defining protagonist of a truly era-defining show, “Saved By The Bell”. Ostensibly aimed at 9-11 year old viewers at the time, the show itself was entertaining enough to cross over to a wide swath of viewers, ranking up it there with “Fresh Prince” as the defining non-adult show of the early 1990s. An awful lot of what made the show itself so endlessly watchable was the one, the only, Zack Morris.
Zack was an endless dreamer - he never for one second stopped thinking about how to make it big. Throughout the series, he was endlessly entrepreneurial, creating small businesses based around everything from spaghetti sauce to French berets. He flouted conventional thinking, but not in an offensive or mean-spirited way; instead he was laser-focused on capitalizing on opportunities and finding a product-market fit. Above all, despite occasional missteps, he had a strong moral conscience, ultimately making the correct choice while simultaneously learning quickly and moving on from past mistakes. All of these characteristics are critical to a key founder.
2. Larry Bird
Another hero of the late 1980s and early 1990s, Larry Bird was the epitome of a competitor. While it is absolutely true that he was gifted with natural skills that bordered on other-worldly, Larry's drive to improve his game and that of his teammates was legendary. Never content to accept mediocrity from himself or from those around him, Larry created an environment where success was expected, where anything less than reckless abandon towards the common goal was unacceptable.
Having grown up poor, Larry cites a lot of his tenacity towards having to hustle every step of the way - both literally and figuratively. Having the ability to achieve great things with minimal resources while also moving towards large goals is fundamental to the success of any founder. He was also universally renowned for his work ethic, practicing with endless intensity and putting in the extra work well before the era of year-round training. I don't think I need to draw a parallel to how important that mentality is for a founder
Finally, and perhaps above all, Bird possessed an uncanny and unparalleled ability to anticipate and react to the strategies of his opponents. The same insight and awareness that allowed Larry to see the game like no one else around him allows a founder to make the correct product decisions, align themselves properly in the marketplace, and stay ahead of their competitors.
3. Stanislav Petrov
For my third and final archetype, I'm going to step outside of the canon of pop culture. As much and as truly as I believe that competitiveness and hustle are truly base components of any good entrepreneur, I also believe that the simple concept of humanity is paramount as well. The story of Stanislav Petrov, from Wikipedia:
On September 26, 1983, he was the duty officer at the command center for the Oko nuclear early-warning system when the system reported a missile being launched from the United States. Petrov judged that the report was a false alarm. This decision may have prevented an erroneous retaliatory nuclear attack on the United States and its Western allies. Investigation later confirmed that the satellite warning system had malfunctioned.
Imagine yourself in that situation. It is your sole job to defend a billion people, from a country that has previously acted aggressively upon you and has the capability to launch an unprovoked attack that could destroy you. Every bit of information that you're looking at indicates that there are nuclear warheads coming your way, the effect of which could only prompt full-on retaliation, killing hundreds of millions of people. By looking at the information and deducing the simple logic that such an action was unlikely because the only conceivable reaction from the USSR would be to destroy the United States, Petrov made the impossibly difficult yet ultimately correct decision in the face of enormous consequences.
Extrapolating that to the startup world, you're going to faced with critical decisions nearly every day and thus it is necessary to remain logical, rational, and ultimately always do the right thing. It's worth noting that the right thing does not always equate to the correct thing; instead it means to always do the morally and ethically correct thing, to act as a human that is one in a subset of many, in a system in which individual decisions often have large group consequences. To act and decide with logic and genuine concern for those around you will never, ever work against you.
So, there you have it. Not that I've ever been in the position to do so, but if I was, I like to think I'd be a lot less impressed with academic pedigree (except if they want to CMU) and a lot more impressed if I was looking at a Larry Bird/Zack Morris hybrid. I'd also love to do a Myers-Briggs typology test of all of the CEOs I know but alas, that is another post for another day.