Half-formed thoughts: not everyone’s a curator

When I first started using Quora, I followed a set of topics that clustered tightly around 2-3 nodes (startups, VC, internet television). My stream was super rewarding to consume — it just felt coherent and deep. But as I’ve explored the service more and followed more people and topics, my stream’s degraded noticeably in terms of what I get out of it. What was once a rich experience is now frenetic and confused. But so far, I haven’t found a way to make the service manageable again without sacrificing a content set that I’ve spent a long time curating. Pruning topics would be like throwing out books„ and I just hate that shit.

Twitter suffers from the same problem, although oddly, I’m more ruthless about unfollowing people whose tweets no longer interest me than topics whose content I’ve left for a while. Still, both services face an interesting challenge: the more a user explores the service, the more they dilute the focus of their experience. The nature of the stream is so low friction, it’s just too easy to let yourself push past the efficient frontier of breadth vs. depth. This was less a problem in with higher friction forms of consumption. Before, when I wanted to listen to a CD or read an article, I had to think about what I wanted to hear or read, then actively seek it out, sometimes by even (gasp) walking across the room. But that’s not the case anymore. Now, I just sit and watch the choices go by me, picking out and pursuing the ideas that catch my eye. I’m lazy, so that’s great, but it’s also a different — and in many ways less fulfilling — experience than I had when I was forced to trade attention for effort. This is the problem Twitter and Quora and all other services built around curated streams: few of us are actually good at curation. To win this space, a company must — through teaching or tooling — help users become good curators. Otherwise, they risk letting users turn their streams into a mess, and no one wants that, right?

What We Talk About When We Talk About Digital Sky Technologies

Yesterday, Yuri Milner offered *every* new graduate of Y Combinator $150,000 in uncapped, undiscounted convertible debt. Milner did this ostensibly as an individual, rather than on behalf of his investment firm, Digital Sky Technologies, but it’s probably naive to think the gains and losses stemming from this investment won’t be absorbed by DST. Effectively, then, DST (through Milner) just purchased, for $6M (40 companies * $150k), a 3% equity stake in the Y Combinator portfolio ($150k / $5M estimated average seed round pre-money valuation for YC companies), not to mention a call option on future financings (based on goodwill and early involvement).

Most people in the tech community probably hadn’t heard of DST until its international investment arm, DST Global, invested $200M in Facebook at a $10B valuation in July 2009 (on extremely easy terms, no less). This article by Sudarshana Banerjee of VC Circle provides an extremely well-researched look at the firm, which appears likely to go public next year with help from Goldman Sachs. Owned by a Russian natural resources and media oligarch, the largest Chinese Media digital conglomerate (3rd in the world behind Google and Amazon), a South African media conglomerate, a large Russian investment bank specializing in emerging markets, an American PE/hedge fund, and, Goldman Sachs (sigh), DST is known for writing very large checks on very friendly terms to some of the best performing consumer internet companies in the United States. They also have a habit of outright buying companies in emerging markets with products that closely resemble those of their American investments.

So what does this all mean? All I’m comfortable saying is this: large business interests in Russia, China and South Africa are buying up large long positions in the highest growth sector of the American economy. And while it’s great to see outsiders go long on American innovation, I can’t help but worry that Russia, China and South Africa are proving to be better growth investors than we are. DST saw a gap in the US funding market (passive, large-volume growth equity for consumer Internet companies), and they jumped all over it, purchasing a big slice of the consumer web’s upside that American firms should’ve been smart or agile enough to capture. When it comes to the tech sector, at least, their big money is kicking our big money’s ass.

Onboarding: The First, Best Chance to Make a Repeat Customer

(Apologies in advance for cribbing the Steve Blank blog structure, but well…it’s a good structure)

I’ve been thinking lately about onboarding.  While definitions vary, I like this one from Tristan Kromer: ”onboarding is the process of acquiring and assimilating new people / users into a system [or] culture.”  To reframe that in a business context: onboarding is the process of turning a first-time user into a repeat customer during the user’s first interaction with your product.  It’s what occurs in the time between when a user registers for your product and when a user passes judgment on it.  A successful onboarding session will convince a first-time user to become a repeat customer by:

• Explaining how to use the product,
• Demonstrating the product’s value, and
• Being enjoyable.

For many products, the process is simple enough to map.  Consider a simple example: an electric shaver.  An instruction booklet explains how to set up and use the shaver.  The first use then demonstrates how well the shaver functions.  If all goes well, the customer understands how to use the shaver, enjoyed using the shaver, and has thus been convinced to continue using the shaver.  A successful onboarding.

The Unique Challenge of Social

Social web products offer a unique challenge to onboarding.  Because they draw value from network effects, bringing a new user into the fold is often difficult, especially where that user’s networks aren’t members of the service (note: this is why smart social companies tend to target networks rather than users in the early days—for social, capturing users is a byproduct of capturing networks).  I’ve often felt that the social products I sign up to as an early adopter offer are completely different from the ones I experience once I’ve established a network.  So how do you explain and demonstrate a handicapped product?

Explaining

I think builders of social web products often forget about the incredibly intimidating feedback mechanism built into their networks.  If I don’t use an electric shaver properly, I get a bad shave.  If I don’t use a social network properly, I get publicly embarrassed.  This leads me to two assertions:

• The threat of public embarrassment generally leads people to act tentatively
• Tentative users are less valuable than active users

If you believe these assertions, then it will make sense when I say that, during onboarding, social companies can’t stop at explaining their functionality, they must also explain their culture, because the culture is an essential part of the product.  Consider Hashable.  Mike Yavonditte (Hashable’s CEO) has spent an inordinate amount of time on Twitter educating users about his product.  Sure, he talks about features (e.g., which hashtags will get read automatically), but he also talks about appropriate uses and what constitutes a faux pas (e.g., don’t intro people you don’t know).  It’s great to see Mike work his ass off to build a culture among users, but whenever I read his tweets, I can’t help but think that these culture lessons should be explained during onboarding. (Side note: companies beyond the earliest stages generally do explain cultural norms during new employee onboarding to speed up the newbie’s path to productivity; I’m not sure why the same logic shouldn’t apply to users).  Indeed, onboarding is a social product’s best opportunity to begin inculcating new users into the norms and expectations of the product’s culture, thereby smoothing the user’s transition from from hesitant lurker to active user.

Demonstrating

Because the value available from a social product depends on the size and makeup of a user’s network, social products find it difficult to demonstrate value to new users.  On Twitter, for example, a user following 10 random, unconnected people is experiencing a substantially worse product than a user following 150 members of a loosely organized expert community.  Onboarding is a chance to guide new users to the point where they can see for themselves the potential in a social product.  Too often, the social product onboarding helps you connect with disparate people or topics, when it would do better to help you connect with one or two integrated networks.  

To use Twitter as an example again, rather than having new users follow a few top tweeters in a few broad topics that interest them (the status quo), a better process would help them find a deep network of tweeters to follow in an area of interest to them.  In this way, new users would immediately see the value of an integrated tweetstream that’s amenable to deep exploration.  For instance, what if upon registering, Twitter asked a new user to connect her Facebook account.  Twitter now knows that this user’s first interest is the Detroit Red Wings.  Using Sulia (disclosure: Sulia is an IA Ventures portfolio company) or Twitter’s own Lists feature, Twitter could then serve the user an example tweetstream full of tweets about the Red Wings (http://www.sulia.com/channel/detroit-red-wings/) and Hockey (http://www.sulia.com/channel/hockey/).  Under this scheme, new users would be exposed to a large chunk of Twitter’s power (high-fidelity expert analysis of myriad topics) during their first session.  Twitter would thus make a case for itself as the go-to site for consuming information about something the user cares about deeply during that user’s very first interaction with the product.  Companies should always be looking for ways to increase user engagement (engagement lowers churn, which translates into increased customer lifetime value), and onboarding is the first, best opportunity to do it.

Ancillary games

Some social products accept that there will be a time lag between signup and network creation/value extraction.  To compensate, they create ancillary games which offer users a sense of achievement while they set up their network.  A great example of this practice is LinkedIn, which encourages users to complete their profiles to reach “100% completion.”  It’s a good concept, but companies should remember that profile completion games are only a complement to helping users build useful networks.

Takeaways

• Onboarding is the process of turning a first-time user into a repeat customer
• A successful onboarding process will explain a product and demonstrate its value in an enjoyable way
• During onboarding, social products should teach users about both their product and their culture
• Profile completion games are not a substitute for helping users create useful networks during onboarding

Higher Resolution Fundraising in a Founders’ Market

“Markets always evolve towards higher resolution.” -Paul Graham - High Resolution Fundraising

I’d call this quote incomplete.  Markets evolve toward higher resolution until the return on increased resolution is no longer worth the effort to achieve it.  PG argues that “different terms for different investors is clearly the way of the future,” but that seems to be the way of the past as well, except in the past such differentiation was reserved for sophisticated investors with larger checkbooks and a more exclusive Rolodex.  With the rise of social networking and entrepreneur-oriented tools like Angelist, VentureHacks and TheFunded, the early-stage fundraising market is now sufficiently transparent to justify the work required to raise money on differentiated terms in the early rounds.  But being easy to do isn’t a justification for doing.  

Capping convertible notes at different levels for different investors sounds great—what techie doesn’t love the chance to optimize?—but it may have significant negative consequences in later rounds, especially when things aren’t flying up and to the right. I can easily imagine an A round scenario where semi-institutional super-angels fight over valuation because of the strange dynamics created by a cap table filled with differently capped notes.  Suddenly, issues that were historically the bane of later-round financings are moving up the chain. Not good.  I’ve yet to meet the founder who says “man, what I’d really like to do is make this whole fundraising process more complicated and time-intensive!”  The more time you spend negotiating with angels over where their note’s cap sits relative to your other notes, the less time you’re spending on your product.

What I think it comes down to is this: it’s a founders’ market (at least at YC).  As such, founders get to dictate terms to their angels, including such contrivances as “high resolution” caps.  But I hardly believe that high resolution financing in the angel round is here to stay.  It will be here for a while, sure, and then it won’t be a founders’ market anymore and the pendulum will swing the other direction.  At that point, we’ll be left with a collection of founders searching for their next round while trying to placate a host of debtholders who all have a slightly different idea of what an optimal term sheet looks like.  And don’t kid yourself about the lack of control rights in these converts.  If there’s money, there’s control.  What we need isn’t higher resolution, it’s optimal resolution.  I tend to think that differentiated caps go too far, overly complicating what should optimally be a clean infusion of cash at a risky phase of business by a wealthy investor to a trusted entrepreneur.  

As an attorney, I always seek to push contractual complexity into the future—I know that each additional term I put in a contract will result in 50 headaches I could never have predicted.  Clean terms, clear language, aligned incentives: that’s always the goal.  Why mess with that before it’s absolutely necessary?  Of course, I’m very new to this.  I could easily be wrong.

How to Move A Blog from TypePad to Tumblr (Spoiler Alert: It Sucks)

I spent an embarrassing amount of time in the last few months porting Roger’s blog (http://informationarbitrage.com) from TypePad to Tumblr.  As much as I love Tumblr, this was not an easy process.  My eventual workflow was:

Blog Content

• Export from TypePad
• Convert Typepad file to Blogger format (note: although this app claims a 1MB file size limit, it handled my 6MB file just fine)
• Create a Blogger account and upload the converted file
• Import from Blogger to Tumblr via a 3rd party site (thank you Terry Hung!)
• Use some nifty scripting hacks cobbled together by the team at IAV/Kinetic to crawl informationarbitrage.com, collecting a txt file of every link on the site
• Convert the txt file to csv
• Create a job on Mechanical Turk that asks Turks to go to a given link (the old TypePad link) and note the post title and date. Then, using Google or the Tumblr archive feature, search for the post on our Tumblr domain with the same date and title, and then feed us the corresponding URL.  We paid $0.10/link, which given the uncanny speed of the MT workforce amounted to an effective hourly rate of $18/hour.  It took all of 3 days to map ~600 links.  For those who are interested, here’s what the HIT (human intelligence task, in MT-speak) looked like:
• Next, do some data munging to make sure the newly created linkmap (TypePad > Tumblr) is clean
• Make friends with the (current and former) Tumblr team. This was by far the easiest step. those guys/girls are all sorts of awesome.  On that note, try GroupMe (like BBM, but cross-platform) and Instapaper (take your unread web pages with you)
• Ask said friends to bulk upload a file consisting of some 614 redirects
• Breathe out

Blog Comments

Disqus was easy enough. Luckily, they had just released some migration tools right around the time I was doing this (although the documentation was not at all clear enough to a non-programmer like myself).  Of course, I ran into problems, but Daniel Ha and his team swooped in to save the day.  But what about the older, pre-Disqus comments?  Well, if you have a way to do that, please, please, for the love of god, let me know.

Parting Thoughts

• While I think it’s short-sighted to choose your blogging platform by ease of import (sorry Posterous), I wouldn’t fault someone for not wanting to go through this hellish process.  I love Tumblr.  I think Roger’s enjoying it too.  But man, this just sucked.
• It’s possible that Tumblr consciously de-prioritized building a tool to import old blog content. Their platform is decidedly different from traditional blogging, and encouraging people to pipe in their old content might also encourage them to continue blogging in their traditional manner.  If that’s the case, I sympathize with the motivation, but I think they’d get desired behavior and customer acquisition if they offered the tool wrapped in fun documentation explaining how Tumblr is different and why that makes it so engaging.
• In adding legacy TypePad comments to older posts, I came across an incredibly frustrating bug in Tumblr.  There is an undocumented (so far as I can tell) size limit on text posts.  When you try to post an over-length post, you don’t get a warning, you get a heart attack, because Tumblr will simply delete your body text and save the post as empty.  Hitting the back button will not recover your text. It’s just gone.  This isn’t a CSS/HTML issue; it occurs on the default Tumblr theme.  Nor is it a browser issue; it occurs on Safari, Chrome and Firefox alike. Here are some screenshots to demonstrate:

Boxee iPad App Request: The Perfect Remote

I’m really excited to watch Boxee on an iPad, but as someone who’s invested time and money in a killer home theater setup, I’d love if Boxee would use the iPad to solve the fact that remotes suck as a means for interacting with content.  The iPad is an awesome content consumption device, yes, but it also has the potential to be the greatest companion remote ever.  

What I’d like to see is pretty simple: a Boxee remote app for the iPad that presents the Boxee menu structure in parallel with the video playing through Boxee on my Mac Mini.  A persistent, inch-tall band would contain controls for the currently playing video (play, pause, etc.), but the bulk of the screen would be taken up with the classic boxee interface, allowing me to browse content without interrupting the main screen (comparable to how I can now concurrently browse and listen to music in iTunes).  For bonus points, the iPad’s onscreen keyboard makes text search easy.

I’m all for pushing the limits of the iPad, but let’s not forget that this device can expand the possibilities for tools that don’t warrant the iPad’s cost on their own.  Few people want to pay $500 for a touchscreen remote, but I’m sure many people would love to have the $500 remote experience for free on a device they already own.

The Coming War: Apple (and Boxee?) vs. NBC/Comcast

From last night’s interview with Steve Jobs at d8:

Steve: The problem with innovation in the TV industry is the go to market strategy. The TV industry has a subsidized model that gives everyone a set top box for free. So no one wants to buy a box. Ask TiVo, ask Roku, ask us… ask Google in a few months.

7:56PM Steve: So all you can do is ADD a box to the TV. You just end up with a table full of remotes, a cluster of boxes… and that’s what we have today. The only way that’s going to change is if you tear up the set top box, give it a new UI, and get it in front of consumers in a way they’re going to want it. The TV is going to lose in our eyes until there is a better go to market strategy… otherwise you’re just making another TiVo.

I read this to mean the ultimate battle for TV will be fought over spectrum allocation. Because of the way our IP regime lock up streams for broadcasters, they’ve had little incentive to innovate.  As a consequence, content and advertising delivery innovation “over the top” has wildly outpaced such innovation within the broadcast stream.  Apple clearly sees a massive monetization opportunity in content (and ad) delivery to lean-back devices, but sees the two-box solution as untenable.  To win the war for video delivery, they need bandwidth.  To get bandwidth, they need to convince the FCC to allocate spectrum away from broadcasters and toward broadband.

In the meantime, Apple (more specifically, Steve Jobs, as Disney’s largest shareholder) appears uniquely positioned to push content providers to offer their shows online in parallel with broadcast—they’ve got the motive, the means and “give” (via their monetization platform).  In that sense, their incentives are aligned with Boxee, but it’s gonna be an uphill battle to open up those content streams beyond the iTunes store.  If I’m Boxee (or USV, or anyone interested in perpetuating innovation in online content delivery platforms), I’m thinking about putting a lobbyist on retainer to make sure that any play by Apple for online delivery of broadcast streams is either open or license structured (that is, if NBC decides to deliver a live or “effectively live” stream online, they’d be required to allow anyone with an FCC-licensed platform to deliver it—basically, analogize online delivery platforms to the airwaves).

I concede that this idea is only about 10% baked.  What I’m thinking about here is the danger of platform-restricted content.  The whole point of the internet is to democratize the delivery of information (see: the net neutrality debate).  I consider video content “information” in the same sense as text.  Therefore, I see anti-competitive danger in restricting its delivery to a specific platform, be it Boxee or the next Apple TV product.

To spur innovation in content delivery platforms, we need to allow some form of open access by those platforms to content providers.  Otherwise, we’ll end up with the same innovation problems we’ve seen with the duopoly structure of cable.  Does anyone think Time Warner’s interface is optimal?  Does anyone doubt they would be pushed to do better if they didn’t have a regulatory monopoly/duopoly on their delivery channel?  I recognize that such a grant was required to incentivize the deployment of the network infrastructure in the first place, but if (when?) the delivery of what we now call “broadcast content” moves to broadband (as defined by spectrum allocation), we need to ensure that we don’t copy a regulatory scheme based on recouping buildout costs onto a network without those costs.

I want to see an ecosystem of competition in video content delivery.  As video content product becomes more fragmented, the need for innovation in discovery and delivery platforms scales exponentially. For consumers to get the platforms we deserve, we need to ensure that Boxee (or any other startup) has the same ability to access and deliver content as Apple or Google.  I’m not saying we shouldn’t allow NBC to develop its own content delivery platform, but as a consumer I prefer that that the delivery platform be decoupled from the production platform, with the latter subject to open access regulation.  Forcing delivery platforms to compete on the basis of design (rather than content) is optimal for consumers.

Of course, if I’m NBC/ABC/CBS/Fox, I’m fighting tooth and nail for things to come out the other way…

On social (web) norms and on-boarding

Every social network is its own community with its own norms.  Social norms are often the most daunting aspect of entering a new community.  People like to know what’s expected of them.  When they’re unsure, they’re uncomfortable.  When they’re uncomfortable, they don’t engage.  And when new people don’t engage, a community will eventually die out.

Alleviating such anxiety becomes increasingly important as the social web develops.  Facebook’s recent PR woes are an obvious example of how changing up norms on the fly can unsettle a community, but I want to focus on the period before people enter a community, when they’re hanging around the fringes trying to decide if they want in.  Its a matter of expectations and establishment.  People are willing to establish a place in most any community, but not until they understand its expectations of them.  When people want to belong and the community wants them to join, the parties have to work together to smooth entry.  Outsiders look to insiders for cues on appropriate behavior.  And that (finally) brings me to my point.

I love social media, but the variety of norms surrounding different services isn’t just bewildering, it’s obstructive.  Twitter is open.  Facebook is (or used to be) closed.  Foursquare is closed(ish).  Flickr is open.  Google Buzz is closed.  Tumblr is open.  I think Boxee is open (unless you’re Fred Wilson, who seems uniquely able to approve followers).  I think Last.fm is open.  And so it goes.

So every time a new social service opens its doors, I do the same thing I do when I’m in a new city: I tiptoe around the fringes observing until I figure out what’s okay and what’s not.  This isn’t a hard-and-fast rule.  When I first joined Foursquare, I didn’t know what to do.  I hadn’t used the service (obviously), so I didn’t know how much information users were sharing.  I figured all there was to it was what I saw on Twitter, and it easily let me “friend” people from my Twitter feed, so I decided to apply Twitter norms and friend a bunch of people I didn’t really know outside of Twitter.  Having used the service for a while, I can see that was a violation of community norms, and I probably came off a little creepy.  Oh well.

But that’s not what a startup should want for its users.  If your service depends on building a social network, then part of your job is explaining to those outside the network what it means to be inside the network.  When Foursquare on-boarded me, I would’ve loved to know what the community norms were around friending people, e.g., “Most people only ask people they know personally to be friends on Foursquare”.  Generally, I want to act in accordance with my community.  Just that little note would’ve both alleviated my anxiety about entering the network and saved me the embarrassment of acting out of step with the network’s norms.  Anxiety and embarrassment are two big reasons to avoid or eject a social network.  

Lesson: If you want people to engage in your network, use social nudges during on-boarding to let them know what people in your network are already doing.