Wednesday, February 27, 2008

Askablogr Question: Comment on a Comment on TechCrunch re: Yelp

Q: What do you think of the following comment (last paragraph of #12)?http://www.techcrunch.com/2008/02/26/yelp-raises-15-million-fourth-round-valuation-200-million/#comment-2007944
Posted by Ben R

A: Hey Ben, thanks for the question (and for those who don't have the patience to click through, here's the paragraph in question):

"Local interest websites are always non-viral, because they operate in the disjoint "internets" of each metropolitan area. So one needs to wait a very long time before they reach decent size. For Craigslist, it took 7-8 years. VCs will not wait that long. To accelerate this, you can throw money at the distribution/marketing. I do not know what the timescale for them will be in NYC, but VCs may get impatient, especially because this business is very recession-prone, and the recession is coming." - Posted by SutroStyle

 I don't know that I agree that local content properties are "non-viral", but the commenter is correct (IMO) that reaching any kind of monteizable critical mass is orders of magnitude more difficult in local, and the momentum that you achieve in any one local market doesn't necessarily translate into success in the next one. I'm on record with the view that Yelp might make the founders money, but is unlikely every to be a profitable business, so it's not a stretch for me to agree with the general point here. I think they have a great product and I wish them well, but I'm happy not to be in that business any more (and I'm very happy not to be a limited participating in the current round of funding).

Friday, February 22, 2008

Askablogr Question: Upgrading Your Account to 'Full Install'

Q: When I signed up for Askablogr I elected not to have the Q&A post to my blog. Now I think I might want it to. How do I change that?
Posted by kr8tr

A: Hi Rob, you're not the first person who's wanted to make this switch (I hope it means you're enjoying the service). Here's what you do: login and go to your profile. Next to the header titled 'Account Info' (in the upper left) and click on 'Edit'. In the 'Blog Info' section you have the option to change your settings. In order for your Q&A to post to your blog automagically you need to give us the login for your account (which is totally secure and used only for this purpose). Then we'll insert the formatted Q&A block as an inline post at the same time we publish it on Askablogr.

Thanks for asking and don't hesitate to suggest ways that this process could be made more intuitive - we have a lot of room for improvement on that front.

Askablogr Question: When Will We Add RSS / Atom Support?

Q: Are you planning on implementing feeds (RSS, Atom) for the questions and answers Askablogr site?
Posted by aafromaa

A: Hi Anne, and ouch, you hit a sore spot there. Craig and I have had RSS feeds on the Askablogr feature list since our earliest release, but it keeps getting pushed down the list. With a very small team working on this part time, our top goals are to make it easy for people to join, ask and answer, with content distribution an important but secondary need (i.e., if we don't have any content to share, the sharing tools won't do us much good).

We have *lots* of areas for improvement, bur biggest issue right now (at least as far as we can tell) is that the registration burden for question askers is too high, which is depressing question volume for our registered bloggers (you included). The focus of our next sprint is to lower that hurdle, while still preserving a healthy level of protection for the blogger (i.e., so you can't get flooded with spam questions). 

All that said, our member signup and Q&A volume is accelerating pretty nicely, so I don't think we can put off RSS implementation indefinitely. Given our current backlog of bug fixes and feature adds, a cautious estimate would have us adding feeds before the end of April, but probably much before.

Seattle, Startups and "Coworking"

This article in Wednesday's New York Times caught my eye. The theme is 'coworking':
"where someone sets up an office and rents out desks, creating a community of people who have different jobs but who want to share ideas."
We didn't know we were in on a national trend, but this is what Andy and I have been doing since last fall. We now have three companies working in one room (four if you count Askablogr), each operating in a different market, but with significant overlap in their "organizational DNA" (the basic building blocks that make up their go-to-market strategy). Rather than duplicate effort on things like SEO best practices, keyword advertising, and technical recruiting (just to name a few), these companies are able to swap ideas by walking across the room. In addition, the founding teams at each company are able to participate the emotional highs and lows of fellow entrepreneurs, reducing the feeling of isolation that can undermine morale in the early days.

Based on our experience with "coworking" to date, we see real advantages to deliberately clustering non-competitive early stage companies under one roof. We're still trying to figure out how we can scale the idea, but we think the Seattle startup community would be better off if this kind of environment were more widely available.

Askablogr Question: Do We Support Flock?

Q: Howdy - maybee you can help me:my Name is pierro and im from germany.Whats wrong - i can login me in my gmail account with all browsers,but FLOCK dont works..
Posted by Pierro Marie

A: Hi Pierro, thanks for the question and welcome to Askablogr! If I understand your question, you can access your Askablogr account in IE and Firefox, but not in Flock. If that's true, it's doesn't come as a big surprise: Askablogr is still an Alpha, so we haven't tested or optimized it for any of the alternative browsers. I just took a look at our Google Analytics account and here's how our current visitors break down by browser type:

I'm not sure how Flock is represented in Google Analytics, but the next browser on the list is show as Mozilla Compatible Agent, at just 0.88% of all visits. If that's Flock, it may be a little while before we take a closer look. I'm sorry that we aren't able to help right now, but thanks to your question the issue is now on our bug list, so we'll tackle it as soon as we're able to. Thanks again for letting us know, and for using Askablogr. 

Thursday, February 21, 2008

Question from Rahul Pathak on Startups, Entrepreneurs & Winning

Q: Chris, as an entrepreneur, how do you balance the need for a general state of dissatisfaction and the need to celebrate victories as they come?
Posted by rpathak

A: Hi Rahul, thanks for the great question (and apologies for the delay in responding - just operator error, as far as I can tell). My best analogy here is that entrepreneurs are a lot like elite athletes: in my experience, a major source of a founder's motivation is pure competitiveness, a passion for winning at whatever game they've chosen to play. And like most athletes, they know that the opportunity to win comes from a relentless commitment to training and daily improvement. Win or lose, the race (or game) never occupies more than a fraction of the total time and effort required to be competitive. And even if you win a victory, you know that the next day you'll have to start training even harder, because now everyone knows what you're capable of and will be gunning for you even more.

If this analogy holds water for you, there's no harm in making the most of your victories as an entrepreneur, because you're probably not going to think about them for more than a moment or two before you turn your attention back to the work of getting ready for the next contest. And as you also know, there are plenty of uphill days in a startup when it seems like you can't get anything right, so don't miss an opportunity to celebrate when it comes. As Charlie Munger says, "enjoy the process along with the proceeds, because the process is where you live."

Wednesday, February 20, 2008

"Email is Broken"

This item caught my eye this morning as I scanned my Reader account:
"Mozilla officially launched its new Thunderbird focused spinoff Mozilla Messaging yesterday with David Ascher as CEO. Mozilla Messenging begins with the proposition that e-mail is broken, with its goal being to fix it."
I'm currently working with or have recently heard a pitch from four otherwise unrelated startups that are operating on essentially this same premise. Each has a significantly different take on the problem, and (if they all make it through the funding cycle) will each be addressing a different target audience.

I don't know if any of these companies (including the new Mozilla spinoff) will succeed, but I'm convinced that the premise is 100% correct. Gmail is the best thing to happen to email in the last 10 years, but keyword search, conversation threading and free storage aren't exactly breakthrough innovations.

My offhand comment to one of these entrepreneurs was, "messaging today is more collage than poetry" and in retrospect that feels about right. Email (and IM) messages are increasingly just lightly annotated vehicles for contact information, documents, images, URLs, sound and video files, which represent the real informational payload. But most email clients, from MS Outlook to the major Webmail players, are stuck in a text-centric, reverse-chron framework that no longer makes sense. Gmail gave us hope, and Xobni is pushing at the next layer of resistance, but there's a long, long way to go. What a great sandbox for an entrepreneur to play in...

Question fron Niki Scevak: What Defines Success?

Q: Chris, how do you determine failure and success? Judy's Book was a failure but why? Because Yelp had more traffic and momentum? Because it won't return VC's capital? What would have defined success?
Posted by nikiscevak

A: Hi Niki - great questions (and welcome to Askablogr!). In my little universe of 'for-profit Web business' success has at least two (and ideally three) phases:

  • First is success with customers: they find your app in increasing numbers, share it with friends, and derive enough value (whether that's fun, utility or some combination of the two) to come back often. This is the foundation of the other types of success, but it doesn't necessarily follow that the other phases will come (that requires not just great product design + implementation, but great business design + implementation as well).
  • Phase two is cashflow breakeven, which means that the team behind the product has started to figure out what works and can really dig in and run with the idea without the specter of shutdown hanging over their heads. This is often the beginning of what Marc Andreesen calls "Product-Market Fit", and it can mark the inflection point between steady growth and rapid acceleration in customer adoption and profitability.
  • The third phase is the one that everyone says they don't really care about, but that somehow still occupies a lot of brainspace among early-stage employees and founders: the liquidity event. There are lots of reasons to start or join an early-stage company, but it's rare to find risk-seeking behavior that doesn't bring with it an expectation of risk-weighted rewards. In our consumer-capitalist economy money is how people keep score, and competitive people prefer to win.

In the case of Judy's Book, our Phase One was pretty successful, but the flaws in our business design and implementation kept us from turning that into a successful Phase Two. As for Yelp, they've had an even more successful Phase One, but (knowing what I do about local), I'm not confident their Phase Two will be much easier sledding. However, there are many examples of companies whose outsized success at Phase One allowed them to skip Phase Two entirely and jump straight into the arms of an acquirer without ever making a dime. If they don't wait too long or start to believe their own PR, Yelp is a good candidate for this scenario.

It took us too long to figure it out, but your insight about local was the right one: lead generation in a handful of verticals is where the business is now, and if you want to make it to Phase Two (not to mention Phase Three), that's the place to start. Our most recent bet, Cooler Planet, is a direct reflection of that (painfully derived) conclusion.

Tuesday, February 19, 2008

If You're Not Falling You're Not Skiing Hard Enough

I'm not sure where I got that line, but it's a pretty good bet it was my brother (who's one of the best skiers I know). The same formula applies to startups: if you haven't had a blowup yet you're probably not trying hard enough.

I was reminded of this by a couple of posts recently, including Brad Feld's post this morning titled "It's Better To Fail Quickly", and the Mitchell Ashley piece he points to, "Fail Early Fail Often", which includes the line: "if you aren't seeing some failures along the way, it's a pretty good idea you're not stretching, challenging and really going for it."

It's no fun to fail, as I was recently reminded via Judy's Book. But it's also one of the most powerful learning experiences I know of. If you've been reading this blog for a while you know that Andy and I have spent a bunch of time talking about what we did wrong at Judy's Book, and applying those lessons learned to what we're doing next. For example, one promise we've made to ourselves is to only bet on ideas that can get to cashflow breakeven within the first 12-18 months. Our first company out the door, Cooler Planet, is on track to meet that goal, and the next one (to be announced in March) should have the same properties, but in an entirely different industry.

In a gesture of friendship after a spate of snarky comments on John Cook's post about Askablogr, my friend Matt posted this morning to suggest that Seattle is a weaker environment for startups than Silicon Valley because our local culture reacts to failure with criticism. My response to Matt was that it's really just the guys who've never done it who feel the urge to throw rocks. As Brad and Mitchell's posts reinforce, whether they're in Seattle, Silicon Valley, or Boulder, anyone who's actually out there taking risk knows that blowups are just part of the game.

Open Startup: Askablogr Stats Update

Yesterday was Askablogr's 1-month birthday, and in keeping with my "Open Startup" promise, here's a little stats update.

Last week was a great week for the site. I got distracted by real life in early February and stopped fanning the Askablogr flames for a while, with predictable results. But then Craig shipped WordPress support, which motivated me to reach out to a list of my favorite bloggers for feedback. That kicked off a wave of installs, which helped bring the product to John Cook's attention, driving another wave of interest (plus some hilariously snarky comments from local cube-dwellers). Key stats for the 1-month period below:





For those with an interest, here's a little extra color commentary to go with the stats above:
  • Product Progress: Beyond shipping WordPress support, most of our dev effort in the period was devoted to squashing bugs and cleaning up the user registration process (still some ways to go here). We also: enhanced the member profile to include better control over your registered blog(s); added an "Ask Me a Question" button to the member profile pages to try to increase 'question liquidity' on the site; and tweaked the nav to include header links on every page.
  • Customer Engagement: It's hard to pick apart exactly why (e.g., what's due to PR vs. outreach vs. referrals vs. organics), but we're starting to see an uptick in "unsolicited" installs (including our first international pickup, from a Russian blogger). That said, we haven't seen as much reader engagement (in the form of reader-initiated questions) as I'd like to see. Some of this is just the nature of readers vs. writers (Brad Feld's 80-19-1 ratio sticks in my head), but Craig and I are also talking about ways to remove friction in the ask process (more on that soon).
  • Marketing: As the stats above reinforce, nothing happens in the early days of a product or idea that the team doesn't make happen. Per the note above, we're starting to see a little bit of unprompted engagement (and the product is designed to accelerate this), but I've realized that I need to spend a little more time on Askablogr if I want it to have a shot at large-scale adoption.
  • Competition: Thanks to our slightly raised profile, we discovered a new 'competitor' this past week called Qwizzy. I found them by following the thread of a new signup on the site, and then got a sense for how close a competitor they thought we were when they were the first to comment on John Cook's piece. (Brief aside: it's funny how people reveal themselves by their actions. I had a nice exchange with another 'competitor' via Askablogr, Lance Weatherby, co-founder and President of Skribit, but my outreach to Adam Ostrow of Qwizzy was met with silence, unless you count anonymous comments as a form of conversation). Based on a quick scan it looks like our three ideas are different enough that the market will be able to choose what it wants without us having to piss on each other's ideas, but (I remind myself) you can't control other's actions, you can only control how you choose to respond...
All for now - comments encouraged (even anonymous ones...)

Monday, February 18, 2008

New Askablogr Feature: Ask Questions from the Member Profile Page

Q: So does the ask from a button really work?
Posted by Craig Huizenga

A: Hey Craig, looks like it does! This is a new feature that allows every Askablogr member to receive questions from their Askablogr profile page, in addition to the questions they receive through their blog widget. So if you wanto to connect with an Askablogr member, just visit their Askablogr member profile page and ask away!

Askablogr Question: Choose "full install" if you want Q&A to post to blog automagically

Q: Chris: When I responded to your question I somewhat expected it to show up on my blog as a post. That did not seem to happen. Am I doing something wrong or was a just offbase on the functionality?
Posted by lance

A: Hey Lance, if you completed the full install it should have. I don't see the Askablogr widget on you blog, so it looks like you may not have installed it. You can always add it later by going to your profile page and cliking on the 'Edit' link. In order for the Q&A to post automagically you need to give us the login for your account (whis is totally secure and used only for this purpose). Then we'll insert the formatted Q&A block as an inline post at the same time we publish it on Askablogr.

Thanks for the feedback on this - my guess is our user flow isn't totally self-explanatory on this topic (one of the many areas requiring further attention...)

Friday, February 15, 2008

Nice Askablogr Writeup Today from John Cook of the Seattle P-I

John's easily the best local writer on the Seattle startup and early-stage investing scene, so I was very flattered to read the great piece he published on Askablogr this afternoon.

I'll do a full stats dump shortly but after a pretty quiet stretch the signup and visit numbers on the site are starting to pick up, and I'm starting to feel really embarrassed about how ugly it is. I think John's piece is going to push me over the edge on getting some professional help, so if you know a great front-end designer / coder who's comfortable in Ruby on Rails, please send 'em my way.

Thanks again, John, and happy weekend everyone.

Thursday, February 14, 2008

John Cook asks about Askablogr via Askablogr!

Q: Chris,John Cook here at the P-I. I sent you an e-mail, but maybe this is the better way to chat. When did you launch the site? How do you plan to make money or is it a side project? Competitors?
Posted by jcook

A: Hi John, great to see you on Askablogr! I just replied (at length) to your email, but here's the 30-second version:

  • For now, Askablogr is just a side project, one of those ideas I just couldn't let go even though there was no obvious way to turn it into a business.
  • I launched the current prototype in January and have been chipping away at bug fixes and a few small upgrades since then.
  • On the money front, it would be great if we got enough traffic to pay for hosting, but that isn't really the point. It's just something that I thought would be useful and that I didn't see anyone else doing.
  • There aren't any competing services that I know of, but I think of the idea as a mashup of some of the best qualities of Yahoo! Answers, MyBlogLog and a little Colorado startup called Intense Debate.
Thanks again for the interest - I'd love to talk more if it's of interest.

Tuesday, February 12, 2008

Askablogr Now Supports WordPress

I've been neglecting Askablogr lately (and the Urchin numbers show it), but Craig just sent me a note to say that we now support WordPress (in addition to our launch support of Blogger and TypePad).

So all you WordPress users out there (and you know who you are), consider yourself invited...

Monday, February 11, 2008

Heuristics Checklist Mashup: Munger / Cialdini / Stanford GSB

A while back I promised to extract some nuggets from my recent holiday read of Poor Charlie's Almanack; The Wit and Wisdom of Chares T. Munger. I started with the easy one, my favorite excerpts from Charlie's Investment Principles Checklist, but my next project was to do the same with Talk Ten, "The Psychology of Human Misjudgment". As I started in on this project two things became clear: 1) in composing this talk Charlie himself had borrowed liberally from Robert Cialdini's amazing book Influence: The Psychology of Persuasion, and 2) his checklist also overlapped significantly with some of the most memorable bits from my graduate school coursework in Organizational Behavior.

Long story short, when I tried to distill all this into an intelligible post it turned into kind of a mess, so I'm just going to ship it and see if anyone finds it useful. So, without further ado, below is my own condensed mashup of the most important ways people mislead themselves, in language that makes sense to me (but may not to you), and with acknowledgments and apologies to Charlie Munger, Robert Cialdini and the Stanford GSB.

1. Reward and Punishment Superresponse
  • Definition: People are strongly conditioned to seek rewards and avoid punishments, even if doing so leads them into conflict with the rational or ethical course of action (in which case they will consciously or subconsciously rationalize their reward-seeking behavior).
  • Positive Example: Federal Express fulfilling the promise of guaranteed overnight package routing by paying package handlers for completed shifts rather than per hour worked.
  • Negative Example: Mortgage brokers pushing "no document" loans to unqualified borrowers, knowing that they will bear no ultimate responsibility for the inevitable defaults.
  • Application: Offering rewards (especially financial ones) is one of the most powerful levers available to to achieve business goals, but any system of rewards or punishments requires strong controls and enforcement to prevent individual participants from pursuing "gaming" behaviors or unconscious self-deception to achieve rewards.
2. Liking / Loving Bias
  • Definition: People have a strong need to be liked or lived, and will tend to ignore the faults, comply with the wishes and favor the people, products and behaviors associated with the objects of their affection.
  • Positive Example: People will tend to act in the interest of family members, spouses and friends, even when their actions don't produce any material gain (and may even cause hardship) for themselves.
  • Negative Example: Unethical people can easily win the confidence and secure the compliance of others by feigning affection.
  • Application: Be aware of the vulnerability presented by your innate desire to be liked or loved and the power of that desire to cause you to distort facts, act unethically or against your own interest.
3. Disliking / Hating Bias
  • Definition: People have an innate capacity to hate or dislike other individuals and groups, and will tend to ignore virtues and dislike people, products and actions associated with the object of their dislike, even to the point of distorting facts to facilitate their hatred.
  • Positive Example: Hard to see a positive here, but a relatively benign example is the of phenomenon sports rivalries between schools causing a general antipathy between the student bodies of those schools.
  • Negative Example: Negative political campaigning, in which opposing candidates are associated with objects of fear or hatred among the target audience (e.g., Willie Horton, Communism, etc.)
  • Application: Be aware of the vulnerability presented by your innate capacity for hatred and the power of that desire to cause you to underestimate or overlook positive attributes in the object of your dislike.
4. Doubt Avoidance Bias
  • Definition: People are programmed to quickly remove doubt by reaching some decision based on limited information.
  • Positive Example: Recognizing a physical threat posed by an attacker and acting quickly to avoid it.
  • Negative Example: Using irrelevant (or loosely correlated) data like race, age or appearance to judge the merits or capabilities of people without exploring their actual capacity.
  • Application: Be aware of your innate desire for certainty and (where possible) force yourself to defer final conclusions until you have made a rational assessment based on relevant facts.
5. Inconsistency Avoidance Bias
  • Definition: People tend to resist changing their views or behaviors, even in the face of new information that might rationally cause them to reevaluate. This is especially true when the view or behaviors have been publicly declared or observed by others.
  • Positive Example: Public oaths of office or similar institutional commitments leading to more loyal execution of responsibilities by judges, physicians, spouses, etc.
  • Negative Example: Fraternity hazing rituals intensifying commitment to anti-social behaviors pursued by the larger group.
  • Application: Always seek new information and analytical approaches that challenge established patterns of thought, and intensively consider new evidence that tends to disconfirm an established hypothesis.
6. Fairness Bias (and Process vs. Outcome Fairness)
  • Definition: Humans have an innate desire for equal treatment, and will object to circumstances where some individuals perceived as peers are treated "unfairly" relative to others
  • Positive Example: Spontaneous queue formation in public spaces, where crowds self-organize on a "first-come-first-served" basis
  • Negative Example: Racial, political or religious organizations that identify specific groups as being "outside the community" in order to justify denying them equal treatment
  • Application: When designing resource allocation systems, remember that recipients are highly sensitive to perceived inequity. Resource distributions (outcomes) can be unequal as long as the process by which distributions are made is perceived to be fair and equitable.
7. Envy / Jealousy
  • Definition: People tend to evaluate their status or performance relative to their immediate peer group, rather than by absolute benchmarks or internally-defined needs.
  • Positive Example: Sales organizations that regularly publish performance results for each team member tend to see higher overall team performance (due to internal competition).
  • Negative Example: "Keeping up with the Joneses" leading individuals and families to make unwise choices in an effort to maintain consumption parity with their neighbors.
  • Application: Exposing peer performance information can be a powerful level to achieving higher overall performance among groups, but is also likely to undermine intra-team cooperation and information-sharing.
8. Reciprocation Bias
  • Definition: People have an innate impulse to mirror the treatment they receive from others, whether positive or negative.
  • Positive Example: Proactively doing small favors for others significantly increases the probability that they will respond favorably to any future request for help (even if that request is of significantly greater scale than the favors performed)
  • Negative Example: Perceptions of past inter-family or inter-tribal injury triggering persistent hostility that defies reason (e.g., Israeli-Palestinian conflict)
  • Application: When negotiating, be aware of the power of granting (or denying) small concessions to shape the outcome on much larger points
9. Influence By Association (Halo Effect)
  • Definition: People tend to transfer the properties of objects associated with an idea to the idea itself
  • Positive Example: Luxury goods that inherit from their higher price a perception of quality that outstrips their material difference from lower-priced alternatives
  • Negative Example: Managers who underestimate to their detriment the capabilities or morals of competitors they dislike
  • Application: Be careful to separate extraneous information - especially information deliberately placed in association with the object being considered - from your analysis of the of an object or idea
10. Psychological Denial
  • Definition: When the reality of a situation is too emotionally painful to bear, people tend to make extremely unrealistic or inaccurate assessments of the available facts
  • Positive Example: Parents who suffer the disappearance of a child remaining convinced that the child is still alive despite the lack of confirming evidence
  • Negative Example: Addicts convincing themselves that they remain in control of their addiction despite all evidence to the contrary
  • Application: Be alert to the presence of circumstances - especially love, death or chemical dependency - that could lead you or others to faulty conclusions based on the available evidence
11. Excessive Self-Regard / Endowment Effect
  • Definition: People tend to overestimate their own merits, and the merits of the people and objects associated with them (e.g., through relatedness, ownership, etc.)
  • Positive Example: Spouses tend to overestimate the merits of their spouse relative to others in their peer group
  • Negative Example: Managers tend to hire people that resemble themselves demographically and in patterns of thought, inadvertently limiting the introduction of diverging viewpoints or analytical approaches
  • Application: Be alert to the effects of excessive self-regard and seek objective means of evaluating your own merits and faults, those of your family and friends, of the choices you have made in the past and your plans for the future.
12. Irrational Optimism
  • Definition: "What a man wishes, that also will he believe" - Demosthenes
  • Positive Example: Entrepreneurs who pursue their a vision despite a lack of understanding or support from others
  • Negative Example: People who buy lottery tickets despite knowing that their expected value is asymptotically close to zero
  • Application: Whenever possible, make a habit of applying statistics and probability mathematics to your decisions
13. Deprival Superreaction
  • Definition: People fear losses much more than they derive pleasure from achieving gains, and will react with irrational intensity when threatened by even a small loss
  • Positive Example: ?
  • Negative Example: Union labor negotiations leading to the collapse of an enterprise due to unwillingness to accept wage concessions
  • Application: Be aware of the tendency to fear losses and seek to quantify and accurately weigh potential losses against potential gains
14. Social Proof
  • Definition: People tend to imitate the behavior of others around them, particularly in conditions of uncertainty or stress
  • Positive Example: The steady presence of a capable and conscientious leader in an organization tends to draw out the best qualities of other members of the team.
  • Negative Example: In environments where bad behavior is prevalent, it can be very difficult (or even dangerous) for an individual to pursue the correct course of action due to social pressure from the larger group
  • Application: Be aware how contagious the tendency toward social proof is and be quick to (1) identify and stop bad behavior before it spreads to others, and (2) foster and make a positive example of good behavior
15. Contrast Misreaction (Escalation of Commitment)
  • Definition: The human brain tends to use comparative rather than absolute measures when evaluating risk or benefit, allowing wide divergence in perception depending how issues are framed
  • Positive Example: People and organizations can be led through significant change if the change is broken into small steps and each is presented as an increment over the previous one
  • Negative Example: Consumers tend to buy items they otherwise wouldn't have when retailers frame the current price as a time-limited markdown from retail prices
  • Application: Always consider the framing of an issue when evaluating its merits and be certain that the unit of comparison or analysis is correct and (if possible) absolute, not subjectively assigned so as to influence perception
16. Stress Influence
  • Definition: Severe stress can trigger significant (and even permanent) deviations from long-established patterns of behavior
  • Positive Example: Deliberate stressing of cult adherents as a "deprogramming" strategy to trigger a reversion to previously-held behaviors or patterns of thought
  • Negative Example: Aggressive interrogation techniques (e.g., waterboarding) used by intelligence agencies to undermine information discipline "trained in" by opposing forces
  • Application: Be aware that stress can significantly compound the influence of other psychological factors, leading to even more divergent or irrational behavior than under normal conditions
17. Availability Bias
  • Definition: People tend to overweight readily available information and underweight data that is more difficult to recall (due to being less vivid or having been generated longer ago)
  • Positive Example: Speakers that use vivid imagery to make their points tend to be more memorable and influential than those who rely on strict recitation of facts
  • Negative Example: Managers tend to overweight factors that readily lend themselves to quantitative analysis and underweight or fail to evaluate second-order risks that are more complex or harder to model
  • Application: Be systematic in the evaluation of evidence (i.e., by the use of checklists) to include all relevant information rather than weighting more-easily-recalled information more heavily
18. Authority Misinfluence
  • Definition: People tend to defer to authority figures, even when their direction is obviously inappropriate or harmful
  • Positive Example: Advertising that includes endorsements from authority figures (e.g., four out of five dentists recommend Trident) tends to positively influence brand perception
  • Negative Example: The repeat incidence of government-endorsed genocide campaigns (e.g, Russian pogroms, Hitler, the Khmer Rouge), enacted by ordinary citizens under the influence of "official" authority
  • Application: Be careful whom you appoint to positions of power, because the harm they can do extends well beyond their own actions due to the authority they wield

Friday, February 8, 2008

Seattle's Not Silicon Valley (and that's a good thing)

I just came across this interesting piece by John Markoff in today's New York Times titled "Seattle Taps Its Inner Silicon Valley". I grew up in Seattle but lived and worked in the Bay Area through the first Internet boom-bust cycle, and the idea of Seattle becoming more like Silicon Valley strikes me both as somewhat improbable, and (to the extent that it's true) a very mixed blessing.

Since moving back to Seattle in 2001 I've co-founded two companies (Judy's Book and Cooler Planet), and invested in, consulted to and/or served as an advisor to several others. And while the local startup climate has definitely loosened up in that period, the technology entrepreneurs I talk to here still feel like members of an underground subculture, operating on the periphery of a business environment dominated by bigcos (e.g., Microsoft and Amazon). By contrast, starting a company seems like an obvious career move to many in the Bay Area, and a much larger chunk of the tech workforce there has cycled through one or more startups, even if their current gig is at a public company.

On the plus side, the "indie" feeling prevalent in Seattle's current startup culture creates a more open community for those on the inside; it's a small group, everyone is connected to everyone else and there's an us-against-the-world mentality that encourages people in different companies to help each other out in ways large and small. This is a welcome contrast to the Bay Area (at least as I remember it), where mine-is-bigger competitive posturing and paranoid secrecy obsessions were more the norm.

On the downside, first-time entrepreneurs (or those who move here from elsewhere) have a hard time penetrating Seattle's relatively clubby startup community. (Remember that Seattle Times piece called "Seattle Nice / Seattle Ice"? According to some out-of-towners I've talked to, that's how it feels to come here as an entrepreneur as well). While in Silicon Valley, it's hard to go for coffee or drinks and not bump into an entrepreneur (or several), and working for or starting a new company is almost the default choice for ambitious young professionals.

If the trends Markoff observes are true, my expectation is not that Seattle's startup culture will eventually look just like Silicon Valley's. If we're thoughtful about it (and the people I talk to about definitely are), we should be able to create a startup culture here that approaches the transparency and accessibility of the Bay Area (with kudos to folks like Marcelo Calbucci, Chuck Groom and Gaurav Oberoi for showing the way forward), while preserving the openness and collegiality of the current "underground" culture. Seattle won't ever be Silicon Valley, and (except for the great weather and the terrific cycling), that's a very good thing.

Seattle Loves Obama!


Barack Obama is speaking today at Key Arena, a stadium-sized venue and (current) home to the Seattle Sonics. The doors were scheduled to open at 11 this morning, and I picked up my wife around 10:30 to head over. All the roads leading to Seattle Center were jammed so we changed strategy and went downtown, thinking we'd take the Monorail. When we got there, the line for tickets was hundreds deep. We also heard that Barack probably wouldn't be going on until 12:30 or 1pm and realized that, given the crowds, seeing him was going to consume the better part of the afternoon. We retreated.

I dropped Emily off at work and headed home, thinking that I could beat the traffic by riding my bike to the Center. But Emily called just as I was gearing up to say that a friend had called to report that they were already turning people away from Key Arena. The friend had arrived before 10:30 and just barely made it in the door, and there's now a crowd numbering in the thousands standing outside the stadium.

I'm sad to miss the event, but I'm thrilled at the incredible support for Obama here in my hometown. In the fall I'd assumed that the Washington Democratic Caucus this coming Saturday would be too late to matter. That's obviously not the case, and if today's crowd is any indication, Obama is going to have a good day here tomorrow...

Update: added a photo of the crowd outside from otzenphoto's flickrstream

Wednesday, February 6, 2008

More Charlie Munger Nuggets

Following up on my recent book review of Poor Charlie's Almanack; The Wit and Wisdom of Chares T. Munger, below is an excerpt of some of my favorites from the Charlie Munger Investment Principles Checklist. The point of these isn't their novelty (most of them should be familiar to you), but their fundamental soundness; as Charlie says, "it is better to remember the obvious than to grasp the esoteric"...

On Risk:
- "All investment evaluations should start by measuring risk, especially reputational"
- "Avoid dealing with people of questionable character"
- "Avoid big mistakes; shun permanent capital loss"

On Independence:
- "Only in fairy tales are emperors told they are naked"
- "Remember that just because other people agree or disagree with you doesn't make you right or wrong - the only thing that matters is the correctness of your analysis and judgment"

On Preparation:
- "Develop into a lifelong self-learner through voracious reading; cultivate curiosity and strive to become a little wiser every day"
- "More important than the will to win is the will to prepare"

On Intellectual Humility:
- "Identify and reconcile disconfirming evidence"
- "Resist the craving for false precision, false certainties, etc."
- "Above all, never fool yourself, and remember that you are the easiest person to fool"

On Analytic Rigor:
- "Determine value apart from price; progress apart from activity; wealth apart from size"
- "It is better to remember the obvious than to grasp the esoteric"
- "Think forwards and backwards - invert, always invert"

On Allocation:
- "Proper allocation of capital is an investor's number one job"
- "Good ideas are rare - when the odds are in your favor, bet (allocate) heavily"

On Patience:
- "Resist the natural human bias to act"
- "Compound interest is the eighth wonder of the world" (Einstein); never interrupt it unnecessarily
- "Enjoy the process along with the proceeds, because the process is where you live"

On Decisiveness:
- "Be fearful when others are greedy, and greedy when others are fearful"
- "Opportunity doesn't come often, so seize it when it does"

On Change:
- "Continually challenge and willingly amend your 'best-loved ideas'"
- "Recognize reality even when you don't like it - especially when you don't like it"

On Focus:
- "Keep things simple and remember what you set out to do"
- "Remember that reputation and integrity are your most valuable assets - and can be lost in a heartbeat"
- "Face your big troubles; don't sweep them under the rug"

If these strike you as useful and relevant to your world, the book includes several more principles, and supports each of them with a wealth of real-world examples from Charlie's experience as a Berkshire Hathaway partner and as Chairman of WESCO Financial.

Monday, February 4, 2008

How to Make Your Application More Like a Game (Hint: It's worth the effort)

I received a link to this deck last fall via an email chain that included a long list of Seattle-area entrepreneurs and VCs. I've since passed it on by email to over a dozen people who were looking for ways to accelerate user adoption of (or engagement with) their Web application. I just sent it out again this morning, and as soon as I hit 'send' I realized I needed to get this content out of my inbox and up here where others can find it more easily.

It's absolutely worth clicking through and reading the entire presentation (all 58 PowerPoint Slides worth), but here's the 30-second version: written by Amy Jo Kim, the creative director at custom game studio ShuffleBrain, the deck is called "Putting the Fun in Functional: applying game mechanics to functional software". Through a series of concrete examples she walks you through the five big levers of engagement in gaming environments: 1) Collecting; 2) Points; 3) Feedback; 4) Exchanges; and 5) Customization. For each one, she drills into the psychological triggers that drive the behavior, and demonstrates how the behavior has been exploited in a range of successful gaming and non-game applications (including eBay, MySpace, Flickr, YouTube and Amazon.com).

We backed our way into several of these approaches at Judy's Book, but seeing them all laid out in sequence made it clear that we'd missed several opportunities to tap into the gaming instincts present in all of us. And even if you don't think that gaming behavior is a fit for your application, you'll likely be surprised at how applicable her framework is to any software product in which users maintain a persistent identity. If nothing else, the deck is a great reminder that we humans are very predictable animals, and it doesn't take much prodding to get us to act in predictable ways.

Counterintuitive Advice for Visionary Founders: Atomize, Atomize, Atomize

I just got a call from the founder of a new consumer Web startup, and I found myself beating the same drum that I've been hammering on in other similar conversations recently: the more ambitious your vision, the more you need to "atomize" it. By atomize I mean find the most compact unit of value you can create to engage and win the hearts of the audience you want to serve. Instead of trying to ship the vision, just ship that unit - and that unit only - and keep hammering away at delighting your target audience with that unit until your Me Value delta is big enough to carry your users to the next (probably buggy) set of features.

This is difficult advice for most founders to take. They have a full-color, singing and dancing image in their head of how the future will look when their vision is fully realized, and they want to bring the whole thing to life all at once, not in little bites. But as I can attest from my own painful experience with Judy's Book, this is an almost-guaranteed recipe for failure.

Taking this advice doesn't mean giving up on your big vision, it's just a reminder to take smaller bites. And if I say it with conviction, it's just because every time I repeat this advice to someone else I'm really just reminding myself not to make the same mistake twice.

Saturday, February 2, 2008

Book Review: Poor Charlie's Almanack; The Wit and Wisdom of Chares T. Munger

With a two-kid, two-career household, neither my wife nor I get much uninterrupted personal time, so one of the greatest luxuries of our recent weekend away was the ability to read not one but two books from cover to cover. As I mentioned last week, the first was Barack Obama's 1995 memoir, Dreams from My Father: A Story of Race and Inheritance (which I highly recommend). The second was a book I had read snippets of in other contexts but never actually read in its entirety: Poor Charlie's Almanack; The Wit and Wisdom of Chares T. Munger.

What I hadn't fully realized when I started in on the book was that it was compiled with Charlie Munger's blessing, but it was not actually put together under his direction. The most worthwhile portion of the text is a collection of 10 speeches he gave to various audiences over the past 20 years, but the first 150 pages of the 500+ page text are occupied by a collection of biographical sketches and anecdotes compiled by a team of editors who happen, not coincidentally, to be big fans of Charlie's. As a consequence, I almost gave up on the book as a hopelessly puffy and lopsided hagiography, rather than a thoughtful and balanced look into the mind of an unquestionably remarkable man. Thankfully for the reader, Charlie's acerbic voice takes over just before the mound of breathless prose gets unbearably deep.

Once you get into the Ten Talks themselves, Charlie Munger is revealed to be a brilliant, funny and cantakerous man, who's not above repeating himself to get his point across. While each of the talks addresses a different audience and emphasizes different points, the central theme of the collection is his passionate conviction that the method he used to analyze investment opportunities is the one true intellectual path, and that every business professional and academic institution should follow it. Repetitive and self-congratulatory as this sounds (and is), his method is both unusual and - if followed with the rigor he obviously brought to it - extremely effective.

Quirks aside, the book is definitely worth a read, but could have been shortened by 80% and still delivered the same intellectual punch. In fact, if a pamphlet were produced containing just two sections, the "Investing Principles Checklist" (pages 73-76) and Talk Ten, "The Psychology of Human Misjudgment", I would consider it a must-read. (For the benefit of others with limited time and patience, I'll share some of the best of these sections in another set of posts). But if you consider yourself a fan either of Charlie or of his partner, Warren Buffet, it's a treasure trove of ideas and remembrances that's well worth the effort.

Friday, February 1, 2008

The Ideal Founder: Polymath v. Monomaniac?

I had a great conversation this week with three other Seattle-area serial entrepreneurs and seed investors. Among the topics we covered were: what motivates talented people to join startups, and what kind of people are most likely to thrive in a startup environment.

I'll cover the first topic in another post, but in this one, I'm interested to know whether you believe polymaths (people who have a passion for learning and develop skills and knowledge in a wide range of subjects and discplines) make better founders than monomaniacs (those who become obsessed with a single narrow area of focus and develop deep skills and knowledge in that specific area).

The position I took in the discussion is that polymaths make better investors (because they're better able to discern and apply patterns across companies, industries and disciplines), but that monomaniacs make better founders (because they pour their obsessive focus into their company and product and aren't distracted by potentially irrelevant intellectual side-trips).

To all you founders and investors out there: what has your experience been? Who would you pick to run your next startup?

Member Question: Why I Created Askablogr

Q: How did you come up with the idea for Askablogr? [mostly just testing the product - don't need to answer!]
Posted by rr

A: Hi RR - thanks for the question (even if you're just testing this will show you the process flow from end-to-end).

The sequence went something like this:

  1. I sat down to write my first blog post and was looking for inspiration
  2. I remembered how well member-posted questions worked to create conversations on Judy's Book
  3. I thought about the runaway success of Yahoo Answers, and the rumors that Google is looking to reintroduce its own answers marketplace
  4. I thought about how most blog Q&A today happens in the comments, in an unthreaded way that is hard for readers to follow
  5. I thought about Brad Feld's posts about comments being the "dark matter of the blogosphere"
  6. I wondered if a blog Q&A utility already existed
  7. I did a little looking around and didn't find one
  8. I decided to build one.

Beased on early feedback I think Askablogr could catch on, but not without significant polishing and a healthy chunk of feature extension to bring in the community and gaming elements that helped drive Y! Answers and MyBlogLog's success. Given the total lack of a revenue model I'm not sure how far I can go with it, but I'm listening hard to the few users I have and have a few near-term improvements already in the works. If you want to help out, please (a) send me any thoughts you have about the idea and how it could work better, and (b) tell your friends!

Thanks for the question, and thanks for using Askablogr!