The Newest Wonder of the World

I am with my family on the Freedom of the Sea, Royal Caribbean’s newest addition to its fleet which is now the largest cruise boat in the world. It has multiple pools, a wave machine for surfing, minature golf course & simulator, an ice skating rink, a climbing wall and a sports court. The most mind-boggling part of the boat is its four story “promenade” open shopping mall with stores, boutiques and restaurants surrounding both sides of this walkway. On New Year’s Day, they had a full blown parade with trapeze performers, costume processions and confetti down the middle of the Promenade.

Given the scale, it is amazing that it floats. Over 3,600 passengers and 1,600 staff reside on the boat. More than 130 chefs prepare over 15,000 meals a day to sittings of 1,800 people across three levels. Staff vacuum over 1 mile of carpeting a day and computer generator conveyor belt systems wash the thousands of a towels a day. Six generators crank out enough power to light up all of Aruba across 164,000 miles of wiring.

Another interesting part of the trip is that 80% of the passengers are from Mexico and South America (we left from Miami, heading into the Caribbean). Everywhere we go, everyone is speaking Spanish. The crew of the boat come from over 40 countries. Given how homogenous living in the North Shore of Chicago can be, this (along with our ports of call) is a great reminder of how diverse the world is outside of our narrow daily experiences. We are definitely the minorities here.

There is no Blackberry coverage nor cell coverage here and my internet connection (WiFi across the boat) is a modem speed satellite connection. As a result, I am pretty liberated from my normal electronic shackles. It’s not such a bad feeling once you get used to it…

One ironic side note. Tonight, as I went to get dinner at the buffet, I heard some music coming from a performer playing his guitar. Listening more closely, I realized he was playing the theme song from the movie, Titanic. The passenger ahead of me in line commented “probably not the best choice of music on a cruise ship…”

You’ve Been Memed

Kirsten Osolind who blogs the re:invention marketing blog recently memed me. Like her, I have not posted in a number of days and may soon go dark for another week as I board a cruise with my family tomorrow morning. The venture business is supposed to be sleepy from Thanksgiving and New Years, but not this year. The last time it was like this was in 1999…hmmmm.

In keeping with the Meme Code, five things you don’t (might not) know about me:

1) Born in NYC, raised in La Jolla and live in Chicago. I guess this makes me a former surfer with an attitude that likes cold winters…

2) Spent my summer after sophomore year at Williams at McDonald’s. Worked my way up from burger flipper and fry guy to bin supervisor. Must have been the fine job I did in my burgundy polyester uniform with the trash pooper scooper outside the store on Prospect Avenue (La Jolla’s Rodeo Dr).

3) Was a confused youth as I played 4 varsity sports yet spent many hours playing Dungeons & Dragons, taught Pascal and programmed the original TRS-80 and Apple. I can remember the days when you stored your programs on a cassette recorder back then.

4) I spent my junior summer working on Wall Street where my mother made me wear a stripped sear sucker suit on my first day. My packed NYC subway broke down between stops during a 99 degree day. Luckily my suit was able to absorb the sweat from the two heavy set passengers crushed up against me. I had to walk around for 30 min in my building’s air-conditioned lobby to dry out before going up to meet my new boss. The suit went to the thrift shop very soon there after.

5) Would most like to be like Irving Harris (passed away a couple of years ago). He amassed a fortune from a series of successes (Green Goddess salad dressing, Toni Curls, Pittway, Harris Associates, etc) but his lasting mark was on early childhood development. He created new ways and new institutions to address old problems including the Erikson Institute, the Ounce of Prevention, Zero to Three, the Yale program for Early Childhood, the Harris School of Public Policy at the Univ of Chicago. He was the embodiment of venture philanthropy and showed how those with means & success have a responsibility to help others.

I usually blog either late at work or in my boxers at night (have to check Kirsten’s post above for the relevance here…).

What VC’s Look for In A CEO

"I look for honest, able management"
— Warren Buffett

On a daily basis, entrepreneurs ask me what we look for in a CEO. Dick Costolo suggested that doing a post on this topic would make sense (as usual, he is right).  When we have made mistakes with an investment, its demise usually falls into two buckets: 1) we mistimed or misunderstood the market or 2) we backed the wrong CEO. Figuring out whom to back is very much of a black art. Famous, big company executives are just as likely to crater a company as a rank novice. The trick is finding the entrepreneur who fits in-between these worlds and has the following characteristics baked into his/her DNA:

Resourceful: he/she should be weary of raising capital and be thoughtful about taking on any dilution. Large capital raises limits exit potentials, defocuses management and ends up usually being wasted. Our worst investments usually involve a CEO who feels that throwing  capital at a problem fixes it and then feels entitled to option spiffs to offset any dilution to them. These plays lead to 2-3x returns at best and more often in damaged capitalization structures. Like the difference between a great and poor developer, doing it efficiently/creatively versus throwing more resources at it leads to significantly better results. Would you prefer that you had one quality mechanic focusing and fixing your car or an army of grease monkeys poking around trying different things (often with a very structured methodology) and running the bill up?

Relentless: Technology is all about being the market leader (as they say, who was the second person to fly across the Atlantic?). I like CEO’s who are competitive and paranoid about the competition. CEO’s often become complacent by putting down the competition’s products while extolling the virtues of their own. I like CEO’s who are self-critical and come out and say "we are not doing xyz well and we face a significant threat from competitor A on …".  They should abhor losing bake-offs to competitors and continually push their teams hard to iterate product quickly.  In the long run, "all technology companies are dead" (Roger McNamee) as there is no market more darwinistic. Scorched earth…

Creative Thought: we appreciate entrepreneurs who look at problems differently. Successful companies do so not by doing things the same way as their competitors. It gets our attention when we learn something new or view an old problem through a new lens.

Responsive: Keeping with the "R" theme here, we want to see entrepreneurs who see either opportunities or issues and quickly iterate solutions for them. We like resourceful teams that come up with creative, simple responses. They respond quickly to developments in a measured way when needed. They out execute the other competitors.

Proactive: tells us problems or opportunities before we see them or they become self-apparent. I like entrepreneurs who are frank and to the point. I hate Barney meetings (you love me, I love you) where everything is coated in positive spin. "Losing our two major customers (or our product is five months delayed) is really a good thing for us…". In pitches, entrepreneurs should acknowledge biases or skepticism and identify actions or layout ameliorating factors.

Honest/Open Communicator: No politics, no hidden agendas. We need to build the company together. Too many times, entrepreneurs view it as them and us which leads to divisive interactions and lack of trust. Speak your mind. Don’t play the sides against the middle as this will result in his/her eventual dismissal or trip to the woodshed. Life is too short for this kind of crap.

Justified Confidence: Pride (and ego) goeth before a fall. Cocky, self-assured entrepreneurs are setting themselves up for a beating. However, great companies are willed into existence. Entrepreneurs need to communication the vision (the "North Star") and then convey a sense of inevitability. It is hard to explain, but it is an ethos of confidence and certainty. In end, they leave you believing they can do it.

Strong Domain Knowledge: people who come from an industry or technology sector tend to do better than those who are smart but moving into a new sector. They know the dynamics of the industry, its competitors, its history, its customers and has learned from past mistakes or failed efforts. Each industry has its own nuances and we would prefer that the entrepreneur have that knowledge versus learning on our nickel.

Respect for downside: I like entrepreneurs who have failed or who have a healthy appreciation for the likelihood and unpleasantness of the downside. Entrepreneurs are optimists by nature. Knowing the dark side gives them an appreciation for how critical discipline, efficiency and slight paranoia are.   

Leadership/Inspirational: they can define and evangelize their vision. people want to work for them. Enough said since this is often the lead criteria for most posts on this topic. Think big and inspire…

Famous Stoner Girl

John Dvorak and the TWIT folks were talking about the cult Ellen Feiss Apple ad. While not under the influence, she has become known as the Stoner Girl as a result of this ad. Pretty funny… In another note, Mac’s new spokes guy, Justin Long, in the Mac/PC ads is going to be retired. I found the ads very funny but it seems that Justin came across as a mean SOB and PC as a lovable victim. This was not Apple’s goal. I am a bit surprised, but expect a new Mac face in the ads…

Quantcast

Quantcast is an interesting "open internet ratings service". Much like Alexaholic is a poor man’s comscore, Quantcast provides demographic information on various websites pulled from their affiliated partners. It will give you a  quick overview, though the accuracy is going to highly variable depending upon the panels and the site.  That said, it is  interesting to get a rough view of who is getting drawn to a specific site. Serious analysis will obviously go to comScore, Nielsen and such for reliable stats.

Crowdsourcing

"You’ve got access to a global creative department of 4 billion people"
— Steve Henry, Exec Creative Director at TBWA

People have always said that you should listen to your customer. Well, with the advent of Web 2.0 technologies, firms are taking this advice literally. I mentioned a while ago that I expected to see more and more "user generated" marketing efforts (still waiting for the exchange). This Superbowl will have 3 ads that have their origin from the masses but with different approaches. Some are running contests for ideas and then will unleash their professional resources on creating a glossy version. Another is running a contest and plans to air the actual spot created by the winner. This approach has be recently labelled "Crowdsourcing" which is kinda like open source for marketing.

TBWA has launched The Big What Adventure at TBWALabs where you can submit ideas for their different clients ranging from campaigns to events. It looks like their first exercise is wrapping up as it is next to impossible to chase down the submission page and it looks like sending in an email with the idea (not very socially friendly…) is the current solution while they revamp the website.

If any of you come across interesting "Crowdsourcing" models or companies, let me know as I have an interest in seeing if someone can make this work. The challenges are getting clients to sign up (agency based…which means getting agencies on-board), getting people to submit and finally putting the tools in place to that the exchange isn’t laced with every wild-haired scheme under the sun.

Blackberry Orphans

Young children around the world have seen their parents disappear from their lives in the saddest of circumstances. Perfectly normal, functioning parent have contracted severe cases of Berryitis (also known as Screensucking) and disappeared from everyday family involvement. I am certain we will be seeing TV ads to help support these poor orphaned children… My children have expressed annoyance over my Blackberry usage.

I always knew there was going to be a 12 Step program for this illness. Whitney Tilson (Tilson Funds) sent me the following:

 

BlackBerry Orphans

The
growing use of email gadgets is spawning a generation of resentful children. A
look at furtive thumb-typers, the signs of compulsive use and how kids are
fighting back.
By KATHERINE
ROSMAN


December 8,
2006; Page W1

There is a new member of the family, and, like all new siblings, this one is getting a disproportionate amount of attention, resulting in jealousy, tantrums, even trips to the therapist.

It’s the BlackBerry.

As hand-held email devices proliferate, they are having an unexpected impact on family dynamics: Parents and their children are swapping roles. Like a bunch of teenagers, some parents are routinely lying to their kids, sneaking around the house to covertly check their emails and disobeying house rules established to minimize compulsive typing. The refusal of parents to follow a few simple rules is pushing some children to the brink. They are fearful that parents will be distracted by emails while driving, concerned about Mom and Dad’s shortening attention spans and exasperated by their parents’ obsession with their gadgets. Bob Ledbetter III, a third-grader in Rome, Ga., says he tries to tell his father to put the BlackBerry down, but can’t even get his attention. "Sometimes I think he’s deaf," says the 9-year-old.

The household tension comes as gadgets like BlackBerrys and Treos — once primarily tools for investment bankers and lawyers — have entered the pantheon of devices, including the TV, the personal computer and the cellphone, that have forcefully inserted themselves into the American home. Research In Motion, the maker of BlackBerry, logged 6.2 million subscribers at the end of the second quarter this year, up from 3.65 million in the same period last year. Palm sold 569,000 Treos in the first quarter this year, up 21% from the same quarter the previous year. The problem has only gotten worse as more devices combine phone and email. Since people rarely leave home without a cellphone, even events that were once BlackBerry-free are now susceptible to office email.

KICKING THE HABIT
Engaging in near-constant BlackBerry checking is similar to acts associated with Obsessive-Compulsive Disorder. We sought advice for curbing the habitual email itch from professionals (12 Step Program Below).

The gadgets are recognizable to young children. A few parents say "BlackBerry" is in their toddlers’ early vocabulary. Lucas Ellin, a Los Angeles 5-year-old, pretends he has his own, parading around the house with a small toy in his hand while shrieking, "Look, Mommy, it’s my BlackBerry!" Earlier this fall, Novelty Inc., a manufacturer in Greenfield, Ind., unveiled its "My Very Own Berry Assistant" toy, available at convenience stores and gas stations under a sign reading, "Just like Dad and Mom’s." The company expects to sell nearly 100,000 units before the end of the year.

‘Very Annoyed’

In Austin, Texas, Hohlt Pecore, 7, and his sister, Elsa, 4, have complicated relationships with their mother’s BlackBerry. "I feel very annoyed," says Hohlt. "She’s always concentrating on that blasted thing." (Hohlt says he picked up the word "blasted" from the film "Pirates of the Caribbean.")

Elsa has hidden the BlackBerry on occasion — Hohlt says she tried to flush it down the toilet last year. Their mother, Elizabeth Pecore, who co-owns a specialty grocery store, denies the incident. But Elsa also seems to recognize that it brings her mom comfort, not unlike a pacifier or security blanket. Recently, seeing her mom slumped on the couch after work, Elsa fished the BlackBerry from her mother’s purse and brought it to her. "Mommy," she asked, "will this make you feel better?"

Emma Colonna wishes her parents would behave, at least when they’re out in public. The ninth-grade student in Port Washington, N.Y., says she has caught her parents typing emails on their Treos during her eighth-grade awards ceremony, at dinner and in darkened movie theaters. "During my dance recital, I’m 99% sure they were emailing except while I was on stage," she says. "I think that’s kind of rude."

Emma, 14, also identifies with adults who wish their kids spent less time playing videogames. "At my student orientation for high school, my mom was playing solitaire," she says. "She has a bad attention span." Her mother, Barbara Chang, the chief executive of a nonprofit group, says, "It’s become this crutch."

Safety is another issue. Will Singletary, a 9-year-old in Atlanta, doesn’t approve of his dad’s proclivity for typing while driving. "It makes me worried he’s going to crash," he says. "He only looks up a few times." His dad, private banker Ross Singletary, calls it "a legit concern." He adds: "Some emails are important enough to look at en route."

Some mental-health professionals report that the intrusion of mobile email gadgets and wireless technology into family life is a growing topic of discussion in therapy. They have specific tips for dealing with the problem, like putting the device in a drawer during a set time period every day. "A lot of kids are upset by it," says Geraldine Kerr, a licensed marriage and family therapist in Morristown, N.J. She says parents need to recognize that some situations require undivided attention. When you shut off the device, she says, "You’re communicating nonverbally that ‘you matter and what’s important to you is important to me.’ "

Still, like teenagers sneaking cigarettes behind school, parents are secretly rebelling against the rules. The children of one New Jersey executive mandate that their mom ignore her mobile email from dinnertime until their bedtime. To get around their dictates, the mother hides the gadget in the bathroom, where she makes frequent trips before, during and after dinner. The kids "think I have a small bladder," she says. She declined to be named because she’s afraid her 12- and 13-year-old children might discover her secret.

Even in the context of close relationships, the issue is thorny. Christina Huffington, 17 years old and the older daughter of the Huffington Post co-founder Arianna Huffington, introduced the topic of her mom’s constant emailing during a session with the family therapist. Her mother carries two BlackBerrys with her at all times. She looks at them while shopping and doing the downward-dog pose in yoga practice. "I had the feeling that my mom never listened to me," Christina says. The therapist advised that the family dinner table be an email-free zone. Still, Christina has her own BlackBerry — a gift from her mother — and she often uses it to communicate with her mom.

For many parents, finding the right balance is a struggle. Although mobile email allows them to attend a soccer game in the middle of the day, it also brings the office into the family room after dinner. In an age of connectedness, they sometimes have trouble disengaging from the office — and many admit they check their messages more often than required. Bob Ledbetter Jr., whose son questions his hearing, agrees that he spends too much time checking his email. The commercial real-estate developer usually turns off his BlackBerry each night around 7:30 but then sometimes finds himself fiddling on his laptop computer. Totally disconnecting during family time "is a discipline I need to learn," says Mr. Ledbetter. "Even though I’m home, I’m not necessarily there."

Parents point out they’re not alone in their habits. Jerry Colonna, father of ninth-grader Emma, says that for her birthday earlier this month, she asked for and received a T-Mobile Sidekick. "She’s obsessively on email now," he says. "Kind of ironic." Emma responds: "I use it a moderate amount."

One of BlackBerry’s biggest defenders, Jim Balsillie, the chairman of Research In Motion, says children should ask themselves, "Would you rather have your parents 20% not there or 100% not there?" Yet he, too, struggles with the issue. His wife tried to keep him off the device after work, asking him to leave it by the front door every night. When he snuck it in his pocket, he feared getting caught.

Chris DuMont, 15, of San Marino, Calif., recognizes that his father’s habit helps bring in income. "Sometimes when we’re on vacation he’ll be on" his device, Chris says. "But the whole reason we’re on vacation is because he’s working."

Part of the blame certainly lies with the corporations that are outfitting their staffs with email devices, creating the expectation that employees will be available and responsive at all times. Still, some professionals have successfully carved time away from email, says Melissa Mazmanian, a fourth-year doctoral candidate at the Massachusetts Institute of Technology’s Sloan School of Management. For her dissertation, Ms. Mazmanian, 31, is studying the patterns of BlackBerry use among nearly 200 bankers, lawyers and employees of a footwear manufacturing company. People with infants and toddlers most actively set aside personal time, and colleagues learned to leave them alone.

More often, intervention is required. Lucas Ellin, the son of "Entourage" creator Doug Ellin, says his dad checks his email at restaurants, during Lucas’s soccer games and on school visits. Lucas sometimes tries to divert his father’s focus away from the device by hiding it or taking his dad’s face in his hands to physically get his attention. When nothing else works, Lucas turns to the highest of authorities. "I go tell my mom that Daddy’s not listening and then my mom yells at him," he says.

Sophie Singletary, the 7-year-old daughter of BlackBerry-driver Ross Singletary, can only dream of the day when she gets to call the shots. "I would say, ‘You can only use the BlackBerry for two hours a day,’ " she says. Then she pauses, and reconsiders: "Oh, actually, make it five minutes!"

—————–

A 12-Step Program for Addicts

By KATHERINE
ROSMAN


December 8,
2006; Page W14

If you work at an organization where no important business is conducted between 7:30 a.m. and 8:30 a.m., is it necessary to check your BlackBerry at five-minute intervals during that period? For many, the word "CrackBerry" has established itself as a regular, albeit humorous, part of their lexicon. But engaging in such "checking rituals" is similar to acts associated with Obsessive-Compulsive Disorder like frequently checking that the lights are off, says Dr. Michael Jenike, a professor of psychiatry at Harvard Medical School.

Users might be clinically considered compulsive if they feel very anxious when they haven’t "completed" the task of checking for new messages, says Dr. Norman Epstein, a professor of family studies at the University of Maryland. After checking email, he says, compulsive people will feel temporary relief but then "will need to check again" soon to temper recurring anxiety.

We sought advice for curbing the habitual email itch from a nearly a dozen professionals — a time-management expert, professors and therapists who specialize in family counseling and Obsessive-Compulsive Disorder. Here are their recommendations:

1. During meals, do not check email.

2. Do not hide your email habits from family members. If you feel that someone would be upset to see you BlackBerrying, it’s a sign that you probably shouldn’t be.

3. Commit to stop emailing while driving (even at red lights), walking across the street or doing anything that requires careful attention.

4. Do not check email for the first hour of the day. In addition to giving you time to leisurely read the newspaper or spend time with your family, the practice will help you shake the tic-like checking ritual.

5. Endeavor to leave the mobile email device in the car or at home when attending any function taking place at your child’s school, or when picking up your child from school.

6. Decide on an email-free block of time. Parents should first assess their child’s conversational patterns — some like to talk about their day immediately after school, others just before bedtime. Even if your child doesn’t seem interested in talking, stick to your promise not to email during that time.

7. Set boundaries at work: Alert your colleagues that your mobile email device will be turned off during the predetermined time slot.

8. Actually turn off your device and stick it in a drawer during the time you’ve designated as email-free.

9. If you are in the middle of a work crisis, still try to respect some boundaries. Consider blocking out a few 15-minute periods to check email — and then turn the device off again. Honestly assess whether the situation at work is an actual crisis that can’t be solved without your oversight.

10. When emailing while socializing or spending time with your family, ask yourself if your priority at that moment is enjoying after-work activities or getting work done. If it is the former, power-down. If it’s the latter, return to the office.

11. Upon arriving home, practice a ritual that helps you mentally separate the work day from the after-work evening. Light a candle, put on music, pour a cocktail. Don’t check your email during this time.

12. If mobile email overuse creates tension between you and your significant other, consider creating jointly agreed-upon BlackBerry-free zones. For instance, unless your bedroom doubles as a home office, consider maintaining it as a sanctuary of your personal life.

A Microsoft Ass Whooping

Two key theme we discuss often here are: the importance of simplicity and transparency with customers and beware of strategics. Well…

Microsoft recently launched the Zune player. It is a massacre. You have probably seen the (uniformly horrible) reviews. It could be one of the quickest tube shots (or bloodiest) in the history of consumer electronics. Surprisingly enough, this is the same team that successfully launched the XBox and has put Sony in its current bind. Why the issue?

There are two culprits: Microsoft is trying to be too cute and they are also dancing too close to the devil.

Respect Your Installed Base:
In order to grab exclusive control over the player and content, they have sold all of their Windows Media Player partners downstream (Rhapsody, Yahoo, etc). The Zune will not accept their music and you can’t buy Windows Media content at the store (sorry Samsung and all). So, trying to be cute and stealing a page from Apple’s book, they have ended up throwing away one of their few assets…an installed user base.

Minimalism and Common Sense:
In order to throw in all their function (like WiFi sharing), they have made a clunky, brown music player. It is much larger than the iPod and looks more like an Archos. It’s like Windows vs Mac all over again.

Make Purchase Simple and Eliminate Friction:
Microsoft has hired a few too many consumer consultants on the design of their music store. The complexity of buying music is amazing. They are getting too cute for their own good. You have to buy in $5 chunks which forces buyers to give Microsoft float. You don’t buy with dollars, but with points since consumers tend to spend more money when they redeem points versus dollars (think of your average kids fair). You also redeem 79 points for a song which is designed to make you think it is less than the $0.99 Apple songs. In other words, they try to game you at every corner. The result is a convoluted solution with lots of friction points.

In contrast, the Apple store has one click purchase, stores your credit card, charges you $0.99 and you can buy whatever quantity you want. It is so simple, I find myself buying way to many songs since I just look them up and then click buy.

Give the Devil the Heisman:
I have danced with the record labels and they will pile constraints on you until they make your business model unworkable. Strategics don’t think rationally in fast moving markets and, like a drowning man, will take you down with them often.

Many of Microsoft’s woes are driven by restrictions thrust upon them by the labels including, I am certain, much of the idiotic DRM scheme. I saw, first hand, an investment (Dataplay) bury $180m in the ground because of DRM restrictions demanded by the labels.

As one of my favorite CEO’s, Tim Stultz says "Ask for forgiveness, not permission."

I own Macs everywhere, am drowning in iPods and enjoy our XBox 360. Thank goodness for Microsoft that Apple hasn’t come into console gaming…

What Sequoia Expects from Entrepreneurs

Entrepreneurs are always trying to figure out what it takes to get funded by the brand name venture groups. VCRatings recently wrote a post using Sequoia’s website criteria for what they look for in a start-up. While these seem fairly straight forward, I thought it would be helpful to expand on some points. Historically, the elements that are the hardest and most intangible are:

1) Team DNA: this is one of those "you’ll know it when you see it". However, if the VC knows more about your space or business model than you or you come across as naive due to your claims, it is not a good start. The tech world grows more Darwinistic each day and those with the best street smarts win (not always the brightest). "A’s" attract "A’s".  Compare your team (honestly) and yourself to your highest profile competitors and determine how you stack up along the lines of creativity, tenacity, execution, public persona and such. Also, do the same against the "best in class".

2) Think Differently: VC’s get lots of pitches on any given area. It is those teams that can think about a problem or solution from a different angle, especially one that makes it more defendable, that stand out. It makes a VC want to hear more about how the team views the problem. Teams that can approach a problem from a different angle are advantaged since other competitors will be biased towards their own way of thinking (which may be flawed or too traditional/cookie cutter). This gives the team a head start and on-going advantage if they have the better mousetrap regarding approach.

3) Agility and Frugality: Iterate quickly and see what the customer wants. Keep it simple. While you’re at it, don’t spend a lot. Money doesn’t solve problems but usually causes defocus. Mike Cassidy (of Direct Hit and Xfire fame) believes in keeping everything to a minimum when launching to force focus and discipline. Think small and fast.

Sequoia_criteria