Socializing

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Techstars is Austin’s Tipping Point

I was lucky to live in Austin for ~10 years before I moved to Boston. Over those years, I, and many other entrepreneurs, notably Josh Baer and more recently, Bill Boebel, did everything we could to make the Austin startup community more robust. While it has improved around the edges, with an uptick in the past year with Capital Factory’s new space (visited by the President last week) and Bazaarvoice’s IPO, no single event has served as a catalyst. Fast forward to today, and Techstars’ announcement of their new incubator there will be the event that pushes Austin over the edge.

I’ve been fortunate to be a mentor at Techstars Boston, and have seen the profound impact it can have on an ecosystem, even one as dynamic as Boston’s. For Austin, it will mean 3 things:

1) More startups


While Austin has many positive virtues, inertia keeps most companies from moving (though some do, including those fleeing high taxes in California). Getting into Techstars, however, is a reason in and of itself to uproot and move. Techstars usually has two classes a year, and with ~10 startups per class, that is 20 new startups a year! These startups come from all over, which I will talk about in 3) below, and in my experience I’ve seen many stay in Boston after they graduate from Techstars. This will be a huge boon for the Austin startup community as they all come out with some funding, and many go on to become successful businesses. Startups from the Boston Spring 2011 class, for instance, have raised nearly $58 million collectively and have 124 employees!

2) More investors


Crunching the data linked to above, the startups in each Techstars class, on average, have raised $17 million! Austin Ventures, Mercury Fund (our awesome investors at Infochimps) and Silverton can’t fund that by themselves. Money will flow in to fund these startups from all over. Who knows - will a West or East Coast VC open up a satellite office in Austin? This is how it started in NYC…

3) More diversity


I’ve been privileged to mentor a number of Techstars startups, but I’d like to give a nod to three in particular to exemplify the diversity Techstars adds to a community.

Eyal Yair of CartCrunch (aka Saverr) moved from Israel to join the Techstars program and stayed after they completed the Fall 2012 class, working out of Dogpatch Labs. Also from the Fall 2012 class, Alex Schiff moved the whole Fletchnotes team from Michigan and have set up roots in Cambridge. Cyrille Vincey moved his family from France to be in the current Boston Techstars class (demo day is next week) and will be moving his team here following fundraising. These are amazing people that have made the move to Boston because of Techstars.


Austin has always been a great startup town - and it is great to get the validation from Techstars. This is the tipping point.

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“When Gretzky said “skate where the puck is going” he meant in like 2 seconds, not 2 periods. Being 2 periods ahead of the puck is bad.”
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I just finished reading Antifragile, by Nassim Nicholas Taleb, which is, without question, the best book I’ve ever read. I am blogging less since I get most of the same benefits from twitter (interesting conversation, thought leadership attribution, etc.) at a much lower cost (it takes considerably less time to tweet, than to blog). That said, I thought I’d share some of my takeaways from Antifragile in long form since they are worth the extra characters. Below is a summary of the crux of the book, by Dr. Shaiy Pilpel: Everything gains or loses from volatility. Fragility is what loses from volatility and uncertainty. To be antifragile, and thus benefit from volatility and uncertainty (norms in today’s macro-environment), one must be able to identify things that “love volatility” and things that “hate volatility”. Taleb says to be antifragile, one must learn to “not be a turkey”. What he means is that turkeys think life is good on average because every day they are usually well-fed and allowed to roam free. That is of course until Thanksgiving, when they are slaughtered. Turkeys are not free, and they are only fed to be slaughtered. Turkeys are in the matrix. To free oneself of the matrix, one must understand that the fragile breaks with time and thus embrace, and love, volatility. Taleb has a recipe for translating this theory to practice: (i) Look for optionality; in fact, rank things according to optionality, (ii) preferably with open-ended, not closed-ended, payoffs; (iii) Do not invest in business plans but in people, so look for someone capable of changing six or seven times over his career, or more (an idea that is part of the modus operandi of the venture capitalist Marc Andreessen); one gets immunity from the backfit narratives of the business plan by investing in people. It is simply more robust to do so; (iv) Make sure you are barbelled, whatever that means in your business. As in the turkey example, the notion of average is of no significance when one is fragile to variability (e.g. Thanksgiving). Taleb suggests one should not spend any energy on mundane events and should only focus on Thanksgiving-type events (not necessarily Thanksgiving itself, since a Turkey could not know about Thanksgiving, but only that something was likely to change significantly - variability). He uses iatrogenesis as an example. …we need to focus on high-symptom conditions and ignore, I mean really ignore, other situations in which the patient is not very ill. He also uses what he calls the “tragedy of big data” as an example. The more variables, the more correlations that can show significance in the hands of a “skilled” researcher. Falsity grows faster than information; it is nonlinear (convex) with respect to data. Taleb’s solution is to only look at very large changes in data or conditions, never at small ones. Because the commercial world only benefits from addition, not subtraction, one can identify things that hate volatility as things that would be harmed if, as the result of changing conditions, they would no longer exist. For me, I plan to become more vigilant to things in my life that “hate volatility”, and will seek more opportunities to subtract. Happy new year everyone!

I just finished reading Antifragile, by Nassim Nicholas Taleb, which is, without question, the best book I’ve ever read. I am blogging less since I get most of the same benefits from twitter (interesting conversation, thought leadership attribution, etc.) at a much lower cost (it takes considerably less time to tweet, than to blog). That said, I thought I’d share some of my takeaways from Antifragile in long form since they are worth the extra characters.

Below is a summary of the crux of the book, by Dr. Shaiy Pilpel:

Everything gains or loses from volatility. Fragility is what loses from volatility and uncertainty.

To be antifragile, and thus benefit from volatility and uncertainty (norms in today’s macro-environment), one must be able to identify things that “love volatility” and things that “hate volatility”. Taleb says to be antifragile, one must learn to “not be a turkey”. What he means is that turkeys think life is good on average because every day they are usually well-fed and allowed to roam free. That is of course until Thanksgiving, when they are slaughtered. Turkeys are not free, and they are only fed to be slaughtered. Turkeys are in the matrix.

To free oneself of the matrix, one must understand that the fragile breaks with time and thus embrace, and love, volatility. Taleb has a recipe for translating this theory to practice:

(i) Look for optionality; in fact, rank things according to optionality, (ii) preferably with open-ended, not closed-ended, payoffs; (iii) Do not invest in business plans but in people, so look for someone capable of changing six or seven times over his career, or more (an idea that is part of the modus operandi of the venture capitalist Marc Andreessen); one gets immunity from the backfit narratives of the business plan by investing in people. It is simply more robust to do so; (iv) Make sure you are barbelled, whatever that means in your business.

As in the turkey example, the notion of average is of no significance when one is fragile to variability (e.g. Thanksgiving). Taleb suggests one should not spend any energy on mundane events and should only focus on Thanksgiving-type events (not necessarily Thanksgiving itself, since a Turkey could not know about Thanksgiving, but only that something was likely to change significantly - variability). He uses iatrogenesis as an example.

…we need to focus on high-symptom conditions and ignore, I mean really ignore, other situations in which the patient is not very ill.

He also uses what he calls the “tragedy of big data” as an example.

The more variables, the more correlations that can show significance in the hands of a “skilled” researcher. Falsity grows faster than information; it is nonlinear (convex) with respect to data.

Taleb’s solution is to only look at very large changes in data or conditions, never at small ones. Because the commercial world only benefits from addition, not subtraction, one can identify things that hate volatility as things that would be harmed if, as the result of changing conditions, they would no longer exist. For me, I plan to become more vigilant to things in my life that “hate volatility”, and will seek more opportunities to subtract.

Happy new year everyone!

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How I Use Twitter

A colleague of mine at Boundless signed up for twitter earlier this week and asked me how to use it, and yesterday, a friend of mine mentioned he hadn’t “figured out how to fit it into [his] everyday workstream”. I thought I would share my top 3 pieces of advice with everyone, so here they are:

1. Only follow as many people as you care to interact with. If you are overwhelmed by your twitter feed, unfollow anyone that you don’t tweet with or whose tweets you don’t enjoy reading. By “enjoy” I mean: learning or laughing from. Another colleague of mine at Boundless put it this way: “choose the people you want in your coffee house”.

2. Don’t click on every link, but set up a work flow to read links you might find interesting later. I typically don’t click any links during the week, and batch all of my article reading over the weekend. I’ve shared the IFTTT recipe I use which adds the link in any tweet I favorite to my Instapaper.

3. Use twitter to connect with people that geography or social dynamics might otherwise preclude you from. My wife and I were in Maine over Labor Day and sat at a table next to Harold Dieterle (Top Chef Season 1 Winner). It wouldn’t have been appropriate to walk up and talk to him, but after the fact, I tweeted to him and we talked about our experience at dinner. I’ve also made connections over twitter that evolved into meeting IRL and ongoing relationships, including with Mark Suster (who lives in LA) and others.

I hope these 3 tips help you. See you on twitter!

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New blog post on signaling!

Hi everybody. Sorry that it has been a while since I wrote a blog post. I’ve been busy ramping up in my new role at Boundless. I had a conversation today about signaling with a friend of mine who is raising money and he suggested I share my advice to him on the interwebs.

The question: Whether to include institutional investors in your seed round?

The answer: Yes.

Why:

  • The entire dilemma is a fallacy. If you can raise institutional money, you raise institutional money. In my experience virtually every company that is worried about this can’t raise institutional money *yet*. And that’s OK. Angels exist to fill this gap.
  • Signaling only* comes in to play if you’re sucking wind. The main reason some pundits advise companies not to include institutional investors in their seed round is that there is a signaling issue if that institutional investor does not want to lead or participate in the subsequent funding round. The reality is that if the company is sucking wind, it is unlikely to be able raise *any* additional funding. See more here in my Techcrunch guest post Series A Squeeze.
  • If you’re sucking wind, you want institutional investors not angels. Institutional investors are more likely to chase bad money simply because they have more of it. Angels are considerably less likely to follow on than institutional investors. I don’t have time this afternoon, but I anticipate I can find empirical evidence of this looking at participants of follow-on rounds in crunchbase.
Summary: 100 times out of 100, I recommend taking institutional money in your seed round if you can, even with the tiny risk there could be a negative signaling event. If you’re doing well, your institutional investor will likely want to lead or participate. If you’re sucking wind, your institutional investor is considerably more likely than an angel investor to continue supporting the company.
*I anticipate there have been and will be instances where companies were “doing well” and their institutional investor didn’t want to lead or participate in their subsequent round for some reason. I anticipate the number of these instances are insignificant.


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3 take aways and my favorite pin Offline online journal via @pinterest Boundless Learning Raises $8 Million to Make Expensive College Textbooks Free “The revolution is going to happen one way or another, and the future of education won’t be textbooks any way you slice it,” Diaz said. (Ed. Note: I am joining Boundless Learning as VP Content!) Startups Squeezed Out Of Kendall “To be competitive, innovation clusters have to have bulk, because the best people will go to the places that have the most jobs in their industry,’’ said Rowe, whose [Cambridge Innovation Center] provides flexible work space that start-ups share and is already jammed with around 450 small companies. Everything You Wanted to Know About Data Mining but Were Afraid to Ask Despite the fact that the specific technical functioning of data mining algorithms is quite complex — they are a black box unless you are a professional statistician or computer scientist — the uses and capabilities of these approaches are, in fact, quite comprehensible and intuitive.

3 take aways and my favorite pin

Offline online journal via @pinterest

Boundless Learning Raises $8 Million to Make Expensive College Textbooks Free

“The revolution is going to happen one way or another, and the future of education won’t be textbooks any way you slice it,” Diaz said.

(Ed. Note: I am joining Boundless Learning as VP Content!)

Startups Squeezed Out Of Kendall

“To be competitive, innovation clusters have to have bulk, because the best people will go to the places that have the most jobs in their industry,’’ said Rowe, whose [Cambridge Innovation Center] provides flexible work space that start-ups share and is already jammed with around 450 small companies.

Everything You Wanted to Know About Data Mining but Were Afraid to Ask

Despite the fact that the specific technical functioning of data mining algorithms is quite complex — they are a black box unless you are a professional statistician or computer scientist — the uses and capabilities of these approaches are, in fact, quite comprehensible and intuitive.

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Special “typography” Scrabble edition (via @pinterest) Start-Ups Try to Crack Education Market “Overall, venture capitalists invested $429.1 million in 82 education-technology deals last year, up from $334.3 million and 58 deals the year before, according to Thomson Reuters.” How to Steal Like an Artist and Other Tips On Creativity “Instead of studying an entire discipline, “chew on one thinker — writer, artist, activist, role model — you really love.” Learning everything about a particular discipline is overwhelming. That’s why Kleon suggests picking one person and learning everything you can about them. Then he instructs readers to find three people that person loved and learn everything you can about them. When you’re done, just keep repeating the process.” What CRM Means In a Social Age “Customer data has no value in itself. What you do with that data is imperative. Social media gives a marketer a unique lens into content, campaign, and customer insight that has not been available until now. Using this new data source to better understand your customer can drive increased marketing effectiveness across all channels.”

Special “typography” Scrabble edition (via @pinterest)

Start-Ups Try to Crack Education Market

“Overall, venture capitalists invested $429.1 million in 82 education-technology deals last year, up from $334.3 million and 58 deals the year before, according to Thomson Reuters.”

How to Steal Like an Artist and Other Tips On Creativity

“Instead of studying an entire discipline, “chew on one thinker — writer, artist, activist, role model — you really love.” Learning everything about a particular discipline is overwhelming. That’s why Kleon suggests picking one person and learning everything you can about them. Then he instructs readers to find three people that person loved and learn everything you can about them. When you’re done, just keep repeating the process.”

What CRM Means In a Social Age

“Customer data has no value in itself. What you do with that data is imperative. Social media gives a marketer a unique lens into content, campaign, and customer insight that has not been available until now. Using this new data source to better understand your customer can drive increased marketing effectiveness across all channels.”

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Sick Limited New Balance Kicks (via @pinterest) Just the Facts. Yes, All of Them “When I would tell him what a genius he was, he’d give me a dirty look, so I learned to keep it in my heart.” Note: This article is about Gil Elbaz, who I greatly respect. He sent me a nice message after I congratulated him. The Iced-Coffee Economy: Why the Cold Stuff Costs More “All told, these variables, along with the extra coffee required for cold-brewing, add up to a goods cost [for iced coffee] of about 80 cents. That means owners must charge at least $3 to keep their margins healthy.” Flying Robots Deliver Tacos To Your Location Nuff’ said

Sick Limited New Balance Kicks (via @pinterest)

Just the Facts. Yes, All of Them

“When I would tell him what a genius he was, he’d give me a dirty look, so I learned to keep it in my heart.”

Note: This article is about Gil Elbaz, who I greatly respect. He sent me a nice message after I congratulated him.

The Iced-Coffee Economy: Why the Cold Stuff Costs More

“All told, these variables, along with the extra coffee required for cold-brewing, add up to a goods cost [for iced coffee] of about 80 cents. That means owners must charge at least $3 to keep their margins healthy.”

Flying Robots Deliver Tacos To Your Location

Nuff’ said

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3 take aways and my favorite pin University of Texas “Hook ‘em” Cookies (via @pinterest) Understand a New Job (Before You Accept It) “Your career progression will rest on your accomplishments. The role suggests what those accomplishments might be. Think about whether they would make you proud, whether they would meet your aspirations for personal impact.” Interview with Jeff Dachis “Social is a unique marketing platform because it provides something that no other channel can: engagement at scale.” Frighteningly Ambitious Startup Ideas “Empirically, the way to do really big things seems to be to start with deceptively small things. Want to dominate microcomputer software? Start by writing a Basic interpreter for a machine with a few thousand users. Want to make the universal web site? Start by building a site for Harvard undergrads to stalk one another.”

3 take aways and my favorite pin

University of Texas “Hook ‘em” Cookies (via @pinterest)

Understand a New Job (Before You Accept It)

“Your career progression will rest on your accomplishments. The role suggests what those accomplishments might be. Think about whether they would make you proud, whether they would meet your aspirations for personal impact.”

Interview with Jeff Dachis

“Social is a unique marketing platform because it provides something that no other channel can: engagement at scale.”

Frighteningly Ambitious Startup Ideas

“Empirically, the way to do really big things seems to be to start with deceptively small things. Want to dominate microcomputer software? Start by writing a Basic interpreter for a machine with a few thousand users. Want to make the universal web site? Start by building a site for Harvard undergrads to stalk one another.”

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3 take aways and my favorite pin High quality rain jacket to keep you dry at #SXSW (via @pinterest) Why Influencer Marketing Isn’t About the ‘Influencers’ “Most consumers’ purchases are not influenced by someone who tweets frequently or scores high on Klout, but rather by a person’s tight-knit group of family, friends and peers who share common interests and have earned trust regarding purchasing decisions.” Five Factors Accelerating Hadoop’s Mainstream Adoption in The Next 18 Months “Over the next few years, Hadoop will become a common component of the standard IT tool belt. To meet this demand, vendors are starting to package Hadoop into commercial off-the-shelf software (COTS).” Why You Need Marketing Analytics, Not Web Analytics “All of the insights, information, and data you can gather from a marketing analytics tool is really only useful if you do something with it. The true value of analytics isn’t just to prove to your boss that all the marketing activities you’re doing are worth the time and money; it’s also to help you improve and optimize your marketing performance — on both an individual channel-by-channel basis as well as an overall, cross-channel machine.”

3 take aways and my favorite pin

High quality rain jacket to keep you dry at #SXSW (via @pinterest)

Why Influencer Marketing Isn’t About the ‘Influencers’

“Most consumers’ purchases are not influenced by someone who tweets frequently or scores high on Klout, but rather by a person’s tight-knit group of family, friends and peers who share common interests and have earned trust regarding purchasing decisions.”

Five Factors Accelerating Hadoop’s Mainstream Adoption in The Next 18 Months

“Over the next few years, Hadoop will become a common component of the standard IT tool belt. To meet this demand, vendors are starting to package Hadoop into commercial off-the-shelf software (COTS).”

Why You Need Marketing Analytics, Not Web Analytics

“All of the insights, information, and data you can gather from a marketing analytics tool is really only useful if you do something with it. The true value of analytics isn’t just to prove to your boss that all the marketing activities you’re doing are worth the time and money; it’s also to help you improve and optimize your marketing performance — on both an individual channel-by-channel basis as well as an overall, cross-channel machine.”