November 2011 Archives

Over the Thanksgiving holiday, I took a nostalgic trip to the past -- junior high school.  We reminisced over good times, bad times and awkward times.  I had to say though, those years were not so horrible -- they were pretty much good times.  True, I was that dweeby, nerdy Asian guy with the bad haircut, glasses, and out-of-fashion clothes.  This was when being a nerd was the furthest thing from being cool.  But, I didn't care.  I was blissfully happy and ignorant of what others thought.

But, maybe this could all be attributed to a fortuitous happenstance. 

The head cheerleader was one of my best friends. It wasn't exactly clear why, but she was.  I had known her for a long time. She was the arbiter and director of all things and people cool and popular.   From that one friendship, other friendships were made. I mingled effortlessly with the pantheon of the junior high school elite and was invited to the best parties.  It was like an episode right out of the Wonder Years. 

Which brings me to my point:  Social Proof.

This friendship provided the Social Proof necessary for acceptance with all the cool kids.  And, from there, I "spiraled up" to meeting other cool kids.  Robert Cialdini, author of Influence: The Psychology of Persuasion, would be proud....Only if I had planned it this way.

Now, Influence is a great book -- a fun and easy read.  It's one of those bookshelf-wonders like the Art of War by Sun Tzu and Marketing Management by Philip Kotler that every (aspiring) MBA or consultant should have read.  Or at least have on the bookshelf.   And, (not so) ironically, it's received social proof from the cool VC/start-up pundits -- McClure, Ries, Suster.

And, today, Social Proof seems to have popped back into the current tech world discussion:

Social Proof Is the New Marketing.

When Social Proof Goes Awry (actually titled, "When the Majority Is Wrong," by Larry Cheng)

and A Guide to Using Authority & Social Proof in Fund Raising (from a while back).

Of particular interest is Larry Cheng's article.  I posit Social Proof is the flip-side of groupthink, colloquially referred to as the "Lemming Effect."  Groupthink is where Social Proof fails. Particularly interesting is how Social Proof is manipulated ("gamed") for unearned authority.  And, in our corner or the world, many carefully consider how to use Social Proof to get financing for one's start-up.  From the entrepreneur's perspective, if you don't have the goods, how do  you  build social proof ("Fake It Till You Make It, in dotcom 1.0 parlance) in your bootstrap process?  From the VC's perspective, can you tell when you've been "snowed" by "false" social proof?

In short, can you really convince/manipulate the head cheerleader or captain of the football team to (pretend to) befriend you?  Which brings me to my meta-point;  Everything I learned about getting along with others, I learned in junior high school.  And, maybe it all works out in the end.

 

The Turing Test is a well known question considered by computer scientists, especially those studying artificial intelligence.  It's a basic question that helps us understand whether or not machines can think.  Essentially, the Turing Test asks,"Can you tell if you are conversing with a person or a computer?"  We've philosophized about this problem for 60 years.  I think it's becoming increasingly difficult to tell.  Consider Siri on the iPhone.  Is there someone behind the query that is manually figuring out the answers to your questions?

While at Pubcon this past week, I've realized that there is a reverse problem that many are trying to solve.  A problem that is equally interesting and perhaps becoming more difficult as well -- the Reverse Turing Test (which I call "Tset Gnirut").  Tset Gnirut is also a question:  Can a machine figure out if you are a human or a machine?  There is an on going effort to solve this problem, mostly around spam.

CAPTCHA popped onto the scene a few years ago.  Certainly, this was one form of the Reverse Turing Test.

However, after listening to Matt Cutts,  I realized Google's search quality group (well, at least those fighting index spam and defining search relevance) is all about answering Tset Gnirut. Detecting link spam is all about solving this problem.  Figuring out if link strategies are created by machines, deciding whether or not text has been created by humans or not,  understanding if a bot is clicking on links, or understanding if a tweet or facebook post is automatically generated are all problems of Tset Gnirut.

Machines are getting smarter and we are off-loading more and more of our consciousness to machines.  Machines are making more decisions for us.  Soon, the machines will figure out decide if you are a machine or not.  When that happens, it will be an interesting world when the machines decide they would rather talk to each other than talk to us.

I tread carefully when using tired metaphors.  However, "Putting the Band Back Together, " accurately describes the attempt to achieve success as a startup by pulling together a team from key players in a previous successful startup.   The anecdotal evidence for repeat success by a successful startup team that re-forms is pretty strong.  Consider:

• Newhoo->Topix
• Blogger->Twitter
• Expedia->Zillow
• Dodgeball->foursquare
• Hotwire->Tripit
  
• BroadVision->MerchantCircle

In these instances, a founder is able to recruit a core team from past successes to create a new company.  Further, "re-coalescing" to work in the same, similar or adjacent space allows the players to re-create the "magic" that allowed them to be successful the first time around and leverage accumulated expertise.  It's not a guarantee for success, but perhaps it gives your company a leg up and reduces risk.

Why is this you ask?  After all, isn't past performance no guarantee of future return?  And, what of the possibilities that your team is in a "rut" and can't adapt to the rapid changes in the land of technology startups?  Further, since you and your team have enjoyed success, are you no longer "hungry" and now "lazy?"  Plus you are older and face the up hill batter of founded and unfounded biases against the  old.

All valid points.  However....

Making a Bet on the Past

The value of getting together "one mo' time" is undeniable.  You are a proven success story.   You are a team that has shown it can work together, stick it out in thick and then, and predict how others think, act, and decide.  You know each others strengths and weaknesses.  You are a "well-oiled" machine.  And, to mix-in yet another metaphor, you can complete the blind, over the shoulder alley-oop without even practicing.




Further, you are a proven success story.  Others have confidence in your team because you've done it before.  Investors are more likely to flock to you because of your past successes.  You might get a "pass" from a skeptical investor, partner, or potential new employee only because of your track record.  Possibly, odds tilt in your favor because success begets success.

What about Charity Blossom?

At Charity Blossom, we believe this.  We embrace this.  We're banking the company on it.

We're making a bet -- indeed, we've pulled together a team of known players that we've worked with, fought with, and succeeded with.  Nearly every key early individual I hired at MerchantCircle (merchantcircle.com) is back.  Engineers, product managers, marketing types, and biz dev managers are back in some form of another - employees, advisers, contractors, partners, and seed investors.  Even our legal team and F&A organization are staffed with people we worked with at the 'Circle.  At Charity Blossom, we  leverage our past experience and success in an adjacent space with similar characteristics.  What small businesses are to MerchantCircle, nonprofits are to Charity Blossom.

Moreover, we tap relationship strengths that are even older and more successful.  We've brought in some of the very successful personnel from the early days of BroadVision.  Sales people, product managers, and marketing executives from a company Jason and I help grow to a $25 billion market cap are all on board too.  In fact, at Charity Blossom, some of us --  Jason, myself, and few others -- are on our "third tour of duty."  We've known each other for over 20 years.

Of course, we don't rely only on people from our past.  We are bringing in "new blood" too - we believe this is key.  Even so, the initial players, the culture and "DNA" of the company, the processes, and the philosophies come from our past.  An injection of new people bring updated and different values that we believe are essential to transforming the company for the future while we believe we must leverage our strengths from the past.

What about Investors?

One thing we are carefully considering - will we bring in investors from our past?  Or  will we work mostly new investors?  Certainly, we've worked with some great ones in the past (Rustic Canyon Partners, Scale Venture Partners, Steamboat Ventures, IAC).  Investor relationships are obviously key too.  However, is  there great strength in leveraging these past partners too?  We think so, but we are less certain than the importance of bringing together the old operating team.

Relationship Matters (or Relationships Matter)

Putting the Band Back Together hinges on a key issue - the people you used to work with must want to work with you again.  And perhaps you must understand why.  Do they really want to and enjoy working with you?  Are they in it for the money?  Do they want to work the other people you have brought on board?  Sometimes, even if people didn't enjoy working with you in the past, they might want to do so again.  Maybe because coming together again is just a means to an end - success.

However, I've come to realize that if I won't enjoy working with someone, I probably won't bring him/her into the band (at least in the early stages). Life is too short.  When I was younger, I thought differently.   Stellar players are often difficult to work with.  I'd sacrifice for the talent.  (What? That prima donna killer drummer that is difficult work with is available?  Go for it!)  Further, the reason you hire good management is to get the best players to operate at maximum capacity while mitigating the "collateral damage" from difficult personalities. Nonetheless for the first few players, I've decided not to go with "difficult" talent, regardless how good they are.

Ultimately, your ability to work with people again depends on the relationships you had in the past.  Indeed relationships matter.

Timing

You can't always put the band back together because the timing might not be right.  Regardless of how much  former colleagues might want to work with you, it might not be the right time for them.  Perhaps he or she just started a new gig.  Or there are personal circumstances that prevent someone from coming on board.  Timing is critical if you take this approach.

Further, you really can't approach a former co-worker of your last company.  Only when they approach you or after they leave can you engage.  It's just too messy.  (BTW, I'm thinking about you, Wes Mitchell.  ☺)

Charity Blossom:  The Reunion Tour

Our core team is in place and we're ready to rock.   We've taken the approach of focusing on hiring key people from a pool of people we've worked with before. Each new person that has come on board has been able to "hit the ground running."  (Pardon yet another  metaphor).  A few "mix-ins"/additions have plugged in.  But, we're largely a band doin' it again, one more time.  Indeed, we've pulled the team together from a deep list of BraodVision and MerchantCircle colleagues that have been instrumental in our past successes.

We're off making some music and hopefully we'll produce a monster hit!

The Band:

• Neerav Berry
• Josh Cook
• David Creemer
• Jason Culverhouse
• Carl Dellar
• Dana Denault
• Bill Fraser
• Bill Gerth
• Mark Hull
• Mike Kennedy
• Doug Kilponen
• Jeff Lee
• John Mayerhofer
• Liz Poggi
• Chris Tolles
• Wayne Yamamoto

Who Else (Or Are We Crazy to Have Drunk the Kool-Aid)?

Is there really evidence for this approach?  Perhaps looking in the "rear view mirror" to predict if this will work in 2011 might not be the best predictor for future success.  The time and place in which these aforementioned success stories might be very different than today.

But others are making this bet.  Here's who I'm watching:

• Rich Skrenta is pursuing his third act with Blekko after Newhoo and Topix.
• Oren Etzioni has launched Decide after successes with Farecast and Netbot.
• Sean Parker has...well, what can I say about Sean?  Napster, Plaxo, Facebook, Spotify, Airtime....

I'd bet on them too.

Among my friends and co-workers, we continually debate two disjoint topics that are seemingly related.   I find it increasingly uncomfortable that these two discussions don't intersect because they are related.

First, we  complain and contemplate the frothy technology market --  Are we in a bubble or not?, paths to exit, and the dearth of quality engineers and designers.  Certainly, these are high quality, "first world" problems.  From the outside,  I'm sure it sounds like a lot of elitist whining. 

On the other hand, we consider the possibility of a global (economic) melt down and decreasing wealth and power in the United States.  The European economy, the Arab Spring, the shaky US economy, and China all seem to broadly contribute to this concern. Is the United States in deep doo-doo?  Are we on a long term permanent decline?  Most recently, it's been "what are "we going to do to create jobs?"  Unemployment at greater than 9% is a crisis.

From one perspective, job scarcity threatens our country.  From another, there aren't enough qualified workers to satisfy the demands of our industry.

What's going on here?  It's all most as though these discussions are happening on two different planets.

In general, it seems reasonable that "Job Creation" is a good thing.  Having more jobs and more people employ seem to benefit society. And, yet the Information Technology industry has been systematically destroying jobs in the name of efficiency, productivity, and improving the quality of life for all.  The demand for more IT workers to that destroy and industries has never been higher. 

Let's peel back the onion an take a look.

Are Web About Job Creation?  Or Job Destruction?

The computer industry (whether it be hardware, software, Internet) is all about automation, efficiency, and exponential change and improvement.  This has gone on for decades.  The impact on society is breathe-takingly noticable. Price decreases, improved product quality, frictionless communication, and access to tools and devices that were unimaginable (except for maybe Star Trek fans,  Aurthur C. Clarke, and Jules Verne) are the results of the computer revolution.

But, along the way, we have created a long term ecosystem that is destroys jobs as a consequence  Insiders use the phrase industry disruption.  We are really all about job destruction. For all the talk in Washington and in local coffee shops about job creation and "putting Americans back to work," the technology industry is like Godzilla, destroying jobs and industries in its path.  Sure, the tech industry creates jobs.  But for every job created, thousands of jobs are made obsolete by the advancement of more technology.

And, this has certainly been a long term trend in my career.


My first job out of college was working for AT&T Bell Laboratories ("The Phone Company")  I was a software engineer writing code for the 5ESS, perhaps the largest and most complex distributed software system in the world at the time.  More specifically, I built software to automate "call processing" and make the telephone system infrastructure more efficient.  As a consequence, tens of thousands, if not hundreds of thousands, jobs went away.  Telephone operators, telephone pole climbers, bill processing agents, customer service reps, blue collar workers who build telephone switches, and even other software engineers (because I was also building tools to make software engineering more efficient) all lost their jobs.

I later went to work at BroadVision.  First, we built some of the early infrastructure for ecommerce, transforming Main Street and small businesses.  The rise of ecommerce (probably most symbolized by Amazon) made retailing more efficient, resulting in job losses in the entire supply chain. I then went on to  build financial services software putting bank tellers and stock brokers out of business.  Next up was travel.  We built some of the first online travel systems (.e.g. American Airlines) so that you could purchase airplane tickets over the Internet.  The travel agent industry was never the same.

I then founded MerchantCircle.  While the verdict is still out on it's impact, our goal was to completely transform how small businesses bought advertising.  The effect was going to put the Yellow Pages out of business, eliminating "feet on the street" sales forces that sold such advertising.  Again, will tens of thousands of sales people be out of work?

And now, at Charity Blossom, we're out to transform the charitable giving industry by making donations easy, efficient, and fun.  Along the way, how fund raising is currently done is going to change dramatically.  We don't know precisely how this is going to play out, but large events, fund raiser activities, and internal operations for those on the "development" side of nonprofits are going to change.  Hopefully, for the better.

Is this Good?

On the surface and in a fairly deep examination, it seems that the progress that we've made in the Information Technology industry is good.   We operate more efficiently, we have access to more stuff, and products and services are cheaper.

Looking back, we've moved from an agrarian culture to an industrial culture, incorporated more process efficiencies (e.g. the factory assembly line), decreased the number of hours, and days we work.  Much like technology's impact, processes got more efficient and we believed that life would get better as a result.  And it probably has.  More free time (i.e. less time working) promised to lead to a more fulfilled, more satisfying, and happier lives. We'd have more time to "enjoy life."

However, as technology removes (rather "destroys") jobs and entire industries, what will happen to those that were (happily) employed in those roles?  Are we creating new jobs or are jobs just going away?  And, if there are new but different jobs,  can we re-train a work force to do something completely new?  In other words, can we "teach old dogs new tricks?"  Or are we fooling ourselves?

As politicians get on the "job creation" bandwagon (who could argue against this?), we are left with more sound bites than substantive solutions to our "job problem."  I'm not sure what the solution is.  Technology marches on.  I'm not sure where this ultimately leads.  A world where there are far less people working and far more machines working is coming.  Utopian or dystopian, I know not.  That point in time is near.  I can hardly wait.  (That's a topic for a new blog post in the future.)  In the mean time, as technologist continue to make the world a better place, a few jobs are created, millions more are destroyed, and entire industries will go away, all most overnight.