Carter Cast on the “Drama of Comparative Living”

My friend, Carter Cast, gave a wonderful talk to a large group of Fortune 500 executives and non-profit leaders. I highly recommend everyone reading this to take this to heart given where Carter comes from. Carter has had a career unmatched by most I know. Starting as one of the star swimmers on Stanford's national championship team, he has progressed through a host of successes ranging from being employee 4 (CMO) at Blue Nile, defining its successful launch strategy to being the CMO of eBay to CEO of Walmart.com (growing it from less than $100m to several billion). On top of this, he is one of the most down to earth, humble people you'll meet and his former lieutenants will tell you how engaged he was in their development. Enjoy…

"For much of my adult life, a subtle form of fear has been my constant companion.  Eventually, I found myself in the position where I could no longer attempt to ignore it. It had sufficiently eroded my health that I was forced to confront it.

From my own personal experience, (and this is by no means an academic definition) fear can be grouped in three areas of descending intensity: 1) the anticipation of direct danger to one’s being—the guy in the alley coming my way, to fight or give flight; 2) the fear that something I have will be taken away—my house, my job, my loved ones. (In this category, the Buddhist preaching of acceptance of life’s impermanence has helped me.) 3) The feeling that I am not enough, that I don’t measure up to some ever-moving standard of worthiness. This last category of fear is the one I will discuss tonight.

In this categorization, there exists a kind of anxiety gap between what is and what we think should be. “I should have a PhD like Rob Wolcott.” “I deserve to be as wealthy as Ben Elowitz, because I was instrumental in building the Blue Nile business.” This is the drama of comparative living. Bertrand Russell, in The Conquest of Happiness, calls it “worry fatigue.” He says, “Envy is a form of vice which consists of seeing things never in themselves, but only in their relations.” He had a great example: “Napoleon envied Caesar; Caesar envied Alexander; Alexander I daresay envied Hercules, who didn’t exist.”

I am fairly certain that the destructive emotion of envy has increased in the age in which we are living. Amidst all of the opulence we not face the alarming gap between the have and the have-nots, we now also have the ability, due to the opening up of the world through technology, to compare ourselves to others with just a few keystrokes. We all do this. Everyone in this room has done it. How many of us have gone on Zillow or another real estate site to check out the value of our neighbor’s house? How many of us, when perusing Facebook, have seen that one of our friends just dined with someone fancy, dined somewhere fancy or become downright fancy themselves? And then and felt…envious. Today we have the dubious “opportunity” to gauge our progress relative to just about everyone with an Internet connection. And we can gauge the progress of those without one too. Meet your new neighbor, commit to memory his name, and Google the guy when you get home…Only a few hundred years ago, we compared ourselves to the work product of the one other blacksmith in our village. Now we compare our work to all the blacksmiths in all the villages throughout the land…If our values aren’t strong and properly reinforced, we will feel envious. And if we don’t pay attention to this destructive emotion, it can spin out of control and turn into a deep-set fear that we just aren’t good enough.

If you think about it, this comparative frame of reference should only matter when we’re competing in a zero-sum situation. He gets it, I don’t. There’s a winner and a loser. Yet most of the situations we find ourselves in, on a daily basis, do not involve zero-sum outcomes. In most of our life experiences, we find ourselves working with others in situations where we all can benefit. Even in very complex negotiations, creative solutions exist that expand the pie and leave plenty of slices for everyone.

So in reality, in the vast majority of the many millions of discrete moments that make up our lives, we have the ability to choose not to participate in the drama of comparative living.  And that is my epiphany: that through awareness and discipline, I can choose to see things not in their relation to others, but only in their relation to myself—in relation to my own spiritual and intellectual development. Am I increasing in my capacity to show compassion to others? Am I increasing my business skills in order to be more useful to others? Now, at night, I reflect and remind myself that my development as a human being is relative to no one else, just myself and where I was at a prior state of development.

Everyone in this room is in the bonus scoring round of life. We’ve taken the tests and passed. We’ve auditioned and gotten the gig. We’ve made it—the degree, the car, the house. We have respect. Yet the only respect we really need is our own. We can choose keep trying to make it, over and over again, or we can realize we don’t have to live our lives in pursuit mode. We don’t have to keep trying to keep up with the beat of an imaginary metronome. We can say, “I am enough.” As Thomas Merton said, “We have what we seek.” Harmony, for me, lies in this thought."

 

Synchronicity in Everyday Life

"A connecting principle
Linked to the invisible
Almost imperceptible
Something inexpressible
Science insusceptible
Logic so inflexible
Causally connectable
Yet nothing is invincible"

— the Police, Synchronicity  

People, places and events come into our lives for a reason. We rarely fully appreciate or even notice them. Often we'll observe a confluence of them and comment on what a "coincidence" we've experienced. Well, after 15 years in the venture industry, I strongly believe that there are no coincidences but rather synchronicity in our everyday lives. There are invisible webs that hold them together and it is our responsibility to be curious enough to examine and enjoy them.

We race around, head down, failing to observe the greater picture. Great entrepreneurs, successful authors, wise everyday people all seem to have a gift of standing back and seeing this activity in the periphery.  They see connections between apparently unrelated events or trends and create/uncover new realities. They see, connected to a set back, a lesson and a message to head in a different direction (rather bemoan their poor "luck"). If you ever catch your self commenting on something being "ironic" or "quite the coincidence", stop and look around. There is usually something bigger going on and you should be more curious and open to what that new reality is.

"Jung believed the traditional notions of causality were incapable of explaining some of the more improbable forms of coincidence. Where it is plain, felt Jung, that no causal connection can be demonstrated between two events, but where a meaningful relationship nevertheless exists between them, a wholly different type of principle is likely to be operating. Jung called this principle "synchronicity."

In The Structure and Dynamics of the Psyche, Jung describes how, during his research into the phenomenon of the collective unconscious, he began to observe coincidences that were connected in such a meaningful way that their occurrence seemed to defy the calculations of probability. He provided numerous examples from his own psychiatric case-studies, many now legendary.

    "A young woman I was treating had, at a critical moment, a dream in which she was given a golden scarab. While she was telling me her dream, I sat with my back to the closed window. Suddenly I heard a noise behind me, like a gentle tapping. I turned round and saw a flying insect knocking against the window-pane from outside. I opened the window and caught the creature in the air as it flew in. It was the nearest analogy to the golden scarab that one finds in our latitudes, a scarabaeid beetle, the common rose-chafer (Cetoaia urata) which contrary to its usual habits had evidently felt an urge to get into a dark room at this particular moment. I must admit that nothing like it ever happened to me before or since, and that the dream of the patient has remained unique in my experience." The Scarab represented Self-Generation, Resurrection and Renewal.

We live in a non-linear world that defies our linear thinking (just look at weather). We are focused on getting Jimmy to soccer or the project done at work or the report done for class. We can go through entire periods of our lives, jumping from one fire drill to the next and never tuning into the bigger symphony and the inter-related flows around us. This could be the random person on your plane, an article that catches your eye or an event you witness but move on. Life's best experiences and lessons come from these synchronistic encounters.

If you want to be a good entrepreneur, a good parent, friend or partner, look around and try to see the forest from the trees. Introduce yourself to complete strangers, do random acts of kindness and force yourself to do things outside of your normal routine. Life is unpredictable and as the Rolling Stones said, "You don't get what you want but, sometimes, you get what you need."

The Torch is Passed to Android

Everyone watching the mobile OS wars has been expecting Android to become the dominant OS by powering a lot of the non-Apple hardware. The most recent Comscore numbers indicate that the torch (no BB pun) has been passed to Android in Q4, 2010. Below are the share numbers of mobile handsets and OS share. Android is powering much of the key handset players' devices (Samsung, Motorola, etc) and the Android market share just passed Apple's. The iPhone still has legacy stickiness due to the App store, iTunes, desktops, etc so it is not likely going to be a repeat of the Mac/Windows wars but it'll rhyme. Below is an excerpt from the Comscore Report (link here)

OEM Market Share
For the three month average period ending in November, 234 million Americans ages 13 and older used mobile devices. Device manufacturer Samsung ranked as the top OEM with 24.5 percent of U.S. mobile subscribers, up 0.9 percentage points from the three month period ending in August. LG ranked second with 20.9 percent share, followed by Motorola (17.0 percent), RIM (8.8 percent) and Nokia (7.2 percent).

________________________________________________________________
Top Mobile OEMs
3 Month Avg. Ending Nov. 2010 vs. 3 Month Avg. Ending Aug. 2010
Total U.S. Mobile Subscribers Ages 13+
Source: comScore MobiLens                                       .
                            Share (%) of Mobile Subscribers
                                            Aug-10    Nov-10    Point Change
Total Mobile Subscribers    100.0%    100.0%        N/A
Samsung                              23.6%     24.5%        0.9
LG                                        21.2%     20.9%       -0.3
Motorola                               18.8%     17.0%       -1.8
RIM                                        9.0%      8.8%       -0.2
Nokia                                     7.6%      7.2%       -0.4
________________________________________________________________

Smartphone Platform Market Share
61.5 million people in the U.S. owned smartphones during the three months ending in November, up 10 percent from the preceding three-month period, as RIM led with 33.5 percent market share of smartphones. After several months of strong growth, Google Android captured the #2 ranking among smartphone platforms in November with 26.0 percent of U.S. smartphone subscribers. Apple accounted for 25.0 percent of smartphone subscribers (up 0.8 percentage points), followed by Microsoft with 9.0 percent and Palm with 3.9 percent.

____________________________________________________________________
Top Smartphone Platforms
3 Month Avg. Ending Nov. 2010 vs. 3 Month Avg. Ending Aug. 2010
Total U.S. Smartphone Subscribers Ages 13+
Source: comScore MobiLens                                           .
                                Share (%) of Smartphone Subscribers
                                                    Aug-10    Nov-10    Point Change
Total Smartphone Subscribers    100.0%    100.0%        N/A
RIM                                                37.6%     33.5%       -4.1
Google                                           19.6%     26.0%        6.4
Apple                                             24.2%     25.0%        0.8
Microsoft                                        10.8%      9.0%       -1.8
Palm                                                4.6%      3.9%       -0.7

Buckle Up for the Next Chapter

I don't want to pile onto or repeat some of the great posts of the current market conditions. Fred Wilson's post, Storm Clouds, was one of the better initial snippets on what is going on. One of the advantages of being in Chicago is that we are the first to lose liquidity and the last to get it. So, we track the number of term sheets from the Valley hitting Chicago as an indication of froth. When it goes up, we know that the Valley has so messed up its ecosystem that they are willing to fly in Winter to Chicago. The planes have been flying in with significant frequency, some driven by the Groupon halo and some driven by a hunger for deals at 50% the price of the Valley. I made the call in June 2008 that the cycle had ended and to buckle up:  Rough Ride Ahead.  I am not prognosticator but rather a risk handicapper. I still believe the next 5 years will produce some amazing wins but we will have a rough interim period here in the next year or so.

Having survived three VC cycles, the pattern is usually the same.

In Stage One, fear sets into the market when the public markets pull back and VC's grow concerned that they won't get exits. They stop feeding the funnel. Valuations fall in the Valley and they pull back their activities to their "two hour radius".  The markets eventually stabilize and VC's come out with a more cautious approach, often looking hard at core fundamentals, take extended periods of time on diligence and price deals somewhat conservatively. Recruiting of talent is rational and effective.

Stage two, the market starts to heat up, companies start to ramp, revenue grows and VC's start to pick up their activity. They have moved from fear to semi-greed.

Eventually, in stage three, a couple of deals pop in a big way (Groupon, Facebook, Playdom, Zynga, etc). Suddenly the VC's begin to get greed and fearful that they are going to miss the next big win. They start pricing deals not at core fundamentals today but at expect or hoped for revenue in the future. If the deals inflect they look like heros and if not, they have a portfolio of destroyed cap tables.

Indicators of Stage Three are:

— frequent "pre-emptive" rounds at 50-100% the expected valuation to "take the deal off the market"

— high valuations in excess of historical norms ($5m revenue, $50m pre-$, $20m revenue-$200m pre-$)

— general sense of anxiety and envy in the Valley with fear of missing the next Facebook dominates partner discussions on Monday's

— talent wars with pricing on salary, tenure shrinks

Well, guess what, we have a lot of term sheets hitting Chicago, talent wars are resulting in Google engineers getting paid $3m+ not to leave, valuations are insane and momentum investing in vogue (term sheets after 2-3 days). My suggestion to VC's is to wait for you pitch and it may be a bit of time before things come back around. My belief is the leading indicator will be an increasing rate of IPO efforts and perhaps a market pull back. Be smart and be ware…  That said the revolution is still alive and strong!

The Entrepreneur’s Greatest Enemy

Anxiety and fear are the greatest enemies of the entrepreneur. You attract what you focus on and anxiety and fear not only focus on negativity, but eat up energy that can be applied more productively. Even worse anxiety and fear trigger the fight or flight portion of your brain which literally shuts down your ability to do abstract thinking. With this region asleep, it is hard to visualize a new revolution.

During the Bubble implosion in 2000, I lived perpetually in this state for 18 months until exhaustion and 16 lost pounds forced me to reconsider. I got nothing done during this time.

In this market there are three things are creating anxiety and fear in the entrepreneur. Economic conditions are poor, leading to stress around funding and revenue. Secondly, the market is in a momentum phase in which each entrepreneur is trying to keep up with the latest exit of momentum exit. Third, by definition start ups have poor visibility and their success depends on non-linear, unpredictable outcomes.

Anxiety is toxic. No one wins and it is a remnant from our evolution when it was essential for our physical survival. Healthy paranoia and respect/understanding of what you don’t know is essential but not energy draining emotion.

Top entrepreneurs use a handful of techniques to manage this.

0) live in the present and stop fearing what horrible outcome might happen. You will always amplify the worst case case. They focus on what they can effect…the here and now.

1) they clearly visualize and define the promised land and communicate it clearly to their employees.

2) they remain focused only the core subset of activities necessary to reach them (versus frantically throwing noodles into the storm).

3) they maintain a calm conviction and confidence in the inevitability of the end success (will the company into existence).

4) appreciate and accept the possibility of the worst case…the Samurai’s would accept death first and then enter battle with no fear.

5) try to take care of themselves by eating and working out as needed.

6) focus on the things that count in your life…family and friends and mentors. Use them as your foundation and sounding board.

So, be aware of your anxiety level. High anxiety helps insure failure with your firm/team and health issues. It leads to nothing productive and it is driven most often by fear of the unknown future. Know where you are going but focus on the tasks at hand and bypass Anxietal Paralysis.

What Could Do with $1/Year

I’m at the Kellogg Innovation Network Global Summit which is the creation of of Rob and Stephanie Wolcott. It is a global group of CEO’s and heads of R&D from Fortune 500’s.

Kimmie Weeks from Liberia, founder of Youth Action International, which focuses on raising global philanthropy in youths, kicked off the event with a wonderful talk. He discussed a program they launched giving women in Sierra Leone looms to make clothes and drive self-sufficiency.

One quote that stuck with me was “when you have people who get by on a dollar a day, imagine what they can do with small amounts of money you give them? They are resourceful and not to be only pitied.” It reinforces how one needs to see the positives tied to all negatives.

You see this resourcefulness in the entrepreneurial world with both bootstrapped companies and some of the small grants given by accelerators. I found that this Spartan DNA is the number one predictor of success in portfolio companies. It shows both their respect/understanding of dilution and their innovativeness & resourcefulness.

Why You Should Start a Company in Chicago

The folks at Fast Company have a series on articles on starting up companies in different regions of the US. I had a chance to talk with them about Chicago, my home town. Below is the beginning and link to the article Why You Should Start a Company in…Chicago.

Why You Should Start a Company in… Chicago

By Laura Rich
 
Chicago may lack the crackling energy of other startup hotspots like Seattle [1], Austin [2], Boston [3] or Boulder [4], and its reputation for back-office, white-collar companies such as the former Andersen Consulting firm doesn't help much. But Chicago is where many Internet mainstays were launched, from the jobs site CareerBuilder and travel service Orbitz to RSS technology innovators Feedburner (bought by Google in 2007) and the online audience measurement outfit comScore. One hot startup right now is the coupon site Groupon [5].

Health-care companies also have realized great potential in the area, led by Abbott Laboratories. And lest one forget, it was at nearby University of Illinois Urbana-Champaign where Marc Andreessen developed Mosaic, the Web browser that paved the way for the commercial Web. So there's that.

These days Chicago's startup culture is aimed at the steady and sure. As Matt McCall, a partner at New World Ventures and managing director at DFJ Portage, notes, Chicago is home to many of the largest companies in the country, including Accenture, Boeing, Integrys Energy, MillerCoors, McDonald's, ACNielsen, Trans Union, and Fortune Brands. The list is long and comprehensive. For startups, it means a rich source of customers for products that fill a need or enhance their businesses.

McCall spoke with FastCompany.com about what makes Chicago's startup scene so strong.

What makes Chicago a great place for startups?

continued at Article link…

AO Top 100 VC List

Well, I got a very pleasant surprise last night in my email. Tony Perkins notified me that I had made the Top 100 VC list in their inaugural year of the list. I don’t usually like to self-promote but this was a particular recognition for me. PE Hub just did a piece on this list which is expected to replace the Forbes Midas Touch list. Many thanks to all of the guys at FeedBurner, Lefthand Networks, TicketsNow, Everdream and others that did all the hard work and deserve the credit!

PE Hub Article: Always On’s Top 100 Venture Capitalists

Copy of VC100 List Final

The Significance Of The Karma Bracelet

I have an old, wooden beaded Karma bracelet that I wear most days on my left wrist in the place of a watch. It’s worn down a bit and is held together with three loops of silver coated elastic line. It’s dirty light brown with faded chinese symbols on it. It is definitely not the most appealing accessory.

“If you don’t go after what you want, you’ll never have it. If you don’t ask, the answer is always no. If you don’t step forward, you’re always in the same place.” — Nora Roberts

People continually ask me about it and why I wear it. I originally bought it on a lark several years during a business trip. As readers of my blog know, I believe (as many VC’s do) that Karma sits at the middle of our investment (& personal) universe. Good acts & intentions attract like. In my mind, the Venture Capital world is the single strongest proof point behind the Law of Attraction (made famous by the book & movie, The Secret). That said, at the time (around 2003), the venture world was coming out of the darkest chapter in its history. Let me give you a sense of what it was like.

I had 12 investments at the time that I had made between 1995 and 2001. Regardless of how compelling or promising the business, by 2000, everything was in free fall. I moved from board meeting to board meeting, reviewing how much each firm had missed its revenue plan and what draconian steps we would take to reduce cost (e.g. usually laying people off). As I stepped back and reviewed the bigger picture, it painted a pretty bleak scene. It looked as if I would lose all of the investments. Very quickly, my mind would linearly extend out this bleak future. Without success, my days as a VC would be short. Without a job, I’d have little to show new employers in the industry. Without strong job prospects, what would I do for a living. You can (or even have personally) imagine how this negative feedback loop feeds on itself. In fact, I see a lot of people today going down this path. Ironically, the best relief I had from this grind was to help others, to make introductions where I could, to counsel entrepreneurs or just listening to people in need. My philosophy has been that just because your world is not going as hoped, does not mean that you can’t try to help others. In fact, you usually get as much out of it as they do.

By 2003, things had stabilized but I had little to no visibility on exits or good news from my companies. While I had lost several investments, the lionshare had pulled through. IT customers had not returned to the market in strength and it was difficult to see what trends or strategies would carry the day. I had had a long, grinding three years and was not certain how much resilience I had left nor how long this would drag on. I definitely had my days where I questioned if I should remain in venture capital. My confidence was shaken and I could point to only modest gains.

Ironically, during the day, I would counsel entrepreneurs about perseverance, resilience and hope. Jim Clark, the founder of WebMD, Netscape, Silicon Graphics and myCFO, has always said the great companies are not built, but rather willed into existence. I realized that I couldn’t believe in and preach A while doing B (running away). So, day in and day out, I ground it out.

Fast forward to 2008. I was in the midst of a string of successes that, honestly, surprised me. Many of those struggling companies from years before, had managed to conquer their challenges, scale their businesses and realize strong exits. In fact, during 2007 & 2008, these companies sold for nearly a $1B to the likes of IAC, Google and Dell.  In fact, the largest exit of all, Lefthand Networks, sold to HP for $360 million in November, 2008 as our economy was nearing the bottom of the world’s worst downturn in 70 years. Furthermore, because of these exits, I had few portfolio companies to manage through the current economic mess, leaving me with more time to look at new investment opportunities.

So, when I look at my beaded bracelet, do I think of it as a good luck charm? Maybe a little bit. However, more importantly, it symbolizes to me that, no matter how dark things get, the world is full of good people & good intentions and that tomorrow will be better than today. It reminds me that success is driven not by brilliance & insight (though they help) but rather by persistence, resilience and faith. Often, just getting up in the morning and putting your feet on the floor is the best strategy when you don’t know where you can muster the energy & confidence to go on. This is not to say that one should chase after the wrong windmills. However, if you still believe in your very fiber (during your good days) that you are on the right path, push forward.

As the Rolling Stones wrote, “You can’t always get what you want, but if you try sometimes, you just might find, you get what you need.”