Crafting Code Across the Stack: 3 Benefits of Cross-Technology Engineering

One of the engineers in my startup asked some thought-provoking questions in a hallway conversation today:

Should engineers own end-to-end implementation of features that cut across multiple layers of our technology stack?  Or should engineers focus/specialize on specific layers of the stack and collaborate with each other to develop each feature?

I’ve repeatedly observed that small teams of developers run circles around large teams in every company I’ve ever been in.  [Caveat: I focus on consumer internet software, so my observations will be biased towards that industry.]  I have a strong preference for company cultures that encourage individual engineers to develop as much of a featureset as they can on their own.  If there’s a front-end user interface to be created as well as a backend API required to support a particular feature, I’d like to see the same engineer coding it all.   Obviously this isn’t always possible for either technical or personnel constraints, but it is the ideal in my mind.

Today’s announcement of Facebook’s integration with Skype is a timely example of this principle in action.  I wasn’t a direct part of that integration project, but knew the folks on both sides.  With two big companies like Facebook and Skype coming together, there were dozens of people involved in the overall project.  Even so, it was really remarkable to me to see how much of the integration really hinged on two key individuals — one on the Facebook side and one of the Skype side.  Both of those individual engineers are really amazing “multi-lingual” developers who were able to make key coding contributions across multiple layers of technology ranging from Java applets and compiled desktop executables to in-browser Javascript and CSS/HTML to server-based API’s and cloud services.

Seeing that reminded me of the three main benefits of getting engineers to own entire featuresets, even (or maybe especially) if they cut across multiple technologies…

1. Motivation

When an individual engineer works on a feature that they know is going to impact large numbers of users, they viscerally feel the huge contribution they’re making to their company (and society!).  Nothing is more motivating than feeling like your work really makes a difference.

2. Quality

An engineer who really understands an entire featureset front-t0-back is able to grok critical dependencies between technology layers more effectively than a team of multiple individuals.   I assert that the ability to see the whole picture enables the single engineer to more effectively write test cases, identify likely breaking points, and ultimately deliver higher overall quality code that is defensively coded against future commits.

3. Iteration

This is a key advantage for individual engineers: the engineer who designed and coded an entire featureset on their own will be more likely and much faster to modify/iterate their designs when presented with market feedback from real consumers.  In contrast, a team of engineers who each only coded parts of a feature (and therefore relied on some other person, usually a project manager or a product manager, to provide a holistic view and integration guidance) will be much slower to collectively process market feedback and iterate.

Now, this may all be much easier said than done…   For one thing, it’s hard enough to recruit great engineers in any given technical area, much less a team of cross-technology superstars.  And in practice, there are significant friction points to the lone-ranger style of development.  E.g., if every engineer is a gun slinger they may unwittingly produce a lot of conflicting or redundant code that at some point needs to refactored.  Furthermore, even if an engineer is capable of contributing code across many different levels of a tech stack, that doesn’t mean they will always *want* to do so…

Even netting out those potential disadvantages, I think that cross-technology development has a strong positive impact; especially in the consumer internet space where companies actually have a decent shot at recruiting engineers who can effectively contribute code across the entire LAMP (or insert your favorite mobile or web development framework here) stack.  And even if your company doesn’t, in practice, hand over entire featuresets to a single engineer to execute, I think it’s still really important to foster cross-technology understanding.  It can only benefit your team if the javascript front-end wizard really understands the database impact that all her AJAX calls are going to produce; or if your backend API engineer really understands how often and how quickly his REST services will be requested by a mobile client; etc.

Have you ever worked in a company that had a policy of “single engineer owns an entire feature”?


How employees get screwed in private equity deals

learned a hard lesson from working with a bunch of rat bastards leading private equity firm, Silver Lake.  I joined Skype after the company was spun out of eBay  by SilverLake in deal valued at $2.7B and was recruited to help accelerate the pace of product development and make the Skype app more web-oriented.  I was at the company for just over a year in a product management role and felt like my team accomplished some important things along the way, including reduction of software development cycles from months down to 2-weeks and delivery of a whole new advertising revenue stream to the company.   It was a fun and challenging job, involving tons of international travel and I met some amazing people along the way.

Now despite the fact that Skype has a Palo Alto office and kind of seems like it would fit right in with Silicon Valley tech companies, it turns out that the employment terms for a Silver Lake company are *very* different from what most Valley high-tech employees are used to.  Here are three important things to watch out for if you’re thinking about joining a company that is being managed by a private equity firm or if your company gets taken over by a PE bank.

1. Lawyer Up

(image credit: http://weheartit.com/entry/5625871)

The most important lesson I learned from Skype was that compensation and stock policies in PE-owned firms can be very heavily tilted in the owners’ favor and against the employees.  Skype employees have 5-year vesting of stock options, for example, not the usual 4 year schedule that most Valley firms have.  Even worse, Skype’s stock option agreement had special clauses that the Board had slipped in that gives them the right to “repurchase” any vested shares for anyone who leaves the company voluntarily or is terminated with cause — effectively taking “vested” shares and making them worthless.  Here’s a nice letter I got from the Associate General Counsel of Skype that points out exactly how my stock options have “no financial value.”  (see lee.pdf).  Gee, thanks.

Now, I’ve seen my share of legal documents for tech companies.  I’ve worked in Valley tech companies for over 15 years, have founded startups, done VC financings, and invested in companies.  None of that prepared me for the kinds of legal shenanigans that the PE guys at Silver Lake pulled because I had never come across those kinds of terms before, let alone the fact that these clauses were hidden as one-liners in otherwise pretty standard-looking documents.  (see Stock Option Grant Agreement for Kuo-Yee Lee – signed)

So my first point of advice to anyone considering working for a PE-lead firm is to LAWYER UP — it’ll be worth your while to get an attorney to carefully review all employment documents so that you know what you’re really getting into.

2. The Bobs

Working with Silver Lake was my first opportunity to witness up-close-and-personal how a PE firm does its business of restructuring a company that they’ve just taken over.  And it was breath-taking.  The firm inserted itself into every level of the company.  At one point in my tenure at Skype, Silver Lake had representatives or consultants on the Board, in C-level executive roles, in technical leadership and operating roles, and all the way on thru the organization to the person actually running our software deployment schedule…   So Silver Lake put its fingers really deeply into Skype’s pie and they started rearranging things.

You can agree or disagree with the practice of re-organization, but I personally had never been part of a restructuring that ran so deep in a company.  During the year I was at Skype, the company:

  • hired and fired a CFO
  • gained a CEO, CMO, CIO, and CDO
  • created an entirely new product development org structure
  • eliminated every Project Manager role
  • fired, re-interviewed,  and re-hired Product Managers
  • created a two new business units
  • combined two business units into one
  • dissolved one business unit
  • opened a new office and hired several hundred people
  • the list goes on…
I mean, these are crazy changes for any company to go through over the course of years.  To have that all happen within a short number of months was staggering.  The conventional wisdom in Silicon Valley is that good engineers and product designers will always have job security.  Still, there were times at Skype when even really solid engineers and designers were asking me if their jobs were going to be safe from all the changes going on.
So, second major lesson learned: prepare your resume and get ready to re-interview for your job (or a different one) because organizational change is a major part of the private-equity-lead restructuring of a company!

3. It Ain’t Over ’til It’s Over

Even if an employee of a PE-owned company has avoided the legal beartraps and weathered the re-org’ing, they’re still not safe.  Even as Skypers were celebrating the huge potential of the Microsoft deal, the PE bankers were sharpening their knives and plotting which employees to fire in order to maximize profits and minimize payouts to non-owners.   Seriously, how greedy do you need to be to make $5B and still try to screw the people who made that value possible?  I mean, Silver Lake is trying to hyper-optimize their returns to the point that they’re trying to deny employee payouts that amount to less than 0.3% of the returns that they’ll get from the deal.  Srsly.  Really?

So, just be warned: Silicon Valley startup folks may think we’ve had hard dealings with venture capitalists…  But in my opinion, VC greed pales in comparison to the level of greed exhibited by the Silver Lake private equity firm.

And there you have it, my top three lessons learned from being raked over the coals by a PE firm.

Have your own story?  Leave a link or comment below!


How Facebook Ships Code

I’m fascinated by the way Facebook operates.  It’s a very unique environment, not easily replicated (nor would their system work for all companies, even if they tried).  These are notes gathered from talking with many friends at Facebook about how the company develops and releases software.

Seems like others are also interested in Facebook…   The company’s developer-driven culture is coming under greater public scrutiny and other companies are grappling with if/how to implement developer-driven culture.   The company is pretty secretive about its internal processes, though.  Facebook’s Engineering team releases public Notes on new features and some internal systems, but these are mostly “what” kinds of articles, not “how”…  So it’s not easy for outsiders to see how Facebook is able to innovate and optimize their service so much more effectively than other companies.  In my own attempt as an outsider to understand more about how Facebook operates, I assembled these observations over a period of months.  Out of respect for the privacy of my sources, I’ve removed all names and mention of specific features/products.  And I’ve also waited for over six months to publish these notes, so they’re surely a bit out-of-date.   I hope that releasing these notes will help shed some light on how Facebook has managed to push decision-making “down” in its organization without descending into chaos…  It’s hard to argue with Facebook’s results or the coherence of Facebook’s product offerings.  I think and hope that many consumer internet companies can learn from Facebook’s example.

HUGE thanks to the many folks who helped put together this view inside of Facebook.   Thanks are also due to folks like epriest and fryfrog who have written up corrections and edits.

Notes:

  • as of June 2010, the company has nearly 2000 employees, up from roughly 1100 employees 10 months ago.  Nearly doubling staff in under a year!
  • the two largest teams are Engineering and Ops, with roughly 400-500 team members each.  Between the two they make up about 50% of the company.
  • product manager to engineer ratio is roughly 1-to-7 or 1-to-10
  • all engineers go through 4 to 6 week “Boot Camp” training where they learn the Facebook system by fixing bugs and listening to lectures given by more senior/tenured engineers.  estimate 10% of each boot camp’s trainee class don’t make it and are counseled out of the organization.
  • after boot camp, all engineers get access to live DB (comes with standard lecture about “with great power comes great responsibility” and a clear list of “fire-able offenses”, e.g., sharing private user data)
  • [EDIT thx fryfrog] “There are also very good safe guards in place to prevent anyone at the company from doing the horrible sorts of things you can imagine people have the power to do being on the inside. If you have to “become” someone who is asking for support, this is logged along with a reason and closely reviewed. Straying here is not tolerated, period.”
  • any engineer can modify any part of FB’s code base and check-in at-will
  • very engineering driven culture.  “product managers are essentially useless here.” is a quote from an engineer.  engineers can modify specs mid-process, re-order work projects, and inject new feature ideas anytime.  [EDITORIAL] The author of this blog post is a product manager, so this sentiment really caught my attention.  As you’ll see in the rest of these notes, though, it’s apparent that Facebook’s culture has really embraced product management practices so it’s not as though the role of product management is somehow ignored or omitted.  Rather, the culture of the company seems to be set so that *everyone* feels responsibility for the product.
  • during monthly cross-team meetings, the engineers are the ones who present progress reports.  product marketing and product management attend these meetings, but if they are particularly outspoken, there is actually feedback to the leadership that “product spoke too much at the last meeting.”  they really want engineers to publicly own products and be the main point of contact for the things they built.
  • resourcing for projects is purely voluntary.Engineers decide which ones sound interesting to work on.  a PM lobbies group of engineers, tries to get them excited about their ideas.  Engineer talks to their manager, says “I’d like to work on these 5 things this week.”  Engineering Manager mostly leaves engineers’ preferences alone, may sometimes ask that certain tasks get done first.
  • Engineers handle entire feature themselves — front end javascript, backend database code, and everything in between.  If they want help from a Designer (there are a limited staff of dedicated designers available), they need to get a Designer interested enough in their project to take it on.  Same for Architect help.  But in general, expectation is that engineers will handle everything they need themselves.
  • arguments about whether or not a feature idea is worth doing or not generally get resolved by just spending a week implementing it and then testing it on a sample of users, e.g., 1% of Nevada users.
  • engineers generally want to work on infrastructure, scalability and “hard problems” — that’s where all the prestige is.  can be hard to get engineers excited about working on front-end projects and user interfaces.  this is the opposite of what you find in some consumer businesses where everyone wants to work on stuff that customers touch so you can point to a particular user experience and say “I built that.”  At facebook, the back-end stuff like news feed algorithms, ad-targeting algorithms, memcache optimizations, etc. are the juicy projects that engineers want.
  • commits that affect certain high-priority features (e.g., news feed) get code reviewed before merge. News Feed is important enough that Zuckerberg reviews any changes to it, but that’s an exceptional case.
  • [CORRECTION -- thx epriest] “There is mandatory code review for all changes (i.e., by one or more engineers). I think the article is just saying that Zuck doesn’t look at every change personally.”
  • [CORRECTION thx fryfrog] “All changes are reviewed by at least one person, and the system is easy for anyone else to look at and review your code even if you don’t invite them to. It would take intentionally malicious behavior to get un-reviewed code in.”
  • no QA at all, zero.  engineers responsible for testing, bug fixes, and post-launch maintenance of their own work.  there are some unit-testing and integration-testing frameworks available, but only sporadically used.
  • [CORRECTION thx fryfrog] “I would also add that we do have QA, just not an official QA group. Every employee at an office or connected via VPN is using a version of the site that includes all the changes that are next in line to go out. This version is updated frequently and is usually 1-12 hours ahead of what the world sees. All employees are strongly encouraged to report any bugs they see and these are very quickly actioned upon.”
  • re: surprise at lack of QA or automated unit tests — “most engineers are capable of writing bug-free code.  it’s just that they don’t have an incentive to do so at most companies.  when there’s a QA department, it’s easy to just throw it over to them to find the errors.”  [EDIT: please note that this was subjective opinion, I chose to include it in this post because of the stark contrast that this draws with standard development practice at other companies]
  • [CORRECTION thx epriest] “We have automated testing, including “push-blocking” tests which must pass before the release goes out. We absolutely do not believe “most engineers are capable of writing bug-free code”, much less that this is a reasonable notion to base a business upon.”
  • re: surprise at lack of PM influence/control — product managers have a lot of independence and freedom.  The key to being influential is to have really good relationships with engineering managers.  Need to be technical enough not to suggest stupid ideas.  Aside from that, there’s no need to ask for any permission or pass any reviews when establishing roadmaps/backlogs.  There are relatively few PMs, but they all feel like they have responsibility for a really important and personally-interesting area of the company.
  • by default all code commits get packaged into weekly releases (tuesdays)
  • with extra effort, changes can go out same day
  • tuesday code releases require all engineers who committed code in that week’s release candidate to be on-site
  • engineers must be present in a specific IRC channel for “roll call” before the release begins or else suffer a public “shaming”
  • ops team runs code releases by gradually rolling code outthere are 9 concentric levels for rolling out new code
  • facebook has around 60,000 servers
  • [CORRECTION thx epriest] “The nine push phases are not concentric. There are three concentric phases (p1 = internal release, p2 = small external release, p3 = full external release). The other six phases are auxiliary tiers like our internal tools, video upload hosts, etc.”
  • the smallest level is only 6 servers
  • e.g., new tuesday release is rolled out to 6 servers (level 1), ops team then observes those 6 servers and make sure that they are behaving correctly before rolling forward to the next level.
  • if a release is causing any issues (e.g., throwing errors, etc.) then push is halted.  the engineer who committed the offending changeset is paged to fix the problem.  and then the release starts over again at level 1.
  • so a release may go thru levels repeatedly:  1-2-3-fix. back to 1. 1-2-3-4-5-fix.  back to 1.  1-2-3-4-5-6-7-8-9.
  • ops team is really well-trained, well-respected, and very business-aware.  their server metrics go beyond the usual error logs, load & memory utilization stats — also include user behavior.  E.g., if a new release changes the percentage of users who engage with Facebook features, the ops team will see that in their metrics and may stop a release for that reason so they can investigate.
  • during the release process, ops team uses an IRC-based paging system that can ping individual engineers via Facebook, email, IRC, IM, and SMS if needed to get their attention.  not responding to ops team results in public shaming.
  • once code has rolled out to level 9 and is stable, then done with weekly push.
  • if a feature doesn’t get coded in time for a particular weekly push, it’s not that big a deal (unless there are hard external dependencies) — features will just generally get shipped whenever they’re completed.
  • getting svn-blamed, publicly shamed, or slipping projects too often will result in an engineer getting fired.  “it’s a very high performance culture”.  people that aren’t productive or aren’t super talented really stick out.  Managers will literally take poor performers aside within 6 months of hiring and say “this just isn’t working out, you’re not a good culture fit”.  this actually applies at every level of the company, even C-level and VP-level hires have been quickly dismissed if they aren’t super productive.
  • [CORRECTION, thx epriest]  “People do not get called out for introducing bugs. They only get called out if they ask for changes to go out with the release but aren’t around to support them in case something goes wrong (and haven’t found someone to cover for you).”
  • [CORRECTION, thx epriest] “Getting blamed will NOT get you fired. We are extremely forgiving in this respect, and most of the senior engineers have pushed at least one horrible thing, myself included. As far as I know, no one has ever been fired for making mistakes of this nature.”
  • [CORRECTION, thx fryfrog] “I also don’t know of anyone who has been fired for making mistakes like are mentioned in the article. I know of people who have inadvertently taken down the site. They work hard to fix what ever caused the problem and everyone learns from it. The public shaming is far more effective than fear of being fired, in my opinion.”

It’ll be super interesting to see how Facebook’s development culture evolves over time — and especially to see if the culture can continue scaling as the company grows into the thousands-of-employees.

What do you think?  Would “developer-driven culture” work at your company?


Four early-PayPal entrepreneurial culture norms

(in response to Quora question “Which strong beliefs on culture for entrepreneurialism did Peter / Max / David have at PayPal?“)

Four aspects of early PayPal culture really stood out to me when I joined as a product manager:
1) self-sufficiency — individuals and small teams were given fairly complex objectives and expected to figure out how to achieve them on their own.  If you needed to integrate with an outside vendor, you picked up the phone yourself and called; you didn’t wait for a BD person to become available.  You did (the first version of) mockups and wireframes yourself; you didn’t wait for a designer to become available.  You wrote (the first draft of) site copy yourself; you didn’t wait for a content writer.

2) extreme bias towards action – early PayPal was simply a really *productive* workplace.  This was partly driven by the culture of self-sufficiency.  PayPal is and was, after all, a web service; and the company managed to ship prodigious amounts of relatively high-quality web software for a lot of years in a row early on.  Yes, we had the usual politics between functional groups, but either individual heroes or small, high-trust teams more often than not found ways to deliver projects on-time.

3) data-driven decision making — PayPal was filled with smart, opinionated people who were often at logger-heads.  The way to win arguments was to bring data to bear.  So you never started a sentence like this “I feel like it’s a problem that our users can’t do X”, instead you’d do your homework first and then come to the table with “35% of our [insert some key metric here] are caused by the lack of X functionality…”

4) willingness to try — even in a data-driven culture, you’ll always run in to folks who either don’t believe you have collected the right supporting data for a given decision or who just aren’t comfortable when data contradicts their gut feeling.  In many companies, those individuals would be the death of decision-making.  At PayPal, I felt like you could almost always get someone to give it a *try* and then let performance data tell us whether to maintain the decision or rollback.

Those four cultural attributes actually make up a lot of the attitudes and beliefs that you’d expect to see in great entrepreneurs — i.e., multi-disciplinary, self-sufficient, action-oriented, data-driven experimentalists.  So it’s no surprise to see the number of successful startup ventures founded by PayPal alums.  To be sure, PayPal is/was not unique — I would expect any company that established these kinds of cultural norms to produce a lot of entrepreneurs.


Five Points for Better Exec Summaries and Briefings

Here’s a quick five-point format for executive summary/briefing documents.  This is intended to be a short “get to know you” briefing for prospective investors.  It’s also supposed to be a scalable document — that is, you can expand it into a full business pitch deck by fleshing out each section more.  Or you can compress it all the way down into a single paragraph by just putting the punchlines together.

I’d recommend doing this in a single page (it’s good discipline to be brief).   The bullet points of each section should all build towards the punchline.
1) Team
  • Bullet points: Quick recap of team members’ experience
  • Punchline: why your team has the right experience and/or unique industry connections that give you an unfair advantage in this business
2) Market size
  • Bullet points: who are your paying customers?   who are your users (for ad/audience-driven businesses)?  what’s the overall industry size?  what specific segment (or sub-segment) of that industry are you going to dominate?  how big is that segment (e.g., how many customers/users are there in your target initial segment multiplied by your expected penetration of that segment multiplied by anticipated customer lifetime value)?
  • Punchline: there’s a believable path for the company to get to $100MM in annual revenue
3) Customer tests
  • Bullet points: if working alpha/beta product, then what are the customer/user activity stats like?  if no product yet, then what surveys, smoke tests, or mockup tests have you run?
  • Punchline: we’re not just sitting in an office making up a business plan; we’ve gone out to talk with real customers or users, lots of them.  We’ve tested working product or realistic mockups with customers/users and they like it.
4) Distribution strategy
  • Bullet points: how will your customers/users learn about your service?  how much do you need to pay per customer/user acquisition?  how will you drive a customer/user adoption curve that is doubling every month?
  • Punchline: we know how to reach customers/users.  we’re not gonna end up blowing your money on building something that it turns out we can’t sell.
5) Deal and Milestones
  • Bullet points: how much are you looking to raise?  what will that money be used for; e.g., what milestones will you hit?  what questions will you be able to answer with this investment?  which risks will be de-risked with this investment?  how long will these milestones take to achieve?
  • Punchline: your money is going to buy significant reductions in risk (and therefore significant increases in the next valuation)

Hope that’s helpful.  Did I miss anything?  Leave any questions or edits in the comments section…  Thanks!


TEDxSV LiveBlog

My notes on ideas that struck me at TEDxSV

Featured videos:

Featured speakers:
YouthSpeaks
  • “Today is the day”
  • “We are the search engine to our solution”
Reid Hoffman
  • “public intellectuals help us reflect on who we are and who we should be as individuals and as a society”
  • concept: “cause-based movements/companies”
  • 3 things to look for in startups: “scalability, margins, defensibility”
  • “web 1.0 was about going online to this different place [AOL chatroom] where weird behavior happens, web 2.0 is about real identities”
  • “internet: cheap, scalable infrastructure to reach millions of people”
  • “we use the same language to talk about cause-based movements as the internet: building ‘networks’, ‘marketplaces’, etc.”
  • “the fastest growing internet corporations are ‘pure plays’ — entirely online.  It’s harder to get people to actually change what they’re going to do on a Saturday afternoon.  But as people get more familiar with being in a network, being in a marketplace, that [behavior change] will become easier.  And it will be sustainable because the low-cost, scalable infrastructure of the Internet helps [reinforce] that behavior.”
  • concept: “large scale group coordination & distributed effort”
  • quote: “the future is sooner and stranger than you think”
  • concept: “collective problem identification, crowd-sourced ideation”

Leila Janah, Samasource

  • “here in the US, it’s easy to think that we live in a meritocracy”
  • “well meaning outsiders have created a culture of handouts [in Ghana]“
  • “we are witnessing a tremendous surge in human capacity — global literacy on the rise & 90% decrease in cost to get online.”
  • “digital microwork: crowd-sourced labor, small tasks worth a few cents each.  this is the future of work.”
  • “future is about humans and computers working together to get stuff done”
  • “people don’t need charity, they need a decent way to make a living”

Drue Kataoka

  • “building social bridges with art”
  • “bridges: art & science, culture & technology”
  • concept: “negative space: the space between brush strokes, it’s what’s NOT there.  it’s inherently participatory and collaborative.  it’s where imagination can play.”
  • “social entrepreneurship is about building bridges.  art is uniquely empowered to build those bridges.”

Clayborne Carson

  • concept:  tension of top-down vs. bottom-up organization in social change…  MLK = top-down, prophetic visionary, difficult to emulate.  Bob Moses = bottom-up organizer, empowering individuals
  • “organizer: building self-reliant, grassroots leaders.”
  • “organizer: our job is to work ourselves out of a job”
  • “skilled organizing can create an enormous amount of energy from poor people with small resources”
  • “our movement may have still happened without King, but it would have been a very different kind of movement”
  • “good organizing, good teaching sets free the best qualities of those who have never been allowed to shine”

Eoin Harrington

Peter Hirschberg & Josette Melchor

  • “the meeting place of art & technology”
  • “photography — the quintessential meeting of art and technology — initially dissed by French literacy establishment”
  • “impressionism — the new ‘platform’ or ‘ecosystem’ of its day — also panned on first reviews”
  • new art doesn’t fit labels, categories, critics can’t write about, people don’t understand, it gets shunned
  • “what’s been bubbling up in the silicon valley technology community is now spilling over into the art community”
  • http://www.gaffta.org/

Nancy Lublin

  • [Emperor's March from Star Wars] “Do you think of Darth Vader?  Luke?  I think of the Stormtroopers!  They really made things work.”
  • “We are obsessed with leadership.  Google ‘CEO’ and you get 4MM hits.  Google ‘COO’ and you get far fewer…”
  • “We are obsessed with ‘new’, perhaps at the expense of ‘impact’ — we don’t need another new cancer oragnization, we need the 300 existing ones to work better together.”
  • “You have permission to JOIN something [instead of 'founding'].  Permission to make IMPACT.  Permission to coin a new title: ‘DO-er’”

Di-Ann Eisnor

  • “On the CNN map, borders look solid, permanent — between us and them.  Up close, borders are fluid; they’re social.”
  • “Less than 10% of us cross borders for tourism.  [Correlation to tourist dollars.] 10% of countries take 70% of tourist receipts.”
  • “273 cross-border groundwater aquifers — governments need to manage these with each other.  higher potential for conflict.”
  • thought-provoking: “Who in this room spends time with their friends in East Palo Alto?  The borders that we draw in Silicon Valley have just as much impact as the ones in Gaza.”

Yvonne Lee Schultz

  • what happens when you turn guns into chocolate?

Alberto Vollmer – CEO of leading Venezuelan rum distillery & bottler

  • Project Alcatraz – criminal re-insertion into employment
  • [opposing violent criminal gangs in Venezuela] “We have to retaliate, but it has to be creative; it can’t be violent.”
  • [presenting a recruiting pitch in middle of gang-dominated slum] “I came here to make you dream.  Let’s talk about what kind of TV you’re going to have, what do you want for your kids, what kind of restaurants will be here.”
  • quote: “hope is so much more powerful than fear, it will always win”

Victor Tsaran – advocate for the blind, musician, Yahoo accessibility lead

  • “Transformation through technology.  Using technology to overcome perceptions of what is possible.”
  • quote: “Life is upbeat, rhythmic, and full of surprises”
  • “We create technology to make life meaningful.  With technology, we can do certain things that we could not without technology.”

YouthSpeaks

  • [teens in Bosnia were tired of foreign journalists coming in to steal their stories] “They wanted to tell their own stories, in their own voices”
  • “The #1 fear in this country is public speaking, more than death”

Peter Thiel

  • Poll: which disaster is most likely?
  • * robots kill/enslave humans
  • * biotech-driven pandemic
  • * runaway nanotech gray goo
  • * nuclear war
  • * governments use computers to control everyone
  • * runaway global warming
  • * singularity takes too long to happen  <== Peter’s worried about this
  • “our entire civilization is predicated on accelerating technological change”
  • “example: retirement planning is based on assumption of 8.5% annual return on investments.  that assumption is based on last 100 years of economic data.  problem: last 100 years have been a time of incredible accelerating technological improvement.  if you ran that same analysis on 1200-1300 A.D. or the last 100 years of the Roman Empire, you’d be lucky to get 0% return, just to keep your money.  Trouble is that the pace of technological progress seems to be slowing…”
  • “people seem to be working harder, running really hard just to stay in place.”
  • “when people talk about progress in the developing world — China, India — it’s always a 20 year story.  Life there will be so much better in the next 20 years because they’ll get all the things that the developed world has now.  But when we talk about progress in the developed countries, it’s always on 6 month time scale.  Is the recession over?  What’s the market going to be like in 6 months?  Why do we not talk about how life will be dramatically better in the developed world in 20 years?”
  • “of 538 congress people, 11 have degrees in engineering.  they all think that ‘science and technology are solved by other people.’  but if everyone thinks that, then that’s a problem.”

Thomas Goetz, ex-Wired editor, Public Health MA

  • “Life is an experiment.  How can we turn this into more of a controlled experiment?”
  • Health information is dumped on us, scattered, disconnected.  Not effective.  Health problems are increasing in US.
  • “Hawthorne effect — when people know they are being observed, they changed behavior.  Usually experimenters want to get rid of the Hawthorne effect.  But Kansas City orthodontist experiment shows that we can use Hawthorne effect to drive behavior change [brushing teeth more with 'experimental' toothpaste].  Also applies to weight loss [e.g., taking daily photo of your weight on scale].”
  • “Whitehall experiment — controlling for diet and habits, people of high social standing were 2X less likely to die of heart disease than those of low social standing.  Why?  Control.  People at top of social ladder have more control over their lives than those at the bottom.”
  • “Feedback and Groups are effective, powerful driver of behavior change.”
  • “Need a control tool: an algorithm, a decision tree that anyone can follow.”
  • “We want tools and techniques that have minimal friction and scale.”
  • “Data means more when it’s our own.”
  • “The more we mind our health, the better we are.”
  • “Don’t just make people responsible, but give them the tools and data to make behavioral change.”

David de Rothschild – explorer, both poles

  • “When people ask about expeditions, the question that has stuck with me: ‘How was it out there?’  What does that mean, ‘out there’?”
  • “Kids are learning about nature, but they’re not out there, in it.”
  • “Nature Defiancy Disorder”
  • “We view nature as chaotic, intimidating.  But we like to think things in a linear fashion, things have a start and an end.”
  • “We are starting to manufacture nature at the expense of nature itself.”
  • “GDP is a deception — we treat the cost on nature as an externality.  It’s like kid who puts up a lemonade stand, says they made $20 when the lemons, the jug, the sugar, all the materials were paid for by his mom.”
  • “when you undertake a dream it becomes an adventure.  adventures create stories.  humanity is based on stories.  stories become the inspiration for more dreams.” [sidenote: that's a viral loop]
  • “humanity always wants to take the path of least resistance.  curiousity and innovation may lead you down a different path, NOT the path of least resistance.”
  • “you never change something by fighting existing reality.  you change things by building a new model that makes the existing model obsolete.” [Buckminster Fuller quote]

Andrew Hessel – “the end of cancer” & PinkArmy.org

  • “computer systems are analogy for biological systems.  insight: you can look at humans as a network of trillions of computers.”
  • “computers and networks break in ways that are similar to biological systems.”
  • “DNA is genetic instructions, biological software.”
  • “We generated so much data, information about genetics & cancer through research.  we generate lots of research, we pay a lot of researchers.  but fundamentally, we need to realize that research does not make therapies.  Who makes therapies?  Developers.”
  • “we’re spending more and more on research, while getting fewer and fewer and therapies actually produced.”
  • “research is exponential [more and more every year], development is linear [can't keep up, obsolete before it's even delivered]“
  • “how about focus on the very end of the long tail?  one therapy for one person: YOU”
  • “build viruses based on your own DNA, that attack one particular type of cancer in your own body while leaving the rest of your cells alone.”
  • “co-operative business model – the first drug company for people that don’t need to make a profit”

Steve Blank explains the evolution of Customer Development

If you’re an entrepreneur or are thinking about starting a company, Steve Blank’s blog is must-read material.

Steve’s latest series of posts establishes the reasons why Customer Development and Lean Startup methodologies are so important (and why prior models of startup development often resulted in failure).  Read them in order:

The Leading Cause of Startup Death

Customer Development Manifesto Part I

Customer Development Manifesto Part II

Customer Development Manifesto Part III

Customer Development Manifesto Part IV


Many Benefits and The One Big Risk for Entrepreneurs-in-Residence

See my last post for context:  https://framethink.wordpress.com/2009/08/08/what-does-an-eir-do/

There are some really great benefits that come from being associated with a venture fund as an entrepreneur-in-residence (EIR).

EIRs have a unique position that makes it easier to launch a company.  In some ways, being an EIR actually inverts the typical resource-gathering exercise that most entrepreneurs go through — the partners at a venture firm will often pitch ideas to their EIR’s and they continuously introduce their EIR’s to interesting and talented people who could be potential co-founders or business partners.  The first time that happened to me as an EIR, I was completely bowled over by the fact that a venture capitalist was actually pitching me on an idea instead of the other way around — it’s an interesting role reversal to say the least!

EIR roles are also fantastic for research.  EIR’s get direct access to their firm’s partners for feedback, advice, and brainstorming. They get to sit in on business pitches and help evaluate them from the VC’s perspective.  Participating in pitches and listening to how your venture firms partners think about companies is a truly precious learning experience…  Think about how many VC pitches you might be involved with directly as an entrepreneur — through the span of an entire career, how many VC pitches do you think might give?  Ten?  Twenty?  An EIR might get to see that many pitches within a few weeks if they wanted to.  Getting exposure to that volume of pitches in a compressed time frame really helps an EIR develop a comparative study of business pitches and gives you an opportunity to see what happens when teams come in to pitch in various states of preparedness & maturity, with varying styles, and different team compositions.   With full advantage of those learnings and direct access to their firm’s partners, an EIR should end up with a very good understanding of what pitches will work for their firm (and which ones won’t).

And let’s not forget the great fringe benefits of being at a venture fund!  Most VC’s have very nice office buildings that are quiet, secure, ergonomic places to work (much nicer than trying to do conference calls while hunched over a noisy cafe table).  Firms always have free snacks, coffee, and sodas to power you through long days.  Plus they have comfy couches to crash on after that all-nighter.

It’s not all sugar and spice, though — there are serious downsides to being an EIR, too…

It’s seductively easy to hang out in a swanky office, sit in on meetings all day long, listen to other entrepreneurs pitch, and dispense your opinions.  It’s fun to play “the connector” role — introducing that entrepreneur you met at a conference to the firm’s partners.  The partners appreciate it.  The entrepreneur who is raising a round really appreciates it.  And you get to give your ego a smug pat on the back for being so smart and well-connected.  All of that is so fun and easy that an EIR might literally spend entire days taking calls, doing meetings, vetting ideas, and introducing people (mea culpa).  That may be fine if the EIR is trying to add value to the firm by essentially playing an associate’s role, but definitely is not helping the EIR directly learn about use-cases that a customer would actually pay for or launch a new company per se.  So there is this unfortunate but very real tension between spending time helping the firm vs. working on launching a new venture.

This notion of the balance between an EIR’s firm vs. an EIR’s startup leads me to the The One Big Risk for EIRs…

The tension between firm vs. EIR becomes most apparent if/when the entrepreneur seeks financing for their new startup.  VentureHacks would tell you (and I would agree) that the key to closing a financing quickly with favorable terms is to have a strong BATNA.  But an EIR is at a fundamental disadvantage in getting their company favorable financing terms relative to a non-EIR making the exact same pitch…  because EIRs have a harder time creating strong BATNAs.  Why?  There is a fundamental information asymmetry between an EIR’s host firm and other venture firms.  Whether or not the EIR’s host firm actually does know more about the EIR and her/his company, they appear to have access to much deeper information about the EIR’s deal than other venture firms do.  So, as such, if an EIR’s firm does not participate in an EIR’s deal, then you can imagine the partners at other firms wondering: “What does this EIR’s host firm know that we don’t know?” , “There’s got to be something wrong with this deal…” or “Maybe there’s something wrong with the EIR her/himself!”  This information asymmetry gives an EIR’s host firm a strong upper-hand in financing negotiations.  That dynamic can prevent other investors from participating in what otherwise would have been a “fundable” deal or cause them to come in with reduced commitment at lower pre-money valuations.  Every EIR I’ve spoken with has said that their firm brought them in with a promise of “no strings attached, you can work with whomever you want” — but when it was fundraising time, everyone felt palpable pressure to do the deal with their host firm.  Usurious firms can take advantage of an EIR’s lack of negotiating leverage to drive down pre-money valuation and thereby inflate their post-money stake in the firm.  Even well-meaning firms that have great relationships with their EIRs may cause an EIR’s company to accept sub-optimal valuations if the EIR fails to create a market for their shares as aggressively as a typical (non-EIR) entrepreneur would have done.

This is the biggest pitfall for an EIR and potentially a dire/fatal situation for a hatchling startup…  If a startup’s cap table becomes too tilted towards investors in Series A, then the founder(s) may give up control of their company too quickly, or become too diluted to make the startup worthwhile to pursue.  Obviously, everyone loses when a startup gets pushed to the point that the founders are demotivated.  But that’s a very fuzzy boundary and EIRs seem more prone than non-EIRs to end up pushing that boundary in a bad way.

So, is being an EIR the right thing to do?  Depends on your goals and how you manage the risks mentioned above.  I’ll wrap up this series on EIRs in my next post with a list of venture hacks for EIRs to mitigate these risks.


What does an EIR do?

I’m back after a looooong blogging hiatus. Yay, glad to be getting back into the swing of things.

So, @vijayv recently asked me:

Would you be able to tell me more about being an eir? Mainly Interested in role specifics/responsibility

I’ve had the honor of being an entrepreneur-in-residence (EIR) with two VC firms, Venrock and Matrix Partners.  And through those programs, I’ve been lucky to have met and learned from many other entrepreneurs who have had way more success and experience than me.  And if there’s anything I’ve learned about the EIR role, it’s that there’s no such thing as a “standard” EIR program.  It’s kind of a “make it up as you go along” role (and that actually suits entrepreneurs very well).  Quite frankly, there aren’t that many EIRs running around Silicon Valley all the time because most venture firms do not support EIR positions at all.  Those that do will customize the role on a case-by-case basis.

At the highest level, I think we could say that EIR programs involve:

  • working with partners at a venture firm whom you’ve previously worked with or gotten to know very well
  • researching existing startups to find promising ones that you’d like to personally join or introduce to the firm
  • ideating and creating new businesses
  • helping the firm vett business pitches

Within those general activities, roles do vary a lot depending on each individual’s prior experience and their goals.  E.g., some EIR’s are seasoned executives who are specifically looking for teams that they can pair up with to launch a startup.  Other EIR’s are product innovators who are trying to launch new companies while incubated at the VC firm.  Still others are entrepreneurs who are considering switching to become investors and are using an EIR program as a way of getting to know a firm.

And the specific arrangements that an EIR has with their host firm will vary a lot, too.  Some EIRs are actual employees of the firm, some are contractors/consultants, others have no contractual relationship with the firm at all other than coming by to use a spare desk every once in a while.  Most, but not all, EIRs are compensated by their firms; and compensation levels seem to vary significantly from corporate-executive-equivalent to ramen-subsistence-stipend.

There are significant benefits and risks associated with being an EIR and I’ll talk about those more in my next post.


Two schools of thought on how to gain early traction for consumer-focused startups

I’m a co-founder of a startup and I’ve noticed that our advisors are beginning to form “teams” around two opposing schools of thought for gaining early user adoption.  These two philosophies are mostly mutually exclusive so I think entrepreneurs need to make a choice about which camp they fall into…   Which are you?

Read the rest of this entry »


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