Below is the resulting presentation – “An Insider’s Guide to VC”

The core of the presentation is based around “Three Lessons” on how to drive an investor to “Yes.”

For context, those three lessons are:

1) Build Trust
2) Make it Sharable
3) Create a Tribe

Would love any feedback. Enjoy!

Fraud prevention at Wells Fargo flagged issues with my card and at a friend’s suggestion – I’ve spent the last 14 days waiting for my new Debit Card trying to only use Credit Cards (and in one very specific case – a check.)

The Good:

• No need for a wallet.  Just carry my ID, two credit cards, and metro card in a small money clip.*
• No change! Ever!
• Perfect record of my expenses.  It all flows into Expensify / Mint where I can get visibility into my spending.
• With one exception, my purchasing patterns didn’t change

* Huge help here from Expensify.  Now I just take a photo of my receipt and its magically uploaded to the Internet.  No need to carry receipts around anymore for the eventual expense report experience.

And while I’m not financially responsible for the few $1,000+ purchases that occurred in Green Bay Wisconsin (Weird Place for Internet Criminals?), it does mean that I will be waiting 5 – 10 business days for a new debit card to arrive in the mail.

Turning oranges into orange juice, Bryan Jowers of Giftiki suggested that I use the opportunity to test living life with just credit cards and other forms of digital payments.  (Unfortunately, he did it over a large group brunch on Sunday where they wouldn’t take multiple credit cards to split our bill and ended up paying for my meal)

Thinking upfront, most of my purchases have been driven online – partially for convenience of shopping time (I like to shop really late at night) or convience of not having to move goods (without having a car in the City.)

Some examples:

• Groceries: Via Safeway Online – Once per month delivery paid online
• Clothes: Mainly Online Retailers (especially with sales.)
• Concert Tickets: My main form of nightlife which fortunately enables pre-purchase
• Assorted Books, Other Electronics: Amazon.com with Prime

The main purchases where I think I’ll run into a problem is going to be local restaurants and the small deli near my house.  I already know that my favorite Burrito shop in Palo Alto is totally off limits (unless I can con someone into buying my meal ….)

Fred Wilson ran this experiment last year (and still may be) – the one addition for me is that I’m going to carry a few Square Readers with me to try and spread the Credit Card love.  It’ll be interesting to hear a merchants take on Square and Credit Cards in general (plus I’d love for more merchants to take credit cards.)

I’ll put out an update post at the end of the week with progress – any purchases that haven’t worked or success stories with Square.

And let me know what you think – do you always have cash? How do you think a week or month without cash would affect your life?

This year’s broad theme is focus – selecting fewer projects and working on going deeper in my learning and experience.  For ease, I broke them into three categories – Fitness, Fun, and Professional.

Looking forward to CES this week and another great year together!

Goals for 2012

Fitness:

• Run 4 Half Marathons (with at least one being outside the Bay Area)
• Continue to work out 4 times per week
• Complete Tally Point Sheet each week

Fun:

• Go on a long motorcycle / bike ride at least once per month
• Produce at least one new hour mix per month (Target 2)
• Have at least one different / new experience each month

Professional:

• Blog at least twice per week
• Spend at least 5 hours per week researching markets / building themes
• Spend at least 7 hours per week on personal projects / business ideas

In general, Startup2Startup tends to be one of my favorite startup events with high quality speakers and engaging small group conversation over dinner and last week’s event was no exception.

This month’s theme was “How to Sell Your Startup” and featured a panel discussion from Jack Abraham of Milo (recently acquired by eBay), Brian Mason of Typekit (recently acquired by Adobe), and Leonard Speiser of Clove (who sold his previous startup to Yahoo!) discussing the details of their acquisitions and best practices for selling a company.

Following the panel, each small dinner table group spends time discussing the panel and their own experience with the topic and what became quickly apparent was how the title of the panel was a misnomer – that in reality, none of these companies had been sold – but rather had been acquired with Founders not initially having plans to sell the company.

For both Milo and Typekit, the companies were simply growing and building out partnerships down the path to building a long-term business.  In both cases, one (or more) of their partners had realized the incredible amount of strategic value each represented for the company in terms of both product and team – and pushed to acquire the company.  Similarly, Leonard’s team had just launched their product and had a long runway still available to keep growing – but the business became highly strategic to their acquirer and acquired them early in their lifecycle.

In all three cases, the Founders had told the company that would eventually acquire them that they were not for sale and that they were building a long-term business – in some cases, multiple times to multiple people – and each of the Founders mentioned this commitment to building value and long-term belief in the vision of the company as a reason that they were able to have successful transactions.

For a panel on how to sell your startup, it was an interesting lesson to be learned:

You can’t really sell your company.  Focus on building long-term value and a real business and the outcome will happen.

However, missing from the ensuring press love was more context and thinking around the most dangerous new feature: Activity Broadcasting

For background, Activity Broadcasting (as it is today) is exceptionally similar to the failed experiment called Beacon which publicly shared all your data from launch partners such as Netflix.

While, the press loves this (and the many other new features) today – the re-releasing of this feature (in an almost identical manner) demonstrates how Facebook still hasn’t learned the key difference in how people think about and want to use their data.

In the simplest form, this difference is represented in the delta between:

• Tracking, and
• Broadcasting

For those who have read my blog before, I love to track my personal data.  I think its awesome to look back at my old check-ins, to track my activity levels week over week, and even watch my sleep patterns.

For me, the same body chemistry shifts via nostalgia that drive photo taking and sharing drive my personal tracking (be it via Foursquare, Fitbit, Zeo, or others) – I love the feeling of remembering and looking back. (And would argue that many others are driven by the same internal motivations.)

This same motivation has driven the growth of services like Foursquare and Seven Years Ago, MorningPics, and OhLife that enable users to easily see their old tracked personal data – be it check-ins, photos, or diary entries.

Sometimes I like to share that data with others.  This includes Instagraming photos on Tumblr, tweeting about my steps for the week on Twitter, or even broadcasting my current favorite track on Facebook.

This is driven by my desire to be social – its not about the nostalgia I feel for remembering later (or the possible utility driven by recommendations from mountains of data) – its because I feel good now and want to share that with others that I care about (Yes – even all my Twitter followers I haven’t met yet.)

The new Facebook integrations of Activity Sharing (and its use vis a vis Timelines) entirely misses the boat on thinking about any of these inherent human emotional motivators – rather deciding for me that I want to publicly broadcast my life for all to see.

What?

Think about the success of Myspace and Tumblr – driven by enabling people to control their external image and how they represent themselves to the world.  Similarly, LinkedIn and Twitter let people express themselves in a professional manner (again heavily curated for my audience and by what I want to share.)

Timelines (and the activity Feed) throw the concept of self curation and personal identity out the window and force people to put themselves completely public as one single identity (which we’ve discussed before is just not how people exist.)

My caveat here is that I think its exceptionally valuable to passively track tons of data about people (see my post here about how people lie without even knowing) – because users want to be able to look back later (privately) and remember the older versions of themselves and also encourage services that make better recommendations based on my previous choices (see Hunch.)

However, taking that data and making it public entirely misses the point of why people care about tracking (and just demonstrates that Facebook still hasn’t learned their lesson about the nuanced differences between tracking and broadcasting.)

Now Playing:

As always, I’ve included some brief notes on themes and trends that I’m watching – but I’d love to hear from you in the comments or via email with what you think or if there are people or companies I should be talking to.

1. Data Products

Check out my recent post on Web 3.0 here – but in simple terms, tightly customizing the user experience out of the box using third-party and existing data is becoming more and more important for successful web products.

2. Physical Offline with Online

Riding the growth of SSL, eCommerce has been a growing component of global retail spend starting in the late 90s.  In the second wave of the Internet, we saw major chunks of offline spend driven online with the launch of companies like Gilt Groupe, Groupon, and Rulala. However, despite the massive growth of these eCommerce products, we’ve seen very little innovation happening in the physical retail stores leveraging the components that made these types of businesses (and other Internet companies) successful.

Early examples of this type of thinking are “The Melt” – the Sequoia-backed fast food restaurant chain which leverages mobile ordering as a core tenant of their business model and Square’s “Square Up Wallet.”  However, I believe this is early in cycle and we will see the next great brands of retail come out of this revolution taking the best of eCommerce such as Amazon (for both sourcing and recommending products) and core web tenants like open data and open design.

Think of how Amazon would do Brick and Mortar:

• Big public space for reading and community
• Inventory-driven by demand (they know the profile of every market from their eCommerce stores making sourcing and making recommendations much easier and vastly reduces inventory risk)
• Mobile ordering (No more need for check-out – just take a photo of the book and buy via your account – see what Apple has done for in store purchasing)

 3. Men’s (Data-Driven) Commerce

This is a specific vertical within Data Products that is most interesting to me right now.

Men shop in  a different way from woman – and the early success of products like J. Hillburn and Trunk Club have demonstrated that when you work with men in a way that makes sense to them – they will buy products in the most effective way, are not price, but rather value conscious, and are extremely brand loyal if you make them look good. However, existing products on the market have an exceptionally steep learning curve and it is difficult to push a man to switch from his current method to a new provider without absolute certainty it will work.

Given these dynamics (and the large amount of data out there both about what I wear as an individual and what makes a man look good in clothing) – I believe there’s a huge opportunity to redefine the male shopping experience driven entirely by data.  Passively take information of what clothes I have now and my current style and start making light recommendations for me out of the box.

Done correctly – the customer won’t ever leave.

4. Kinect Hacks

In the next few quarters, Microsoft is going to begin pushing Kinect as a platform heavily.

This is incredibly early – but what can you do when you redefine how a user can input information into a machine and engage with technology.

5. Clean Slate

Clean Slate is a fascinating project at Stanford looking to reinvent Internet architecture from the ground up by integrating new technologies that didn’t exist in the early days of the web and focusing on overcoming the architectural limitations that hinder innovation today.

More information here: http://cleanslate.stanford.edu/

It’s early, but we’ve already seen interesting companies and technology come out of the Openflow project – which is redefining networking via software.

I love projects like this because it forces new and different thinking and am excited to see more projects and research come out of the program.

7. Home Automation

Much longer post coming in the next few weeks – but the digital connected home is much closer than before and open standards / new devices are posed to disrupt the traditional closed vendors who’ve traditionally won the space.

Why I totally agree with them that your online ID is contextual (check out my post on why Facebook comments won’t work here), I disagree with their approach in how they believe online ID should be handled.

To summarize really briefly from Fred’s post:

So what I want is a layer that sits on top of all these services, aggregates up all of my URLs (identities), and then provides authentication in the same way that Facebook, Twitter, and Google do today.

And the main reason I don’t agree with it is that I don’t believe it’ll work in the scenario he describes below:

So maybe the big three can get together and cooperate on building this authentication layer on top of their services and promoting is as an indepedent way to authenticate and provision identity and related data to web and mobile services. I’d love to see that happen and I suspect the Internet would be a better place because of it.

For me, it comes back to incentives and who has the power in driving online identity.

Assumption 1: Consumers are lazy.  Even if long-term a service like OpenID would work, most consumers wouldn’t understand it – but even more over – wouldn’t feel the need to use it (which is why I believe it wasn’t adopted originally)

Assumption 2: Founders will do what makes their life better. This is a combination of reducing the amount of work they want to do relative to the creation of a successful product. (This is more broadly applicable – people like to be successful – especially Alpha personality-types that Founders tend to be – but for now we’ll focus on creators of consumer facing web applications)

I’d argue the reason that OpenID wasn’t adopted was a combination of the two reasons above – consumers weren’t innately driven to create an OpenID (they would already be in a registration process when they would think about signing up for OpenID and most would just want to finish the process) and as such developers weren’t motivated to promote it (they can keep complete ownership of their data and don’t have to worry about supporting a third-party log-in credential or confusing new potential users)

I believe the same issue is going to affect any plan to create a new unified log-in for web services – either the major players have to want to work together or consumers have to actively push for it to happen (which neither feel incredibly likely)*

So starting again with our premise – let’s focus on the developer (instead of the consumer) – how can we incentivize  a developer to want to work within an identity framework?

I think the answer is starting from the bottom up – with data – and working up – with a product that focuses on the Facebook Platform layer (or providing instant personalization out of the box) with a data locker service.

To define, the product would be a locker for all of a consumer’s information – social, interest, and professional – including both explicit information (these are my friends on Linkedin and I like WordPress on Facebook) and implicit (I call Meaghan every night for 30 minutes or I tend to spend every Sunday in the park.)

The net result for developers is that you can start to build really interesting, truly personal experiences leveraging data across the entire data set (as opposed to the old world where they only had their own data to work with – Hunch is built on this premise.)

Overtime, this experience can grow beyond just traditional social web applications – to everything a consumer does both offline and online – enabling true personalization for any product or service directly out of the box.

The value for the first developers would be similar to the early adopters of OpenID – you don’t have build it yourself and we’ll help you get more early users.  Consumers would be pushed into adoption via these applications (Do you want to own your data?  Very few people will say no even if they don’t understand it) and over time bigger applications would be forced to use these products due to the consumer demand.

In the process:

1. Consumers can still choose which service they want to use from a service (Twitter for broadcast, Linkedin for professional, etc)

2. Users still get out of the box customization – but now they have access to additional sets of data that make the experience even more uniquely tied to me

3. I don’t have to think about the data storage process until I’m already in the application – and then it seems like a win for everyone for me to opt-in

4. Developers are happy because of shared data ownership and shared user ownership (and happy users)

At the end of the day – identity is not one thing – its a combination of every experience and moment a person has – and can’t be forced into a single sign-in (the same reason Facebook can’t control online identity on its own.)

However, by enabling consumers to control and maintain their data across services – you’re able to package someone’s identity in totality – and then we’ll start seeing really interesting products and services – both offline and online.

* Footnote:

Christina dives deep into identity and how people communicate.  This problem is improved by the above, but not solved.  Where I believe really interesting changes will occur here is naturally with the growth of mobile – as mobile phones are uniquely tied to a specfic individual.

It doesn’t matter what service you’re using – they all tie back to the same device.  So numbers, addresses, and protocols matter less than the person you want to talk to.  Services like Rapleaf have started doing this for the enterprise – taking addresses and turning them into people – so will the future of communication focus more on the who (people) than the how (channel.)

Think Plaxo 2.0

Now Playing:

Some examples of what I use on a daily basis:

• Fitbit – General Health
• Zeo – Sleep Data
• RunKeeper – Running
• Ginger.io – Wellness
• Pandora Favorites/ Last.fm – Music Playlists
• iFitness – Workout Data
• RescueTime – Productivity

And the list goes on and one all the way to just simple pen and paper (which works really well for most things.)

For this post, I counted the number of devices and applications I own solely designed for passively tracking my life data.

The count: 12

(And its growing …)

However, despite all of the data I’m collecting on a daily basis – I’m not really doing anything with it.

Yes, I love the graphs my Fitbit creates each week and the maps of my runs created by RunKeeper- but beyond that, I don’t really gain any value spending all this time tracking the activities of my life each day.

What I find really interesting is that every company in the world is experiencing the same problem today.

They’ve spent the last few years capturing trillions of bytes of information about their customers, suppliers, and operations through active human input or passive sensors because data was important – but very few have figured out what to do with it.

Similar to my situation above – some have created interesting charts mapping performance over time or heat maps of where customers are located – but no one has truly found a way to take data and make it really useful for the end customer. (And others haven’t done anything with the data yet at all.)

In reality, it’s not their fault.  We’re at the beginning of a massive shift in how products and services are built and the first wave of this shift was fully focused on enabling companies to more easily collect and store the firehouse of data that was being created by their business everyday.

As part of that we saw tremendous innovation with:

1. Rapidly declining cost for sensors and mobile devices which allow for simple passive data tracking and collection
2. The creation of opensource database products such as Hadoop and Cassandra optimized for large quantities of data
3. Relatively cheap storage, bandwidth, and computation via platforms like Amazon and Rackspace

And the end result was two-fold:

1. Companies are storing a ton more data about their business that they’ve never been able to track before
2. Companies are opening this data up to other companies and developers for use in new products and services

And what’s exciting is that this “open access to data” has created a for significant disruption and value creation not seen since the beginning of the “social web.”

Similar to the early days of the social web (when social was just a feature, before becoming core to every product today) – there is going to be tremendous opportunity for early players in the market as data moves from being simply a feature to a must-have core part of every new product and service.

Or simply put – the next wave of software applications are going to be driven by this new world of open and available data sets – in what we’ve been referring to at True as “Data Apps.”

In short, “Data Apps” are software applications where the core user experience is driven by combining various sources of data (both internal to the application and from third-party sources) to create value for the end user.

These products will leverage both internal data (collected via sensor and human input) and external data via third party API (such as Yelp or OpenTable.)

The net experience puts data at the core of the product experience – leveraging data inputs from various sources to create new actionable insights that were unapparent before.

Some early simple examples of data products:

• Milo: Leverages local inventory data to tell users where a product can be purchased near them.
• Linkedin: People you may know feature
• Klout: Quantifying social media influence for consumers

And today, this is more a feature than core to the entire product offering.

However, in the case of Milo, it’s not too hard to imagine a similar product that goes a step further and taps into my purchase history (via a service like ProjectSlice) to tell me when a clothing brand that I like is having a sale or that my laptop is coming up on warranty and I might want to check out a new one.

More over, go a step farther and a product like Milo who is able to take input data from sensors in my home and can remind me to pick up milk on the way home or even help me plan the dinner party it finds in my calendar by selecting a recipe from Epicurious and purchasing the ingredients from Safeway.

Scary? Yes.

Awesome? Totally.

Even today, we’re starting to see early examples of this type of product design with companies like Ginger.io who are tracking cell phone sensor data to provide predictive healthcare insights for consumers.

By sensing the change in your movement and contact patterns, the team is able to predict when an end user is going to have a health issue.  While today its only for a few select diseases, its not too far fetched to imagine the day when the growing numbers of sensors and time enables them to get better and better at predicting issues (and potentially even order your prescription at the pharmacy and schedule an appointment with your doctor.)

Yes, all of these examples have huge privacy implications and seem like crazy big brother issues today – but as technology improves and makes our lives better – those problems will be dealt with.

As technology continues to improve with innovations such as Linked Data and people continue to get more ambitious in how technology can improve their lives – we’re going to see more and more products leveraging this outside data set pushing the boundaries on better enabling us to live happy lives with the help of technology.

From a purely technical perspective – no longer will the “What’s your technology stack” question be answered by simply Linux, Apache, Database, and a Language – but rather will include a list of first-party sensor and third-party data inputs that will be core to the product design and execution.

Value is created at the bleeding edge of emerging platforms.

As the social wave moves towards maturity and social becomes a required feature set, it opens the door for the next wave of value creation in data and data-driven applications.

And I’m totally ready.

• http://www.betabeat.com/2011/07/25/turntable-fms-400-k-users-dont-really-listen-while-they-work/
• http://techcrunch.com/2011/07/28/music-tweets-spotify-turntable-fm/

To summarize, while early usage of Turntable FM followed the typical pattern of a consumer web application (heavy weekday usage with a slight decline in overall usage on Saturday and Sunday) – the last month has seen a significant drop off in during the week listening activity – with users only listening during their weekend.

Probably worse, according to App Data data from the Betabeat article, the number of MAUs on Turntable FM has flattened and the number of DAUs is down from a high of 49,892 on Sunday 7/17 to 41,865 on Sunday 7/24.

Overall, this highlights the issue with the first wave of Alive Web products – mainly that the rich, engaging experience that drives such quick, widespread adoption – also makes it difficult for consumers to use on a daily or even weekly basis.

Because of this – engagement with the product moves to the weekend (too rich of an experience for work hours) and has to compete with other free time activities (like family and real world activities – which is difficult)

(This is in comparison to traditional consumer web products such as Facebook or Twitter – where users can stop by for a few seconds, generate value, and then get back to life.  These products actually see an increase in during the week traffic relative to the weekend as people use it to substitute for activities at work.)

Because of this – it requires different type of thinking by companies about how to enjoy long-term success and for investors, it requires a different type of thinking when it comes to thinking about metrics for success (especially early on.)

For companies, early focus should be on driving light-weighted utility into their product.

The best metaphor is Facebook and Zynga.  Most users don’t go to play Farmville everyday, however, they do stop by Facebook (utility) where they are drawn into the game via viral hooks around gifting.

Create some light-weighted utility feature that doesn’t require much work from a user – they’ll come back more often – and when they do have a few extra minutes – will quickly find themselves sucked into the deeper Alive Web experience (which is easier to monetize)

For investors, in traditional web products, exceptional growth like that seen at Turntable is a strong signal of consumer traction.

With most utility products, usage and adoption would continue in most cases in a similar pattern into the future.

With Alive Web products, the initial “Wow” factor drives a huge pop in usage – but the adoption speed and stickiness of users is much lower than traditional web products.  The key is to dig in deeper into the cohort analysis (even a short-lived one) and track individual users time on site and how often they come back – both initially and over time (or at least learn more about a Founders plan to create more utility-driven features.)

Alive Web products are great from a revenue perspective – deeply engaged and excited users are willing to pay real money to continue and enhance their virtual experiences.  The key is creating some light weight product feature that is low cost for a user to engage with (its super easy for me to check in to Facebook and Twitter with the few extra minutes I have between meetings) that has a fixed positive outcome (the upside of me checking isn’t terribly high, but I know what it is and the cost is really low)

Once users are in the product, you can more easily pull them into the Alive Web experiences when they have the time and energy to engage – but just in case they don’t – you want to ensure they have enough value to keep coming back.

* These are from my observations of the consumer web services as a user.  I don’t have any insight or data beyond my usage as a consumer and lover of the products listed above . **