Two years ago, I partnered with an awesome CTO, Alex Lines, to start a company called Path 101.  We didn’t get enough traction on the product and business to continue it fulltime, so we’re now working on it as a nights and weekends thing as we take other jobs.  This is the 1st of a series about what I learned starting up a company.

Raise money--That's the first thing many entrepreneurs think of when starting a business.  They plot world domination schemes that hinge on their ability to get an angel round together, without answering a lot of important product questions first.  That's fine if you're Rich Barton from Zillow and Benchmark gives you 7 million bucks to go do to real estate what you did to travel at Expedia.  If you're running leaner and you're raising "Get something up" or "just feed ourselves for a little while" money, you need a lot more questions answered. 

That was our first mistake at Path 101 and I'll take the blame for that one personally.   Or, you could think of that mistake in a different light and say that I should have realized that we were going to have to be a lot more experimental and iterative.  That would mean needing closer to a million dollars than the 350k we raised—and we definitely could have gotten more.  We just had this innate desire to be lean and only take what we thougth we needed.  Nowadays, I tell people to take twice what they think they need, especially if they’re doing this for the first time.  Maybe it should have been a little of both, but regardless, wireframes, specs, etc  should all be done before you take money.  Granted, these will all change, but you can go a long way to honing in on the product roadmap in great detail on your own time. 

For example, Aardvark worked on their product design and user interactions for 8 months before writing any code and before taking a big slug of cash.  The social answers platform started out with a dude on the other side of a chat account manually interacting with users in a structured way in order to product test.  They knew a ton about how their product was going to work and what it needed at the onset of development--and that's something you can do nights and weekends or bootstrapping.  It doesn't need a designer either.  Just tell me your best thinking on exactly what the product will do, in detail--talking basic wireframes here--at each milestone and how much money it will take to get there.

Milestones are important because not only does it help to estimate cost, but it helps figure out revenue and funding potential.  You can (and should) take a wireframe to a customer and say "If we build this, will you buy it...and if no, why not?" 

VCs may be a little different.  They probably won't take a vaporware presentation very seriously unless you know them or someone vouches for your ability to build something.  Get a warm intro.  Scared that they'll take your idea?  Someone can steal your idea a month after launch anyway, so what's the difference?

At Path 101, everyone we talked to thought that the idea of pulling resumes off the web to figure out career paths was really interesting.  We talked about what data you might want to pull out of the Resume Genome Project but not a lot about what the data actually needed to look like to be useful to a user.  There was no way we were going to get that right on the first try, but there's no reason we couldn't have had three or four iterations of that done--not just to show investors but to show developers, too.  This would have helped us get a sense of technical challenges that maybe we weren't considering or just to generate more interest in our vision.

There wasn't a good model out there for what we were trying to do, so answering a lot of the questions about how users were going to interact on the site would have gone a long way.  Instead, we did a lot of this research (and made more mistakes) when we should have been developing to more specific, vetted milestones.

That was lesson number one--more to come.

On Tuesday, October 13th, at 6:30PM, 100 Founders and CEO’s of NYC tech companies will gather at Sun Microsystems for nextNY’s “NYC Media: Meet the startups” event.

The idea behind the event was that, on a pretty regular basis, tech and small business reporters find their way to me and want to know about the “comeback” or “birth” or “rebirth” or whatever of the NY tech scene.  Then I have to tell them all about the fact that we’ve been here for years, heads down working.  Half the time, they don’t know about the most successful startups or the most innovative ones. 

It’s not easy, either.  NYC startups blend in pretty easy—squatting in other offices, in coffee shops, in their own apartments.  You never know when the two dudes in the back of your Williamsburgh design showroom are actually a couple of hackers trying to change the world.

Therefore, I thought it would be great to gather a bunch of NYC’s really awesome startups together in  one room—and that’s what we’ll have.  There will be 100 Founders and CEOs of NYC startups all in one room, including:

Brian Adams – AdMeld (Raised $15 mil in two VC rounds since 11/08)	Seth Besmertnik – Conductor (Raised $12 mil, including $10 mil this year from Matrix Partners and Firstmark)	Zephrim Lasker – Pontiflex (Raised $8.75 mil since 4/08)
Anthony Volodkin – Hype Machine (Doesn’t need VC to be cool… Inc Top 30 Entrepreneurs Under 30)	Dave Morgan – Simulmedia (Founder of Tacoda, sold to AOL for $275 million)	Geoff Lewis – Udorse Up and comer from TechCrunch 50 - $500k from Founders Fund, Private Beta

So the big question is… where are all the local tech and small business reporters covering this?  We’re going to have Jenna Wortham from the NY Times and John Abell from Wired, but I expected journalists to be tripping over themselves for this and we haven’t seen it yet. 

Where have all the reporters gone??   If you cover innovation, small business, technology, etc. you absolutely need to be here!  We’re also going to include a short presention called “Your Guide to the NYC Tech Community”.  Reporters, RSVP here!

PS… If you are an entrepreneur, we are sold out (or more like free’d out, since everything at nextNY is always free).  Please do not try to sneak in with a media ticket.  I will find you and hunt you down like the dog that you are.  Grazie.

Last December,  Owen Davis from NYC Seed decided to make my company, Path 101, the fund's first investment.  Given my recent announcement that I'm taking a full time job at First Round Capital and that the Path 101 team is going part time, I have to imagine we've been written off as an investment--from a financial point of view.  God help the next company that has to pitch to the NYC Seed board now.  The board is a room full of about a dozen folks, which is about ten people too many for making early bets on seed stage companies.    Undoubtedly their mindset after the news will shift even further to risk mitigation versus additional risk taking, especially after what our experience might be saying about the funding environment. 

That would be a mistake, however.  Experienced angel investors know that a 50% loss rate is about average--they expect half their portfolio not to return any capital.  That's how the business works.  So, if another NYC Seed company fails soon, that would pretty much be well within normal expectations.  I feel like a group of government folks isn't really going to buy that, but they have to.  The Bloomberg administration trumpeted the fund as a way to spur on innovative technology ideas and fill the funding gap for cutting edge startups.  If it had to only pick from companies that could break even on $200k, you'd see little in the way of large scale market disruption coming from these companies.  In other words, you don't pick the next Google by mandating that the company generate enough funds to cover itself within the next nine months.  You might as well invest in a couple of accounting firms or food stores--very little chance of losing your money on those. 

In fact, one could easily make the argument that a heck of a lot of good could be done while still losing the whole entire fund--laying a big fat goose egg.  People learn a lot from failure, and having a culture that excepts high failure rates is critical to a truly innovative scene.  Also, when companies don't work out, founders and employees often move on to other startups, taking their experience and making themselves more prepared for the next challenge.

Take the investment in Path 101, for example.  By enabling us to continue an extra year, we were able to build better relationships with the innovation community and investors.  I was able to pitch and continue communication with Josh Kopelman from First Round Capital.  In turn, First Round is now opening an office here in NYC.  There's no doubt in my mind that First Round will invest *at least* $2 million more dollars in NYC than they would have anyway now that they have an office here--so this development is actually a net positive for the city.  We all said there wasn't enough early stage capital located in NYC, and now, we have a new top tier VC fund setting up shop right in the Union Square/Shakeshackville area.  Add in the fact that my partner Alex Lines is joining Betaworks.  Who knows, he could hack something up that winds up becoming huge.  In a way, NYC Seed enabled him to find someone to fund his hacking.

Plus, we've now unleashed machine learning PhD/scientist Hilary Mason's data mining expertise on the NYC startup market.  After moving here to NYC, she's now looking for neat data projects to work on, particularly locally.  She has a highly soughtafter expertise and our company attracted her back to NYC in the first place. 

By allowing the Path 101 team more time to be out there in the market, NYC Seed unintentionally deposited some innovative human capital back into the innovation ecology here.  The results are likely to be way better than anything just our one company had a realistic shot at, but I wonder how this fund will be measured...  Net returns or overall economic impact.  I hope the board will take a broader view of the impact of the fund and even extend it's life past the mandate for $2 million.  It certainly can't help the portfolio's risk profile if Owen is making bets thinking he's only got six bullets left in his gun and that's what he's going to be judged by.

For quite some time now, I've been saying that New York City needs more dedicated early stage capital.  Having an office and people on the ground here build community and human capital infrastructure.  Doing it from a dedicated pool of long term, early stage money insures that ecosystem will be more permanent.  You can't jump in and out of early stage depending on the temperature of the market, or do this as a "test" to see if you really want to be in this game.  It's also really difficult to support the innovation community here when no one in your firm can ever stay out late in the city when the entrepreneurs are just getting started.

That's why I'm excited to announce that not only will I by joining First Round Capital, but, more importantly for the NYC startup community, they are going to be opening up a dedicated New York office in the Shakeshackville or Union Square area. 

I’ll be full time in NYC as an Entrepreneur-in-Residence looking at deals (which you can send to me at charlie@firstround.com) and setting up an office here.  I don't mean just building Ikea furniture, but also helping strategize how to best support and inspire startup success in the Big Apple through engagement, conversation, and strategic support of community building.  Helping to build up a firm's physical and virtual presence, as you probably know, is something I've been a part of before. 

I’ll be ramping up my efforts to support the local innovation community through nextNY and other projects.  The more I can help local entrepreneurs, the better the opportunities will be for any early stage investor in NYC, and the better I can do actually proving out the First Round Capital value proposition.  NYC entrepreneurs want and need investors who prove valuable in helping them create successful businesses—and what better way to do that by supporting them even before formal business relationships are built.  The entrepreneur is the customer of a VC firm and in today’s world, customers have choice.  We need to give a lot more upfront if we expect to get your business.

How did this all come about?  Well, not surprisingly, the open dialogue I’ve been having with the innovation community on my blog for over five years is how it happened.  After I wrote my “Free Business Plan” on how to start a VC firm in NYC, Josh Kopelman approached me at the Shake Shack.  He told me how much they believed in NYC as a major opportunity for them, as it has been with all the deals they’ve done here already.  We talked about our shared a vision of the kind of active, open, community focused firm that NYC needs.  They’ve already done 12 NYC deals, and the FRC team spends a fair bit of time here already.  This is a signal that they believe in NYC enough to make a commitment to being on the ground here in a more substantial way.  It's also a reflection of the fact that you can better serve the local community if all the hours that you spend here aren't squatting in other people's offices.

So what about Path 101? 

You’ve probably seen the math—half of all funded startups don’t make it and become zeros, a bunch go sideways, and then a select few shoot the lights out and return your portfolio several times over.  Well, suffice it to say that Path 101 isn’t going to be one of the shoot the lights out deals, but I’m cautiously optimistic that it isn’t going to become a zero either—and may even have some upside.  It's definitely not going anywhere.  It may just take some time to return what went into it—more time than it’s cash resources will allow. 

The three of us—myself, Alex, and Hilary—are no longer going to take a full time salary, small as it had been, from the company after September.  We’re just a couple of weeks away from launching our first revenue generating features—thanks to their hard work on the technical side—but those features probably won’t ramp fast enough to sustain a full time commitment for a team of three.  Therefore, Alex and I will move to a nights and weekends approach—a “born again” startup if you will.  Hilary will move on.

I'm excited to share that Alex will be joining Betaworks as Hacker-in-Residence.  It's a fantastic cultural fit.  He'll continue to support Path 101, especially through an upcoming feature launch, and trim the hedges, mow the code, and occasionally (albeit much less frequently I hope) fall asleep tweaking a server in the wee hours.   However, his main focus will be on building awesome stuff FRC can invest in.  :)

Hilary is seeking out cool data problems and will undoubtedly have more opportunities than she can handle--that is, until she optimizes the code and database structure in her head.  Then, she'll take on even more. 

Alex and Hilary have been incredible from day one and I have been extremely lucky to work with them.  I look forward to getting Path 101 on its own two feet so we can all see the fruits of our labor.

In the coming weeks, I’ll be detailing the lessons I learned in working on my own startup—lessons I’ll be taking with me to my job at First Round.  Launching Path 101 taught me enormous lessons about financing, product management, and process that changed the way I look at how innovation happens. 

There’s so much more to write about my experience at Path 101, our upcoming features, my switch back to the other side of the table, First Round Capital, etc…   Look out for quite a bit of content coming out of me over the next week or two.

Oh, and if you’re a reporter covering the local innovation scene here in NYC, you absolutely need to be at this event.  We have almost 100 founders and startup CEOs showing up on October 13th to meet the local media, like Dave Morgan from Simulmedia, Dan Porter from OMGPop, Anthony Volodkin from HypeMachine and tons of the next wave of up and comers.  Don’t call it a comeback—these are the companies that have been making NYC great for quite some time.  It’s time for you, the reporters, journalists, and tech bloggers to meet them.

I'm super psyched to be part of the First Round Team--I actually knew most of them fairly well already. I'm psyched for New York City that another dedicated early stage fund is firming up its commitment here.  Lastly, I'm psyched to be able to do more to help the innovation community in my hometown.  Please do not hesitate to reach out to me with your ideas (no matter how early), thoughts, opportunities, or just to say hi.  Hopefully, you can stop by our new office soon--maybe even within a couple of weeks.  I promise it will be a fun, open, accessible place.

Sarah Tavel posted this morning on something I've been thinking about for a little while now: Twitter Spitter.  That's the term she's given to machine generated updates from apps trying to co-opt Twitter as a viral marketing mechanism.  Whether it's a Foursquare update or a Nike+ run recap, lots of apps are realizing that letting people post to Twitter can drive a lot of growth. 

Here's the problem, in Sarah's view:

"...the natural evolution of this is that Twitter will be increasingly abused by new web apps hoping to leverage Twitter’s effortless word-of-mouth. There is no mechanism in Twitter that I know of to limit what I’ll call web app Twitter “spitter”, and so there is no reason for web app companies not to push their app-specific messages to Twitter. And while conceivably there should be a natural mechanism of Tweeters not wanting to abuse their followers by allowing too much “spitter”, that mechanism is just not that efficient. I’m willing to put up with my friends’ spitter in much the same way that you put up with a friend’s occasional bad jokes or body sounds. But that’s not to say that spitter doesn’t degrade my experience on Twitter. As more applications look at FourSquare as an example of how to leverage Twitter, Twitter is going to increasingly become a jungle of 3rd party tweets."

Justin Shaffer said something similar to me the other day at breakfast--that we'll soon be near 80% conversation and 20% autotweeting from 3rd party apps.  He said, "What happens to the value of Twitter when it's the other way... 80% autotweets?"

I think we all know what happens then--the value of Twitter falls off the table, and it happens long before we hit 80% autotweets.

The problem is that Twitter Spitter is inherently a watered down, out of context version of behavior on the actual app.  Despite being guilty of Foursquare posting myself, I'll admit that to my Twitter followers, hearing that I'm at a particular place isn't as useful via Twitter as it is on Foursquare itself.  Foursquare provides the appropriate context and action steps to deal with this piece of structured information.

This was basically the Friendfeed problem.  Friendfeed waters down a person's activity across social networks and throws it all at me at once.  So, if you follow a person because they have a great blog, you're also going to get pictures of their kids on Flickr.

I go back and forth about this, and while I appreciate the value of getting to know the whole person, I also feel like it degrades me signal.  What I realized is that it's not the fact that this esoteric content is in my feed, it's that the receiving mechanism isn't built to make the most out of the structure it contains.

Reimagining Tweetdeck

The solution, in my mind, is to make Twitter clients, like Tweetdeck, smarter.  Since Twitter Spitter usually comes with an underlying link, it wouldn't be hard to give users the opportunity to opt out of these kinds of automated updates.

Even further, you could imagine channeling these links into more appropriate interfaces.

For example, how about:

- A map panel that aggregates all the Foursquare, Brightkite, etc. checkins and displays my friends' last known location.

- A play button for music that I can use to play, when I want, all of the aggregated songs posted to twitter throughout the day, even sorted by tags or genre.

- That same play button for video.

- A meme panel that collects and ranks the top links from all the people I follow on Twitter or different groups.

- A suggested user list powered by Follow Friday.

This way, people can post all the Spitter they want, and it doesn't get in the way of the real time conversation I came to Twitter to find in the first place.  Otherwise, Twitter is soon going to become the MySpace of real time--overburdened by so much spam at a critical time that the key users jump ship for more well controlled pastures.

I had lunch with Julie Steele from O'Reilly the other day and we were talking about how we both regretted not being able to write code.  I've thought about picking something up hundreds of times, but never really followed through on it.  That's when I realized the buddy system might be helpful and so I suggested that we figure out a framework to learn together--a book, some meetings (online or off), shared resources, etc.

We've already decided that we're going to try Python, so let's not debate languages here. What we'd really like is some suggestions on the following:

-- A good beginner book

-- A reasonable schedule to follow along

-- Tools that we should look into to share work, learnings, etc.

-- Ways that others can follow along and join our efforts

Thoughts?  Links?   Anyone who doesn't already write code want to join us?

The other day, I noticed an event at Fordham's Lincoln Center Campus on Gary's Guide.  The event was titled "Entrepreneurs Day at Fordham Midtown" and it cost $62.50 to attend, and $125 if you wanted to present your business to Steve Brotman, Mark Davis and James Kollenger.  It was upsetting to me as a Fordham adjunct professor in the entrepreneurship area that we'd participate in an event that reached so deep into the pockets of would be entrepreneurs.  Obviously, I didn't have anything to do with it.

But, was it worth the price of admission?

Steve is a partner at Greenhill SAVP--a recent investor in local NYC standout Mobile Commons and clearly someone who can lead a deal.  Mark, on the other hand, is not a "check writer" as Chris Dixon puts it.  That being said, his blog is a tremendously useful resource and he is truly a student of the industry.  Still, the very fact that he does blog makes paying to pitch to him seem a bit silly, since a relevant link in the comments to your cool product or thoughtful blog post will surely get his attention.  Steve is now blogging as well.  So we have one deal lead, one more junior guy--both pretty accessible through their social media presence.  James seems to run an advisory company called Genesys Partners.  While it's not clear that he's still actively putting money to work in deals, given that most of the "recent deals" on his site are a few years old, he seems to be a pretty connected guy who can gather a party with more VCs than you can shake a stick at.

So...  three seemingly smart, connected folks--only one of whom seems to be in a position to lead a traditional early stage venture deal themselves:  $125

I suppose that's a pretty good bargain to the Funding Post, which charges $2,500 for a single ticket to their funding event.  Interestingly enough, many of the active funds represented at the Funding Post don't even send partner level professionals to this event.  I think if I was shelling out this kind of cash, I'd want to meet as many partners as I could.

Want Funding Post on the cheap?  Try the New York Venture Summit--filled with largely the same people, but only $695 if you're an entrepreneur.

Put aside, for the moment, whether or not these events are worth it to entrepreneurs.  Are they worth it for the investors?

Consider that these are companies that couldn't figure out a way to research the active investors in a space and find a way to get warm introductions.  What are the chances that these represent the cream of the crop of the startup universe?  I'll go out on a limb and say that the best deals are not coming from these types of events.

Moreover, these events are undoubtedly having the unintended effect of casting the local community, New York in this case, as lacking active investors who are interested in meeting entrepreneurs.  If all of the investors sit behind a pay wall, then how startup friendly of a place will that make our city look like?  Last I checked, VCs and angels were in the business of trying to see as many good deals as possible, not making it harder for people to meet them.

Some might argue that money represents a quality filter.  Some, such as myself, might call bullshit on that.  There's absolutely no correlation between a startup's willingness to pay a fee to meet investors and the eventual outcome of the deal.  If anyone can prove otherwise, I'd be happy to eat the keyboard I typed this post on. 

No, what these deals reflect is the willingness of investment professionals to accept just about any invite that comes their way to meet companies that matches open spots in their calendar--without much regard at all for what their presence means to the innovation community.  When entrepreneurs see names like First Round and Firstmark, they're led to believe that pay to play is an accepted industry standard, when it isn't--or at least, it shouldn't be.  If New York City is ever going to fulfill it's potential as an innovation center, step one to meeting supportive investors should not be "open your wallet". 

One argument that investors might admit to privately is that they know the best deals come straight to them anyway--so it doesn't really matter if some entrepreneurs pay to attend these events.  Smart entrepreneurs will figure out a way around this expense.  If that's the case--if investors knowingly are supporting events that take advantage of less savvy entrepreneurs--well that just seems kind of mean, actually. 

When I was at Union Square Ventures, I took some meetings and spent time with "aspirational" entrepreneurs--many folks who probably didn't have the know how or savvy to build a successful business, but who were well intentioned nonetheless.  Honestly, I didn't want any kind of artificial scarcity creating business screening them out for me.  I tried to spend time with them when I could because entrepreneurs, both experienced and aspirational, will always wind up running into each other.  I got intros to good deals from several um... less than good deals... that I had turned down.  The more helpful I was, even to a startup that wasn't going anywhere, the more I built up the brand of the firm.  Some of those folks would go on to join other startups and become good networking contacts, even though their attempts at launching a company didn't work out--so the last thing I wanted to do was to built a high wall around myself to keep them out. 

I think local investors need to start examining how they spend their time in the community and start getting a little more discerning about how they spend their time.  Instead of attending events that are pay to play where not everyone can attend, how about offering yourself up to a local user group or free entrepreneurial community group--or even host your own event as a firm?  Why make the entrepreneurs pay when you're the one who is in the business of investing.  Entrepreneurs can always try to bootstrap, but VCs have to invest--its their sole purpose in life.  The burden should be on them to pay to build connections. 

What I would like to see is a pay to play walkout--an all out ban on participation by established, active firms on events that set too high a barrier for entrepreneur attendance.  UPDATE: I'm talking specifically about events setup for the purpose of introducing entrepreneurs to investors or about financing a startup.  If you want to speak at an industry conference and they happen to charge everyone, that's fine.  I don't want to kill the conference industry.

It's one thing if someone needs to charge ten or twenty bucks to cover the cost of a room or pizza and beer.  It's another to ask for thousands of dollars to pitch.  The investors in the NY tech community have a serious branding issue when compared to their west coast peers, and only by becoming a lot more entrepreneur friendly is NYC going to be seen as with the Valley in terms of innovation support.

In it's place, I would love to see investors make an active effort to reach out to local, entrepreneur driven community groups like the NY Tech Meetup, nextNY, or the Entrepreneur's Roundtable--who all run free or very cheap events that have featured top tier, partner level investors and active angels.  How about getting this many VCs to attend a BarCamp, or helping entrepreneurs self-organize, on the cheap, a FundingCamp that will be open to all regardless of their ability to pay.  There's just no reason why these pay to play events should more investor participation than the nextNY listserv

And start sharing your wisdom, too.  If you're blogging about the NY tech community or NY companies, add your blog to the nextNY blog, which aggregates stories about our local community.  All you need to do is signup here and post about anything NY tech or startup related while adding "nextNY" as a category in your post. 

The Foursquare "Crush"

First we put our investment thesis out there and got feedback from a lot of people on it. Second, the company appreciated our strong early endorsement of their service long before we had even offered to invest. Third, we saw the market develop around the deal as most interested parties contacted us at one time or another. And most importantly, now that we are investors we have a good sense of what the company is doing, what they need to do, and how we can help.

So I come out of this situation with my resolve to continue to play the venture capital business with an open hand firmer than ever.

When Kristin Maverick (Twitter) joined Carrot Creative, she helped put the boys from Dumbo on the minds of the local PR and marketng community in a big way.  Not only was she an active participant in the community—attending NY Tech Meetups and social media/PR events, but she helped to create community as well, running a nextNY event on PR for startups, and then starting up the very popular Digital Dumbo.  No doubt that her network and social capital were key assets that Attention! saw when they hired her.

Similarly, Fraser Kelton’s involvement in community brings much value to Adaptive Blue.  Not only does he show up to local community events, but he’s a two sport star, having participated on both Soccer 2.0 and Dodgeball 2.0—two recreational sports teams formed by local entrepreneurs, tech, and VC professionals.  He organizes the NYC Lean Startup Meetup and is always meeting up with other folks in the community.

What amazes me, though, is how many people around the periphery of the innovation community never get out from behind their desks, rarely come out to events, and even when they do, listen to panels and just leave afterwards.  Any startup who has ever raised money will tell you that they day they annouce, their inbox is filled with a pleathora of service providers of all types—recruiters, PR folks, CDNs, bandwidth providers, etc.  What I want to know is—why aren’t I meeting all those folks out in the community?  Apparently, they’re content just being a random name I’ve never heard if in my inbox trying to pitch me on something—or even worse an unfamiliar voice on my voicemail. 

I think the city government has that same issue.  No matter how many times I’ve invited folks from the NYC Council who sit on tech committees or members of the various city offices to events to mingle with the people on the ground actually innovating, I can never seem to get anyone to show up.  Seems they’re too busy running big programs—i.e. flying over the ground war.

People want to work with people they know and trust—it’s that simple

I don’t expect the partner of a PR firm with three kids to be out every night mixing with the innovation community.  However, the list of people and companies who have told me over the years that they’ve wanted to “get involved” with the NYC tech scene and meet people, yet never ever seem to come out from behind their desks or stay out late is as long as my arm.  Do you know how many junior folks working for these service providers I know who are afraid to take a lunch—and when they do they have to rush right back?   Seriously, when Fred Wilson or the Tumblr team shows up to the Shake Shack, you want your people knowing that not only should they find a way to be there, but they should hangout as long as everyone else does.  Or when a Twitter buddy of yours invites you out to Citifield in a big group, you might think about changing your flight to be there.  If you don’t think either of those things are worth it, from a business perspective ask Bryce Roberts, the VC who just got into one of the hottest startups around.

In the startup and tech scene, maybe even more so than any other industry, you are your network.  Your next opportunity, news on the latest trends, a potential hire—it all comes from the people around you, both online and offline.  As an organization, you depend on the networks of the individuals who work for you to gather mindshare and knowledge—and they get it out at a bar or on the dodgeball court just as often as they get it in a business meeting or sitting behind their desks staring at a screen. 

Not sure how to get involved?  Start following this girl—Elicia Banks-Gabriel, Social Media Strategist at Anomaly.  I haven’t even met her yet, but she’s quickly getting to know just about everyone you’d want to know around here—with such a velocity that I can “hear” her in my network.  Everytime I turn around, she’s tweeting to someone I know or people are asking me about her.  She’s got social momentum.  Look around your office.  Do the people who work with you or for you have social momentum?  If not, you’re probably missing out on something “out there”.  

Chris Dixon attempted to do the NYC tech community a favor with his latest post, but I think winds up doing it an injustice.  He acts as if New York being a good place to build a startup is a new thing, which it isn't.

"One thing that was puzzling about the “web 2.0 boom” from 2003-2008 was how irrelevant the East Coast, and particular New York City, was compared to the first dot-com boom. There were a few big hits – Right Media comes to mind – and a big near miss – Facebook – which started in Boston but moved to the West Coast.

I was mostly checked out of the internet scene in the 90s (in perpetual grad school), but from everything I’ve read and heard, New York City and the East Coast in general was much more competitive with the West Coast. One interesting supporting data point: Matrix Partners in Boston had the best return of any VC fund in the 90s (an astounding 516% IRR)."

Jeez... where do I begin here?  He seems to be making two separate points here.  One, that we were "irrelevant" here in NYC, and two, that the gap between the coasts is widening. 

Comparisons between Silicon Valley and NYC are sticky issues.  Sure, Silicon Valley is *bigger* but does that necessarily mean better?  Better how?  And for who?  Someone told me yesterday that it was easier to get a job as a web product manager in the Valley--which I took to task immediately.  Sure there are more product manager jobs available, but there are also way more people with product manager experience--so the ease of getting a job really depends on supply/demand, not overall market size.  It's the same thing with engineering.  It doesn't make sense that there would be more engineers per idea in the Valley.  If anything, since every Valley engineer probably has an idea for a startup, while there are many NYC engineers just solving interesting enterprise challenges and not into the startup thing, there are probably more hireable devs in NYC per good idea. 

But the term Chris uses is "irrelevant" and that's where I'll take issue.  In addition to Right Media, there have definitely been exits of significant size in NYC over the period in question:  Doubleclick ($3B), About.com ($410m), LinkShare ($425m), Tacoda ($275m), Quigo ($340), and Massive ($187m).  In addition, there are companies here that will no doubt (based on significant current revenues) be triple digit exits like Huffington Post, TheLadders, Meetup, Etsy, Paltalk, Indeed, Thumbplay, and Gilt Groupe. 

On top of that, the influence that the New York scene has is significant, even if it has missed out on some opportunities to capitalize on it.  One of the most impactful companies of the Web 2.0 was del.icio.us, built right here in NYC.  It was scooped up very early, but it's impact on web service navigation is far reaching--what site doesn't have tags?  You could also argue that the search DNA that will make Twitter a huge exit came from NYC through the Summize acquisition.  Certainly Twitter's initial VC funding came from here. 

As for whether the spread is getting wider, well, Chris largely discounted his own ability to even have an opinion on that--since he wasn't involved in the web during the late 90's.  His idea that the east coast was more impactful on the web is "proven" by the performance of a single VC fund.  Of course, a nice chunk of that Matrix fund's performance came from Alteon WebSystems, a west coast company, and other network hardware plays, not web startups. 

The stats just don't prove that out either.  As Fred Wilson pointed out about 3 min into his Web 2.0 Expo talk, NYC had 4 times as many VC backed deals in 2008 as it did in 1995, while the Valley only grew by 1.5 times.  While the startup scene in the Valley is certainly larger, the gap is narrowing. 

Chris goes on to try and explain his incorrect assumption about the lack of startups in NYC with the same flawed logic that the NYC government has when they keep thinking that Wall St. folks can easily be turned into entrepreneurs:

"The finance bubble of 2003-2008 was a giant talent suck on the East Coast.  The people I knew graduating out of top engineering or business programs on the East Cast were all trying to work at hedge funds or big banks or else felt like fish out of water and moved west.   Money was flowing so freely in the finance world that there was no way the risk/reward trade off of startups could compete.  Eventually it just became downright idiosyncratic to be a startup person on the East Coast."

I'm sorry, but if short term financial gain is your primary goal, you're probably not right for a startup anyway.  Last I checked, engineers like to work on interesting technical problems.  Sure, they won't do it for free, but given that the size of the venture backed startup market is a third of the Valley, not to mention the number of consultants who fund themselves by doing consulting work for agencies, there are plenty of people not getting sucked into the finance world.  I just don't buy that finance is a talent suck because most of the people I know in the startup world who came out of finance hated it and couldn't wait for a startup to scoop them up.

At the same time, their time in financial firms served as a training ground for working on large systems that needed to scale and be absolutely bulletproof.  My Co-Founder at Path 101, Alex Lines, used to work on the financial side, as did many NYC area founders. 

NYC is not the Valley, and I'm glad it isn't--but the local tech "revival" has been going on for several years now.  nextNY, a group of over 2,500 local tech and digital media folks, was founded in February 2006.  I joined Union Square Ventures a year earlier after the final close of its first fund.  First Round Capital started around the same time as well.  The NY Tech Meetup needed a venue as large as Cooper Union's Great Hall back in 2006.

The point...  If I were starting a company right now, I'd put New York right up there against any city--because good companies can attract talent and funding from anywhere.  Also, you're not going to wind up with crybaby Facebook engineers here who complain that their equity isn't worth anything after two years and need to be bought out before the company even exits.  Your quality of life will be extremely high--since NYC rents are pretty cheap now and transportation costs, unlike in the Valley, are near zero if you're biking to work like I am. 

So wake up people.  The New York tech boom isn't new news!  Dave Lifson made the comment via Twitter that "until google showed up, NYC was a barren wasteland for college grad tech people who did not want finance jobs" and "generally, startups are out of reach for those with no experience, so young entrepreneurs went elsewhere (I was one, in 2005)".  Well Dave, since you worked for a Bethlehem, PA company in 2005 and then went to Amazon, I'm going to respond by saying that a) you must have conducted a pretty crappy job search if you found more startups in Bethlehem in 2005 than in NYC, and b) Amazon is an interesting conception of an "entrepreneurial path".  He wrote on Chris Dixon's post that Google was the only NYC company he applied to.  Again, if you work for Google, you might as well be working for Goldman Sachs or any other big corporation.  Just because it's finance doesn't make it a place where you can't learn tech, and either way, it's definitely nothing like doing a startup in New York or anywhere else.

Here are some cool peeps deserving a vote for their SXSW Panels for 2010.  They're certainly panels I'd plan on attending.   While you're at it, don't forget to vote for mine:

Everything I Didn't Learn About Startups in VC

People always tell me that I'm really lucky to know what VCs want when I go and pitch them, but starting my company has taught me some very valuable lessons I didn't learn in my time at Union Square Ventures.  I'll be joined by three other former VC professionals working on startups now as well.

Here are my picks:

Scaling Simplicity: Grow Your Income, Not Your Headache  Awesome guy with a really relevent message--because most people *shouldn't* look for the big VC round and the huge exit--they'd be a lot better off first figuring out how to make food and shelter money from doing something they really love.

Coconut Valley - Building a Tech Community on the Beach  I love "outside the Valley" stories, and hearing about how the Miami tech community grew should be very informative for people who don't think you need to be in CA to make an impact in tech.

Tweet Your Way to Your Next Job  Might be a bit remedial for this crowd, but I'm giving him the vote because of the first question that he listed that this panel will answer--and it should be the question that every panel answers in some way: How to make connections that matter?

The 10% Problem: Fostering Real, Engaged, Quality Conversation Again, same theme... is there any more worthwhile problem to address?

Hacking The Funding Process  Jason Schwartz, through his job at Angelsoft, gets to see a lot of the way real angel investors operate from behind the scenes--and it's not always how you might think if all you're doing is reading the blog buzz.

How the Internet is Disrupting the Concert Industry  Ian is cool dude and I'd be really curious to hear about how live events are being affected by the web, as opposed to your usual "labels suck, how can we get free music" debate.

In Code We Trust: Open Government Awesomeness  I cannot be happier that "No Neck" Noel found an outlet for his passion--breaking open government silos and walled gardens.  Only someone with his kind of energy could really tackle that--think Juggernaut from X-men.

Understanding Lies, Deception, and Truthiness in Social Media  danah would get my vote for a panel if she was going to discuss pickles, and I don't even know if she knows anything about pickles.  If she was talking about it, I'm sure she would research the hell out of it and have real conversations with pickle eaters, makers, etc. and get down to the bottom of what pickles are really about, cutting through the hype. 

Media Armageddon: What Happens When the New York Times Dies  This sounds like a fascinating thought exercise--or prep session, depending on your view of the future.  While we're at it, check out Mark Josephson's talk on new models for news as well--supposedly with "real fucking numbers".

Handheld Awesome Detectors: Sustainable Apps No doubt with Rachel giving this talk that everyone's awesome detectors will be going off the whole session. She may need to make an announcement to shut them off before the panel starts.  It's an important topic, too... who hasn't been in a restaurant thinking about what you're supposed to be eating if you care about the planet.

People-Powered Education: Building A Community-Run School  This is something I've been thinking about a lot lately as I love teaching, but like many others share that passion, I find that academia isn't really the best place to be if you actually want to teach, particularly if it's something useful. 

What Guys are Doing to Get More Girls in Tech!  A road I've been down... and I keep trying. 

Will Kiva Kill Your Nonprofit? Donations 2.0  Interesting approach given that it's Kiva people talking about whether their approach will implode the space.  Honestly, I'm a bit skeptical, because most of the online donations I've made in the past year have been to old school orgs using old school websites just put in front of me by passionate people, so I may go just to poke the bear.

Brands Don't Think Like You Think They Think  Answers the question, "Why brands don't want to advertise on your website?"  I can name, ooooh... about a cajillion websites that need to know this answer.

Jumpstarting Sales in a Start-up  Startup sales?  What?  You mean... making money?  Srsly? 

Earlier this month, two of the smartest people I know (and smart because they actually do their homework--like... you know... real research), danah boyd and Fred Stutzman did a good job casting a lot of doubt on the numbers used to support the "teens don't tweet" meme.  That didn't stop Claire Cain Miller from digging it up again. 

If you work for the New York Times (and you expect that paper to be a viable entity in the future), your content, it's quality, insight, analysis, etc. has to be better than everything else that's out there.  So when a NY Times tech story comes out, and it's at least three weeks behind where everyone else's head is at, full of inaccurate assumptions passed over as common knowledge, it really needs to get called out.  It's nothing personal against Ms. Miller.  I'm sure she's a lovely person, but she missed the mark here with this article.

So badly, in fact, that while I don't drink myself, I think it might be a fun game to do a shot every time there's a ridiculous assertion made about social media or just overall poor analysis of tech trends in her recent article "Who’s Driving Twitter’s Popularity? Not Teens". 

Ready... go:

"Kristen Nagy, an 18-year-old from Sparta, N.J., sends and receives 500 text messages a day. But she never uses Twitter, even though it publishes similar snippets of conversations and observations.

“I just think it’s weird and I don’t feel like everyone needs to know what I’m doing every second of my life,” she said.

DRINK!  So she doesn't feel like everyone needs to know what she's doing every second of her life, but according to a recent Nielsen study, Ms. Nagy exchanges more than 6 times as many text messages as the average teen--a report covered in the NY Times itself this year.  The average teen only texts back and forth 80 times--so while she many not feel like *everyone* needs to know what she's doing every second, it seems like *almost everyone* might be a better answer.  So, not only is she not the "average" teen, but she's also a bit hypocritical for saying that people don't need to know what she's doing all the time when she's texting like that.

"Her reluctance to use Twitter, a feeling shared by others in her age group..."

DRINK! This is so typical of MSM's reporting of tech trends.  Let's take one user and a nice lead quote and generalize a whole trend out of them.  So one Jersey Girl is reluctant to use twitter, and that's a "feeling shared by others in her age group. 

Here's a different example, for illustrative purposes:  "Bob is a teen and doesn't like black people, a feeling shared by others in his age group."  Are there other teens who have an issue with black people?  Sure... and funny enough a few of them are actually black--but by no means would I position that as representative of the entire teenage population. 

"Just 11 percent of its users are aged 12 to 17, according to comScore..."

DRINK! "Just..."  And what's that number supposed to be?  Well, let's start with the fact that teens make up less than 10% of the overall population of the United States.  Now throw in that, according to Nielen, somewhere around 60% of teens send text messages to friends or send messages through social networking sites.  So, as danah pointed out in her article, that means that if around 11 percent of Twitter users are 12-17, teens are actually way overrepresented on Twitter.  Comparatively, according to Quantcast, only 1% of the users on the NYTimes are teens. 

"That success has shattered a widely held belief that young people lead the way to popularizing innovations. "

DRINK!  Innovations are driven by the markets they're intended for.  At price points in the hundreds of dollars, many innovations are driven by non-teens...  like the Kindle or smartphones.  Teens didn't drive the growth in getting e-mail on your phone because they're not as focused on e-mail as business professionals are, nor are they as finacially capable of buying smartphones.  Blogging didn't become mainstream because of teens either.  The 2004 election is when the blogging tipping point came, and clearly that wasn't a bunch of political teens getting into the fray. 

Do teens drive fashion trends?  Perhaps.  Music?  Perhaps...  but I don't think there's anyone out there with a tech innovation thinking, "This is a tech product... we need to get teens using this right away!"  Imagine if the Garmin folks thought that.

“The traditional early-adopter model would say that teenagers or college students are really important to adoption,” said Andrew Lipsman, director of industry analysis at comScore. Teenagers, after all, drove the early growth of the social networks Facebook, MySpace and Friendster.

DRINK!  The early growth of Facebook among teens and college students came from the fact that YOU COULD ONLY GET ON IT WITH A .EDU E-MAIL ADDRESS!!  It wasn't as if teens just disproportionately flocked to it--they were the only people allowed in!  To position teens as critical to the growth of Facebook is like saying that people with drivers licenses are responsible for most car accidents--it's by definition, not a trend derived from any kind of intelligent analysis of the data.  Note that this wasn't part of Andrew's quote--it was the reporter's attempt to pass off factually incorrect "common knowledge" as a trend. 

Ms. Miller is wrong about Friendster, too.  Friendster's early adopters weren't teens--they were 20 somethings, as danah boyd points out:

"When Friendster launched, it was quickly inhabited by populations who had good reasons to connect with each other. By and large, the early adopters were living in a region different from their hometown (or living in their hometown post-college and cranky about it). Finding "lost" friends was a fun game - people wanted to connect... Friendster's early adopters were 20-somethings....   Friendster launched at a time when the economy was slow and many web-minded 20-somethings were slacking at menial jobs that they didn't care about (particularly in the SF region where people were only coming out of post-bust depression); many web-minded folks were happy to spend hours futzing online."

That makes sense to anyone who had a Friendster account.  I got my invite to it sometime in 2003, when I was 24.  Few of the students that have taught over the last few years, who average 8-10 years younger than me, ever had an account on Friendster.  It was clearly not populated by many teens when it first came out. 

"Twitter’s success represents a new model for Internet success."

DRINK!  Again, Twitter didn't prove this.  See AOL (bought by families looking to get online), any e-commerce site, like Amazon, eBay, casual gaming sites (whose usage is driven by stay at home moms), LinkedIn, HuffingtonPost, Flickr...   In fact, other than MySpace, what top sites were actually driven by early adopter teens that aren't otherwise specifically targeted to teens?  While I'm thinking about it, was Google itself a hot new trend driven by teens that eventually bubbled up to the mainstream?  I'm pretty sure it wasn't.

Then, Ms. Miller goes on to write for a couple of paragraphs about how, "The notion that children are essential to a new technology’s success has proved to be largely a myth."  She goes on to list LinkedIn, GPS devices, Youtube...

Wait...  all these counterexamples...  the same ones I wrote about...  Then... if it isn't a big deal whether or not teens use Twitter, than what the heck is this story even about??

"Its growth has instead come from adults who might not have used other social sites before Twitter, said Jeremiah Owyang, an industry analyst studying social media."

DRINK!  Seriously?  How much does Owyang get for speaking gigs these days?  He can't seriously believe this.  If he does, I have a bridge to sell him.  With over 250 million Facebook users, it's really hard to believe that the majority of Twitter's growth is coming from people who haven't used any social sites before. 

Everyone who has never used MySpace or Facebook or Friendster who just starting using Twitter as their first social network please raise their hand. 

[crickets]

"Wendy Grazier, a mother in Arkansas, said her two teenaged daughters thought Twitter was “lame,” yet they asked her to follow teenage pop stars like Miley Cyrus and Taylor Swift on Twitter so she could report back on what the celebrities wrote. Why won’t they deign to do it themselves? “It seems more, like, professional, and not something that a teenager would do,” said 16-year-old Miranda Grazier. “I think I might join when I’m older.”"

DRINK! Yeah, because it's really just a bunch of professionals who are twitter about their Sweet Sixteens.  One mom in Arkansas has two daughters who think Twitter is lame and too professional, and now that's what the New York Times puts forth as the generalized opinion of all teens.  Maybe Claire should have interviewed 14 year old Melik Yuksel, who has 34,397 more followers than she does.  His last tweet?

"I can't legally drive yet. :o"

"Perhaps Twitter’s experience will encourage Web start-ups to take a more realistic view of who uses the Web and go after a broader audience, Ms. Forte said. “Older populations are a smart thing to be thinking about, as opposed to eternally going after the 15- through 19-year-olds,” she said."

DRINK! I'm sorry, but what startup is mistakenly going after 15-19 year olds on the web that doesn't have a teen site?  Having worked in VC, you never hear investors going, "Well, you know how it goes... they tried to crack the teen market first and when that didn't work, it was all over--same old story." 

Next time, don't ask an expert on teens and social networks for advice on startup marketing.  If anything, most websites are mistakenly going after geek crowds on Techcrunch when it might actually be teens or other mainstream users that could benefit. 

So what did we learn here? 

Teens are supposedly not using Twitter, even though they actually are, in disproportionate numbers, and it doesn't matter if they are or aren't because mainstream websites aren't usually driven by teens--except with sites like Friendster, which wasn't true anyway.  Riiiight. 

DRINK!

I have a friend that doesn't blog, doesn't tweet, doesn't update FB all that often--doesn't even get text messages.  Yes, there are people out there like this.  :)

I was thinking about what my habits must seem like to her, and the reasons why she doesn't share more about her activities.  One argument that often comes up with nonstreamers is "Why would anyone care what I'm up to?"  I thought about that a lot and realized that when I share, I never make any implicit assumption that anyone does care.  In fact, the reason why I choose to tweet something is actually because I probably don't think of it as important enough to go e-mailing or texting individual people.

So when I'm sharing that I'm going to Staten Island to visit my Nana, I don't actually think anyone cares, but a few things could happen around that:

1. People may respond with relevant  info about traveling to Staten Island today--like Verrazzano Bridge construction or a street fair on Midland Beach.
2. My friends or family will know where I am *if* they need me for something and want to check back on my whereabouts. 
3. You might share some tidbit about your nana...  which is always nice.  
4. It might remind you to call your nana... even nicer.
5. ...or something good that I'm not even thinking of.

The point is, there's upside to sharing via a lifestream of some kind... and there's really very little downside.  You are the one choosing to subscribe, so if you don't like it you can leave.  Therefore I don't fear overwhelming people--you opt in.  I know how to be reasonable and professional--so I'm not scared of oversharing and costing myself my job or my next job.  Nor am I scared of stalkers--because honestly, someone could choose to stalk me on my way to and from the office just as easily.  Knowing who I am doesn't really increase the chance if someone randomly stalking me, IMHO.  Plus, being a black belt, maybe I don't fear the stalking that much.  I'm quite sure I have a higher chance of getting hit on my bike than picking up a random interweb stalker. 

Anyway... point being, most what you see in my various streams is all the stuff I don't assume to be important enough to specifically direct at someone.  In that sense, it doesn't warrant any kind of response either.  When you e-mail or text me specifically, I'm supposed to respond and I'm a dick if I don't.  Again, that implies that you think your message is that important.  When I tweet, I'm content for everyone to just ignore it. 

The other thing is that it's not interruptive.  I rarely ever make phonecalls these days--not just because I really don't like talking on the phone, but because I don't consider my call important enough to bust into your moment.  Who knows where you are or what you're doing--but barging in with a phone call makes me feel like it doesn't matter, because my conversation is more important.   A tweet or a text seems so much more subtle. 

So rather than thinking of us tweeters and bloggers as a bunch of narcissists--perhaps we really don't think you'll care about what we have to say, so we're not shoving it all in your face.  We just leave it out there, and if you want, but please don't feel obliged, you're more than welcome to check it out.  But, you don't have to... really... it's ok.

I'm a guy.  I'm not a metrosexual or a fashionisto--just a pretty average dude who plays sports, occasionally doesn't match, and can't figure out why anyone would pay over $100 for a pair of jeans.

I'm also an extremely casual guy--and would never dress up if I didn't have to.  T-shirts and jeans or shorts would be fine with me.  However, I do see the need to dress to impress once in a while, and it hasn't escaped my notice that on the rare occasion that I do put some effort into my clothing, it gets some non-zero attention from the opposite sex. 

So that's me. 

During Startup 2009, I had the occasion to meet Alexis Maybank, the founder of Gilt.  I followed up with her and asked her to lunch, since I think it's generally a good idea to get to know successful local entrepreneurs--and we also know a few people in common. 

I'll be totally honest--I didn't really expect a lot going in.  I couldn't imagine I'd have much to talk about with someone who started a high end fashion sales site--who could probably name more labels than I could name baseball players.  On the contrary, Alexis was awesome--extremely down to earth and very personable.  We had a great conversation and she was just as interested in what I was up to and the NYC startup scene in general as she was interested in talking about Gilt. 

We talked a lot about the way men shop (or try to avoid shopping) and how much of an opportunity there was in selling to men for the site.  It made a lot of sense to me--that guys want to get good value, but they also want to minimize time spent browsing.  They're also more likely to buy online because they don't run into the same sizing issues that women do.  In a way, Gilt almost seems more built around the way that men want to shop than women do--quick and efficient.

So I decided to try it out--and something hit me right away...

I have no idea what the hell I'm looking at.  You see, not being well versed in all these brands, I really can't tell whether what I'm buying is worth it.  They seem like good prices, but I really have no idea.

Actually, what's even more concerning to me are the associations that certain brands have.  As you get up the ladder in terms of brand hierarchy, I feel like most brands are associated with a certain kind of lifestyle--either intentionally or not.  We all know what it means (meant?) to be an "Abercrombie guy". 

Take for example, lobster pants.  Now, I didn't know what lobster pants were (thank God I don't hangout with anyone who wears them) until a friend of mind used them to describe a very special kind of douchebag. 

I didn't exactly need to be told about the association between lobster pants and douchebaggery to avoid wearing them--but what about associations that are not so obvious? 

Take this shirt for example:

What if, in the fashion world, it's universally known that John Varvatos is the shirt of choice for cokeheads?  I don't want to accidently wind up in the cokehead shirt just because I thought it looked cool.

Ok, all kidding aside, my main point here is that Gilt lacks the tools for anyone who isn't really into brands to make informed choices.  Interestingly enough, Amanda Peyton told me that she doesn't really know the brands either, but still loves Gilt because she implicitly trusts the site to pick out good stuff.  I wonder if men and women are different like that.  Guys don't hand over choices too easily... not without some kind of proof or more insight into the decision making. 

Compare that with the shopping experience at Fresh Direct.  I feel like Fresh Direct makes me a smarter food shopper.  It tells me what fruit is in season and which apples are for baking versus eating.  I'm a smarter food shopper because of Fresh Direct--and while I still want a simple and quick shopping experience, I think I might want a way on Gilt to reach out to the crowds and get a sense of whether these clothes are "me".  On top of that, some background on the designers or lables, some reviews of the lines, etc. might be helpful as well, otherwise I feel like I'm flying blind.  I think Gilt could use a bit of an editorial voice or some way to get to know the brands.

The bigger question, though, is whether it's part of Gilt's model to really care about me as a customer.  Maybe I'm just not the target market--and they're doing well enough with people who are more info fashion than I am.  I guess that would make it a lot like art that I didn't understand.  I had an ex that would tell me "Maybe it's not for you."

I just got this e-mail from LinkedIn.  Someone in my network wanted to know if I could help fill a job opportunity. 

What was neat was that it showed me who in my network I might be able to forward this to.  Instead of just telling the person who was looking to fill the position, it was helping me be a more useful contact by letting me vet the candidates:

I've long thought that LinkedIn had done a piss poor job in helping me understand my network.  It was a great way to connect everyone, but for a long time the actual networking aspect of it has been little more than just a rolodex on steroids.  Actually figuring out who's in the rolodex and how I can leverage them, or how I can help, is something they've never really focused on. 

What I'd really like to do is create some active searches...  like allowing me to see who's actively looking for a job, looking to post a job, looking for funding, etc...   or when I see a profile I like, to allow me to turn that person into an active search.  "Tell me when people like this appear in my network."

I'm long on products that help make me look smarter.  That's stuff I'll even pay for.

There are now over 2200 panels up in the SXSW panel picker.  It's basically impossible to go through every one of them.  You have to rely on recommendations from others or people you know.  Therefore, I'm going to help you out by making 10 recommendations.

How will I choose?  Am I going to read all the panel submissions?  No. 

What I'm going to do is to take pitches until Thursday at noon ET.  Start your engines PR people!  My inbox is open for business until Thursday. 

So send me an e-mail at charlie.odonnell@gmail.com and tell me the following:

1) What is your panel on?

2) Who is on it?

3) Why are you the best person to talk on that topic?  (Don't just feed me your bio... tell me why you're actually better than others.)

4) Tell me what I'll learn that I'm likely to Tweet or blog about.

5) Tell me why I won't walk out in the first five minutes looking for another panel.

On Thursday, I'll recommend 10 panels to vote for.  Pitch away!

Facebook's Twitter envy has gotten out of control.  First they redesigned the interface to make the whole Facebook experience much more about conversational feeds--like Twitter--and now apparently they've just acquired Friendfeed. 

It's not surprising.  Clearly Benchmark looked at the flat traffic of Friendfeed and realized that without a revenue model, and with a post money valuation undoubtedly in the teens, Friendfeed wasn't going to raise a next round at any kind of pleasent smelling pre money.  I wonder if they got their money back.  What's the current price of an engineer these days?  Still a million a pop?  With a team of 12, maybe they salvaged something, and I'd even bet they all broke even.

Whatever they paid for it doesn't matter at all, because their cost of capital is a joke.  The valuations that Facebook has been able to raise money have been astronomical.  So whether they gave cash or stock, it's all a drop in the bucket for Facebook.

What's more problematic is the company's indication that they share a vision with Friendfeed.  This is the "vision" of Friendfeed that has seen essentially flat traffic since January--the vision of everyone drinking from a firehose of the completely unrelated social media apps of everyone they know all at once without any context. 

And mainstreamers think Twitter is too much?  Someone should aim Friendfeed at them!

Here's a photo!

Here's a song!

Here's an article!

Good thing Friendfeed never spread much past the Techcrunch navel gazing fanboys, otherwise someone we care about might have gotten an eye poked out. 

Real time is clearly hot, though--and while the peak of the Friendfeed buzz was clearly behind it, the demand for real time anything couldn't be higher.  It seems like every other day that another Twitter client gets funded or a startup completely changes it's product model to chase after what's happening right now.

But is what's happening right now really that important?  If you're a day trader, perhaps--but with everyone else, I'm not so sure.  I think real time is going to be a real let down for a lot of people.

The problem with many real time apps is that they lack focus and context.  Even with Twitter itself, users need to build in focus and context to get value out of it.  While it's become an integral part of the communication infrastructure--that's what it is--infrastructure.  It's hard to just login to Twitter.com and  get immediate value.  Build in a couple of saved searches, group the people that you follow into "competition" or "media", and now you're cookin'.  Layer on apps and communities like StockTwits and you've got gamechanging services, but just the feed itself is just a dumb pipe. 

More and more I've been feeling like Twitter is just the UGC equivilent of a big telecom--owner of a hugely critical pipe but perhaps a total commodity compared to the value of the services people can build on top of it.  The transatlantic cables changed communication forever, but the businesses that made use of it, in aggregate, were worth much more than the business of owning the cable.  Don't get me wrong--the telecoms are still multi-billion dollar cap companies and I have no doubt that it's investors will make a boatload, but pipes often fancy themselves more than just a pipe--wrongly. 

That's why I can't understand Facebook's insistance on chasing Twitter.  It's already a pipe--a social pipe--the social pipe.  If I had to be the social pipe or the real time pipe, I think I'd rather be the social one.  Social makes stuff more relevent to me than "now" does.

Compare that to Foursquare, which I just made the homepage of my mobile browser.  When I login, I get to see where all of my friends are right now.  Simple, perhaps, but infinately valuable for a specific purpose.  Foursquare's laser focus and geographic context makes its data that much more useful.  When I login to Twitter, I don't even see my friends answers to "What are you doing?" anymore.  I get Foursquare checkins and blog link shares and loves from Last.fm and Follow Fridays--all at the at the very moment they post something, not at the moment I need it.

By stripping away the services that create focus and context, Friendfeed seemed to want to compete in the race to the bottom of the value chain.  The more and more these services just open up to everything and everything, the more they feel like... a phonebook.  That's certainly what if felt like when my second grade teacher found me on Facebook to ask if that was the same Charlie O'Donnell from Brooklyn they interviewed in the paper and on the news about this weekend's helicopter/plane crash.  Twenty five years ago, she would have looked me up in the white pages, and now she checks Facebook. 

The more my Facebook feed gets cluttered with Friendfeed-like all-inclusiveness, the less useful it's going to be on it's own.  I don't want to listen to music and see pictures and read quotes and play games in real time just as my friends are doing it.  Don't get me wrong--having all that piping in the ground makes the game playing and music listening that much more fun and useful, but for those apps.  I want to watch a TV connected to a big fat datapipe... I don't actually want to watch my TV while sitting IN the pipe. 

At Alley Insider Startup 2009, there was a panel called "How to raise a boatload of money at a huge valuation".  The implication was that, every startup should go for that if they can.  I actually think that's one of the worst things you could ever do as a startup--and it proves over and over to be a trap for many hot startups or people raising money from unsophisticated investors.

Let's start with the basics.  Very few startups that last over the long term ever raise just one round of money if they choose to take outside financing at all.  Therefore, you need to think of your first financing as groundwork for future ones--each at nice, incremental step ups in price at an appropriate size given business or product milestones and goals.  You want to avoid down rounds and getting your earliest and most supportive backers wiped out.  While you might be able to negotiate a sweet deal now, you have to ask where that leave you the next time.

Take the example of someone trying to raise just 600k.  Let's say they're offered a pre of 1.8 million--meaning that cash buys a quarter of the company.  You might not think that's such a great deal.  Someone else comes along and offers 1.2 million on a pre of 3.6--double the money at twice the price for giving up the same amount of the company.  What's not to like?  No-brainer to take the bigger deal at the better price right?

Maybe not. 

Take a look at where each round gets you and what story you're telling at each raise.  Maybe the first 600k gets you to a nice growing userbase and some promising biz dev possibilities--but most importantly a short history of meeting milestones and a promising chance at hitting your future ones.  Sometimes, getting a round of financing is just a matter of timing and being able to say you did what you said you'd do and you're in position to take the next reasonable step.  Given those metrics, your next round could be at a significant stepup and your overall dilution across two rounds could be pretty low.

What if that next reasonable milestone realistically requires another 1.5 million on top of the 600k?  It's not a ton of money, but had you taken that second "sweet" deal, it would have left you with a bridge to nowhere--halfway to a milestone.  That looks worse than if you had accomplished nothing at all--because you will have burned cash and maybe not grown as much as your next product milestone will help you do.  It's like that saying goes, "Nothing like numbers to ruin a perfectly good story."  At that bridge to nowhere point, you might have to raise a flat or even a down round, giving up more between the two rounds than you would have if you just took the "worse" deal early on.

On top of that, a lot of people forget about what more cash and a higher price signals to the market in terms of your post-money (the valuation someone bought in at plus the cash that came in).    If you took that second deal, you'd be signaling to the market that, at the end of this cash, you will not only be a nearly $5 million company, but you believe you'll be even more than that because you should be looking for a stepup.  When I see early stage deals where someone takes $4 million, assuming the VC didn't buy a controlling take, I'm thinking about how that company will be able to get a next round valuation in the mid teens--because that's what they'll have to do the next time around.  If you took 4 million from a VC, even at a pre of 5, you're looking at trying shop yourself around at a mid-teens pre the next time around--so you sure as hell better have some significant revenue traction or you're going to hit a wall and your current investors will be wiped out. 

On top of that, I have to wonder about investors who get deals just by tossing in ridiculous term sheets.  If that's the way they get deals, and their portfolio is just full of people who just go after short term pops for big "on paper" money, is that really the kind of group you want to be in?   They shouldn't need to win deals like that--and you should immediately raise an eyebrow for someone who tries to win you over on price.  That's a little bit like choosing a husband or wife purely on looks.  That may pay off the wedding night, but over the long term, I doubt that's a ticket to happiness and a successful marriage.  If you wouldn't pick an investor over another one if they were all at the same price, you shouldn't ever pick them.   Make no mistake that if you are taking outside money, this is a marriage and you need to pick partners based on quality, not on price. 

If you're worried you're not taking in enough money, instead of trying to raise more, how about just trying to do less?   Better to have hit the only milestone you were attempting than to get halfway on three.  When you're more focused, you tend to spend money more wisely.  How many companies do you see that raise a bunch of money and then start playing business model roulette?  You might say that gives them room to experiment, but I wonder if maybe it gave them the ability to hire too many scientists and allow too much experimentation. 

So instead of going for big money at a big price, perhaps you should be thinking about smaller, incremental steps, at lower prices, so that your next round seems much more palatable to investors.

From Searchme CEO Randy Adams' letter to Mike Arrington:

"You are correct, we haven’t closed the financing. We knew when we started the company that to compete with the likes of Microsoft, Google and Yahoo,it was going to take at least $100 million, half to build the back end across thousands of servers and half to get distribution (maybe more with Microsoft spending $100 million on Bing advertising alone). What we didn’t plan on was the terrible downturn in the economy which made it impossible to raise another $50 million to get distribution (mainly through toolbar deals). In this economy nobody wants to invest that kind of money in a company that is pre-revenue, even if the net result is potentially a multi-billion dollar company."

So wait a sec...  this company raised $46 million to compete with Microsoft, Google, and Yahoo!, knowing full well it would take at least $100, they still have no revenue, and it's actually news that they're going offline.

Can I see what your investor pitch looked like? 

High burn...check. 

Big, successful competitors...check. 

No revs after $46 million in... check.

And here I am trying to go up against big dumb job boards that everyone thinks should die, trying to raise $2 million, and on the verge of generating some revs after $550k in...   

Today, Hilary and Alex went to lunch with a programmer they knew from the local startup community.  They brought him back to Path101's office and asked if I wanted to see the new side project he was working on.  He came in and what he has is pretty interesting.  We suggested a rollout strategy, a few lawyers to talk to, and some possible alternative sources of funding.

This kind of thing happens all the time.  In fact, after I was done with this meeting, I found someone in my inbox asking me about entrepreneur mentors.  He also added, "I am an aspiring entrepreneur myself and would like to bounce some ideas off of you as I am moving into the execution phase of my venture and will be located in NYC."

Add this to the phonecall I took over the weekend with a fellow entrepreneur who just got a termsheet and was trying to figure out his gameplan.

Meanwhile, in Louisville, Todd Earwood and Rob May were meeting a local entrepreneur giving feedback and talking shop.  It's something I know they do on a regular basis in their neck of the woods, too.

So, while it's exciting to see new entrepreneurship mentoring initiatives like The Founder Institute, First Growth Venture Network, or the upcoming NYCMedia2020 program, there's really no substitute for a strong community of peer mentoring.  Not everyone is going to hear about or even make these programs--but knowing that there's someone experienced, knowledgeable, and well networked within arm's reach in your local area is where the rubber meets the road in an innovation community.  For every YCombinator, there's some dude who owns a warehouse in Bushwick giving cheap rent to a bunch of hackers and lending him his lawyer for contracts. 

Rob and Todd, or people like myself, and Jimmy Gardner down in DC...   we're probably talking to nearly as many startups as some actual investors are, often way before investment pitches.  In fact, I'm surprised at how often I'm in touch with a startup and the junior person at a venture firm who is supposed to be the "feet on the ground" isn't talking with them at all--and they're getting paid to do this! 

We don't make money doing it.  We don't charge for the intros we make.  And these are just some of the people I know about.  This goes on all over the place.  If you're a local city government, venture capital firm, or entrepreneur, figuring out who in the community has a reputation for being able to help startups is integral to understanding the startup ecology. 

Innovation in today's world is a ground war--house to house, relationship to relationship, one conversation and introduction at a time.  Programs with names, logos, and money are great, but when you get down to that incremental college kid with an idea sitting with a PHP for Dummies book, he needs to be able to find someone that he or a friend trusts to share his idea with and get advice from or it's never going to happen--and that could have been your town's Google.