Right after OMGPOP released DrawSomething to rave reviews (and traction), I was catching up with my friend Nabeel Hyatt and chatted a bit about the game’s meteoric rise.  I joked that the success was eerily well timed with him joining Spark as a Venture Partner, although of course, the development of the game was well in the works before then.

I asked Nabeel (who was previously the GM of Zynga BOS) how the company developed the hit game after a number of years with more moderate success.  His answer: “They just decided to throw a fastball right down the middle”.

What he meant was that the company had previously tried to be innovative in a number of different ways in their game development. That led to a catalog of beautiful games that were edgy and different on many dimensions, but ones that didn’t quite have the growth everyone was hoping for.  With Draw Something, they took a pretty plain vanilla, tried and true playbook.  They started with a popular and familier offline game (Pictionary), added asychronous social components (a-la Words with Friends), and of course, built it beutifully with good viral loops.  They focused on building the best drawing game they could, instead of trying to be too cheeky, cute, or implement a bunch of other innovations on the edges.  It helped Draw Something become one of the fastest mobile games of all time, even if that growth wasn’t sustained long term.

Since then, I’ve noticed that many really interesting companies start out as fastballs right down the middle.  And many pivots look like that too.  The reverse is that I often see less successful companies start out very complicated, or require customers to make too many leaps.

Mobile payments is a good example. A lot of companies have gone after this opportunity, and tried different versions of stored value on phones, wireless payments, etc.  But what’s the company that has really broken out here? Square.  They started with a little white dongle that allowed merchants to just take credit cards.  They are moving beyond this, but they started with a fastball right down the middle.  As Angus Davis (the founder of our portfolio company Swipely) has said, “millions of people are walking around with a mobile payment device in their pocket… it’s called a credit card.”  Similarly, Swipely is starting to show terrific traction based on a that simple premise

Increasingly, when I speak with companies that seem to be in a promising space but aren’t quite getting the traction they hope for, I ask myself “what’s the fastball down the middle for this business?”  It’s hard at time to give up on the elegance and innovative-nature of the more complicated solution, but sometimes, the best way to earn the right to be completely transformative is to do one simple thing really really well.

We have our NextView 2013 Annual meeting this afternoon. I blocked off the morning expecting to have to do a bunch of last minute preparation, but everything seems to be pretty much ready to go.  If you are an entrepreneur and are unfamiliar with these, think of it as a board meeting, but with more participants and a bit more gravity since it only happens once or twice a year.

There is a fair bit of work and preparation that goes into VC annual meetings. One could get overly focused on presenting information in just the right way or scripting the message perfectly. It can be pretty stressful.

We’re tried to maintain a different perspective over the years. I find these meetings to be a really good way to force ourselves to look at the forest from the trees, and think less about day-today activities and try to take the long view on our business and our industry. It’s helpful to be able to synthesize our thinking and get feedback from our limited partners based on their own extensive experience.  We’re lucky to be in business with some great Limited Partners, who are a mix of terrific institutions as well as a number of individuals (many of whom have known us for a long time).

We also want to have fun and enjoy the day. Not that our meeting is all that entertaining (it’s fairly serious), but it’s a nice time to reflect on how lucky we are to do the work we do, with partners we like and respect, and with entrepreneurs that grind it out each day to try to change the world. When I think of it that way, I can’t help but enjoy the process, even if the material is dry, and we have to share both good and bad news.  I find this perspective also frees us to be more intellectually honest about the state of affairs, and more authentic in our interactions overall.

Anyway, I better post this and make sure everything is in order and ready to go.  Thanks for reading this stream-of-consciousness post!  I might post some follow-up thoughts in the coming days/weeks.

I’ve been using the days.am app for a few months now. (Full disclosure, I’m an investor in their parent company, Wander). It’s a beautiful, visual diary that allows you to capture life “unfiltered”.  You can read more about the thinking behind the product here.

It’s been a fun app to play with, and one that has brought with it some cool, unexpected surprises. First, it has changed my behavior and made me start cataloging many more life moments. These moments were one’s I enjoyed, but then again, why would anyone really care about a mediocre picture of a door, or a bee, or a fountain in isolation?  Previously, I’d just take a mental snapshot, and move on.

I also was pleasantly surprised by what I saw from other people. It’s amazing how I feel like I “know” the people that I followed in the closed alpha, even though I may have never met many of them. Sharing the moments in their life in an unfiltered way, with a low-bar of “does this make me look good” was really cool. It gives you a unique lens into the way your friend see the world and themselves.

Consumer social services are always pretty tricky. They aren’t really utilities (at least at the start), and it’s hard to pinpoint why something may or may not work. Also, some social utilities come out of the gates fast, and others are a slow boil. But long-term, it’s not how fast you are out of the gates, but how you finish that matters.

What I think gets me excited about a consumer social application is whether a) it changes my behavior meaningfully and b) I feel excited to see what my friends are posting. Pretty simple, and I think days.am has done a nice job on both counts.

Congrats on Jeremy, Keenan and the team on the initial product and launch.  Below is one of my favorite days from a trip to NY a few months back.  Click through to see the comments, some animation, and check out the app. Enjoy, and have fun!

Last night I attended a really fun event called the NEVY’s put on by the New England Venture Capital Association.  It was a wonderful showcase of all the great companies, people, and investors that have helped the Boston technology market come roaring back in recent months and years.

It was fun to attend, and I was really pleased that a bunch of our portfolio company founders (and many other friends) were nominated for awards that night.  Click here for the full list of nominees and winners.

I was reminded last night why I moved to Boston from Silicon Valley many years ago and why I think the ecosystem is so great.  There have been naysayers in recent years about the strength of the ecosystem here, and I think people are finally waking up to the reality that that meme is simply untrue.  It’s funny that it’s taken so long – given that the raw data on large-scale venture-backed exits is so strong relative to some other markets.

But forget what the media says.  There are things on the ground here that make this place really great, and the folks that were honored last night really hammered it home for me. In particular, I love this place because:

Boston is a town of substance.  Maybe this is why the tech community here has been less embraced by pop-tech media which seems to care more about movie-star investors than real businesses.  But I love the focus here on real substance. Now, substance can take many forms.  Where this market has gone wrong ~5 years back was in failing to understand that “substance” could mean something different from “hard science” or “a guy who sold his company for $500M and is doing it again”.  The definition of substance is much broader, but the new crop of investors and entrepreneurs totally get that.  And along the way, amazing businesses of substance have been built.  Wayfair in particular was honored as the “best startup” in Boston, and what a startup it is.  Although other flashy e-commerce sites might have greater notoriety, none can come close to matching Wayfair for scale ($600M+ revenue), profitability (bootstrapped all the way until last year), and long-term potential (that’s my own commentary).  And by the way, check out all the “deal of the year” candidates and you’ll see a bunch of other extremely substantial businesses in the making as well.

Boston founders want to finish.  Acme Packet won the award for exit of the year for its $2.1B acquisition by Oracle.  What impressed me was that the company is still led by its founder Andy Ory who stuck with the business from inception, to IPO, and to acquisition.  Similarly, I’ve really admired Steve Kaufer, who founded Tripadvisor and saw it through its acquisition by Expedia, but then continued to lead the company as it was spun out as an independent public company.  You hear a lot about founders leaving formerly “hot” startups and starting new companies to great fanfare, and that can be good at times. But I do love that many of the best Boston founders want to start, build, and finish. Just as impressive, I find many entrepreneurs that are far earlier in their careers really seek to build their abilities and leadership so that they can scale to be GREAT CEO’s, not just great founders.  Sravish Sridhar, who was the “rising star entrepreneur” award is just this sort of guy, and I admit I regret not being in business with him just because of what a great CEO he is becoming. Our portfolio company founders at IS2, Boundless, Plastiq, and Lookout were also all nominated for various awards, and fit this bill as well.

Boston is a town of grit.  After the horrific bombings a few weeks back, pretty much everyone who commented publicly about this city said something like “Boston is tough”.  It’s funny – people know that this is a tough town, it doesn’t seem that way outwardly, but everyone knows it inwardly.  People here just have a lot of grit, and can bounce back from challenging times.  That’s why the story of Atlas Venture is so captivating for folks here.  Fred Destin (who is a new but terrific member of the tech community) wrote a really wonderful post yesterday about the re-invention of Atlas in light of their newest fund.  As he describes, the firm had their “battle of Thermopyles” moment, but the team there took the bull by the horns and wrestled the beast to the ground to build a really terrific firm that entrepreneurs rave about.   All startup founders know how much grit is involved in building great companies, and I love this town for the grit you see everywhere you look.

I was born in the Philippines and lived the first 17 years of my life in Manila and in Hong Kong.

It occurred to me that this year marks the year that I have lived in the United States longer than I have lived anywhere else combined. It’s kind of crazy.

I have a lot to be thankful for about this country. I was educated here. My best friends are Americans. My wife and children are Americans. I’ve had the professional opportunities I’ve had because of this country, and I’ve become the person I am largely because of the values instilled by this country.

I’m lucky that I have always been able to secure H-1B visas to stay here and work, at least prior to getting my green card. But it honestly changed the calculus for me in many ways about risk and professional ambition. I know it’s impacted the lives of many friends who have had trouble staying in the country because of their career choices. And I’m on the board of two companies led by founders who had to jump through hoops to get their O-1 visa so they can build their companies in America and continue to contribute to the local economy and hire lots and lots of people.  Pretty nutty.

Immigration policy is pretty confusing, and it isn’t that cut and dry, obviously. Many elements are a total no-brainer, but as Fred Wilson discussed in his last post, these policies end up getting intermingled with other, more controversial initiatives as part of immigration reform.  Check out his post here.

I’ve actually been pretty torn on immigration reform overall. But I’m coming around. I come from a long line of immigrants.  My grandfather left China to be an indentured servant in the Philippines.  My Mom fled China to Hong Kong after her father was imprisoned during the Cultural Revolution.  My parents left the Philippines to go to Hong Kong during the revolution that over-threw the Marcos regime.  And as a Christian, I think it’s quite clear that the story of my faith is one OF immigrants welcoming immigrants.

I’m pasting below Fred Wilson’s call to action and suggestions for how members of the tech community can help.  Please spread the word, and let’s get something done.

“There are many opponents to the comprehensive immigration reform bill out there. And they will use anything, including things like what happened in Boston last week, to kill it. We need everyone in the tech industry and the world of startups to get behind this bill. Not only because it addresses pretty much every request we have made on immigration but also because the US is a land of opportunity and diversity and it is our greatest strength that we allow good people to come here and build a life, a career, a family, and a company.

I hope all of you will support comprehensive immigration refrom loudly and vigorously. We will need it. If you want to do something right now, go here or here and get involved.”

I’ve been getting this question a lot recently. I think everyone who asks the question isn’t really expecting that unique of an answer, but find it helpful to ask anyway in hopes of gleaning something specific to me or the firm.

All investors pretty much look at team, product, and market, in various ways.  We are no different.  But in a nutshell, here’s our take on what we look for that mirrors pretty closely to these three.

1. Golazo Potential. The #2 reason why VC’s pass aside from strength of team is “it’s too small“.  It’s because of fund return economics, but also because of personal interest and ambition.  Golazo is a spanish slang for a “beautiful goal” in soccer, and we are most excited about opportunities that have the potential to be uniquely spectacular. My partner Lee has shared more about this here.

2. Capital Efficient Beginnings. Although a company might have a spectacular goal, we focus on companies that have the potential for capital efficient beginnings.  This is a fit for our own investment strategy as seed stage specialists, but also because we notice many of the best entrepreneurs take a capital efficient approach to starting and testing their businesses.  Extraordinarily few internet based businesses started out by raising $10+M before ever launching a product.  Our model works when a company is able to prove a lot with modest capital, and then leverage that early validation and market knowledge to really lean in and start growing their business.  Some of these companies may raise quite a bit of capital to grow, but we look for opportunities where significant, value-creating milestones can be achieved with modest capital up front.

3. Excellent, authentic teams. We look for high-potential founding teams with some unique insight into the market they are going after due to authentic and deep prior experiences.  This is in contrast to some companies that are hatched through a more academic approach of “what’s an opportunity that fits X, Y, or Z attributes”.  Some great companies have been birthed through a more academic approach, but we tend to get excited about authentic founding stories, and feel like on the margins, authentic entrepreneurs have better intuition and determination in the early stages of building a business.

I was lucky to attend a discussion last night on technology education in Arlington schools.  It was graciously organized by Larry Bohn from General Catalyst, who sent multiple kids through the Arlington school district.  There was a great group of investors, entrepreneurs, and educators who all live in Arlington.  As the parent with the youngest kids in the group (4 and 1.5) I was mainly learning, although I really hope to contribute in the months and years to come.

It’s not entirely clear what will come from this meeting, but I’m pretty optimistic.  A couple broad observations and thoughts.

1. Do something, fast. Paul English, the founder and CTO of Kayak very quickly noted that there was a lot that could be done to bring technology to the Arlington schools fast, and with litte/no cost. There are terrific resources out there that are free, like Codeacademy that can get high school students engaged tomorrow.  As a group, we pushed our town’s assistant superintendant to think through what it would take to get some meaningful new programs in place by the 2014 school year.  There are a lot of practical reasons why this isn’t possible, but I think this is something that the startup culture is really good at – circumventing beaurocratic timelines and driving for things to be done quickly, and utilizing terrific free resources even if it won’t be used perfectly early on.  This ethos of cheap experimentation with openly available resources is something that needs to penetrate our education system to drive faster change and adoption of effective (and cheap) tools in the classroom.

2. Human Capital Limitations. There were a number of discussions tonight that revolved around human capital. We talked about the difficulty of recruiting teachers with technical skills because of opportunity cost, and the expense of training teachers in skills that we want our kids to be able to learn. It’s a real issue that has no easy solutions.  For a long time though, I’ve been thinking about how the race towards smaller class sizes actually goes against the economic reality of teaching.  Rather than have smaller class sizes, is there a way to leverage great teachers and allow them to impact twice as many kids (or three times as many, or many more times over)?  I think technology allows us to do this – both multiply the presence of great teachers, and replicate the impact of their know-how through software.  I’m excited about companies that are starting to do this, and think it would be wonderful if we could couple this sorts of technologies with a delivery model for education that would allow great teachers to make 2x+ what they make today, and still have the math work economically for schools and districts.

3. Start Early.  My friend Adam Medros from Tripadvisor also made a good point early on inspired by Sheryl Sandberg’s talk earlier this week. His point was that a big issue is not just around the availability of technical education, but in the attractiveness of it to kids.  And especially, to girls.  He argued that in order for both girls and boys to get engaged in technology and programming, it’s important to integrate it into the curriculum (as opposed to providing it as an after-school program) and to start really early, before strong social gender norms start to form.  As the father of two girls (and with a wife who also attended Sheryl’s talk), I’m totally a believer and am starting to think that I might want to be more aggressive about encouraging my daughter to play with my ipad, rather than rationing her time with it each week.

These are just some quick thoughts, but I’m ruminating on a lot more.  Hopefully, I’ll have some more insightful conclusions to share in future posts.  Oh, by the way, I also learned about a terrific programming language for kids developed by the Media Lab called Scratch. I’m looking forward to checking it out!

As it’s been reported, a number of companies are having a harder time raising money in the Series A crunch.  As a response, I’ll sometimes hear entrepreneurs say something like this:

“I know that fundraising is going to be tough.  Se we are going to start earlier and give ourselves more time to raise”

I don’t know if this is really the right approach.  It’s not like investors now need more time to make a decision than they used to.  There remains only so much due diligence one should be doing for a series A stage company.

The other problem is that budgeting more time for fundraising usually means starting earlier. Is that a good thing or not?  The positive is that it might allow investors to “watch the movie” more.  But the downside is that A) you wont’ be as far along with your company and B) because of the time allotted, there is no sense or urgency on anyone’s part to get it done.

I think that fundraising is taking longer is a symptom of something else.  Instead of starting the process earlier than normal, I think the right strategy is to start at the same time, but go broader.

The #2 reason why VC’s pass (aside form team) is some version of “I just don’t get how this is a really big opportunity”.  In some cases, this is just objectively true – some companies are going after markets that are too small.  In many cases though – it’s more a matter of fit than a matter of fact.  The goal for a company looking to raise their series A is to show as much market validation as possible, and then find the right investor that shares the same vision as you do.  That’s it.

More time doesn’t help an investor really absorb your vision.  The only benefit of having more time is that you have more opportunities to turn over more rocks.  What I’d say is instead of budgeting more months to fundraise, my mentality would be to just hit the process harder, go broader, and search for true believers.

Final thought – sometimes, I find that entrepreneurs want to reach out to investors sequentially.  They focus on the most name-brand, aspirational firms first.  Don’t do this. Make your targeted list, make it pretty broad, and go search for true believers all at the same time.  If anything, you want to save the aspirational names for your 4th or 5th meeting, not your 1st or second, because you’ll need to work out the kinks of telling your story.

We did a little upgrade on our website recently (about time!). We are pretty frugal, and think it’s nice to flex our operating muscle every now and then, so we didn’t hire an outside firm. Instead, I got to play product manager again with a terrific designer and developer we know.

There are a bunch of things that aren’t quite perfect about the site, but in the spirit of the Lean Startup, we put out our MVP pretty quickly and will continue to improve it over time.  I also learned a lot going through the process. Some observations.

1. I never really noticed the shift towards flat design over the last couple years. We made a subtle upgrade to our logo based on this, and reduced a fair bit of the layers, shadows, etc from our former design aesthetic. It does look cleaner and more lightweight. I’m curious if the flat design aesthetic will continue to persist or not.

2. It’s amazing how quickly designs look old and out-dated.  We built our old website a couple years ago, and I found it pretty old school two years later (but I was pretty happy when we first launched it).  Time moves fast.

3. I like how simple a site seems when you restrict it to a single page.  For a VC fund, it totally makes sense because our business is reasonably simple and what you see is what you get.  Not sure if the continuous scroll design will continue to be a standard, but I’m happy with it right now.  The other nice thing is that the continuous scroll aesthetic works pretty well on mobile without too much effort.

4. Speaking of mobile… it’s pretty important. Duh. ~20% of our traffic is on a mobile device, and this is true of our blogs too. That said, mobile traffic often has different intent from desktop traffic. That’s why “mobile first” is a bit of an over-simplification, and I believe you can’t simply do “responsive design” and have a great mobile-optimized site.  Our goal was to have a first version of the site that looked great on desktop and worked for mobile.  Ultimately, however, we’d like to build a great mobile version of the site that really meets our customers’ needs.  Specifically, this means catering specifically to entrepreneurs and others who are hitting our site on-the-go, probably on their way to a meeting with us.  This actually means thinking less about a “mobile site” and more about what the “mobile landing page” is for someone in this situation, and crafting the site around that.  This probably means a mobile site with only a few options: links to big mug shots of our team, one-click to launch a map and get directions to us, and one click to get a condensed version of our content in a way that is easy to scroll through quickly.  The good folks at BlueTrain mobile have some smart thoughts about this here.

5. The little things really really make a big difference.  That’s something that I really had an appreciation for this time around.  Our designer spent a lot of time perfecting the actual interaction of every click and hover state, and was very detailed about the timing and overall “feel” of the site.  I’m more of an 80/20 kind of guy, so this was fun and really instructive.  I particularly like the steam you see when you go to the “invited guest” section of our ethos.  Next time, we’ll try to put in more fun “easter eggs” in the site. I already have a running list.

These things are always a work in progress, and we will do another site refresh in not too long.  If you have comments or suggestions, please let me know!  Also, many thanks for the people who helped make this happen. Specifically:

- Moses Ting who worked with us nights and weekends for his design and development work

- Chris Keller who took time from running followup.cc to help develop the site

- Junhee Chung for his terrific photography

As an uncreative VC, I figure I’d find a way to outsource idea generation for my blog.  So I was excited to partner with the good folks at Intelligent.ly on a regular series of posts where we would collect a bunch of questions from the local tech community and respond to a few that I think are relevant to a reasonably broad group of readers.  Here are my first two questions and responses below!  If you have questions, please post them in the comments or on intelligent.ly here.

What are some common-sense tips for startups as they seek to avoid the “Trough of Sorrow” that Brian Balfour has blogged about? That is – running out of cash, letting staff go, facing potential failure. What can founders do in advance to make the trough as shallow as possible? 

[Rob Go] This is a great question! There really aren’t many easy answers – honestly, most startups face some sort of trough of sorrow. Even Mailbox (which just got acquired by DropBox for likely a big number) I’m sure faced a trough of sorry when they shifted resources away from their original product (behind which their raised their seed round) and pursued what could have been yet another email client. The trough I’m sure happens even for every successful companies.

That said, I have a couple basic tips of advice:

1. Know that the trough is coming. Sometimes, just knowing that hard times are ahead allows you to get yourself and your team ready to push through. These troughs tend to happen at somewhat predictable points. First, the first time products hit the market and it’s clear you don’t have 100% product market fit. Second, when you do have PMF, but growth starts to stall. Third, when you have PMF and growth, and you find yourself needing to really build a repeatable business model. Fourth, when major team members start vesting serious chunks of their equity and start finding themselves unmotivated or lured by other companies. etc etc. Be aware that these milestones are ahead of you and be prepared!

2. Don’t fool yourself for too long. The challenging points I mentioned above happen to nearly every company. The trough is worse when you have less time and resources to deal with these problems. You don’t want to fool yourself into thinking your product is great, or just one or two features away from success until you have 3 months of cash left and it’s clear that things aren’t working. Be brutally honest with yourself. The best trick I’ve heard (which is actually really hard to do) is to talk to customers, but to do it from the perspective of a skeptic. If you are in the pre-product launch stage and want to ask random people what they think of your idea or product, don’t say “hi, I”m the founder of XYC company, can you tell me what you think of this product?”. Say instead “hey, a good friend of mine is thinking about quitting his job and starting this company. I think it’s a pretty risky move, but I said I’d help him get feedback from potential users. Do you mind having a look? I just don’t get it… but maybe I’m missing something?”. By positioning a question like that, you are way more likely to hear the negative feedback, and probably the honest feedback vs. the sugar-coated feedback of someone not wanting to crush your dreams. Find ways to get realistic feedback so you know sooner not later that trouble is brewing.

3. Find good financing partners. You want to find financing partners who help you in the situations described above, don’t become yet another impediment. When you are going to be dealing with growth and business model scaling issues, it’s nice to have big VC’s that are committed to your company because they can write you one more check if it’s just taking a bit longer to figure stuff out. If you are still really early and aren’t sure exactly how big your venture could become, you might not want to take money from big VC’s who could kill you with signal risk, but instead finance your company with angels who can help you navigate a plan-B type funding path if things are going well but it looks like your opportunity isn’t as big as you hoped. Which leads us to our second question:

Two friends and I are building a company part-time. We all have full-time jobs elsewhere, but hope to work for our company full-time by the end of 2013. We want to bootstrap as much as possible and believe we can because we should be profitable by summer (not a lot of profit, but some). Our desire to bootstrap may be a good thing because we don’t believe our industry is one where we could have a huge exit and potentially attract investors before we get there. So here is my question: should a company that wants to bootstrap apply for an incubator/accelerator? Is it possible to take seed money and not go for the Series A, etc, and just earn revenue? If we never want to exit and plan to own and run the company forever, would anyone invest any money at all? 

[Rob Go] Sounds like you are being very realistic about the company you are building and smart about thinking through your financing options.

On the accelerator question, it depends on the accellerator. I find that accelerators that are run more by ex operators (and in many cases, operators who have been successful without huge sums of VC money) are pretty good at helping companies that might not go the VC route. Usually, accelerators do build a portfolio of companies, some of which are kind of binary, others that might be smaller but more straightforwad businesses. Also, many companies that come out of accellerators are funded by angels who would be happy with a non VC outcome that happens through capital efficient financing (and potentially faster).

Now, I will say that all investors in a company will hope to see some liquidity from their investment at some point. Hopefully, anyone investing in an early stage private company knows that that liquidity will not come for at least 5-years+. But if you think you are building your company in a way that it mgiht never go public or get sold, then you probably want to have some concept of how investors will get their money out in a reasonable amount of time with relatively little headache. There are a number of ways to do this. One is to do a royalty based financing, where some percent of revenues goes back to investors. John Landry has been a proponent of this for certain companies.

Another option is the investor put-option, where the investor at some point as the right to sell a portion of their holdings at a pre-determined multiple. The third is some sort of dividend structure. Whatever approach you pursue, do more research and talk to your lawyer and fellow entrepreneurs about the pros and cons of each approach. As an investor who focuses on companies with GOLAZO potential, I rarely contemplate these sorts of structures, but I do respect the fact that different types of companies can be financed differently. And for many investors, this kind of company can be quite attractive!