The other day, I took part in a forum about technology education in Brooklyn. So much of the focus was on how to produce usable software developers inside the four walls of a classroom. There was a CTO in the room who had a fifty plus person tech team and so I asked him, "How many of your developers learned their trade in the classroom versus being essentially self taught?"
Answer: All self-taught. Not a single one of his developers came out of school as usable commercial software developers.
And yet the number of software developers in NYC who work at startups has probably grown tenfold in the last eight years, leading me to ask the question of whether or not putting code in the classroom will make the biggest impact on innovation in our community. It's an especially relevant question for me as I've recently joined the board of the Bronx Academy for Software Engineering, one of two software focused high schools in NYC.
Don't get me wrong--I think software literacy is extremely important. Whether or not you decide to actually write code for a living, understanding how computers work and what they're capable of will be a life skill going forward. My biggest question is how you get the biggest bang for the buck educationally, based on what we can observe in real life.
Software languages evolve more quickly than schools could ever change their curriculum--so it seems somewhat problematic to hard code a set of learning goals when industry requirements are so fluid.
That's why I think the main goal of any educational endeavor whose goal is to produce engineer should be focused on what they inspire kids to do *outside* the classroom--we should be teaching them to tinker. If we can't inspire kids to learn when they leave the classroom, they're never going to pick up software development as a lifelong pursuit.
The computer titans of today grew up building computers--coding up programs not in a classroom, but at home or in libraries. In fact, many of them dropped out of school. Their learning happened beyond the four walls--which is a concern of mine because, traditionally, schools seem to act like they're the center and sole source of all worthwhile education on the planet. They're not setup to acknowledge that there are perfectly good Ruby on Rails classes available on the internet or that you could pick up a lot of knowledge by buying a book on your own.
In a way, schools need to start thinking like companies built around the distribution of open source software companies. Instead of selling you software, open source companies acknowledge that the software is out there for free--but what you really need is support around that software. What gets sold, at a fraction of the price, is technical support, constant updates of the software, customizations, etc.
What would the equivalent at a school look like?
Perhaps instead of being focused on teachers and classroom instructions, we'd staff up on the Teachers Assistants who supported the work you were doing on freely available courseware. The school might look more like a co-working space than a bunch of divided, closed off rooms--where you could spend more time getting your hands dirty by collaborating on projects versus getting lectured. Staff would be there not to teach, but to help you learn.
I have a friend who went to school for boat building up in Maine. There wasn't a lot of instruction at all--just a pile of wood in the corner and an open space where people who were a couple of years ahead of you were working on their own boats in a collaborative environment. They were there to help you just as someone had helped them--they were a community of learners.
That's another thing schools haven't been so good at traditionally--building relationships across groups of learners. Just because they make you do group work doesn't mean they're good at building communities. A great learning community would mean that you could walk into a room that didn't have a teacher and the kids would forge ahead and teach themselves--and continue to do so well beyond the scheduled end of class and movement out of that physical space.
What I'm thinking about focuses more on things like science fairs, egg drop contests, hackathons--a veritable firehose of opportunities to just get in there and build in a supportive learning environment. That's how students are going to build the relationships necessary to participate in communities--because this kind of group involvement is a necessity if you're ever going to be on the cutting edge of software development. Groups will pick up on the latest trends far faster than classroom curriculum ever could, so how can we build curriculum that encourages students to participate in communities and tinker on their own?
You can do the math on Tumblr's pageviews, throw in some expected CPM, weighted average cost of capital, and try to justify the billion dollars that Yahoo! is spending on Tumblr.
I think you'd be kidding yourself if that's what this was all about. The Tumblr community isn't going anywhere, but that's not the asset Yahoo! bought. It will be run on it's own and probably not touched too much.
If you're spending a billion dollars on something, you have to be taking the long view--and I don't think we'll be sitting here ten years from now focused on display ads on webpages. At least, I hope not anyway. I hope by then someone will have figured out something more interesting. The next ten years of the internet will be won by great product minds.
Great product minds don't work by committee. Like the great Steve Jobs, all roads lead to one, singular decision maker with not just a vision, but an uncompromising one. The iPhone was a revolutionary product because of all the prototypes Jobs probably threw against walls until people got it right.
How many web entrepreneurs in their early 20's would have ignored Fred Wilson when he said they should include comments in their blogging platform early on?
Answer: One... David Karp.
In December of 2007, I wrote the following e-mail to Fred Wilson, Brad Burnham, and Bjian Sabet:
"I met with David the other day about using Tumblr to power Path 101 career blogs. I didn't know what to expect, because it wasnt obvious what the biz dev or business philosophy was there.
His response to the idea could not have been more perfect...and his ideas for letting other communities use the Tumblr platform, particularly the nitty gritty details of the integration were really top notch and very forward thinking. He even had some great insight about Path 101's relationship to its crawled resume owners.
And today, a bunch of us went over to help Nate Westheimer with the BricaBox product strategy and David was just as impressive. His feedback was brilliant, but not in the least bit condescending...
I hadn't had much of a chance to talk to David before... He is a rare product mind, and I just wanted to pass on how impressed I was with my interaction with him this week.
Enjoy your weekends..."
They all responded, and Fred wrote:
"A beautiful mind is a wonderful thing."
David Karp is one of the best product minds I know--and if anyone can make Yahoo! into a compelling product experience, he can. I didn't realize how prescient that note would be as I think about Tumblr's nearly certain acquisition by Yahoo! For Yahoo! to survive and be relevant, it doesn't just need more pageviews. It needs product direction and vision--and that can't just come from Marissa Mayer. Product, just like at any startup no matter the size, is a full time job. Marissa needs to run Yahoo! David Karp has been leading product at Tumblr from the beginning and leaning on others for everything else. It's the same way with Zuckerberg at Facebook, Anthony Casalena at Squarespace, Scott Belsky at Behance and Jason at Fab.
It's why Google tried to throw $100mm at Dave Morin at the beginning of Path--to lead all social efforts on the web. They knew that to transform the web properties at Google into a coherent vision for the future, you needed centralized decision making that led to a great product visionary. It wasn't about having Path at all. It was about a product leader.
So all that stuff about how many advertisable pages Tumblr has, porn, no porn, etc... It doesn't matter. This is so much bigger and there's so much more at stake.
My brother once told me a bit of fantasy baseball advice that holds true--overpay for the thing that is toughest to get. There aren't too many David Karps on the market these days, and if you have three billion of cash sitting around, and great product is going to win the Internet one day, it's a no brainer to spend a billion of it on someone like that--and it couldn't happen to a nicer guy, to be honest. He's one of the most polite, personable, down to earth people I've ever met in tech, and I don't imagine having a few hundred million in the bank is going to change that one bit.
That's the term that Fred Ehrsam, founder of Bitcoin startup Coinbase, used to describe the current state of play in the Bitcoin ecosystem.
It's an interesting term, one that a) makes me uncomfortable as an investor and b) I'm not sure totally applies to a marketplace that is all about decentralization and openness. First of all, it's a real estate term, obviously. It applies to a finite, physical resource. As the saying goes, "They're not making more land."
When and where do land grabs happen? Shifts in population, transportation, and economic opportunity produce land grabs. Settlers in the Western United States in the 1800's participated in land grabs. The more real estate you could secure, the better off you were--sort of. Technically, there's only a finite amount of land in Wyoming, but there are so few people there, it's priced as if it was pretty abundant. You could claim a whole bunch of land. However, the land itself had more value in terms of what it enabled you to do rather than having some inherent transactional value in a marketplace--because it was so abundant. Even today, land in the middle of the country is still pretty much dirt cheap--but if you decided to be a rancher on your land, you could probably scratch out a living. Contrast that with Williamsburg in Brooklyn eight or ten years ago. Anything you bought could be flipped now for multiples of what you paid for it--regardless of whether or not you developed it. That's because there's a finite supply of land within a certain amount of subway minutes from Manhattan. There's only N number of plots that are walking distance to the Bedford stop on the L. Increased demand, finite supply, price goes up.
Is there a North Brooklyn real estate bubble? It's entirely possible. We've certainly witnessed recent real estate bubbles before--but they tend to be more pronounced in places like Nevada and Florida where there seems to be tons of land AND tons of excitement about that land. Excitement is overestimated, and development outstrips demand. Lot's of people build, but there's lots—too much—land to build on. Poof, bubble.
My biggest issue with Bitcoin is that the decentralized nature of the system, while potentially promising lots of opportunity to create value for people, may look more like the Midwest than Brooklyn. The actual supply of Bitcoin is somewhat capped, but that may mean that you'd rather be a currency investor than a service business around Bitcoin--because access is going to be open, distributed, and trend towards as free as possible. It's the kind of market where the second you start making a lot of money by being a provider of services, someone's going to come along, copy it, and give it away for free. Why wouldn't all of the Bitcoin supporters make currency conversion, fraud protection, and trasaction processing of various types free for all, to encourage use of the system?
In a Bitcoin world, you'll never be the only provider of something, because that only tends to happen in centralized, regulated environments. Take the internet domain registries. If anyone could sell any names, there wouldn't be as much of a profit to be made in the business as there is now. To me, the magic and promise of Bitcoin is that the friction in the financial transaction system (and hence the profits to be extracted--taken out of the system), will move to zero using technology.
E-mail might be a good example to think about. It's an open, distributed architecture that anyone can jump onto. It's about as democratized as you get. If you add up the sum total of all of the enterprise value created by e-mail related companies, the bulk of it didn't happen until almost 20 years after the first e-mails were sent. Companies like Lotus, or the spam blockers, virus checkers, bulk senders, authentication providers, marketers etc made their money quite a long time after the medium was invented.
On the other hand, are there benefits to being the first investors in Bitcoin related companies? I think there are, if you're a bigger, established fund, with long term minded LPs whose coin you can educate yourself on. By being early to a space, you start building the earliest network of thought leaders in that space. You gain a reputation and, most importantly, you learn. There have been studies done on venture capital returns that state that being first to market for an investor isn't necessarily a good bet with those early companies, but that it provides you with the opportunity to invest in better companies in that market later on. Your first investments in an industry tank, but your performance in that space overall is better over time.
I think the key is understanding which of these markets are worth being early to. There was a time when we thought virtual worlds were going to be that kind of game changing space--where everyone would have an avatar and we'd stop traveling around by plane. That didn't quite happen.
Nanotechnology was another space that investors piled into that was supposed to change the world, but didn't live up to it's promise.
You might even say the same thing for social. What's the sum total of all of the enterprise value that has been created around social, compared to the money that went into it from investors? How much of that value is concentrated in Facebook and LinkedIn? Social changed everything, but few companies actually made money off it and exited by being solely about social.
I like the idea of having a currency that doesn't get manipulated by big banks and political types, but I think I'll always wrap a $20 bill around my Metro Card and my credit card if I go out for a run, just in case. As a consumer, I like knowing that the FDIC insures the cash in my bank and that I'm protected against identify theft with my credit card. Call me old fashioned.
Does that mean I'll likely miss out on the next few years of Bitcoin related investing? Perhaps, but Google wasn't the first search engine and Facebook wasn't the first social network. History has shown that it's ok to wait until the next card gets turned over until you have a more stable environment to root in.
Board meetings are a pain in the ass.
Unless you're a well funded, growth stage company that has lots of hands on deck--tons of instrumentation that easily dumps out pretty charts and metrics, or luxury amenities like, well, time, most entrepreneurs probably feel like they could be doing more productive things than telling their investors what they did last month.
Same goes for update e-mails. "Frankly, this company is duct-taped together and will be for quite a long time, and shit hits the fan just about every day. Just the fact that we're still here is a major accomplishment, but now we've got to write a rosey little story about how things are great." When stuff is actually bad, you need to find a way to say it without freaking everyone out--and in the grand scheme of things, does it really matter? Shouldn't we just mail you a check in a few years if it works, and let you know when it's a tax write-off if it doesn't?
Obviously, investors might have a few issues with that--for obvious reasons. But, why then, other than "Because we want to know what's going on," should entrepreneurs make investor communication a priority?
1) Good Investor Communication Saves Time
When you have some kind of consistant methodology--metrics you track each month, a meeting that is already booked, a repeat call scheduled, you actually take less time than dealing with individual investor queries one at a time. Investors are less likely to ping you with random stuff when they feel well informed on a consistant basis. So, from a purely selfish perspective as an entrepreneur, if you really want to deal with investors less, you'll setup a good communications strategy.
2) If Investor Communication is Too Hard, Perhaps Your Management Process is Broken
If answering questions and coming up with a review on how things are going feels like reinventing the wheel, perhaps you haven't built in all the management structures you really need to run the business from a well informed perspective. You should already be tracking key metrics and be able to call them up pretty quickly. How much customer engagement was there, what profit or loss did you make on goods sold are all of the kinds of metrics that shouldn't take more than a few clicks. The more you know about what's going on with your business, the easier it should be to tell someone else about it--so communicating with your investors once a month should be a good kick in the pants to get that stuff going.
3) They Trusted You With Their Capital--Maintain That Trust with Transparency
Whether it's their money or their investor's money, a lot of trust went into investing in you. You are how the keeper of that trust--and you can choose to do things that maintain it or destroy it. While you're not likely to do anything unethical to completely tear it apart in one fell swoop, making your company into a black box is a good way to slowly erode investor trust over time. You owe them more than that. They deserve more than that for trusting you. Transparency helps create an atmosphere of trust. If things aren't working well--that's ok if I feel like, as an investor, you're telling me how bad it is, and that you're giving me a chance to be part of the solution by keeping me informed. I may not be happy about the turn of events, but I signed up to take this kind of risk--so it is to be expected. When an entrepreneur goes radio silent, I start to worry that there's more than meets the eye, things are worse than they are, and that I *could* be helping, but I'm being shielded from the issues. It makes me feel like the entrepreneur took my trust for granted and that, while I respected their ability to run the company, they don't respect my ability to provide assistance, or find someone who can.
4) Transparent Communication Across Your Investors Gains Leverage
If you divide and conquer--updating your investors individually--you're missing out on the potential that something one investor said could inspire some thoughtfulness on behalf of another investor. I might feel one way, but if someone more experienced in this matter weighs in, they could change my mind--helping the entrepreneur to build concensus among investors. I'll have my own opinion, but I'd like to know what other investors think, because maybe someone else around the table has a better idea.
5) You Can Never Know What You Don't Know
You could be the most experienced entrepreneur in the world, but you can't know everything. Getting outside perspective is the mark of a learning entrepreneur--someone who considers other possibilities and wants more information rather than less. You still need to be decisive and not freeze in the face of information overload, but if you can get someone to check your thinking on something without it being a big production, there can be a lot of benefit--even if it just reconfirms your thinking, giving you confidence to move forward or simply sharpens up the details a little bit. Sometimes, despite the fact that you're in the trenches everyday, there's something that you've missed. That's when I'd want someone looking across a number of different companies at my side. What haven't I thought of? Ask that and you become an entrepreneur that is much more prepared to go into battle.
If you need a way to keep your investors updated, you might look into this template.
Yesterday, I got profiled in Crain's about my investment philosophies. They do this cool lunch series where they try a new place and profile both a person and a place. We went to Brick, which is a sorely needed lunch spot by City Hall.
I made the following comment:
"I've looked at 2,000 companies, and I'm funding eight. It's not about picking the eight. It's about eliminating the other 1,992, and the eight are leftovers."
Don't get me wrong, I'm psyched about the investments I make--calling them "leftovers" doesn't really do them justice. But, it does emphasize one important fact: You absolutely do not know the future or know for certain that a company is going to be successful. No one does, despite the best Monday morning quarterbacking. VCs will tell you what they saw in a team or in a product early on, and most of those stories are revisionist history.
Not only that, saying stuff like "This is a great team" isn't really a good investment criteria, because lots of great teams totally fail. In fact, most of the investment criteria I hear, if applied as a filter, wouldn't work to build a good portfolio--early traction, great team... again, lots of people have still failed under those circumstances.
What I'm much more mentally comfortable with is this process of elimination. I'm much more certain about what won't work--teams that don't have talent to match the core challenge of what they're doing, or not playing in big enough spaces. What I'm left with is a bet where I'm saying "This could work." It's not a weak bet--it's a reasonable bet. I'm not going to convince myself that I'm way smarter than I am--that's a good way to fail.
I believe in my teams and their products, but I'm not drinking so much Kool Aid that I don't realize that I'm actually taking risks and don't know the future.
For the record, I actually really like leftovers. When I left for college, my mom told me that she finally figured out how much I was actually eating, because leftovers were piling up in the fridge and going bad.