Browsing articles from "January, 2010"

Up Your Clock Speed

Yesterday I met with an experienced executive who had recently left a large and successful local software company. He had spent his entire career at three large companies in succession and was now looking to do something early or mid-stage. He asked me what to expect.

Entering Startup

Frankly it’s been so long since I worked at a large, established company that I almost forgot how challenging it can be to make the transition. He had been out networking with a few other VC’s and had received the common wisdom: he should truly expect to get his hands dirty – a lot of the infrastructure one comes to take for granted at the big corporation simply does not exist at the small one.

I certainly support this feedback, although I will say from first-hand experience that asking what it’s like to go from a big company to a small one is a bit like asking someone what a bungee jump is going to feel like – ask all you want but there’s just no substitute for experiencing the real thing.

What is really different at a startup is what I call cycle time. If you remember the days when Intel used to make a big deal about the clock speed of its processors (yes, I’m dating myself – this was in the days when increasing clock speed was still possible, before adding more cores became the answer), startups are just that. At a startup you have to act fast. Very, very, very fast. The best startups are running at ultra-high clock speeds.

Coming from a big company, cycle time at a startup is unbelievable – a question is asked and the next minute someone has run an experiment and has an answer to the question. This is probably the single biggest challenge for an executive transitioning from big company to small.

Yes, infrastructure can be challenging at times, but in today’s world you need little more than a wireless router and an Internet connection to do your work. No need to setup cumbersome servers, run lots of wires, configure email, or deal with all the other tedium that used to be involved in setting up a company. Google Mail, Amazon Web Services, and you’re good to go. Small, nimble teams can work just about anywhere as long as they have high-speed Internet connectivity. After all, just about every enterprise or consumer facing web application is now hosted in the cloud.

But for the experienced executive, adjusting to a startup’s dramatically faster clock speed is no easy feat. After spending years presenting to senior management, asking permission to act, and preserving legacy revenue streams, the switch is often a difficult one. There’s typically no upside in coming in guns a blazing, but conversely, being too cautious at a startup is actually much riskier than taking more risk.

Those startups that cross the chasm and grow into big companies face a prisoner’s dilemma of sorts once they’re wildly successful – defending their legacy revenue streams quickly becomes a higher priority than aggressively creating new ones. Startups, conversely, are all about running offense, and running it fast. Really fast.

So my advice for the executive leaving the big company and going to a startup is this: if it doesn’t feel like the processor is about to overheat, you’re not yet running fast enough.

Jan 21, 2010

Cool Factor

Forty-three years in, the Consumer Electronics Show (CES) is still going strong. The show has certainly come a long way since the VCR was launched at it in 1970. This year there were 3-D televisions, miniature iPhone-connectable projectors, and eBooks galore. Consumer Electronics, of course, is known as one of the great money-pits of venture investing, chewing up lots of dollars with little to show for it.

So for a venture investor, a visit to a show like CES is good for three things.

CES Screens

First, it is a great reminder that it takes a ton of capital and brand-building, not to mention the ability to deliver products that millions of consumers can’t live without to be successful in the consumer space.

Second, it’s a chance to see what all the “others” are doing. By that I mean, everyone but Apple. Because Apple didn’t participate in the CES show this year, and never has. Yet by any measure, Apple is the undisputed consumer leader. The iPhone, as I wrote way back in 2007, changed everything.

Companies like Microsoft (my employer until 2000) have tried repeatedly to get the sort of cool factor that Apple has. Sony – which has some really nice looking televisions – once had it. Those companies have the huge booths, the flashy displays, and the marketing programs. Many of their products are more feature-rich, earlier to market, and in many cases, cheaper, than competing offerings. Yet when it comes to making consumers fall in love, the only one who has come close is Amazon – by delivering a best of breed online retail experience, and now, an addictive electronic reading experience that is potentially threatened by, you guessed it, Apple.

Finally, it’s an opportunity to step outside, albeit, briefly, my life of digital media and customer facing software and services. Amazingly, even in 2010, not everything is connected to the Internet. And when it is, it still takes a lot of hardware to move all those bits around and to display them to that fickle but ultimate determiner of mass success: the consumer.

Jan 8, 2010