Miles To Go.

Pretty much sums it up.

A recent post had me going on about my three word manta: Discover. Develop. Deliver.

I’ve been fortunate enough to be around five companies from founding to past the Dunbar line, and that’s where the people stuff gets real interesting. (see the Develop section of the post). Well, 2013 started out with recruiters ringing employees and we decided to fight for what we value: A Players.

Ironically, just as you are seasoning a team and kicking into growth mode, the rest of the market often takes notice and starts trying to poach your best. The more competitive the marketplace, the worse the soliciting gets (I’ll submit mobile ad-tech ranks right up there). It won’t stop, so what we have done is create every possible intangible and tangible benefit to being happy while working with us. So here’s what we’ve done at Mojiva for example, to deal with it:

First, I learned more about the Dunbar line, a fairly interesting social study about leading groups.

Dunbar’s number is a suggested cognitive limit to the number of people with whom one can maintain stable social relationships. These are relationships in which an individual knows who each person is, and how each person relates to every other person. No precise value has been proposed for Dunbar’s number. It has been proposed to lie between 100 and 230, with a commonly used value of 150.

As we were approaching 100 employees I worked with my co-founders and core team to describe our core values. Everyone knows we try to govern by those values; it’s an early test as to whether a prospect matches up well with us (and if not, it’s eventually not going to work anyways). Once in the house, we all try to live and work by them. I’m proud to share them here

BOLD & NIMBLE // 360° RESPECT // INNOVATE // OPEN // SCALE AND BE PROFITABLE // LAID BACK LEAN FORWARD // TEAM UP

Next, I worked with our HR team to come up with every imaginable intangible program for start-ups (many of which I have to credit my EO group, Maximus for the ideas). We have bi-annual MAPs that people can self-assess their skills against their peer’s assessments, and identify places and skills to improve. We have bi-annual performance reviews, but so does everyone. We have Quarterly peer awards, where individuals are nominated for recognition (and swag!) by teams for their superior effort. We have a recruiting and retention program fashioned after GH Smart’s Who process, where most everyone who interfaces with new hires has a say in their fitness for offer. We have a 401k. We have a disaster recovery program that had 100% check-in within 3 hours of hurricane Sandy. We pay bounties for finding, and keeping people rated A Players. We have a cool office in SoHo. We have a 90 day leave bonus (yes!) where we actually look at people’s mojo after a quarter and offer them to leave if they want. We figure the cost of searching, recruiting, and training a new hire is expensive, so if they don’t confirm a perfect match in 90 days the company will suffer going forward. Better to part ways sooner.

But far and away, the reason people want to be around is to make their dent in the sky. We really believe that what they do in the coming years will echo through the rest of their careers. Working at a mobile ad-tech company growing 100% is about as exciting as it gets. They can point to that and say “I helped build that!”.

So if you’re looking to hire away someone from any of my portfolio, rest assured: we know who the A Players are, our core values are matched, and we serve them well. Most are just too busy for the flattery, and rarely do they take calls (we have a program for that too).

Face it: if your are a recruiter calling, you are likely speaking to someone who is not many of the above, and you will likely overpay for them. Happy hunting.

Gate is actually the basis of the Vaux Logo

Despite focusing most of my writing efforts on my blog, and keeping up with the world via my twitter the year-end letter to Vaux angels is a tradition well worth continuing. I’ve cribbed the best of it here…

 Discover. Develop. Deliver.

These three words are scrawled across everything I do for Vaux. They are three parts of my personal mission to success as entrepreneur and angel investor, which I had the honor of mapping out in a 2012 white paper for the Family Office Association  “Angel Investing for the Family Office” . I took a hard look at the process of building a foundation on the long journey from inception to exit, and nowadays I plan my week based on these categories. I color code each meeting in my outlook. They might as well be scrawled on my bathroom mirror in lipstick. They are the cycle of life for Vaux les Ventures and the angels that have supported these endeavors for nearly 10 years. Here’s what these simple words mean to me:

Discover is about being very focused on what you can do well, and what markets will have an impact that can generate angel returns. Big market trends that people don’t yet see, or are unwilling to accept. Trends that will obviously converge, but no one knows exactly when. It means being early and brave, but it also means being patient to find the right mix that can sustain the long march. This is where the DNA of the business is set: habits formed early are virtually impossible to break. Many people in the business call this “deal flow”, and I did too for a while but I soured on the term as too many IB ‘s and VC’s (both of which I have been) over-use it. Having a well know criteria for how to invest and who to invest with seems to do very well in attracting the right types of people. So does being a good guy. But it’s about discovery as much as it is about network. And that discovery includes markets and their real problems as well as solutions and the best team to build them.

A recent example of this would be my work on WellAware, the mobile health solution. I’m as committed as ever to the trend of mobile devices having profound affect on health and wellness. And I truly believe that very simple data can have tremendous impact on lives. The Wellaware team did a tremendous job developing the platform for this theory to play out, but certainly overshot the MVP standard. What we need in 2013 is more cycles with large user bases to refine our solution, likely in the mobile environment.

Develop is where the entrepreneur (in anyone!) takes over: translating a vision for a product solution into a product itself, and testing it with users to see if the darn thing works. It takes tremendous amounts of courage, persistence and luck. Some attempts are ridiculously off the mark. Ironically, more often there are overshots than undershots when going for the minimally viable product. And users are rarely the viral dream everyone hopes for- more like a block-by-block struggle to get to a vantage point where people notice you. But more than product and users, the team is the big part of the develop picture. Entrepreneurs have a passion for building things are not always Schwartkoffs when it comes to leading people. And that is where the coaching and mentoring foundation is laid. Capital begins to show up at this point, as we have baked enough of the risk out of the opportunity for larger sources of capital to begin to show interest. That too is a major challenge in this phase, and if you grow fast enough, it never ends.

[Major edits here from the angel letter. Sorry, that's not public.]

The poster child for the develop phase is certainly TrustCloud, which just 9 months ago had product solution in search of a problem, no user base, and a team that had already endured a few pivots. Such are the risks of being early! But the saving grace was each of the founders used the sharing economy and saw what it could deliver, as well as its limitations. Something had to give, we thought.

And 2012 was full of such breaks, as TrustCloud found its core team, delivered a product and began building users at an impressive clip  (10x from July to December) after the Wall Street Journal picked us up. Check out the product here, or the very impressive Facebook TrustCloud user group (which tracks bugs and promotes the product passionately). The Company rolls into the New Year with a new Peer Protect insurance product to couple with it’s ever growing number of sharing networks.  Kudos to the indefatigable and imminently coachable CEO Xin Chung, who details the year here:

 I shared keys to my NYC apartment on Airbnb, rides through San Francisco in a Sidecar, and my workload with TaskRabbits. I’m not alone– people worldwide are sharing more than ever with millions of room-nights booked, cars rented, and dogs walked by reputable strangers. The movement is called The Sharing Economy, Collaborative Consumption, or as Mary Meeker calls it, living Asset Light. (this is a great read! Don’t miss it!)

 Flush with VC funding, the movement scaled fast in 2012– but not without growing pains: A quick look at recent sharing history would give anyone pause before sharing with a stranger. Home sharing market leader Airbnb had a redux of its 2011 EJ incident with the so-called airbed & brothel snafu where a Swedish apartment was literally pimped-out. Carsharing had it’s own collisions with the luxury carsharing service HiGear shutting down due to thefts, car sharer RelayRides’ liability issues with a fatality crash, and regulatory fines for on-demand ride-sharers.

 These events highlighted that trust between strangers in peer-to-peer marketplaces must keep pace with their own rapid growth. In the offline world, hotels have long adopted star ratings, rental cars are licensed and insured by brands spend billions to give consumers confidence to buy. Since online, peer to-peer marketplaces powered by micro-entrepreneurs don’t have time to brand themselves or vet strangers, they are much less efficient as buyers and sellers waste time sizing each other up, figuring out a schedule and even haggling over price before committing. Trust can make these transactions much faster, and insuring the risk is something we look forward to. Read more at TrustCloud’s Blog.

Deliver is where all the hard work pays off. That would seem like a triumphant moment, and I’ll allow myself a few. But as I have matured it has become a little more bittersweet. Here are companies we have built from scratch, communities that started with a handful of people, angel capital that came in for under $1M pre money. And despite some intermittent liquidity opportunities, in some cases these companies have futures that remain bright(er). We have seen large that we turned down; we may see 2x-3x-4x from here (or of course, we may not). So parting with some or all of the ownership isn’t as easy as “see ya later”. It’s an asset, with a value that has to be managed detachment that is at arms’ length, hard as that may be. We also live in a world of high risk, so those precious few windows of liquidity opportunity have to be considered when they are open.

[More major edits here from the angel letter. Sorry, that's not public.]

In summary, I guess I feel every venture I have been involved with has contributed to the next. Things I have learned about the Discover phase have allowed for better Develop results. Those few short peeks at liquidity in Deliver have been viewed with a paradigm that allows the whole group to consider individualized risk and reward before deciding on liquidity. And of course, the success through the process has allowed us the opportunity to feed the beast, return to what we do best, and further diversify with another opportunity.

I am extremely grateful for the opportunity to work in the field that I do, side by side with talented entrepreneurs, backed by caring and value adding angels that ask good questions and have the patience to help realize the vision I had almost ten years ago. We’ll see great opportunities in each of the three key Phases in 2013. Drop me a line and we’ll discuss which ones best fit your criteria in the days ahead.

All my best in the New Year,

Meet Fake Grimlock

Mary Meeker just called it: Sharing is now a megatrend.

In her wildly popular bi-annual prognosis, Meeker points to the demise of asset-heavy life especially among 20 somethings wherebye sharing economy and  smartphones free time and money, creating an asset-light generation.

So how does this relate to virtual dinosaurs and dating? Hang on, let me tell a good story. Dialing it back a bit, I was watching Cat in the Hat with my son this morning and began to wonder about how that famous tech character might teach us something about a this big trend, now that Mary called it. Suppose I pose these questions abut the tech world’s favorite virtual persona Fake Grimlock… as only Dr. Seuss could:

Would you meet him in a mall? Would you pass him in the hall?
Would you let him drive your car? Would you let him drive it far?
Would you let him watch your pet? Would he eat them, hmm, sure bet?
Would you let him tutor the kids? Could you, would you blink an eyelid?
Would you let him sleep upon your couch? Would he scare you with those teeth- Ouch!
Would you date him late at night? Would you lend him money? Right!

Which means, essentially, if you were going to do a “Sharing Transaction” with an unknown Peer, do you trust the person behind fake grimlock? He’s extremely well known in a small circle of tech entrepreneurs (and deservedly so- he’s hilarious in a CAPSLOCK kinda way). But my point is, there are millions and millions of Fake Grimlocks out there.

From Spencer 323232 on gMail to Pineapple88 on EBay, people have for more than a decade created and maintained personas and avatars for everything from virtual gaming to very real Craig’s listings. Taking it back to Dot.com days, we used to hear the reason the internet was popular was … no one knew you were a dog. People could go online (Chatrooms!) under any handle they chose and behave pretty much with impunity. It was the digital equivalent of turning out the lights at a teen mixer. Stupid ideas came and went, as did plenty of fortunes and not a few great companies. But the ability to take on an alias, or even build an avatar in another parallel world lingered as a quaint benefit from back in the day. To some gaming sites, it’s a hell of a business that virtual world.

But now comes along Social, Mobile and Local where a billion people share their profiles, activities, photos and innermost thoughts with perhaps way too many friends. Privacy was redefined, or its boundaries were pushed out by the devils favorite vice, vanity. Rachel Botsman called it early with her Colaborative Consumption moniker, and subsequently has talked about trust within peer networks a lot. Now, as big data companies are starting to realize this data is meaningful, strong voices are pointing out that people should own their own data. Tim Berners Lee is one such voice, having started what I call the “Data to the People” movement with this Guardian interview. Add to this a rich mix of a green consciousness, underemployed/over-indebted college graduates and a sluggish economy and you get the Sharing Economy a/k/a the very more wordy Collaborative Consumption. Al it needs now is some glue, or as Neal Gorenflo recently said in a post to Shareable Magazine the dramatic transformation of the economy that’s needed is not going to happen until a large coalition begins to work together.

This is precisely why companies like TrustCloud, Connect.me  and MiiCard are helping stitch together a trust and reputation metric for the Peer economy. Basically, in 2012 everyone knows you are  dinosaur, and if you are transparent enough with it, more and more people are ok with it. So, for argument’s sake, let’s say Grimlock does not want to reveal his identity, but he wants to claim credit for all the good things he has done online. He has a ton of influence and follows (you can see that from twitter or Klout) but maybe he also contributes to Stack Overflow and helps out on GitHub under Grimmy22. Maybe he maintains an ebay account where he is top rated as a seller, but under FakeyBoy101. He has a few verifiable email addresses, and actually lives somewhere under the name Human B. Good. What if Human B Good claimed all that data and consolidated in one place- without actually divulging that he was Grimmy22, FakeyBoy101 or any other avatar. But he claimed the credit for all the good things he does for the community under whatever name. If he was transparent enough to verify and share his human identity, he’d be golden, or the human behind him would be. And all without blowing the connection to the mysterious Grimlock. Here’s my point: thousands of people every week are coming to that conclusion and getting TrustCards.

So… let’s look again at these peer transactions

Would you meet him in a mall? Would you pass him in the hall? 

This is the perfect CraigsList question. If Grimlock offered me $100 cash for my old iPhone in some dodgy exchange in the mall parking lot, it’s a pass. To much risk there. But if Human B. Good made the same offer (and had claimed all the virtuous data Grimock threw off), it would be a different story.

Would you let him drive your car? Would you let him drive it far?

This is the GetAround/Relay Rides/ Ridepost question. As Anotonin Leonard’s partner Benjamin Tinq (both OuiShare guys) remarked, “Ten years after Jeremy Rifkin wrote The Age of Access, shared mobility is fundamentally changing the way people think about car ownership, among other things. Especially the younger ones, to whom owning a car has lost its appeal of independance, which is now embodied by electronic and social media devices. So you want me to hand over the keys to  a $30k asset so Grimlock and his monster buddies can go up skiing Vermont for the weekend, and he will give me… $30 per day? Can you say asymmetrical risk? And for some extra credit reading, has anyone really looked at their insurance coverage when you turn your car into a small business. The answer is pretty disappointing (and the backup from the sponsoring sharing network won’t be good for much either, especially as that risk scales). But Human B. Good give me a better feeling about his identity, interactions and behavior with his TrustScore. Perhaps things would have been better for HighGear had they such a system in place. RideShare is already doing this, and more will follow I think.

Would you let him watch your pet? Would he eat them, hmm, sure bet?

Talk about precious assets! I would not turn Baxter over to Grimlock for fear of dinner! Rover.com is already onto this, and has trustscores flowing out to their 70,000 dog watchers nationwide. Essentially, people Human B. Good would get the job, and Baxter would come home safe (and incidentally, my home would be safe, seeing as how Human B. Good has the keys to the house).

Would you let him sleep upon your couch? Would he scare you with those teeth- Ouch!

This one comes right out of AirBnB’s book- and Wimdu, LoveHomeSwap, HomeAway, InterHome and lots of others. While millions of room nights have been booked, as the early adopted give way to a more mass acceptance of “crashing on the couch”, so to will a demand grow for “who is this”, and from both sides of the transaction. AirBnB has had its “Ej Incident” and the “Hookers on Holiday“, which at the very least left a bad taste (sorry) for the hosts. I’ve heard there are plenty more where those came from. But there is risk on the guest side as well, just ask the poor blokes who wired in advance for their Fun and Sun Holiday in France and got… (sorry) just pictures for their trouble (the house did not exist), and the hosts, well what do you think? Again, no keys in this scenario for Grimlock. Human B. Good, more likely.

Would you date him late at night? Would you lend him money? Right!

So after the roundup of the “Sharing Companies”, it makes sense to imagine the other places that a trust and identity system could help other Peer economies. While I have heard stories of young ladies throwing themselves at Grimlock at his personal appearances, I’m not so sure that is scalable. Dating is the ultimate peer transaction, and one where a few simple verifications would do a world of good. To wit: a) does the guy really make $100k+ and b) are those photos of the girl recent or retouched? Likewise, peer lending could be greatly enhanced with a similar solution. Of course, the incidence and transaction data that flows back through the intake API becomes crucial to the richness of the scores.

So to wrap this one in a bow… there is a great saying about trust and context: I would trust my dog with my life, but not with my hamburger.

Grimlock has done a good many great things for our tech community across a few social networks. He is known to the community, and he adds to it. And that’s fine for the virtual world. But for the rest of us, so much of our lives pass between the virtual and real worlds. And many of us have piled up so much virtuous data, it’s time to start harvesting it, claiming it and organizing it in one place that makes it useful to a variety of networks.

We all have our data from our own versions of Grimlock out there. Start using it.

 Full disclosure: I mention TrustCloud here. I am an angel investor in same. 

This way, or that way? (Photo ABC News)

This year’s Presidential Election will be the most important in my lifetime… as per usual.

I was a fan of politics back in the day, when the process itself didn’t make me puke. I tuned in to the weekend talk shows eager to see who would say what, and even the most sold-out of hosts played it pretty middle of the road. I did the same this weekend: the most memorable prognosis was David Gergen who went so far as to say we may see a landslide, but he didn’t know for who…

Though I’m just a guy from Pittsburgh, I ended up living in a data driven world, and dealing with a lot of coastals. So I’ve been fascinated with a few interesting graphs like the Path to the White House from the NYTimes and Nate Silver’s BET THE FARM prognosis called 538. After 18 months, there are still hundred of permutations on the path to to 1600 Pennsylvania Avenue… which the rest of the world thinks is another exhibit for America’s case for self-inflicted insanity.

I also live in a world driven by Mobile and social – in fact I helped create it. I’m impressed (or bored or perturbed) by the frequency of Facebook or Twitter posts from friends who feel it’s a good time to share the scoop on the latest Gotcha charge from either camp. Events move dramatically, though they are played out before less people than back in the day, on network TV. Witness this week’s Sandy Storm; it featured the horror of Boardwalks falling into the sea (they are boards!), to cancelled marathons, to inter-party wet kisses on the jersey Shore in exchange for first dibs on FEMA help. Yet most of the rest of the country was faurly clueless as to the true effects of the storm. Or take the singular issue of the election:  jobs. That’s the one thing that will save our economy, but that debate turned to offshoring, tax burdens and the auto bailout. The real value added jobs created by entrepreneurs are too often overlooked.

Those that follow are more engaged, more vocal… and thank god only carry just one vote apiece. This Presidential Election has certainly set a record for skewing of the truth and for willingness to play for the margin of error in states that still count. Nixon campaigned in 49 states in the last month of his election… Romney and Obama, more like a handful. The rest didn’t matter. Data has allowed us to zero in on the few votes that hang in the balance. And our mobile social world have allowed us, even driven us, to magnify differences among ourselves in order to make a breakaway move, left or right.

“If we are victorious in one more battle, we shall be utterly ruined.” King Pyrrhus once said. And indeed, my prediction is the winner tomorrow will face an impossibly divided Congress, a debt burdened Treasury, and a society whose place in the world would best be managed as a soft landing.

Good luck with that.

I think it’s a lock: our next President will be Pyrrhic.

Good Knight

We recently took an investment from an angel who was graduated Cambridge and shared this tidbit:

One enterprising undergraduate examined the University statutes prior to an examination and discovered that all students sitting exams in full fusc are entitled to a glass of sherry. He demanded his due in the exam, and the University’s Proctors duly responded, before fining him one shilling for failing to wear his sword, allegedly also part of the archaic statutes. 

The point he made was, he fully expected that if I ever sat for an exam again I would cite a medieval code, perhaps in Latin, to set the playing field in my favor. I laughed it off at the time as a Frasier-Crane like idiosyncratic remark. But it got me thinking…

I have actually walked Temple Church in London, trekked the Crusader Castles from Syria to Jerusalem, visited the site of Jacque Demolay’s burning at the stake by King Philip IV, and never pass a chance to hoof through a cathedrale on any of my many visits to France. My family name is Norman French (the De Spencer meant warehouse manager, back in the day) and became English a bit after 1066 (lineage impossible to prove, or disprove). So if I wasn’t actually a Templar in training all these years, I certainly went through the paces. As per usual with Spencer’s, I did it without even knowing why.

Irony is, of course, none of these experiences hold a candle to entrepreneurship when it comes to having so many chances to do something with purpose, and to hone a craft in pursuit of that goal. There are so many risks to combat, so many people to inspire and lead, so many “bet the holy sites” decisions to be made every day I have come to rely on a basic code that I recite every day, and spend hours meditating on: my mission statement as taught to me by Steven Covey of Seven Habits. I have become a crusader for doing what is fair and best for the company and all its stakeholders while building enterprise value along the way. And I take it seriously enough to blank out everything else around me when I am engaged.

But to be honest, that’s about the only way to succeed in start ups today.

So what’s my point?  None really. I just consider start ups to be the great Crusader challenge of the 21st century.

I love what I do. And I have a sword. Touche’ BB

{EAV:7439ec7fe5805ac9}

This ain’t easy either

I’ve spent a lot of time with a legendary Broadway producer, working on an epic project that has been documented before: A Line in the Sand. We’re still workin’ on it.

The development process has been a pretty interesting study for me in how an entirely different species functions. In my travels for ALITS, we often were impressed not by the differences (between Islam and Christianity, between Americans and Arabs, between people with oil and people who buy oil) but by the similarities between.Well, taking a moment to think about it, I realized that based on what Nelle has taught me, Broadway and Silicon Alley have a lot to teach each other as well. Here are just a few of my favorites:

• It’s hard to make a living, it’s easier to make a killing. This is perhaps the most true of the Broadway maxims. Bad shows flop, and quickly. Good shows go on and on, recoup and payout like mad. There isn’t much in the middle. Much is true in Silicon Alley. Startups are such a tricky game, and usually require so much more capital than founders can muster, it is a rare bird indeed that escape from that jungle with all his feathers. Conversely, it’s actually hard just to develop a product and plod along these days, making a decent wage or earnings to feed a family and put them through school. It’s damn near impossible, in terms of the odds. Ironically, only the winners (and the good shows) are picked up in the media, and it seems like it was so easy. 
• Do you want it Tuesday, or do you want it good? I can’t tell you how many times I have heard this from writers, who remind me you could have 100 people work on Gone with the Wind and it would be finished sooner. But perhaps not better. Likewise, mobile apps, websites and all manner of digital media solution are never masterpieces: they are works in process, at best. My advice, don’t expect to get it perfect, get it out and start talking to customers about it.
• Stars attract rock stars, and the opposite. If you think it’s brutally hard to recruit star talent in Silicon Alley, try Broadway. The best way, the only way to get it is to start with… a star. A great script begets a great Producer, who attracts a great Director, who has stars that love to work with him/her etc. No different with co-founders and first hires in start ups.
• Good to be tough, better to be nice too. Oh god the things I have heard come out of the mouths of seemingly otherwise charming and polite people in theatre. Spicy! But I’ve always heard it delivered in the kindest, gentlest ways possible. No one actually gets visibly upset, even though they are bleeding buckets. So, I would chalk that up to being superb at your craft and willing to defend your interests, but doing it in a well thought out, perhaps classy manner actually gets better results.
• Leverage a good review. Know when you’re rollin’. Theatre folks are good at this, entrepreneurs perhaps less so. They know when they have the leverage of some momentum, and they move accordingly. I think too many entrepreneurs are to busy executing to recognize this.

Anyways, that’s what I’ve learned up to now about Broadway. Anyways, maybe it helps somewhere.