Venture Realities: Startup financing news from the frontlines

I had a fascinating conversation with an early/seed stage investor yesterday who basically described the market as follows...

He said that, over the course of all of their deals (over 50), they've done a very good job figuring out what a team will need to do to raise venture capital.  Their investments are basically meant to supply a team with about 9 months of capital to go out and build something and "jump 9 feet", because that's the milestone they see for VC--whatever 9 feet is for that particular comapny.

That had been going pretty well up until deals that were done in the first half of last year--right around the time that Path101.com got it's first angel financing.  Now their companies are coming back into the market, as planned, for financing.  They're reporting that instead of the 9 feet they were training for, they're now being asked to jump 15 feet by the VCs.  Somehow, companies are supposed to get straight from product to revenue--without iteration or even traction in between.

If you're an investor and you can get a Series B company--one with revenue traction--for Series A prices, why would you ever do a Series A?  It's not unfair--it's just good business.

Welcome to raising capital in 2009.  Go straight to Series B or do not pass go.

This investor was basically doubling the size of the rounds he was doing--splitting them with a partner fund--in order to give companies longer runways to actually make it to sustainability.  He described your angel/seed funding like a rocket ship.  You need to decide how big of a fuel tank you need to take you into orbit, because, these days, if you run out before you get there, there's no refueling mid-flight. 

We'll be talking to our board tomorrow and the theme of the conversation is more or less "If financing happens, great, but we're not going to wait around for it."  We're still in conversations with investors, but our product plan has prioritized immediately monetizable features.  We're shooting for 45 days, give or take a few bug fixes here and there, to launch both recruiter and candidate services we can sell.  We've cut our burn pretty low and we're working on some in person job search seminars to help extend the runway.  We're not going to disappear tomorrow, that's for sure--but we want to still be here six months from now and beyond.  That takes a solid plan and some rolled up sleeves.

What am I telling startups now?  Forget raising 250-500k.  If you can raise a million, do it--because the chances of you creating a break-even business on 250k-500k is pretty low.  If you can't raise a million, then only focus on building something that a customer is willing to pay for TODAY.  (That should focus your product roadmap just a bit.)  Anything in between will be a bridge to nowhere. 

UPDATE: Fred wrote this post yesterday about becoming the default behavior for your market--ahead of figuring out how to monetize it.  I think the problem with that thinking is that it basically only gives you one shot.  You're playing startup Russion Roulette when your goal is to become the default activity and you have no Plan B.  At least of you monetize in some way, if it takes you two or three tries to become the default, you have the runway to iterate.  We're all aiming to become the default activity for our consumer base and the service we provide--but it's not always clear how to do that.  Lots of people wanted to be the Google of events--it never happened, but not for lack of trying.  In new markets, it's not always clear what model wins out, and often times the last one standing wins.  It's hard to be the last one standing if you're not making money.  The key is to make money in a way that doesn't hinder your growth. 

In hindsight, I wonder if perhaps we at Union Square Ventures did the world a disservice back in 2005 when we started blogging as a fund--opening the kimono on the world of venture capital and making it seem like it was within arms reach.  Maybe the world was better off when businessplans@venturefund.com was the black hole where your ideas went.

We have a new black hole where all the ideas go today--but this time we call it the economy.

Before all the transparancy, those who really wanted to pursue their ideas, out of necessity, went and got paying customers for their business day one.  If you built a great business, the VCs would find you, but short of that, you didn't have all of these conferences, bootcamps, etc. making you feel like you're just an investor away from the next big thing.

People would tell me, "Oh, you're lucky that you used to work for a venture fund, because you understand what they want."  In hindsight, I don't know about that.  I might have been better off not knowing that venture capital existed, aiming for profits from the beginning--and then just being nicely surprised if some dude shows up at my door with a few million in cash asking to buy a minority stake in my business.

Venture capital is like winning the lottery.  Somebody wins, but statistically, it's not you.  Don't wait for an investor to go build the business.  We're not--not anymore, anyway.

Brazenly wrong about generations and networking

Penelope Trunk is supposed to be some kind of expert on generations and the workplace, but I don't think she could get the following more wrong:

"Do you know who is using social media? Gen X. The average Twitter user is in their 30s. The median age of LinkedIn is 40. The majority of people who are joining Facebook right now are over 35. This is because Gen X wants to meet new people online and reconnect with all the friends they lost along the way. Gen X is using social media to network. "

Actually, the average age of internet users--and the US population in general, is around the mid 30's.  To say that Gen X is doing more networking, and disproportionately so, is just misleading--it's just flat out wrong.  Social networkers pretty much reflect the makeup of the US internet user audience.  Gen X isn't any more networking savvy than any other group.

"Gen Y doesn’t need to. They never lost their connections because they’ve been online since they were ten. They do not need to meet more people online to expand their network because they are native networkers – they have had the tools and the predisposition to use them since before Gen X even knew what Facebook was."

This is just utterly ridiculous.  Gen Y doesn't need to meet more people online to expand their network because they've been online since they were 10?  I don't know about you, but nobody I know basically made all the career connections they ever needed to make between the ages of 10 and 21.  If anything, Gen Y needs the most networking help because they grew up with "Stranger Danger."  They got taught that people they don't know are likely to try to hurt them, so they tend to connect online to people they already know.  Facebook reflects that and it's the reason why Gen Y is so much less likely to use LinkedIn.  On Facebook you connect to your friends, and on LinkedIn you build your professional network, often reaching out to new people.  Getting Gen Y to use LinkedIn is like pulling teeth.  Perhaps Penelope should teach a class of college students over a full semester like I do to get a better sense of how Gen Y really networks online.

"So while Gen X is busy using Twitter to let people know what they are up to and promote the hell out of whatever they are doing, Gen Y is using Twitter for tweetups – meetups set up via Twitter. Which is a way of making genuine friends offline."

So Gen Y does tweetups more than Gen X?  Most tweetups are tied around some kind of professional group--not likely to be attended by a majority of Gen Yers.  Disagree?  Flip through who is actually Tweeting Up right this minute.  On top of that, most people on Twitter aren't really promoting anything.  Sure, the "gurus" and social media mavens are, but by number, most people on Twitter just follow a handful of people they know and just Tweet about their life.

Sherry Mason from Bowdoin College wrote "College kids I work with need coaching on tone & style" and she's absolutely right.  Just because a Gen Yer may have 1000 Facebook friends doesn't make them an expert at networking any more than following 10,000+ people on Twitter does so they follow you back.  (I always thought networking involved listening... I'm sorry, but you can't listen to 10,000+ people at once, even if you're using Tweetdeck.)

Networking involves the following basics, none of which I've found Gen Y to be particularly good at:

• Self awareness: How are people perceiving you?  Gen Yers, because of their lack of experience, don't have a great sense of professionalism and professional appearence.
• Storytelling: How can you package up your experiences, interests, goals into something memorable that others take with them and remember.
• Listening: I don't think any generation is good at this, Gen Y included.
• Outreach: Reaching out to the right people to build relationships--this is where Gen Y majorly falls down because those kids aren't any good at going outside the comfort zone of their own network--unless their mom schedules a playdate for them. 

Gen Y sucks at networking.  Don't let their Facebook friend list fool you.

Be an asskicker

Someone sent a note to the nextNY list about how he was unemployed and looking to work for a startup--how it was really hard to find something.  He sent a link to a piece he wrote on a site about being unemployed.

This was my response:

"So the one link you send us is on a site about being unemployed?

Why on earth would you market yourself as an unemployed guy?  In your first instance of participation in this group, you cast yourself as laid off and desperate.  Who wants to hire an unemployed person?

No one.

If I showed up to a date and the girl introduces herself by saying, "I've just been going on nothing but first dates and they never work out...   I'm so desperate to find someone" I'd be looking for the door in a heartbeat.

We all want to hire someone who kicks ass at something.  If you do not kick ass at anything, you should at least be in the process of learning how to kick ass at something.  Startups, or frankly any company for that matter, cannot afford to hire a non-asskicking generalist.

Think of it this way...  If you know the media, perhaps you could have spent the last five months doing free PR and marketing for a handful of startups.  You weren't working anyway.  The goal would be to be so good at it that one of those companies can't help but hire you--or some other company would hire you because they noticed how good you were at it--or worst case you'd suck at it but you'd really learn something.

Forget pursuing.  Spend 110% of your time honing some kind of value proposition that you'd be a no-brainer hire for.

Forget the "I'm unemployed" shtick and work on the being awesome without advertising the fact that you are awesome to everyone.  If you do not know what awesomeness is, try and figure out who the top 30 most awesome people in the NY tech scene are and interview them.  Publish the interviews on your blog.  Make a list and publish it.  Here are my suggestions:  David Karp, Anthony Volodkin, Chris Hughes...

And God help you if I see your blog and it's yourname.blogspot.com.  To be awesome, you must splurge for the $13 domain name."

Jobfail: Why current offerings are failing both the jobseeker and the recruiter

Ask the average venture investor how excited they are about the recruiting space--you'd get more enthusiasm in the waiting room of a dentist's office.  I don't blame them.  There are a million "Me, too!" companies and the space is nearly devoid of innovation. 

How many ways can you smuch a resume against a job post?  Turns out... tons... or really just one, dressed up as tons.  On top of that, there is a severe lack of focus on behalf of the job seeker--and if you're not helping people with their career, just what are you doing? 

Early in 2008, my partner Alex Lines and I finished raising a small angel round and got to work on building a company called Path101.com.  We're a small team working on an innovate approach to career guidance--and we're getting closer and closer to meeting our potential each day, but we're still not there yet. 

The career space still haven't solved really basic problems of helping people find jobs and careers--and each year the potential of the technology pushes forward, the industry falls further and further behind.  The future is coming much faster than the current players are preparing for it. 

It's clear that five to ten years from now--everyone is findable on the web.  Every job is nearly already findable through aggregators like Indeed.com and Simply Hired.  Just like the market specialists on Wall Street who disappeared when electronic trading came into maturity, many of the players adding friction in the middle of this marketplace will go away.  We're seeing this happen on college campuses, where employers are connecting directly with students and visits to career centers are way down.  Sure, there may be some people still finding niches to connect people--but surely a lot less in a hyperconnected, seemless world. 

What we're heading to, like it or not, is a form of electronic trading markets for people--where exactly who you are and what you can do can get instantly mapped to exactly the company and role that makes the most sense for you and your interests.  Unfortunately for most of the existing players--a resume and a job post not the kinds of data infrastructure that will get us there.  A resume doesn't tell you nearly enough about who I am and what I can do, and job post doesn't tell me anything about the path that post leads to or what my experience is likely to be in that position.  That's why all these "eHarmony for jobs" companies are failing to get the job done.  Trying to get everyone in the right place seemlessly with such poor data building blocks would be like trying to run a stock market ticker with refrigerator magnets.

There are all sorts of incentive issues and missteps in the job space.  Here are just a few, as I see them, from both sides.

First, here are five ways job sites fail the job seeker:

1) The job boards like Monster, Careerbuilder, and Hotjobs fail to give job seekers the data they need to make adjustments and navigate opportunities.  How many people already applied to this job?  How does my resume compare to the other applicants?  What were people search for when they found my resume?  How many views did my resume get?  Did anyone even look at it after I sent it in?

2) LinkedIn is masterful at making you think you should be on there, giving you the impression that you'll be networking, and then having you scratch your head as to what the point is.  The problem is that Linkedin has the incentive to get you on, but not have you actually do anything.  Don't take my for it... these people were pretty easy to find on Twitter:

 

 

I personally use it a ton, but if everyone used it the way I do, it would be a noisy mess.  Since they broker access to your profile information, the fact that everyone's on it, without really using it, means maximum profits for the company.  Sure, they have a section about using it somewhere on the site, but if they really wanted you to get the most out of it, they'd take you right into, "Ok, so let's start contacting some people."  Instead, they leave you off right after, "Ok, so let's start adding some people."

3)  Got your resume on VisualCV or Emurse?  These resume on the web sites are supposed to help you stand out and get noticed.  Sure, they come up high when you Google your own name--but if someone's searching for your name (most likely you), then they already know you and most likely have your resume.  What about using these sites you actually get found and contacted?

Meet Carol Anderson.  She has her resume on VisualCV--it won an award as one of the best ones out there.  She's a Heathcare Consultant in Fredericksburg, VA.  It says so right on her VisualCV.  Try Googling for "Heathcare Consultant  Fredericksburg, VA".  She doesn't come anywhere.  In fact, you can't even find her until Page 3 of Google search results for Carol Anderson!  Sure, it's a pretty common name, but isn't the point of using one of these profile sites to rise above the rest?  You're certainly not going to rise above the rest on Google--VisualCV only has 9,000 pages on it's site exposed to the search engine.  Either only 9,000 people have created VisualCVs, or the site is keeping all of the people who joined under wraps--certainly not what people who wanted to "STAND OUT!" and get noticed probably want.

Emurse is a bit better, exposing nearly 200,000 profiles to Google.  However, they're not optimized to get you found for much more than searches for your name.  Brian Robertson sure wants you to hire him as a freelance web developer, but good luck finding his Emurse resume in Google searches for "freelance web developer st. charles, missouri" on the first page.  How many could there be? 

4) TheLadders has a great business model...for TheLadders.  You pay monthly to see jobs paying over $100,000.  It doesn't take a genius to figure out what their incentive is--to keep you on the site as long as possible.  If you get hired, you leave and TheLadders loses out on it's revenue.  That's not really the kind of model that makes me feel like a site is trying really hard to get me a job.

5) Jobfox tries to be a lot smarter about matching you to the right opening, but unfortunately they suffer from a classic chicken & egg problem.  The only jobs you can be matched for with Jobfox's highly scientific approach are openings on Jobfox.  In the current economy, those are some pretty slim pickins.  It would be better if candidates could see what positions they would be best for even if there weren't positions open in those areas right away.  At least they'd have a clue where to look--on other sites.  

 

...and here are five ways job sites fail the recruiter:

1) No site actually understands the full picture of the candidate that the web has to offer versus just aggregating it.  Zoominfo just aggregates everything it thinks it found about you (and some stuff it finds about other people) all in one place.  LinkedIn doesn't understand that even when you don't write "Python" on your profile, someone with a link to their "py.hack" blog and who tags things python in del.icio.us should come up in a search for Python developers. 

2) Search is horrific...everywhere.  Try to find the resume of someone with two years of sales experience with a Chemistry major who worked for a large company in a certain geographic area who can speak Spanish.  This should be a lot easier--and it's why you tend to get spam from recruiters on job boards.  It's not that they want to spam you--they just can't target *and* scale at the same time.

3) No reptuations:  A spammy, underhanded recruiter looks the same as a recruiter who takes the time to get to know candidates and send them relevent stuff.  In nearly every other kind of marketplace, both buyers and sellers have reputations.  Why not in recruiting?  (And no, a few "thumbs up" notes in LinkedIn doesn't count--I'm talking something that says 78% of candidates feel that this recruiters offers are relevent).   

4) We all know that someone updating their LinkedIn profile and adding people is an extremely strong signal that they're packing up to leave their job.  Why not expose this data and let recruiters search on it--maybe even pay a little extra to get out in front of the pack with exclusive access?  Recruiting is falling behind in "real time search" and the "now web".  The whole thing is based not on the blog post that a social media marketer posted just a few minutes ago, but what someone listed on their resume as their job six years ago--and that needs to change.

5) No "soft" data: We search resumes as if candidates like everything they did in the past and want to do it again---even though we know that isn't even close to being accurate, maybe not even half the time.  Doing something simple like asking people if they liked their job would be a huge leap in helping recruiters find people enthusiastic for their offering--not to mention collecting more descreet data about the types of situations they find more satisfying.  Now start laying on things like work values, personality, etc., and for a lot of jobs, you might not even care to see a resume.

 

Have we solved all of those problems at Path101.com?  Not yet--but we have key data infrastructure in place.  The very philosophy on which we are building out our product and laying out our roadmap is fundamentally about this data-driven, candidate centric future marketplace.

That's one thing that we believe strongly--that unless every single line of code, every business decision, every design choice is made with the jobseeker and their data in mind, you're going to get left far behind.  Imagine creating a "green" car company from scratch versus thinking you can make GM green tomorrow.  It's probably already too late for the existing players, but this market represents a huge business opportunity for anyone that understands that the candidate comes first and depth of data is your business--and the only way you get there is by getting the candidate to want to give it to you because they're getting something useful back.  

What's the last time you got something useful back after submitting your data to Monster.com? 

Exactly. 

How long do you think that lasts?

Mayday! Mayday! Is your career is going down (or sideways...) Take part in Path 101's "Career Mayday" and get help from experts and professionals

Are you stuck in a rut?

Don't like what you're doing, but can't figure out how to get ahead, or get out?

Ask for career advice on Path101.com on May 1st -- May Day -- as part of Path 101's "Career Mayday" Advicefest.

Path 101 has built up a community of career experts and experienced professionals to help get answers to your most pressing career questions.

What's even better is that when you ask or answer a question, you can connect your Path 101 account to Twitter or Facebook to help get answers from your network.  Check out some of these great questions and answers from our site:

Best tips for interviewing

Are unpaid internships worth it?

Staying in touch after an interview when there isn't an opening right now

 

Tomorrow, when you ask a question and connect your Twitter account, the Tweet will look something like this:

Mayday! Mayday!  My career needs help!  Please help me get an answer to my Path 101 career question.  http://bit.yl/32vwesd #mayday Plz RT

When you answer, it will look like this:

Just rescued someone through Path 101's Career Mayday.  Save a drowning career, give advice: http://bit.yl/32vwesd #mayday Plz RT

 

Just make sure you connect your Path 101 to Twitter...   After you ask or answer, at the bottom of that question, you can click a link to make a connection.  If you ask anonymously, we can't publish the tweet either (but that shouldn't stop you from just asking a question, of course). 

Path 101: Mint.com for your career

Sometimes, it takes you longer to realize things about your own business--especially somewhat obvious (in hindsight) business analogies.

I was thinking about Mint.com, the personal finance site, and I never realized how similar our goals are at Path 101.

Mint is building a suite of free tools to help manage a mainstream problem that effects everyone--in their case, managing your budget.  Their target audiance?  What about... everyone who makes money?  Spends money?  Wants more money?  It's a pretty huge potential audience and we feel the same way about our career guidance site.  Path 101 is targeted at anyone who works and wants to figure out what's next.

Now, the argument could be made that not a lot of people who make money actually manage their money well, which is what I thought initially about Mint.  However, Mint is making their tools so easy that they're not just converting the beancounters, they're helping people who have never ever kept a budget before--introducing people to the concept of budging and personal financial management.  We want to do the same for careers.  Thinking about your career can be an intimidating thing and we want to shed some light on the process and make it easier. 

Mint.com makes it easy for you to upload your financial data to the system, but moreover they give you a compelling reason to--to get recommendations and gain insight into your budget, the same way we want someone to get value from uploading their resume and other information.

This enables Mint to gain a tremendous information advantage from a business standpoint.  By working hand in hand with their users in managing their finances, they are the best positioned to broker offers from people who want to access those users.  That's ultimately where we want to be with Path 101.  By getting to know our users better, because we helped them manage their career, we'll ultimately be the best place to broker recruiter and employer access--particularly given that we'll know so much more about each user.

They're also using the network effects of having all that user data to improve the product.  The more Mint users there are, the more insight they get into trends and norms, which can, in turn, be presented back to the user in a useful, comparitive way.

It's a business and product model that no doubt works in other areas, too, but I feel like Mint is a particularly relevent comparison given the size of the potential market, the importance of this aspect of someone's lifestyle, and the focus on data.

Path 101 is hiring a developer: What we want out of both the person and the resume...and who we are.

Path 101, the company I started with our CTO and Co-Founder, Alex Lines, is looking to hire a developer.

Over and above anything else, here's the kind of person we want:

• Someone with a sense of ownership and pride in their work.  We get that nothing can ever be perfect, but you need to constantly strive to make things better.  This means not only making stuff works, but that it's easy to use and makes sense--and that you try to make it easier to use and more interesting everyday.
• You see the bigger picture--you realize that there are really exciting things to work on and then there's bug fixing--but at the end of the day you're happy we're moving forward as a team, as a company, and as a product. 
• You really hate when stuff breaks or it sucks and it keeps you up at night.
• You're friendly and/or interesting and are just cool to hangout with--not too uptight to break for a snowball fight in the park or to randomly pass funny images to the rest of the team on chat.

As for the tech stuff, an intelligent, curious, ambitious person can learn anything, that's true, but ideally you'd be an intelligent, curious, ambitious person AND be as much of the following as possible:

• experienced web developer
• very strong understanding of python
• extensive experience with django - you know its strengths and
  weaknesses, its ecosystem of libraries and components, participate in
  django community <-- This is ideal, but if you're strong in python, let's chat.
• obsessed with performance
• you can talk for hours about caching <--Alex's criteria, not mine.  Don't talk to me about caching... ever.
• experience with mysql
• know how to properly normalize a data model as well as the costs and
  benefits of denormalization
• strong unix/linux background
• conversant in html/css/javascript
• familiarity with column-oriented / key-value stores is a plus

We'll accept a resume but prefer a link to your blog and linkedin profile.

Here are some things you might what to know about us:

• We're helping people figure out their careers.  While this might not be feeding the poor, helping someone figure out what they want to do that makes them happy can really make a significant impact in someone's life. 
• We're doing it in an innovative way--by crawling the web for resumes and laying on interesting user data, like personality, blogs, tags, anything you want to tell us about yourself--in order to figure out what everyone's really doing with their careers.  This way, we can help you put your career in a context and figure out what "people like me" do for a living.  There are around 10 million resumes out there and we're going to crawl every last one of them.
• We're funded by some seriously smart and successful angels like Roger Ehrenberg, Fred Wilson, Brad Burnham, Scott Heiferman, Jeff Jarvis, Hunter Walk, Jeff Stewart, Peter Hershberg, Joshua Stylman, Brian Harniman, Shripriya Mahesh, and others...
• We were the first company to ever get an investment by the recently launched NYC Seed fund. 
• We're really passionate and dedicated to what we're doing.
• Team:  Charlie (@ceonyc), Alex (@alexlines), and Hilary (@hmason), as well as some super awesome contract folks.

 

So, tweet @ us, e-mail us, or leave a comment.   But please, no recruiters.  We can't afford a recruiter, so there's really just no point to reaching out.  We're really serious.  Really.  Serious.

 

 

Trading software for the PR exchange: How to get pitches out of the dark ages

Whenever I ask anyone for innovative ways to reach reporters, PR professionals point me to Peter Shankman's Help a Report Out (HARO) list. It comes out three times a day and gets sent to over 50,000 people. Reporters can post requests for everything from housewives who've discovered tantric sex to people who've turned down CEO positions (not *those* kinds of positions).

This is the bleeding edge of media relations, folks--a mailing list.

And thank God for this list--lest we all depend on these hand edited media databases selling for thousands of dollars. These sites make me feel like I'm searching Proquest back at my college library in 1999--cumbersome to search though and lacking the metadata I need to find what I'm looking for. 

At least HARO gives me a sense of what a journalist as actually looking for *today*.

Do you know why there are half a dozen of these things out there?  Most of the data is public!  Media winds up on the web, so all the data is already out there.  So far, I haven't seen anything that provides really specific insight into the current topics of interest of a reporter, nor any real analysis into how much traffic, buzz, and influence a journalist really has.  The blogger information is quite rough, too.

And @microPR?   I track it on Twitter... and it seems to be mostly people suggesting other people follow it for #followfriday or talking about its usefulness.  Fail.  

PR is a marketplace--an exchange of relevant, interesting information for attention and audience. So why doesn't it have the tools of a marketplace?  PR tools shouldn't look like databases... they should look like financial trading platforms, with asks and bids on a ticker--filtered for what I'm looking for or need.  This is trading: I give a reporter information (and an angle to work with) about my company and he gives me his audience's attention--at least to the extent he influences it. Real marketplaces have transparency, quantifiability, uniform elements of exchange, and the information systems that enable both sides to make informed decisions.

Imagine if you bought and sold stocks the same way PR works today.  You'd maybe list your name (or have someone else list you with questionable accuracy) in a database.   Instead of really detailed information related to your risk tolerance, prior stocks purchased, key financial criteria like cashflow, all people could see was a general description that you were interested in "Tech Stocks".  Nevermind that you're specifically interested in bigger name plays like MSFT, GOOG, and AMZN, you now get tons of requests for you to buy tiny little biotech companies with no profits that you've never heard of.  You get these requests in your inbox...and they just keep coming.  You don't have time to answer them and there's really no good way to inform the investor relations world about your interests.

PR,specifically pitching, is just like Wall St.--in the 1780's: Manual, opaque, and lacking the tools to create real actionable information flow and analysis. 

Getting PR is all about recreating the work that lots of other people have done to find good contact lists, which will always be incomplete and never really that accurate, crafting good pitch letters, which is totally not scalable, after hours schmoozing, and brokering exclusives in a world where information just wants to be free. This is why the startup geeks can't hack it and need to hire firms to do the social dirtywork.  They're too frustrated by the archaic process, lack of feedback and randomness of success to count on it as a good way to spend their time--especially when most media drives a seriously underwhelming amount of traffic.

Here's an idea for a better system--one that treats PR like the information marketplace that it really is:

First, index all of the reporters.  A good web crawler should be able to recreate the best online media databases in a very short amount of time. Match them up with feeds for their stories, twitter accounts, del.icio.us tags, etc., and analyze the topics and keywords they talk about in real time.  Also analyze the words that other people use when tagging, tweeting, and reblogging their stories.  I don't just want a list of career columnists who give resume tips. I want to know who is reviewing career websites and who isn't--and specifically ones focused on data and analytics or who have an interest in startups and innovation.  Computers can figure that out a lot faster than people can.

Media outlets need the same thing.  They need more information to sort through the pitches in their inbox.  Who are these people?  Are they backed by the right people?  If I were a reporter, I'd want to know that Path 101 is funded by folks like Fred Wilson, Brad Burnham, Scott Heiferman, Jeff Jarvis, etc., and has recently appeared in CNN/Money, VentureBeat, and Mashable.  Moreover, the fact that I was #61 on the SA 100, or that Hilary is a regular FooCamper might be of interest, too.   I'm not bragging...  I'm saying that if I was a journalist and thought of the PR process as an exchange, I would certainly equate some value the networks of the companies I choose to write about, all other things being equal.  I know I certainly go out of my way to try to connect up reporters who've helped me out with other people I know, like angels and VCs involved with us, their portfolio companies, etc.  If nothing else, reporters undoubtedly need some kind of filter, short of a background check, to figure out who's even legitimate.  I know I needed this when I was on the venture capital side getting inbound biz plan pitches.  Just because someone has the money to hire a PR firm doesn't necessarily make them the kind of people I might want to get involved with--but the interwebs can tell me a lot about "counterparty risk"--who I'm getting into this trade with?

Create a filterable, searchable open market for requests and pitches, with APIs, like Twitter, so I can have it on the web, desktop, e-mail, etc.  Mailing lists and Twitter accounts are archaic... and force people to sift through a whole bunch of irrelevant stuff.  When a reporter asks for new resources for career guidance, not only does that person get our Path 101 info, but so does anyone else writing something similar. Give reporters the analytics around how much coverage a company is getting, how recent, etc--make the whole process transparent.

With historical analytics, I should be able to go back in time and say "Show me all of the reporters that wrote about NotchUp and sort by rating and by most recent date of relevant stories."

At the same time, reporters should be able to create saved searches for "career resource", "career guidance", etc. so that they can see a running ticker of what's being pitched.  Why should they have to wait to be pitched?  When investors want companies that have Low P/E's, they can screen for that.  Why can't reporters screen the universe of pitches?

Allow for ratings on both sides. Some reporters write really thoughtful pieces, even when negative, and others are obviously mailing it in.  Let PR folks and companies rate the reporters. Undoubtedly, some startups are a total PITA.  If you get spammed by the same startup everyday, as a reporter you should be able to ding them.  It should be easy for a reporter to find out who is generally useful to talk about a particular topic regardless if they have something to pitch. Rating expertise on both sides would be great.

The other thing about ratings on pitches would be to allow specific feedback.  If I pitch a reporter, they should be able to easily click something to move on to the next one, but at the same time give me some feedback.   A stock set of responses to choose from would be great: 

"Interesting, but I have enough for this request already."

"My mandate has changed."

"Too early."

"Not relevant."

On top of that, they could suggest future contact with another click:

"Let's talk in the future."

"Please don't contact me anymore."

"Let's talk right now.  Call me."

Otherwise, your pitches will probably go into a black hole.  Who has time to respond to every single pitch they get by e-mail?

Also, let's come up with some objective ratings on traffic and influence. Did the story drive any traffic? How much? Was it reblogged, tweeted by others?   Did the users convert?  This is really what companies care about.  It's great that a site gets a ton of traffic, but if the users from that site never convert, what's the point?

What would this do to PR firms?  The general availability of great financial research tools to the public hasn't made the mutual fund and investment manager industry go away, has it?  No.  So there's no reason to think that PR firms need to go away.  Great tools should be able to cater to PR firms and individuals at companies who want to do their own PR alike, the same as in investing.  We're far from great tools at the moment and what's out there costs entirely too much for the amount of work it still leaves you with. 

Why cover letters don't matter

"I sent a cover letter. It should be getting me that job now."

"No, Lieutenant, your job search is already dead."

 

Alison Doyle defended cover letters today and was rather dismissive about the idea of finding your job by connecting to someone using social media.  I won't take up the social media debate now, but I will put to bed the idea that you should spend any time whatsoever on a cover letter.

What gets read first, a resume or a cover letter?  Ask anyone who has ever hired anybody in the last twenty years.  The answer is a resume.

Here's the short version of the proof, then:

Is your resume awesome? 

If no, then I'm throwing it right in the trash, along with the cover letter, which I didn't read, because your resume isn't awesome.

If yes, and it does not come with a cover letter, will I contact you?  Of course!  Half the resumes I got were from resume databases or LinkedIn, so much of the time, a resume or profile is all I have anyway.

Once you get contacted, then it's up to you and who you are... and that's what you were trying to do with the cover letter in the first place--get a response.  No hiring manager has ever contacted someone with a mediocre resume who wrote a really nice cover letter.  They never get to the cover letter of a mediocre resume--they don't have time!  If they say they did, they're lying to make it seem like they do extra work like read all the cover letters than come in.  I'm sure they don't rip the tags off their pillows either. 

More important than a cover letter, if a resume contains a link to a site, I am going to visit it.  If this site is a blog, and you write about your passion for the industry you're looking to get into or your insights, I'm going to be pretty damn impressed.  I certainly won't ask for a cover letter after that.  Think of this like rock, paper, scissor.  Resume beats cover letter.  Awesome blog beats resume and obviously also beats cover letter. 

No, you can't submit the link to your blog on the front end of a company website, but would Alison suggest that if I was hiring someone to run the career guidence office at a school, that being the About.com job search guide since 1998 wouldn't be enough?  Why would you even ask for a resume at that point?  When I left Oddcast a year and a half ago, no one asked for my resume, but I got 25 job leads from people who had been reading my blog for years.  Cover letters?  What's a cover letter?

Well, Alison defines a cover letter as "...a document sent with your resume to provide additional information on your skills and experience."

She suggests the following format:

1. First Paragraph - Why you are writing
2. Middle Paragraphs - What you have to offer
3. Concluding Paragraph - How you will follow-up

You know, because that's the "basic format of a typical business letter."

A typical business letter?

Has anyone actually received a "business letter" in the last five years?  (Besides ones from daughters of Nigerian generals looking to deposit money in your bank account or official looking solicitations for credit cards.)

Today, professionals are sending one line e-mails from their Blackberries that affect millions of dollars.  Have you ever seen what three paragraphes looks like on a Blackberry?  It might as well be Paul's Letter to the Corinthians.  People want just the facts, as quickly as possible.  Three paragraphes of prose and I'm either on to the next e-mail or I'm asleep.

It's funny, because, today, she expanded her definition of a cover letter to include "via email or a LinkedIn message".   Can you even type three paragraphs into a LinkedIn message?  I'm pretty sure there's a character limit, and if there wasn't, I'd think the person was just trying too hard or didn't really understand normal behavior on that site.

Twenty years ago, cover letters served a purpose.  They introduced who you were and how you found the position--because before widespread use of the internet, how you found anything was actually interesting.  Now, asking how you even know someone is becoming a joke, because we're hyperconnected.  As for who you are, we all know that your cover letter is your marketing pitch--no hiring manager takes that seriously.  They'll do their homework to figure out who you are.  They'll ask Google, Facebook, and LinkedIn who you are, who you're connected to, etc... and if they can't find you there, for a growing percent of the few available jobs, you might as well be persona non grata.

In today's world, if you're contacting someone you don't already know to get a job, you've essentially already failed.  It's too easy to find people and use your network to reach them that coming in without a recommendation reflects pretty poorly on the candidate.  If I was going to hire you to do sales for me, I certainly wouldn't expect you to just cold call all your leads.  I'd hope you'd at least figure out how to be innovative and networking savvy enough to find your say to a warm intro.

And yes, I know, not everyone uses the internet, and not everone can afford a computer, and three quarters of the world lives under the poverty line--I get it.  It's a terrible situation, but we're talking about job advice written on blogs.  There's a clear target audience here of people who have some amount of advanced education, socioeconomic mobility, etc.  For *those* people--if you're thinking a cover letter is going to get you anywhere, you're wasting your time.

There are also some jobs out there where your digital presence just doesn't matter at all because you're basically talking mass hiring of a certain particular skill.  Take nursing jobs.  Hospital systems need to hire 1000's of registered nurses a year.  So long as they have the right certifications and whatever references are needed check out, you're basically in, or at least in line.  Many civil services positions are like that as well.  However, not only does a digital presence not matter to be a police officer or a firefighter (Good thing for my dad, a 20 year FDNY vet), you also don't need a cover letter.

So let's focus on jobs that supposedly need a cover letter--jobs that are sought after enough where the candidate is looking to stand out from the crowd.  So we're assuming a crowd here.  Now put yourself in the position of the hiring manager.  Not only do you get 100's of not 1000's of resumes for each position that you have an opening for, but you're searching resume databases to find candidates, too.  It's physically impossible for anyone to read more than a handful of cover letters. 

Even resume expert Louise Fletcher says that "back when I worked as an HR manager, I never read cover letters".  Louise worked as an HR manager back in 1995.  She did say that her boss liked to read them, but assuming her boss was probably at least 5-10 years older than her, if not more, you're talking about a guy who started his career in the early 80's--almost 30 years ago.  Are we really giving advice to people on how to get hired by dinosaurs are should be dispensing advice on how to be the most innovative candidates out there and to try to get hired by the most innovative companies.

But Alison says "Innovation works for a lot of people/industries. Not others."

Everyone who wants to get hired into an industry that doesn't value innovation, raise your hand.

Ok, everyone with your hands raised, finish up working on those cover letters!

Attracting a CTO to your startup

Businesspeople ask me all the time how to find a technical partner for a startup.  When they ask, it often sounds like they're asking for a product off the shelf--like, "Where can I get some cheap folding chairs?"

Finding a technical partner is more akin to finding a life partner than anything else--the difference being that neither party has any intentions to stick around for fifty or sixty years.
Where to find one is kind of an interesting question, because, like single men and women, there are certainly places they are more likely to hangout--bars and listservs versus bars and clubs--but going to one of these places is no guarantee of meeting anyone.  The key is getting out there--finding as many ways as possible to meet with people and get involved in activities around your interests.

The truth of the matter is that, actually, it starts with you.  No one wants to feel like they're joining less than half a partnership, in either sense.  Don't forget that this person is adding you as a partner just as much as you're adding them, so look in the mirror and think about what you bring to the table.  Think about it this way, if you have an idea and you're willing to give up half of your company to get a technical partner, consider the CTO's side of it.

They're giving up 50% of a company to get you as a business partner, because they probably have ideas, too--ideas they could potentially own 100% of and maybe get built in their spare time.  So, what makes you worth 50%?  (Or 60,70, or 80% if you plan on giving out less...)

Let's start with finances.  The ideal partner is financially independent.  For a startup, if you are a businessperson, a) Do you already have money to start the businesses?  b) Do you already have great investor relationships who will pull the trigger on funding pending the addition of a technical partner or completion of a product?  c) Do you already have clients willing to pay upfront for your product to see it get built?   As the businessperson, financing is just one of the things you bring to the table.  If you're answer is no or maybe to the above, what value are you to the business?  What value you are you to a partner? 

If your product is technically feasible, everyone around the table should believe it can get built.  Then, there's no reason not to have people who say "If you build that, I'd be very likely to buy that/fund that."  That would be my due diligence on you if I was a technical partner--lot's of people saying yes.

If I was a technical person with a prototype, and I was going to give up half (or more) of my company to a businessperson, what would I want?  I'd want a rainmaker.  I'd want someone with a huge rolodex of people already dying to get a piece of the action of this person's next endeavor...someone with so social capital built up with key influencers, industry partners, and investors that they don't know what to do with it.

So rather than trying to make it a process of "finding" you need to think about it as "attracting".  How can you make yourself, as a businessperson, more attractive to a technical person capable, at least from a product standpoint, of executing their own ideas? 

Here are a few ways:

- Get clients and customers.  The more people signed up or at least saying they're willing to pay for something if you build it, the more attractive your business is.

- Generate a buzz with key influencers.  If smart people are talking about your idea, technical people will want to be a part of it.

- Understand the tech.  You don't have to know how to code, but if your ideas are technically unfeasible or product discussions are going to be remedial, a technical person will just move on to someone who gets it.

- Be a leader in your own field.  If you want to make it to the top of the startup/tech heap, jumping from the top of your own heap is much easier than climbing from the bottom.

- Raise money from people who know you best--even if it's just a little friends and family money, a technical person will not want to be the first risktaker in the pool.

And yes, that picture is of Alex Lines, my co-founder at Path 101, which officially launches on Tuesday... and that's how I found him when I walked in at 7:50AM this morning.

We have equal ownership in the company and I'm pretty sure he got the short end of that stick.  :)