Just a couple of quick thoughts on SXSW '13...
Last year, people seemed pretty disappointed, because of where their expectations were. They still wanted to take in the whole conference, but it was just too big to do that, so it felt overwhelming. This year, there seemed to be a dozen little splinter conferences and threads--Edu, Social Good, Startup America, and so people just punted on the idea that you could swallow the whole thing in one bite. Gone are the mass texts, tweets and checkins of "Where is everyone going?" because this year, it's more about who you're with now and where you are at the moment, and making the best of it. In some ways, it's better--people seem less worried about missing something else, and more willing to get to know the person at hand.
In some ways, it's worse. Gone are the days when every single person you met left you with the feeling of "I can't believe I met that person." The conference has scaled and you're statistically more likely to run into a an assistant social media marketing intern from Unilever as you are to run into the team behind that awesome thing that inspired you that you use everyday.
For those that are already well tapped in to their industry, that means that you're more likely to stay close to home in your own circles--and hangout with friends. In a way, it's an analogy for what's gone on in the world of social media over the last year or so. We realized that being superficially connected to everyone isn't as meaningful as having a few close ties to people we genuinely want to get to know--and we tend to know a lot of those people already once we go deep into our passions.
When you've got people more focused on partying with friends, the invite lists don't go as wide, you wind up with more, smaller options, and even a huge party like Foursquare or Mashable seemed a little less #epic. Even a GaryVee secret wine party didn't quite carry the same buzz to it.
In fact, the diffusion of scale seemed to dull a lot of the potential for conference-wide buzz. Without a lot of cross- pollenation, you didn't get the sense that anything could break through and take over the whole conference from an app perspective. People relied on the tools we used last year--Foursquare, Groupme, Twitter, perhaps with a bit more of Instagram mixed in, but nothing really that new.
The keynotes seemed pretty compelling this year--lots of people were talking about Elon Musk and a rare public speaking gig from Swissmiss was a real hit, but the conference failed to help channel folks to the best non-featured panels for them. That is, unless you wanted to spend two hours researching. I felt like people wanted to go see some panels this year, maybe because there were so many new folks, but the user experience behind sorting through them was a disaster. Panelist names weren't even in the mobile app. I might want to go see a 3D printing panel, but it's really going to depend on whether Bre is giving it, or it's Abe Vigoda. SXSW needs to do a much better job of exposing panels--maybe a Twitter/LinkedIn integration where I tell you who I am, you give me a slider on how exposed to new things I want to be, and you recommend a series of panels for me. You tell me who I know that is speaking, who's speaking on the topics I tweet about, and then throw in a few sex hacking panels to broaden my perspective. That would have been something.
As I biked back to my AirBnB last night, I was telling my friend that I had met a potential startup investment, a potential fund investor, and had some awesome meals with cool people. That's enough to get me back--but that doesn't mean that SXSW is the same. It has matured, stabelized, and it seems that it will now forever be something you know what you're getting out of, versus something where seemingly anything could happen that would affect the rest of the world.
That isn't a bad thing. It's just different, so pour one out for SXSW '07 and come back next year.
What makes for company culture? Foosball tables and free lunch Fridays? Is it long hours before launch day? Flexible vacation times?
Too often, when people talk about company culture, they fail to differentiate between values and style. All of the above things are style. Working late, not counting hours, blurring social and work life--that's all how people work. That's not why people work. It's not what makes work meaningful or important. It's not only window dressing, but it can often mask serious culture problems when companies need to deal with style differences as they scale.
For example, if you value working with the best people, you may find that the best people aren't all 24 year olds who can go out until 3am on a weeknight. Your culture should value a baseline of respect, dedication to the task at hand, open communication and quality such that the best performers can thrive no matter what their style.
Values are created by words and actions, by the choices the top people in the company naturally make. They underly every single decision.
Style is a function of activities. Style is either created by rule, programming or just left to happen organically through the whim of the behaviors of your first hires. Values are inherent to who you are.
People either strive for excellence or they don't, for example. You can't have Excellence Day on Fridays.
Be very careful not to let style be your culture, because it never scales and it optimizes for things that don't necessarily dictate success--like hours worked.
I'll be headed to my seventh and perhaps last SXSW Interactive this year. I've spoken twice, judged at the startup accelerator, been around for the first Garyvee SXSW flashmob wine party, tipped a certain investor off to Twitter, been the investor behind the app that "won" the conference, attended a bike rally, tattooed a 4SQ douchebag badge on my head, played actual foursquare, and funded a guy I met for the first time there (Rob May from Backupify) --three years later.
Call me a veteran.
But each year, my expectations of the conference, which keeps getting bigger and bigger, keep getting smaller and smaller. There's been a lot of panel quality dilution--more panelists, of course, means lower quality. You're that much less likely to run into someone amazing in the hallways that you couldn't meet anywhere else--because a lot of those people aren't coming anymore and now the always are swamped with junior agency folks coming for the first time.
So is SXSW over, or can you still have a great time? You def can and here's how:
1) You're going to miss lots of stuff, so don't worry about it. Peruse the panels and try to pick out 3-5 panels that you really want to see, and more importantly, panelists you want to meet. If you could have 3 in person conversations with amazing panelists that you wouldn't otherwise have a connection to, consider that the bar for getting the most out of panels.
2) GroupMe is great for organizing your friends at SXSW, and Foursquare is still a good way to figure out where everyone is. Between the two of them, including commenting on Foursquare if stuff is worth going to, and whether you're likely to stay long, you'll be fine for keeping track of everyone.
3) Be a food leader--there will always be a critical mass of hungry people at any given time, so if you can actually make set plans to get food at a certain place at a certain time, and do the heavy lifting of waiting on lines, getting tables, etc., you'll be a hero.
4) Go deep--find a handful of people to really get to know at the conference. If all you do is get a bunch of business cards and you can't remember who anyone is, you missed the point. If you're going to be down there over a weekend, you should be social with people and get to know who they are, not just what they do. Some of my closest friends in tech come from relationships I solidified while I was down at SXSW.
5) Sign up for SX Social, and tag yourself--what you do, where you're from, fun stuff. Connect your networks so you become findable. Figure out who you want to meet ahead of time and make it like a scavenger hunt of awesome folks.
Bonus: Getting drunk and hungover is a complete waste of time. You can drink all you want when you're home, but if you can't remember who you hung out with, and you miss half or whole days because you're sick, you're just wasting your money. Have some meat and some brews, but don't overdue it--because if you actually take care of yourself, actually sleep, actually eat, you're going to be able to win the marathon instead of getting burned out on the first day.
This week, I spoke to one of the longest running and most active angel groups in the country, the New York Angels. For a long time, they were basically the only game in town for seed and early stage funding in NYC. Luckily for all of us, including the New York Angels themselves, the ecosystem has bloomed.
Not only has the NYC ecosystem changed, but the whole ecosystem around early and seed investing has innovated. Smaller funds are thriving, and technology has been brought to bear in a major way with efforts like AngelList. In a world where startups can pick up 750k in from just a couple of seed funds, or crowdsource a bunch of angels sight unseen, what's the role of an angel group? New York Angels is working to develop a more comprehensive role for angels in this new ecosystem, and that work has inspired me to think about the role that angel groups play.
Initially, angel groups were basically setup for two reasons--to connect angels to each other and to pool money for entrepreneurs. An angel belonging to a group could find more dealflow. Since no single angel was going to take up a whole round, it provided for an easy way of finding co-investors as well. Secondly, it was easier for the entrepreneurs to pitch in front of a roomful of a lot of money than one at a time.
The Internet is making finding co-investors easier--and I don't mean just on AngelList. I'm peripherally more aware of more sources of capital and what they like then I ever have been. This is thanks to my participation in social media. I follow other investors on Twitter, Quora, and respond to blog posts--I've even been able to strengthen my ties to other investors through Instagram. Meeting in person is no longer the only way an angel investor can get looped in a network of other investors.
For entrepreneurs, it's quite the same. By participating in social networks, angels are making themselves more findable, and entrepreneurs can do a better job targeting exactly who the most likely investors are. They can examine prior track records, current shared thinking, and even who seems to know who, in order to create momentum. Crunchbase and AngelList provide a ton of research on who has invested in what.
These changes would lead me to believe that simply aggregating supply and demand isn't enough of a function for angel groups to survive. The Internet already does a pretty good job of that.
What role, then, can angel groups most productively play? Here are five things that I think angel groups should take a look at, because I do think they can continue to play an active role going forward:
1) Industry Leadership
In the public stock market, activist investors rally institutionals to affect change in the investing landscape--keeping boards in check. When you speak for a lot of smart dollars, you can help ensure best practices. Angel groups can and should pool their voices to look out for both entrepreneurs and investors alike. On AngelList, you're using a platform--you don't really belong to a group. That platform doesn't really "represent" the views of the investors who use it--but an angel group can speak for its members on important industry issues.
2) A Platform for Visibility
Not every angel investor has time to keep up with a regular blog--but there are vast amounts of uptapped startup and operational wisdom locked up in angel groups that isn't getting out. What if an angel group of 50 people required, as part of it's membership, one thoughtfully written piece of knowledge sharing on the angel group's blog every six months. It could be about lessons learned from an area of expertise. That would be a 100 blog posts a year! Two a week! It would probably be one of the best resources for both entrepreneurs and investors around--and it would take the pressure off each individual investor to have to maintain their own site or come up with something to say more often. I also think it would do a great job of branding the group as a collective of smart folks and generate lots of inbound dealflow. Trust me--two posts a week will fill your inbox!
3) A Network of Company Assistance
Again, if the world goes to "click to fund", we risk losing a little bit of a community feel--of people looking out for each other. Sometimes, there's a value to people feeling like they're on the "inside" of something--a group where there are shared values and mutual support. I experience that with the schools I went to, the place I grew up in--if you tell me you're from Brooklyn, I'm going to do that much more for you, and I know I get that same treatment in return. Similiary, I'm sure that angels in an angel group would go the extra mile to help other companies invested in by their colleagues in the group, even if they didn't have a stake. That not only needs to be made to be part of the culture of the group, but there needs to be structures in place to allow that to happen--and it needs to be marketed to the outside as a benefit. Everyone knows about the First Round Capital "platform". People are aware that recruiting is my strong suit--having placed over 30 people at startups in the last couple of years. What does your group do for its companies? Through what mechanisms? How would you know?
4) Promote Crowded Sidewalks
An angel group can't be an island. I'm reading Jane Jacob's Death and Life of American Cities and, in it, she talks a lot about how promoting as much street level interaction as possible in a city creates safer and better neighborhoods. If I was an angel group, I'd be trying to figure out how an entrepreneur couldn't take two steps in my city without bumping into someone from our group. If the only interaction you have with an angel group is during pitch day, you're going to miss out on the opportunity to create a thriving ecosystem around the group. What does that mean? It's about getting out there to other events--speaking as well as attending. It means having a diverse set of business relationships. You should be active fund investors as well as angels--building up relationships with venture capitalists to both source deals, find co-investors, and pave the way for later stage investments. Angel investors should think of their participation in an angel group as a launching pad for lots of other investment community activities, not a box to check as their lone participation in the ecosystem.
5) Be fun!
The best business relationships often stem from authentic personal relationships. Are the people in your angel group real friends? Do they go out to dinner together? Are they sports fans? Skiers? Are they members of the same food co-op or school board? This is something you can't replace by investing by click--and it helps promote of active dialogue about more than just investing. The more you talk about things that aren't startups, the more likely you are to recognize the real game changing ideas when they don't look like the startups you've invested in before. I'd want to build my angel group with a fun bunch of Renaissance people, diverse in background, interest, etc.--free thinkers. That's how you fight group think and make the experience of participating in these groups an interesting experience for both investors and entrepreneurs--and that's far more compelling than just a way to aggregate supply and demand.
Got some comments from readers...
Glen Hellman wrote "No PretAngels. Weed out the tire kickers, non-investing members of the group. Especially the group members who see their membership as a biz development opportunity. http://www.drivenforward.com/blog/pretangels-sharks-in-angel-clothing"
Christopher Mirabile wrote by e-mail...
"I think there are some additional benefits to individual angels and some additional roles groups need to play that don't get mentioned enough (or ever) - the education groups provide in how to be a good investor is key (having deal flow on AngelList is useless if you don't know what you are doing as an investor and don't know how to be helpful to a company), recruiting new angels and promoting the formation of capital, encouraging members to be active in the community, etc. In a lot of ways as the masses are poised to pour into crowdfunding, the role of groups is more important than ever - increasingly the Angel Capital Association is focusing on professional accredited investors - company builders in short."
People usually get the really big ideas wrong. That's why you can't crowdsource signals to invest in venture capital--because most people don't see big things coming. Few people ever thought that there would be a need for a personal computer in the home. Yet, the Segway was supposed to change our world as we knew it. Lots of people thought Twitter was a pretty dumb idea, too.
We seem to do a pretty terrible job predicting the nature of big ideas--over and over again. Yet, that's what VCs are supposed to do, right? Pick out the big idea that returns the fund. That's pretty hard to do when you've got two layers of people to explain your choices to--your partners and your own fund investors. The more people you need to make a reasonable argument in front of to support your decisions, the less likely you're going to be early to the next big thing. The next big thing will seem completely unreasonable at first. Sign up to have strangers live in your house? Crazy!! Get a group of people to throw money at a creative project with no financial return? Sounds pretty small.
The first time I saw a Makerbot, I thought the market for it was about 300, total. Not surprisingly, the first investor in, Jake Lodwick, is a guy who has naked pictures of himself on a tractor up on the Internet--ie he's not exactly a boxed thinker. The next set of investors, "people with balls" according to another VC I know--Shana Fisher, Kal Vepuri... Individual investors who didn't really need to talk it over in a Monday morning partner meeting before investing. It wasn't until the third layer of cash came in that an institutional fund "got it".
That's why I'm so excited about my investment in Windowfarms, along with Joanne Wilson and Charles Smith--because a) other professional investors don't totally get it and b) people love the product. It's a way for every apartment dweller with no patch dirt to start participating in the sustainable agriculture movement. I don't see why everyone in the world in a city couldn't be one day be using farming hardware connected to an online community of other indoor food growers.
Crazy, perhaps, but every single person in the room thought Makerbot was incredibly cool when I first saw it. In fact, I don't know anyone who doesn't think it's cool. I don't know anyone who doesn't think Kickstarter does something great or who didn't find AirBnB to be a great experience. Not everyone saw their investment potential though--even though there weren't a lot of things that would stand in the way. The common thread among many of the big ideas today are that they didn't really overcome a lot of big hurdles--it's just that nothing great ever seems like that much of a sure thing. It all just seems really hard--but when it's a little crazy and hard at the same time, it seems too risky. If anything, crazy is just a measure of potential return--because when crazy works, it's game changing. If something is going to be hard (risky) it's probably not worth it unless it is, in fact, a little crazy.
I hope to do a fair amount of crazy stuff out of my fund--because a diversified portfolio of crazy has a better shot at great returns.