Very quick follow-up post to my article on Techcrunch.
There was a discussion between @joshelman and @pingupceo who brought up a question that he was recently asked that goes:
“What have I not asked that I should be asking?”
Josh mentioned that this is something that he asks often, and my partner Dave asks this question occasionally as well.
The question can seem a bit tricky because it’s so open ended. You don’t want to say the wrong thing, nor do you want to evade the question. How does one handle this?
The question becomes much easier when you think of it as an opportunity, not a trick. The opportunity is to do one of the following:
1. Show off something great about your team or your business that hasn’t come up yet. Usually, something that isn’t obvious, but is totally to your advantage.
2. Bring up an obvious challenge that hasn’t come up yet but almost certainly will with any level of due diligence. It’s better to get in front of the obvious difficulties than shy away.
As Josh put it in one of his tweets, the way he is thinking about the question is: “we are getting to know each other – what have I failed to ask that is awesome to know?”
Finding an investor that is the right fit is hard to do. People are complex, and many times, both the founder and investor have far too little time to really get to know each other. So use these sorts of questions as an opportunity to do this.
A problem that I often see founders and investors make is to project their opinion on new products and ideas without really giving them a shot themselves. I see this happen in particular when something comes out that is threatening to one’s own efforts or one’s way of seeing the world.
I do this myself. I’m actually not naturally an early adopter, and I’m pretty comfortable trying to mentally analyze a situation, and make conclusions of how things will unfold without needing to try stuff first hand. Sometimes I’m right, but I’m also often wrong. I think it’s a weakness of mine that I try to over-think a situation rather than just learning by doing.
I made a resolution a few months ago to push myself to suspend judgement and just try new stuff more. This includes using new services and technology, but also to “launch” stuff more often and more quickly when we have an idea or an initiative we are thinking about. I think that living in an academically-minded part of the world (Boston and Cambridge) you get into a lot of theoretical discussions about unknown things. But in areas of uncertainty and change, I notice that there is no good replacement for the real thing.
It turns out, this is true in a lot of different avenues, and I think is part of a broader trend or set of best practices. A couple random examples;
Mythbusters: It’s one of my favorite shows, and what makes it so cool is that they do a great job of creating a hypothesis and then developing a series of tests to see what actually happens. Sure, it makes for good TV, but the best part of the show is when sound theoretical expectations are proven wrong or are shown to have more complications when translated into the real world. I love it.
User Acquisition: I’ve been on a bit of a quiet campaign to meet a bunch of really strong user-acquisition folks at different startups in Boston and New York. One thing that is surprising (that I’ll blog more about later) is that many of these people have limited marketing experience. What they do have is a highly analytical background and a mentality around experimentation. On the flip side, more experienced marketers often enter a startup setting wanting to employ an older playbook to stick to things they know work, which sometimes isn’t a fit for what an early-stage startup really needs.
Hiring: When I dig into the hiring practices of world-class organizations, you see a very obvious trend. The best companies tend to use tests in their hiring. Capital One has been doing this for a long time, and this is common practice among technical organizations as well. But increasingly, you are seeing this become common in a much broader set of companies and types of roles. I recently spoke with an interesting company called Prehire that is making this process much more seamless through software, and they’ve had great early results. There is nothing like the real thing, but the next best thing is to simulate the real thing and see how people respond. It’s a lot better than judging people based on a resume, their pedigree, or how cleverly they answer interview questions.
Enough for now. Time for me to go give my Apple Watch a try!
I hosted a group of HBS students in a tour of startups in downtown Boston a couple weeks ago. It was a fun trek, that had us visit Dataxu, Localytics, and near-unicorn DraftKings. We ended the trek chatting with Paul English, the co-founder of Kayak at his venture foundry Blade.
It was great to hear the inside story of some really interesting companies, including two that have just raised substantial dough and are looking to expand their business and teams significantly in the coming years. Some of these companies have extraordinary growth rates and are poised for really great things. Most are looking to have teams that will be over 200 people over the next year or two, probably quite a bit larger in some instances.
But what I was most struck by was a stat that Paul English shared. When Kayak went public, the company had one of the highest revenue/employee ratios of any business. Here’s what Kayak looked like when it went public:
IPO Market Cap: $1B, Revenue: $225M (2011), Employees: 185 (July 2012), Rev / Employee: $1.2M (Paul has quoted $1.5M, which makes sense given growth of the business in 2012)
Compare that with a couple other recently public companies.
IPO Market Cap: $8.4B, Revenue: $98M (2013), Employees: 628 (2014), Rev / Employee: $156K
IPO Market Cap: $2.6B, Revenue: $331M (2012), Employees: 886 (2013), Rev / Employee: $374K
IPO Market Cap: $967M, Revenue: $64M (2013), Employees: 534 (2014), Rev / Employee: $120K
IPO Market Cap: $1.7B, Revenue: $124M (2014), Employees: 972 (2014), Rev / Employee: $127K
IPO Market Cap: $1.9B, Revenue: $137M (2013), Employees: 680 (2014), Rev / Employee: $201K
IPO Market Cap: $990M, Revenue: $134M (2013), Employees: 342 (2014), Rev / Employee: $392K
Throwing in Etsy now that the data is available:
IPO Market Cap: $1.7B (e), Revenue: $195M (2014), Employees: 685 (2015), Rev / Employee: $285K
These are pretty fascinating comparisons. Of course, these businesses are very different, and that has an impact on this metric. But it’s amazing to think that Kayak went public at a $1B valuation with less than 200 people, when all of these other companies had 300 people or more. Some of the mid-stage startups that I visited that day will have more employees in the next 12 months than Kayak did upon IPO. Pretty extraordinary.
It’s a reminder to me of something that my partner Dave often encourages us to focus on: technology leverage. We are seeing more and more companies out there that are largely based on the time and effort of people or are about making or moving around stuff. Those could be pretty interesting companies, but their value will be largely based on how much leverage they are going to get out of their technology to fuel attractive growth and profitability down the road.
I’m excited to announce that we have promoted Jay Acunzo to Vice President of Platform at NextView.
When we hired Jay to be Boston’s first VC head of platform, we were super excited about what we thought he could do for the NextView portfolio and broader tech community. That said, it was an amorphous role for everyone, and an exploration as a team about what Platform ought to mean for a high-conviction hands-on seed investor like ourselves.
Jay hit the ground running. He has not only multiplied our activities and effort, he has helped us craft a focused strategy about the mission of our platform with a maniacal focus on results. Rather than just throw a bunch of people in a room for random networking purposes, Jay has embraced our ethos here at NextView to be authentic contributors to the community and to be systematic in these efforts. He’s done a terrific job working to “productize” many of the efforts that we’ve been doing on an ad-hoc basis, like The Boston Tech Guide, Growth Guides and other data driven studies, as well as some important internal initiatives outside of the public eye.
Because of this, we’ve been getting some really nice unsolicited feedback from folks within our portfolio (and folks outside our portfolio that benefit some of these initiatives). Stuff like:
“You guys are terrific. Most involved vc of the bunch really appreciate it! Want to get you back out at some point to talk more about our go to market efforts” – Portfolio Company CEO (email to Jay)
“I was reminded to reach out because Nextview has come up a few times recently — once with a company we’ve been talking to recently (where the NextView Platform was mentioned) and another time through a forwarded Nextview Blog post (from one of our Portfolio companies). – VC Coinvestor
“As a guy who just spent way too much of his life (2-3 weeks) creating a pitch deck, I owe you a big, big thank you. Not only was your timing impeccable, the decks you put together were FAR more thoughtful, comprehensive, and helpful than anything else.”
– Entrepreneur (not a NextView portfolio company)
On top of all this, Jay has fit really nicely into our team and shares our common ethos. Dave, Lee, and I have all really enjoyed our collaboration with him, and have become only more excited about what we can do programmatically to help seed stage founders give their companies the best possible start.
Congrats Jay! We look forward to continuing to build this firm and our platform together.
I’m feeling particularly blessed today. And it’s not just because it’s Good Friday.
Nancy has been traveling a bunch the last month. I think she was gone 14 nights in the past 30 days. It was pretty tough with my own travel schedule, but we got through it and am really glad that she’s back for a while. I’m grateful that we have great help and support through my in-laws and our au pair who allow us to handle these sorts of life fluctuations.
My daughters have been amazing, and I’m shocked at how quickly they are growing up. Yesterday, I was knocked out with food poisoning. I was in rough shape. But the girls were really sweet. They brought me food and drinks. They checked in to see how I was, but didn’t try to pull me out of bed to take care of them. A couple times, they would just come in and hang out with me without really saying or doing anything. It was good for my soul.
On top of all this, the snow is mostly melted and we had our first really great day of spring yesterday. I dragged myself out of bed for a walk and felt refreshed.
My cup runneth over.