startups, entrepreneurship, photography, New York City, business building

Clay Shirky has written a truly brilliant essay on the future of newspapers. The short version: newspapers don’t have a future – is, of course, not surprising. Additionally, journalism – not newspapers – are something that we, as a society, very much need. Journalism in and of itself is not a profitable business and has been subsidized for a long time – as Shirky says by WalMart (publishing ads that help the times pay for the Baghdad bureau) and the 14 year old kid who, for a very low wage, delivers the newspaper to your home in the suburbs.

Printing presses, trucks, ink, and union wages simply can’t compete against WordPress, servers, and electrons. And they won’t which is why we should expect that most printed news is going to simply disappear – as anachronistic as a steamship plying the Atlantic ocean or a horse and buggy taking a businessperson home from Wall Street to their suburban home on 70th street and West End Avenue.

The revolution in publishing infrastructure - presses to electrons - means that any [click to continue…]

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It’s not just a provocative title – it’s true. When building a product – especially a consumer web product – it’s important to remember that your potential customers are busy. Take a look at a weeks worth of posts on TechCrunch or TechMeme – the number of new companies and new products is overwhelming. A byproduct of our creative and entrepreneurial culture is that we are collectively churning out massive numbers of new things for customers to try.

Given the noise of new and existing offerings that you are competing against, here are a few things that I think are critical to remember:

• Intersect customers where they already are – your potential customers are largely not going to come find you – you need to go find them where they already are. You can have the best product in the world but if you don’t have a good way to get that product to customers you are going to have a problem.
• Word of mouth (not viral) has more potential than it ever had: The good news is that – particularly for consumer web products – it’s vastly easier than it ever was for word to spread about great products. Twitter, Facebook, mass adoption of e-mail, digg, a massive number of blogs covering every last little niche and Google – both paid and organic – have created a massive distribution network that speeds word of mouth. The noise is vast but if you excite customers, word spreads far faster than it ever did in the past. That’s certainly a part of why we are now seeing companies capture massive numbers of customers in just a few years (it’s still not a few months) where it used to take a decade or more for most. Think of local reviews as an example. In the past decade CitySearch grew and became massive and within the same decade Yelp [click to continue…]

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Doctors Without Borders is a good way to help this and other causes.

Photos of the Haiti disaster from Boston.com’s Big Picture

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Oyster’s much loved photo fakeouts made it to Bing Travel today!

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I previously spent many years running a business whose products I had no real passion for. I learned a lot about entrepreneurship and the high growth experience reinforced my passion for technology, innovation, and entrepreneurship. But I also learned that I wanted to work on a product that I had a real passion for – it had to be about more than money or success but also about building something that I would want to be a customer of. I had always loved hotels and photography and so when the idea for Oyster came along it did not take much to convince me that it was an idea that I worth getting excited about.

Oyster continues to be a dream job for me – my “work” often involves visiting hotels in some of the best vacation destinations in the world. I don’t imagine I’ll tire of that anytime soon. And when it comes time for a vacation, I don’t need or want a change of pace from my work life – I stay in hotels instead.

Here are some of my favorite hotels in two of my favorite US cities: [click to continue…]

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• Great management team vs bad business, bad business wins. Great management  team and a great business and something special happens. (this quote can be attributed to many people include Buffet/Munger and Andy Rachleff of Benchmark). Choose the market you are focused on VERY carefully. In a world of too many VC companies saying “we will figure out monetization later”, it’s critical to ask yourself if there is a history of customers paying for the product/service you are offering?
• Great businesses attract great management teams; a very talented acquaintance applied for a job at Google in 1999/2000 and asked to be paid only in options. Smart people want to go where the fun and money is. Success is the most valuable recruiting lever you have.
• VCs rarely want to give you money when you need it and want to give you [click to continue…]

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Why did Microsoft miss search? Why did Sony miss portable digital music and lose out to a revolutionary entrepreneur (with the resources of a big company)? Why did Intuit not beat Mint? Why has EA had to buy its way into social gaming?

Theories abound about why entrepreneurs are able to capitalize on opportunities that incumbents miss. Here are a few of the better ones:

• Success breeds arrogance and arrogance breeds self satisfaction and a sense of invulnerability
• Incumbents don’t want to cannibalize an existing profit center with a new product that is disruptive. They bet on one in the hand vs two in the bush. The entrepreneur has none in the hand to lose.
• Incumbents tend to be larger companies and the incentive models and management structure of big companies tend to reward small incremental improvements to the status quo and place a high cost on taking large risks that have a small chance of being successful (but massive upside if they are).

To these excellent reasons I’ll add free time as one of the main competitive advantages that entrepreneurs have. Would be entrepreneurs – whether unemployed or working for someone else – have something that the CEO of an incumbent company does not have: a lot of free time with which to think very deeply while the incumbent is trying to beat last years numbers and keep the existing – potentially large – train on the tracks as their full time job.

Think of Bill Gates vs the Google founders. Gates was already running a massive – and very complicated business when the Google founders were crashing the Stanford network with the early versions of Google. Did Bill Gates lack for intellectual horsepower? financial resources? experience with the history of disruptive technology in business? competitive drive? Clearly not – rather, what he lacked was free time. His days were full of emails and meetings and the occasional offsite strategy session. How often did he get to step away from it all and clear his plate for weeks on end to let his mind roam and see new opportunities including those staring him in the face? He famously took a week or so off each year to seclude himself and read. Meanwhile, Larry and Sergei had the thoughtful – and relatively unhurried – life of grad students. With nothing else to distract them, they were able to focus all of their – rather significant – creative energies on just one thing: search. Not a couple of days or a week or even a quarter but rather years. Gates? He was busy with databases, email servers, MSN, multiple OSes etc. more than a full time job even for him. What is a wonder is not that Microsoft missed search but rather that with so many distractions they were so successful in so many businesses. (albeit, typically as a fast follower rather than innovator)

I’ve had a few such missed opportunities in my career – this one stands out: By the spring of 2003, I knew an awful lot about voice over IP (VoIP) – meaning transmitting phone calls on the Internet. Skype is pervasive today but in 2002 and 2003, making phone calls on the Internet was far from mainstream. Time flies in the world of technology so it’s easy to lose track but in 2002, even carrying a Blackberry was unusual. By early 2004 – using bleeding edge soft switches from Sonus Networks – I was running one of the larger VoIP phone switch installations in the US. During that same time, I was also buying early iPods – for myself and as gifts – and filling them with music, some of it downloaded off of the peer to peer networks that were not yet shut down. I had a Blackberry, a Friendster account and bought lots of things on Amazon, had been using a GUI since my dad bought a Mac in 1984 and the internet since 1993 (before that BBS). In short, I was, and had been for a while, a classic early adopter in addition to being an active entrepreneur.

And at that very same time, I also missed starting Skype – one of the biggest business successes of the past decade. While it’s unlikely I would have founded Skype even if I had not been preoccupied, it was not even a possibility. There was a point in time when founding Skype was possible and at that point in time, despite having the requisite skills with which to build the service, I had something more pressing to spend my time on – a full time job just keeping our existing business going and keeping the servers and switches up and running. So while I had everything that was needed to start Skype – I understood the Internet – both technically and as a long time consumer of it, I had a very clear sense of where broadband penetration was trending, and understood VoIP – the one thing I did not have was  time to step back from a full time job and look for other opportunities. I almost wish we had considered building something like Skype and had rejected it. Truth is, we never even had a week to think about the emerging consumer applications for VoIP. We continued to work very hard and built a nice business but we missed one of the biggest opportunities of the past ten years.

Of course, like all hindsight, it’s all clear in retrospect. And while it’s likely that even had we been looking, we still would have missed it, it’s also the case that like most already preoccupied people, we did not even have a moment to look.

I try to remember this now and find that vacations help tap into some of that entrepreneurial perspective. With the Blackberry mostly off (by choice), fresh air, friends, family and some time to decompress, it becomes a bit easier to see more broadly. But entrepreneurial perspective is unique and should be cherished. What’s perhaps counter intuitive to first time entrepreneurs is that as the business progresses you’ll actually become busier and busier. You’ll have customers to attend to, engineering problems to react to, emails to respond to, meetings to attend, conferences to speak at, potential employees to interview. When you are just getting started, those trappings of success sound utterly fantastic – and there is a lot that is great about them – but remember that the luxury of quiet will become ever more fleeting and with it one of the unique competitive advantages of entrepreneurs.

BTW, check out Mark Suster’s excellent blog about entrepreneurship and venture capital. He’s clearly very wise and he’s giving his advice away for free.

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The most recent issue of NY Mag features a long article about the compensation battles raging between Feinberg and the current CEO of AIG (and the AIG board and employees by extension). Pay regimes mandated by Feinberg are doomed to fail – the traders at AIG can, should, and will go elsewhere if AIG pays them a below market rate for their services. Trying to fix the pay problem at AIG will only work if we fix it systemically. The real question is, do we want to fix it?

As a society, we already make choices about what kinds of work we want to incent and create all forms of financial incentives for our citizens to act in particular ways. We’ve created strong incentives encouraging home ownership and taking on debt by making mortgage interest tax deductible. We incent investment through special tax rates on investment profits (long term capital gains tax). Relative to other wealthy countries, we incent the consumption of gasoline and energy by keeping taxes on them low.

Wealthier people pay more taxes on their ordinary income and the debate on what percentage is right at what income level will rage on – almost certainly forever. But that issue pales in comparison to the societal decision to tax all salary and ordinary income equally. While implementing this effectively would by no means be simple, if even possible, there is a strong argument to be made for taxing a teacher, entrepreneur, doctor, trader etc differently.

We already make a large number of decisions about where we want our resources to go – the problem is that we are making the wrong ones. The US will not be a great country if our incentives tell us to take on debt, make our profits on speculation instead of innovation, and  consume energy without taking into account it’s true cost.

Several simple steps to start fixing our problems and reallocating our resources

• Board approved MDs pay no income tax for all income – investments, salary, etc –  under $200,000 per year
• Accredited teachers working as a teacher for any educational institution – public or private – pay no income tax on any income earned
• Anyone in the US military pays no income tax on all income up to $100,000 per year
• The cost of the US Military presence around the world is not factored into the cost of a gallon of gas at the pump.Take a percentage of what we spend on defense each year and charge it as a gas tax – the poor will be impacted by this more than rich so grant them an exemption to the tax.
• Dollars spent commuting on any form of public transit are tax deductible; HOV commuters don’t pay tolls
• Companies without profits and fewer than 100 employees or $10M/year in revenue don’t pay payroll taxes. Currently, an entrepreneurial company – such as Oyster - pays the same percentage payroll taxes that Proctor and Gamble pays
• Increase the short term capital gains tax – Profits made from (long term) stock market speculation are taxed at the same rate as profits made from investments by VCs in innovating startups where capital can often be locked for years, if not decades.
• Eliminate the mortgage interest tax deduction. Home ownership is not an intrinsically good idea. Some people are far better off renting.
• Warren Buffet and Bill Gates Sr. have it right – we should aggressively tax accumulated fortunes via estate and inheritance taxes. Fortunes made in the US were made off of the collective infrastructure that US society provides. Wealth should not be passed on from generation to generation as it grows. If we allow it to, we will have our own wealthy aristocracy in this country emulating what exists in Europe with all of its attendant problems.

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