Archive

Posts Tagged ‘Reid Hoffman’

Reverse Engineering: Gautam Gupta Goes From VC to Entrepreneur

May 3rd, 2012 05:00 admin View Comments

Gautam Gupta had it all. He was just 26 and a rising venture capitalist with a bright future and a big salary. An associate at General Catalyst Partners, he’d sourced six deals, deployed $65 million and had just opened General Catalyst’s Palo Alto office.

Then he threw it all away to launch a startup. And not some cool startup with a mobile-social app poised to be acquired for $1 billion. An e-commerce startup. Even his mother began to wonder.

“My mom’s first question was, ‘Are you sure about this?’” Gupta recalls.

Indeed, it was a surprising decision. Maybe not as surprising as Ben Horowitz’s decision to go public with his unironic and cringeworthy embrace of better management through gangster rap… but still.

Reverse Engineering

Most standout Silicon Valley careers track the other direction, from successful entrepreneur to venture capitalist (see: Peter Thiel, Reid Hoffman, etc.). Why did Gupta go the other way?

“I had never really done anything in my career outside venture capital,” he says. He joined General Catalyst straight out of Babson College. “So now I am 26 and I thought I should spend at least a few years of my life trying to build a business or do something on the operating side before I got too deep into VC and was not able to get out of it.”

Together with a college friend, he started a company called NatureBox, which sells healthy snacks online. He wasn’t completely starting over; General Catalyst provided a large piece of the new company’s seed financing.

Health food is familiar territory for Gupta. He weighed 210 pounds when he was 12 years old – he trimmed his 5-foot-6 frame to 145 pounds by improving his eating habits. E-commerce is also a good fit, since Gupta specialized in e-commerce investments while at General Catalyst. He knows it’s not the sexiest tech space these days, but he likes the challenge.

Solving Difficult Problems

“The first reaction to the food industry you get from VCs is, ‘Why would you want to start a food company? The margins are so low, it’s perishable,’ and on and on. But I like the idea of solving a difficult problem. You can still build an awesome business in the space – it has been done.”

Besides, it’s counterintuitive. Like Gupta.

Source: Reverse Engineering: Gautam Gupta Goes From VC to Entrepreneur

The Potential of Turning Mobile Money Into Mobile Apps

March 5th, 2012 03:30 admin View Comments

shutterstock_mobile_payments_cartoon_150.jpgWhile it might be surprising to some, there are many things that we can learn from Boston-based startup SCVNGR. More appropriately, from its mobile payments business LevelUp. The company is rethinking the nature of transactions from the ground up with one distinct principle: transactions are data.

What is currency but the physical representation of a certain type of valuable data? That data changes hands through transactions and the transactions themselves create data about what was bought, who bought it, where and how. We can call this transactional metadata. LevelUp now has enough money flowing through its ecosystem where it can take the transactional metadata and turn it into programmable applications. As such, the company released an API last week so developers can applications on top of transactions. When you wrap your head around it, this is a pretty neat phenomenon.

levelup_150x150.jpg

The Value of Transactional Metadata

LevelUp is an app that lets you pay at physical merchants with your smartphone. Go to a Subway or Quiznos and order a sandwich and pay by having the cashier scan a QR code on your phone. SCVNGR founder Seth Priebatsch likens it to just another credit card although one that happens to live in your smartphone.

“What we started experiencing is that some of the larger brands using LevelUp were starting to push huge volume through it. In some cases we are starting to see more transactions through LevelUp than they are through America Express and we are closing in on MasterCard for a lot of them,” Priebatsch said.

As an app, LevelUp knows much more about your purchase history than any normal credit or debit card ever could. Creating this type of data, such as where and when you bought something, what exactly you bought, how often you stop at the merchant and what merchants are nearby, has tremendous value. Really, when payment processors think of the revolution of “smart” payments, this is the type of data they are thinking of. Square has its eyes directly on this type of data as well with its “Card Case” initiative and new analytics for merchants. The Google Wallet conglomeration and Google Offers are trying to add value to transactional data as are the big payment processors such as MasterCard, Visa and American Express.

square_card_case.jpgThe fundamental shift in the payments industry is making transactions rich with programmable data and then building services on top of it.

What kind of applications are we talking about? You probably have already seen the early versions. Loyalty programs, which have been in existence for decades, can tap into transactional metadata to offer targeted offers based on frequency of purchases and proximity. Warranties and receipts can become stand-alone apps or integrated into existing apps through some type of Dropbox-like integration. Reviews can become much more effective through existing services like Foursquare if transactional data is taken into account.

The idea of smart payments and turning transactional metadata into applications is not some half-baked dream. It is happening. For instance, look at what Reid Hoffman, Ali Rosenthal and James Slavet of Greylock partners wrote in a guest post in Forbes last week:

“The platform in this case is the payment network. Software developers will add new capabilities to cards by programming the payment network to link online applications to specific payment events. Consumers will be able to effectively ‘drag and drop’ apps to their smart cards in the same way that they add apps to their smart phones today,” the article said.

Two Sides to the Coin

We can talk about the value of payment methods until Armageddon but there are more sides to creating value from transactional metadata than how the purchase was made. It could be a QR code like LevelUp, NFC like the Google Wallet, a digital wallet like PayPal or Square, the method does not matter. The goal of each of these services is to create data that the networks can build on top of.

How is this data carried though? Transactions need vehicles to send that data to the appropriate cloud so it can be processed and sent back in the form of services, offers and applications so it can be of value to the consumer. In this case the point-of-sale (POS) system becomes tantamount.

One of the biggest knocks against NFC and the Google Wallet project is that it that the infrastructure to support it right now is limited. MasterCard’s PayPass terminals can handle NFC but the software needs to be upgraded to handle offers. The fact of the matter is that while payment technology is advancing, the POS systems behind it are the hubs of the transactional metadata and are behind the curve.

square_logo150.jpegSquare is working to change that with its Register iPad app. From a top-to-bottom integrated solution, Square has the future of payments figured out. It starts with the transaction method (with whatever input you might want) and it collects the information in the Register and administers it to its Card Case. The loop is complete. The next step for Square is to expand that loop to add more value.

LevelUp has come to understand that the POS system is tantamount as well. The API it released last week allows POS integrators and manufacturers to add LevelUp as a distinct option next to the likes of MasterCard, Visa and American Express.

“When it is integrated into the point of sale we can start giving the merchant analytics on not just the amount and the customer but what was actually purchased,” Priebatsch said.

By going straight after the POS operators, LevelUp takes the onus of integration out of the hands of the merchant. Square must rely on getting its Register iPad app into the hands of retailers while LevelUp can come pre-loaded straight from the POS vendor that has the possibility of creating scale very quickly. LevelUp should be announcing partnerships with some of the top POS vendors within a couple of weeks.

“These point-of-sale companies are saying that, ‘hey, our customers, both large and small, are requesting this so we are going to build a platform for LevelUp at the payment node. So, we support MasterCard, we support Visa, Discover and LevelUp and we are just going to build in support for that,” Priebatsch said. “When you get into platform level support that opens up many, many retail locations and opens them up to using LevelUp as well. So, that is really exciting.”

LevelUp is currently processing $1 million in transactions a month, a number that is very significant in its growth. Yet, LevelUp still has a lot of catching up to do if it wants to roll with the big boys. Square is now processing up to $4 billion a year and the payment processors see trillions of dollars between them flow through their pipes. But, the big boys can learn a lesson from little SCVNGR at the same time.

2012 will be the year that pilot programs are launched by many of the top payment companies and POS vendors (which sometimes are the same thing) and get actual systems into the hands of merchants. The dream: create an infrastructure where transactional metadata informs the entire ecosystem and creates value for everybody.

Top image courtesy of Shutterstock

Source: The Potential of Turning Mobile Money Into Mobile Apps

The Power Of Pull

July 3rd, 2011 07:08 admin View Comments

Editor’s note: This post was written by Alex Rampell, the CEO of TrialPay. Rampell is a regular contributor to TechCrunch – see his previous guest posts here.

What makes email, Facebook, and Google so valuable? Answer: Visiting them is largely unprompted, notwithstanding the synapses that fire in your brain that make you check your email, your Facebook feed, or decide to research something on Google. In other words, people pull content themselves, rather than having that content be pushed — or foisted — upon them.

The best way of looking at consumer web applications is as a complex stack of “pulls” and “pushes.” Lest these terms be confused with an earlier generation of push: a “pull” is an unsolicited action by a consumer, whereas a “push” is a solicitation by a seller/producer.  The consumer ultimately “pulls” from a mobile phone or computer. Everything else is “pushed” to the consumer, through ads, e-mails or other marketing efforts from companies eager to get business and traffic.

The greatest trick that Facebook ever “pulled” was transforming itself from a push platform (dependent on email to woo users back) into a de facto pull platform.  Facebook touts that 50%+ of its users log-in every day, and my guess is that the vast majority do so with no prompting. Push is still valuable but simply complements the massive pull that Facebook has developed.

Why is Pull so essential for a web company? The intersecting forces of human psychology and economics.

First, psychology: consider how most people hate being “sold” to. “Being sold to” is a form of push. Consumers get hundreds of unsolicited offers and emails pushed to them every week. They learn to tune these solicitations out, especially if they are not in a buying mindset. Relevance is a function of offer-consumer fit paramaterized by time.

Second, economics: A pull platform doesn’t need to spend any money to reach or acquire customers; a push platform does. Facebook’s marketing spend per user has to be the lowest of any company known to man. Granted, Facebook is intrinsically viral and laden with network effects, but the unprompted pull phenomenon has been crucial to Facebook’s dominance.

The value of pull is not just for consumer companies. Any Business-to-Business company knows the value of “demand generation”: catalyzing a “pull” by customers. The quickest and cheapest sales cycles start with a pull by the prospective customer.

For any web company, fostering Pull is essential to creating value and engagement.  There is no shortage of great applications and amazing technologies which stagnate due to a lack of pull.  But the greatest economic achievement of being a “pull” platform is in becoming the mechanism by which “push” companies must engage with audiences, paying handsomely to do so. This expectation is why a company like Twitter can be valued in the billions with minimal revenue.

Here are some ways of thinking about fostering pull:

Plan Around Events

Groupon Now is Groupon’s attempt to add Pull to its traditionally Push service. I want to eat, where do I go? Groupon. Every human desire has a natural pull tendency. Being the “first responder” to a human desire is incredibly valuable.

Find Offline Analogies

Most forms of pull fit a predefined social pattern, per the comment on “human desire” above. Before Google, people used phone books (unprompted) to find services. Before email, people would check their postal mailbox, generally at a given time (after the mail was delivered).

Answer Recurring Questions

There are certain types of content that consumers will invariably pull (or want pushed to them). These types of content generally answer recurring questions of a consumer. How much did I spend Receipts, bank websites)?  Where am I going (Google Maps)?  How do I get there (Kayak)? What’s wrong with me (webMD)?

Build Brand and Familiarity

Once one of the above is satisfied, brand and credential storage foster pull. A frictionless and “known” experience catalyze pull for transactional activities. While Amazon, as the largest spender on Google, does a fair amount of push, they also benefit from a tremendous amount of pull when consumers decide to shop. This is a combination of the brand but also their accumulation of user/payment credentials.

There is no substitute for pull in establishing success for a web company; the key is producing something sufficiently valuable in repeat interactions. Reid Hoffman has noted that “social networks do best when they tap into one of the seven deadly sins.” It’s no coincidence that people have, unprompted, “pulled” those sins since the dawn of humanity.

Image: thisisboss

Source: The Power Of Pull

Zynga’s Largest Shareholders And How Much They Own

July 1st, 2011 07:56 admin View Comments


Zynga just filed for its much-awaited $1 billion IPO and know we know how much founder Mark Pincus and the company’s investors own in the company. Zynga’s investors include Reid Hoffman, DST, Google, Tiger Global, Kevin Rose, Kleiner Perkins, Union Square Ventures, Andreessen Horowitz, Peter Thiel, Foundry Group and IVP.

Pincus is the largest shareholder of Zynga, with 16 percent of the company. Kleiner Perkins owns 11 percent of the company; IVP owns 6.1 percent; Union Square Ventures owns 5.5 percent; Foundry owns 6.1 percent, Avalon Ventures owns 6.1 percent and DST owns 5.8 percent.

Pincus makes a salary of $300,000, and Van Natta earns a salary of $200,000.

Source: Zynga’s Largest Shareholders And How Much They Own

Social Gaming Giant Zynga Files For $1 Billion IPO

July 1st, 2011 07:12 admin View Comments

Zynga has just filed its S-1 with the SEC, indicating that the company plans to go public. According to the filing, Zynga aims to raise as much as $1 billion, but this could be a place holder amount. Updating

According to the filing Zynga has 60 million daily active users in 138 countries. 38,000 virtual items are created every second and game players spend 2 billion minutes a day on Zynga games. The company had $597 million in revenue in 2010, and posted revenue of $235 million in the first quarter of 2011.

Zynga is profitable, posting $90.6 million in net income in 2010, which is a a 28% net margin. In Q1 of 2011, the social gaming giant reported $11.8 million in profit. Zynga has $995 million in cash on hand.

Founder Mark Pincus writes in the filing of the company’s operational philosophies: Games should be accessible to everyone, anywhere, any time; Games should be social; Games should be free; Games should be data driven and ; Games should do good.

Underwriters include Morgan Stanley, Goldman Sachs, Bank of America, Barclays Capital, JP Morgan and Allen and Company.

Zynga’s investors include Reid Hoffman, DST, Google, Tiger Global, Kevin Rose, Kleiner Perkins, Union Square Ventures, Andreessen Horowitz, Peter Thiel, Foundry Group and IVP.

Source: Social Gaming Giant Zynga Files For $1 Billion IPO

Social Fundraising Platform Piryx Is Reborn As Rally.org With Top Investors In Tow

June 16th, 2011 06:00 admin View Comments

There’s a new name in the online fundraising scene, but it’s already got plenty of users — and a very impressive seed funding round. Meet Rally.org.

Rally got its start some 18 months ago, when the company was called Piryx (we covered their growing popularity as a political donation platform about a year ago). The company has built out what’s effectively a ‘Paypal for fundraising’, giving charities and other organizations a fundraising platform with an integrated payment system. And today it’s announcing that it’s rebranding itself to Rally.org, in addition to a seed funding round with investors who include Flood Gate (Mike Maples), Greylock Discovery Fund (Reid Hoffman) and Ron Conway. The size of the round isn’t being disclosed, but they say it’s a “substantial seed round”.

So what exactly is Rally for?

Rally cofounder and CEO Tom Serres says that one of the issues with fundraising platforms is that many of them only work with non-profits. Rally, in contrast, can support both large-scale charitable causes in addition to less ‘official’ groups — like an initiative to renovate a local park. Serres says that the site is looking to help broaden the definition of what a ’cause’ is, and to use social sites like Facebook and Twitter to help each cause turn their supporters into activists.

The company is describing the old Piryx as something of a proof of concept, and the new Rally.org will incorporate existing features as well as new ones.  In addition to handling the payment processing, Rally is also looking to help causes build strong online presences, with well-designed websites (both for desktop and mobile). The result, as you can see below, looks a lot like Tumblr (note the ‘Donate Now’ and ‘Fundraise’ buttons though). Fans of each cause will be able to create their own blogs associated with the cause. Another key change: the homepage for each cause will now be hosted at Rally.org/CauseName, which means that Rally is looking to build itself into a brand that’s synonymous with fundraising and cause communities.

The site is currently in private beta — you can request an invite from the homepage. Rally currently has 15 employees, and says it intends to close out the year with at least 40.

Rally.org competes in some ways with Causes.com, which has long been helping companies and charities leverage Facebook and other social networking sites to raise funds.

Source: Social Fundraising Platform Piryx Is Reborn As Rally.org With Top Investors In Tow

Hornik on Blippy: “Apparently I Was More Interested in Sharing Credit Card Purchases than the Average Person” (TCTV)

June 4th, 2011 06:59 admin View Comments

Let’s be honest: One of the reasons David Hornik actually agreed to be on camera at All Things D is that he didn’t have a startup about to file to go public any second. So we talked about some of his more high profile investments that haven’t always lived up to the hype.

Hornik explains why reports of Blippy’s death have been greatly exaggerated, and why he says the investment still wasn’t a mistake. What’s more he dishes (sort of) of the nine-figure annual revenues of another portfolio company Say Media– the love child of VideoEgg and SixApart. And he tells us about an enterprise software company that’s a budding sleeper hit.

More broadly, he argues the immediate-hit-or-it’s-a-failure misses the point of venture investing. (A philosophy Reid Hoffman might agree with after a decade-long slog at LinkedIn.)

Let’s talk about you as a venture capitalist. I’m just kind of thinking off the top of my head, deals that I associate you with.

Yes.

Video X is expired, they’re now one.

Same media.

Blippy, now it’s gone.

No, no. Not at all.

Well, it pivoted?

Not at all. Here’s the thing. The thing that people associate with Blippy may not be the billion dollar idea. But Blippy, this group of incredibly smart entrepreneurs, is anything but gone. Actually it turns out that… So Chris and Ashvin, who were the founders of Blippy, are some of the greatest… If you’re talking about entrepreneurial athletes, like these guys are unbelievable and you would back them.

And it’s sort of like saying that it’s too bad that they didn’t win that particular world series, but we’ll see you next year.”

So they’re working on some really interesting stuff. They have a great team that no one is leaving. They’re really excited to be working these guys. And they have enough money for the next 10 years or something. So, this idea that… Gee, it either works or when it doesn’t work, then it’s a failure whatever.

Kind of misunderstand the history of startups, right? And it’s a lot… And I going to see this a lot and I can’t… You have to bet on the ones that are the winners and the losers are the losers.

Right.

Look, there will be some that are big winners and it’s exciting and if you’re an early investor that’s amazing and congratulations. But it turns out that there will be companies that are built over a period of time by really smart, hardworking entrepreneurs that build important stuff that people value.

So look, I will admit that our apparently I was more interested in sharing my credit card purchases than the average person. I’m still sort of shocked by that, to tell you the truth because I thought it was super fun.

Yeah.but it’s maybe a good example of “don’t invest in the things that you love”, because what you need to do is find out the things that are compelling more broadly. That’s fine. The good news is that I really…

But I think someone needed to test that assumption.

Yeah.

We wouldn’t have known.

No, it was great.

Like I actually… I mean [unintelligible] TechCrunch about. Oh, we were too [unintelligible], I don’t think we were. I mean looking back at coverage… Again really, really smart entrepreneurs, trying something that is completely crazy just because of the outcome?

Yeah.

That doesn’t make any sense.

Yeah, thank you.

That’s exactly right. Because there have been lots of Twitter-like things that people tried and didn’t work. And so what?

I mean, how many times did social networks not work.

Yeah, exactly. Look at Mark Pincus, he had one of those. So clearly he’s not a failure by virtue of the fact that Tribe.net didn’t succeed and social networking wasn’t a bad idea because Friendster didn’t end up succeeding.

Right!.

And that; so the good news is that, as a general matter, you know, at August Capital, our focus has been on people we really like who are gonna, you know, who are gonna build great stuff and then hopefully they do, right?

Right.

And in a disproportionate amount of time, they actually end up building pretty interesting stuff. And so that’s, I mean, that’s a VC that’s all you can do. So you like, you mentioned Six Apart and Video Egg; they’re now together. Well, you know, it’s a huge company. Same media ; many tens of millions of dollars of business.

I heard how big their revenues are. Would you like to share that with our readers? It’s like fifty million.

No, it’s well more than that.

Like a hundred million?

It is well more that that.

It is my conservative estimate that this company is worth. hundreds of millions of dollars.

Yes, there isn’t any question. It is, it is orders of magnitude larger than the things that think they’re competing with say media, right?

Yeah.

So, people are focused on other things and if they want to under value that or whatever, that’s fine. But the reality is, these were teams of people who are focused on very clear things. So, Video Egg was about bringing real value to brand advertisers?

Mm-hm.

How do you create a better brand experience across the social media infrastructure? And then Six Apart was about how do you build the best possible engagement experience for bloggers, for, and ultimately for passion based media across.

Right.

160 million units or whatever. And when you put those things together, you have a very big interesting business that ends up being, I think, the paradigm for the next It’s a generation of digital media companies. So you know, eventually people will look and go “Holy cow!, how did that get to be such a big business”?

So, are they your most exciting company now? Who gets you out of bed in the morning?

I don’t know. I mean they’re great. They’re a fabulous company and I love the people involved. You know, I have this enterprise software company called Splunk that I funded. That where three really smart engineers who said, “you should take log files and figure out how to correlate them and manage systems”.

And it’s, again, I don’t know, is it a hundred-and-something million dollar business this year?

Right.

I guess we’ll see. It is a big business. Companies are getting a ton of value and the people building it are worried about creating value for their companies and doing a better job of system debugging. And all these things you go, “well, what is that”? Who cares about that stuff? Well, you know, they’re just doing a good job.

So, I love all of my children the same But you know, the ones that are gonna make more than a hundred million.

He will become your favorite?

Did I? My kid? Yeah, that was my daughter. Yes, of course she’s still my favorite. But I’ll tell you what, if my son, Julian wins a Tony, he gets to be my favorite for that week.

It’s just up to the Tony jury.

Yeah exactly! When Noah starts the next Facebook, he can be my favorite for a week.

So, only for a week though?

Yeah.

Source: Hornik on Blippy: “Apparently I Was More Interested in Sharing Credit Card Purchases than the Average Person” (TCTV)

Note to Self: If the Halls Clear at Conferences, IPOs Are Near

June 2nd, 2011 06:38 admin View Comments

In Silicon Valley the terms of venture capital deals, the prices of valuations and the real stories of ousters are routinely dished, whether they always show up in the press or not. Sure it’s all off the record or on background or whispered at a coffee shop, but people who live here love what they do and when companies and valuations grow this quickly, it’s hard to keep the juicy details under wraps.

So when they can’t dish, what do they do? Hide.

No one wants to mess with the Securities and Exchange Commission. So I should have realized sooner the reason why so many attendees that I usually talk to at conferences seemed to vanish into thin air during the All Things Digital Conference.

The Greylock partners– four of them were here– were all conspicuously absent the last few days. LinkedIn founder and Greylock partner Reid Hoffman was here….supposedly but I never laid eyes on him. Ditto James Slavet. And John Lilly was around opening night, but I didn’t see him again. I saw David Sze at check in, but he only resurfaced again an hour or so ago looking for a lost phone. It was the first time I’ve ever seen him refuse to stop and chat. Moments later, the Groupon S1 came out and Pandora priced. I don’t know if he ever found his phone, but fortunately he’ll soon be able to buy about zillion replacements.

Andrew Mason was supposed to sit down with us after his fireside chat, then suddenly had to leave immediately. And of course Mark Pincus pulled out of the conference at the last minute altogether, spurring Zynga IPO speculation. This after Hoffman, the Pandora founders and several others politely declined our invitations to speak at New York Disrupt, saying our San Francisco conference was far better timing. (I should note that Marc Andreessen was also nowhere to be seen except on stage last night, but that’s just Andreessen.)

It’s tough days to be a tech reporter trolling the halls for news, when the newsmakers vanish. Nearly all of Groupon’s investors, its press people and its CEO were all in the same hotel with the tech press elite and somehow the story didn’t leak. Score one for the SEC and a big fail for the tech press. I’d resign in shame, if every reporter here didn’t fail just as terribly.

So who was visible in the hallways this week? Two people of note: Twitter CEO Dick Costolo and Facebook CEO Sheryl Sandberg. Indeed both were quite cordial and easy to find, roaming the halls for several days without handlers. In absence of other news coming out of this event, take that tidbit for whatever it’s worth.

Source: Note to Self: If the Halls Clear at Conferences, IPOs Are Near

Eric Schmidt Is a Surprisingly Worried Man

June 1st, 2011 06:35 admin View Comments

It was a surprising way to kick off a technology conference at a moment in time where any piece of news– big or small– cues up the BUBBLE-OR-NOT Greek chorus of wailing and chest beating. Tech valuations, while almost universally sky-high, are nowhere near as high as the paranoia that we’re in a bubble. Or worse: The fear that you aren’t on the record having called this one out. A lot of tech commentary today has all the sophistication of a schoolyard game of “NOT IT!”

But the man on stage opening All Things Digital’s ninth conference wasn’t a player in the Valley’s central Web 2.0 psychological drama like Mark Zuckerberg of Facebook or Reid Hoffman of LinkedIn. CEO Dick Costolo of Twitter would wait until day two. Hearing from Marc Andreessen, the puppet master behind many of those soaring valuations, would have to wait too.

The man in All Things D’s ergonomic red hot seat was Eric Schmidt, the former CEO of Google– the last company everyone said would incite a public market tech bubble. (It didn’t.) The last company Wall Street watchers claimed was insanely overvalued. (It wasn’t.) The company that has been on top for much of the last decade, as the older generation of Web 1.0 giants have failed to innovate and up and comers have declined to go public.

Schmidt was the man who helped take Google from an amazing product founders were eager to sell to Excite or Yahoo to the most valuable company on the Web with one of the most killer business models in modern economic history. The man somewhat dismissively labeled with the informal title of “adult supervision” over Google’s founders– a role that more modern product wunderkinds like Zuckerberg have actively eschewed as unnecessary.

You could argue Schmidt left on a strategically brilliant high note last year. Google has been eclipsed in the Valley hype machine by Facebook, and no doubt, in the public markets too whenever Facebook decides to file. LinkedIn has already beat it as the largest Web IPO of all time. By handing the reins to Larry Page before that happened, you could argue Schmidt handed over Google’s one-trick-pony problem to the engineers, leaving himself free to play the role of elder Internet statesman for the company, the President Barack Obama reelection campaign, or any sphere he prefers.

So why didn’t he seem more happy?

The talk didn’t seem to focus on all that Schmidt had accomplished, or Google’s still-powerful role as the second most highly valued member of the big four consumer technology companies as he called them, Google, Amazon, Apple and Facebook. Instead, it heavily dwelt on his failures. He repeatedly fell on his sword about missing the social/ identity revolution. He said four years ago he wrote memos about it, but did nothing about the memos he wrote. “I clearly knew I had to do something and I failed to do it,” he said. When asked why he responeded he was “busy, but the CEO should take responsibility and I screwed up.”

That wasn’t all. He talked about his failure to negotiate a music subscription service to run on Android, his failure to make faster product decisions which hopefully Page will change, his failure to make strategic deals with Facebook because he wouldn’t match Microsoft’s terms, and his failure to get Nokia as an Android licensee for its still gargantuan mobile phone base, particularly in emerging markets. He gave a nod to Apple’s “beautiful” but closed hardware products as the opposite of what Google offered, noted Google was no. 2 in display ads but that was still a multi-billion dollar business, and even said Bing did some parts of search better than Google. The talk wrapped up with a demo of Google Wallet– which already demoed last week– and came across less than revolutionary, more as an attempt to chase more nimble innovators like Square and Groupon.

When offered the opportunity to say what he’d done well at Google, he demurred, saying “You guys can write that story.”

Part of it was the questions lobbed at him. He was certainly not offered up softballs. But the last time I attended the All Things Digital conference, Ballmer and Gates were the opening chat. Microsoft is way more behind the eight ball than Google– particularly when it comes to the Web and the consumer– and they scatted and bebopped all over the stage about Microsoft’s all-mighty market position, and how those worried just didn’t get it.

Don’t get me wrong– it was refreshing to hear a tech leader who wasn’t so overtly in spin mode. It was a fascinating and frank window into his mixed feelings about his tenure at what’s still the world’s most powerful Internet company. But there’s a fine line between modesty and melancholy. Maybe it betrays something about my mood too, but for me, Schmidt seemed to tip over that line.

It wasn’t just his tenure at Google that weighs on him– it seemed to be the place the technology industry is in. Google was the crowning moment of Schmidt’s tech career, not the beginning of it. He cut his teeth in the enterprise world and when asked about the consumerization of enterprise, he didn’t immediately spin it as a win for an ad-supported, consumer facing company like Google. Instead, he said dramatically said, “We are seeing the death of IT as we know it.”

On a global policy level he described his biggest fear as the “balkanization of the Internet,” or a trend towards individual nations policing the Web in such a way that it’s no longer one, single open thing, rather a set of different Webs around the world. This is the pessimistic counter to the promise of Android, a platform that is activated on 400,000 phones per day and promises to take Google’s mission to organize and provide access to the world’s information global in a far deeper way than the PC revolution ever could. Similarly, he emphasized that all the great stuff being built on the Web to empower the rise of democracies could also be used to empower the world’s tyrants, terrorists and dictators. This lead to an admission that Google’s face recognition software was the only innovation the company had held back on releasing for ethical concerns that it be used for surveillance or constructing a harmful biometric database.

He insisted repeatedly he liked working at Google, wasn’t going anywhere anytime soon, and joked he’d work there after death if he could figure out a way. That may all be true, but it was clear from Schmidt’s demeanor that Google is no longer the swaggering do-no-wrong company of a few years ago. If there’s a frothy bubble in tech, it’s certainly not located “in the ‘Plex.”

Source: Eric Schmidt Is a Surprisingly Worried Man

Is There A Peak Age for Entrepreneurship?

May 28th, 2011 05:09 admin View Comments

Editor’s note: Adeo Ressi, is the founder of The Founder Institute and TheFunded.com In this guest post he argues against ageism when it comes to to entrepreneurs. Ressi is 39.

The recent articles proclaiming that 25 is the peak age for entrepreneurship deserve a considered and factual response. The demographic and racial profiling that has plagued venture capital and tech entrepreneurship has a new friend—ageism. This has to stop.

Anecdotal Evidence:

It does not take but one minute to look around the world and prove any thesis of a peak tech founder age incorrect. There are countless entrepreneurs over the age of 30, including Reid Hoffman (age 35 in 2002), Evan Williams of Twitter (age 35 in 2007), Mark Pincus of Zynga (age 41 in 2007), Arianna Huffington of the Huffington Post (age 54 in 2005), among many others.

A commonly held belief is that younger founders appear to inspire waves of innovation, like in the mid-1990s and even today with Facebook, while older entrepreneurs launch sustainable businesses. The reality is more complicated. There are older inventors and entrepreneurs, like Dean Kamen (age 60) or Elon Musk of SpaceX (age 39), who continue to create revolutionary products; and there are, of course, thousands of young entrepreneurs pursuing “me too” businesses.

Anecdotal data is at best inconclusive. I launched my first internet business at the age of 22 in 1994, and through naive optimism and blind luck, it eventually became worth over $600 million. My direct impact on the value creation was relatively low. In fact, many of the revolutionary internet businesses started in the mid-1990′s were founded by 20-somethings with blind optimism. However, the majority of the sustainable businesses created in the 90′s were founded or run by older entrepreneurs.

In some cases, older entrepreneurs paired up with the younger founders, like Google (Larry Page and Sergey Brin were both age 25 in 1998, and Eric Schmidt was age 46 in 2001). In other cases, more successful clones were launched by older entrepreneurs, like Amazon (Jeff Bezos was age 30 in 1994). And, many young founders were pushed out or sidelined for more seasoned leaders, like with PayPal (Peter Thiel took over from younger founders when he was age 31 in 1998).

Anecdotal evidence, personal stories, and biased sample sets are not the best way to draw meaningful conclusions, so let’s look at some facts.

Factual Data:

In order to identify the traits of successful entrepreneurs, the Founder Institute has conducted a battery of proprietary personality and aptitude tests on over 3,000 applicants worldwide, and then carefully tracked the progress of our nearly 1,000 enrolled founders and 350 graduates. Research scientists employed by the Institute have examined the results of the successful founders and the less successful cases, looking at high-level traits and even examining test results on a question by question basis.

The research shows that an older age is actually a better predictor of entrepreneurial success, and that three other traits also correlate strongly to success: strong fluid intelligence, high openness, and moderate agreeableness. Let’s dive in deeper on the four key traits of entrepreneurial success:

  1. Older age has shown in the data to correlate with more successful entrepreneurs up to the age of 40, after which it has limited or no impact. Our take: Older individuals have generally completed more complex projects—from buying a house to raising a family. In addition, older people have developed greater vocational skills than their younger counterparts in many, but not all, cases. We theorize that the combination of successful project completion skills with real world experience helps older entrepreneurs identify and address more realistic business opportunities.
  2. Fluid intelligence is a largely genetic trait that measures one’s ability to quickly learn a rule set and apply the learned logic to solve problems. It can also be referred to as abstract thinking, and fluid intelligence declines with age. Our take: Entrepreneurs are constantly faced with new problems that need to be understood and solved within minutes—from sudden resignations to service outages. It makes sense that they require fluid intelligence to succeed.
  3. Openness is a Big Five personality trait that measures one’s ability to see and appreciate the world around them. It is often synonymous with curiosity, adventure, or cultural awareness. Our take: Entrepreneurs, particularly in fast-growth startups, need to challenge accepted norms, and be open to changes and new information that affect the success of their enterprise.
  4. Agreeableness is another Big Five personality trait that measures cooperation versus antagonism. It can be synonymous with compassion, or, conversely, with suspicion. Our take: A moderate level of agreeableness correlates with the ability to stick to a chosen path despite conflicting information and naysayers, allowing an entrepreneur to persevere in the face of obstacles.

Our Methodology:

The 3,000+ tested applicants come from 17 cities across four continents worldwide, and range in age from 17 to over 60. Applicants self-select as being interested in entrepreneurship by applying to the Institute in the first place. Two times per year, the Institute expands the breadth of the test with different batteries, lasting as long as three hours, providing a greater set of data to identify new traits of success. In addition, the Institute enrolls a number of semesters per year without using the test results so that we have a control group to measure the effectiveness of the test results in admissions.

Figure 1: Age of Founder Institute Applicants at Time of Applying

Defining Success:

Since the Institute is only 25 months old and the oldest graduates are only 18 months out of the program, there are no M&A deals or public offerings among the graduates, yet. So, the Institute uses a careful performance evaluation of founders and their companies to identify their relative “success.” Each founder is rated weekly during the program by a subset of their closest peers in their program, rated twice throughout the program by seasoned CEO Mentors, and tracked quarterly after graduation through self-reporting on key metrics, such as revenue growth and market traction, with validation of this progress by the Founder Institute itself. All of this data is collected, processed and analyzed twice per year to check, validate and change our assumptions.

Only 39 percent of applicants are under 30, and of those who graduate, 36 percent are under 30.  The average age of all graduated founders is 34.4 years old, and the performance results of graduates speak for themselves:

Figure 2: Performance of Founder Institute Graduated Companies

Figure 3: Age of Founder Institute Graduates at Time of Graduation

The Testing Results:

The admissions test itself predicts success well by factoring in age and the other traits. 53% of the time the test will predict the assessment of a founder’s success by peers and mentors within 5%. The predictions of the test are off by 20% or more in only 14% of the cases.

Figure 4: Prediction of the Test Results Measured Against Peer Reviews

Conclusion:

Age is only one factor among many to predict the success of entrepreneurs, and anybody at any age can break any molds put forward by “experts.” However, it’s clear that the stories of a few “college-dropout turned millionaire” (or billionaire) startup founders have clouded both the mass media and the tech industry from reality. We have romanticized the idea of a young founder because, well, it’s a great story, but these stories are not the norm. In the end, classic biases of gender, race, and age need to be discarded for a real science of success.

Source: Is There A Peak Age for Entrepreneurship?

YOYOYOOYOYOYO