Hire Uncomfortably!

When I started Community Connect Inc., I was 23 years old and my only job after graduating college was working at Merrill Lynch as an Investment Banking Analyst for 2 years.  I had never managed someone yet in my career and therefore never learned how to hire well.  I was recently reading the annual shareholders’ letters by Jeff Bezos and in the letter reviewing 1998 he writes the following:

During our hiring meetings, we ask people to consider three questions before making a decision:

Will you admire this person? If you think about the people you’ve admired in your life, they are probably people you’ve been able to learn from or take an example from. For myself, I’ve always tried hard to work only with people I admire, and I encourage folks here to be just as demanding. Life is definitely too short to do otherwise.

Will this person raise the average level of effectiveness of the group they’re entering? We want to fight entropy. The bar has to continuously go up. I ask people to visualize the company 5 years from now. At that point, each of us should look around and say, “The standards are so high now — boy, I’m glad I got in when I did!”

Along what dimension might this person be a superstar? Many people have unique skills, interests, and perspectives that enrich the work environment for all of us. It’s often something that’s not even related to their jobs. One person here is a National Spelling Bee champion (1978, I believe). I suspect it doesn’t help her in her everyday work, but it does make working here more fun if you can occasionally snag her in the hall with a quick challenge: “onomatopoeia!”

When I reflect on how I hired, I focused much more on  the question “Can this person do this job well?”.   However, I tended to hire people that didn’t intimidate me.  Meaning I avoided hiring people that were so smart, talented and knowledgeable that there was not much I can do to teach or instruct them on.  As a first time CEO and manager for that matter, I avoided those type of hires because I wanted to feel like I had full control.   It was like being a first time pro basketball head coach and then having Michael Jordan on your team.  Do you think being a first time head coach and coaching Michael Jordan would be a bit uncomfortable?  Definitely.  This insecurity pushes us to hire comfortably instead of what would be truly best for you as a manager or for the company.

The first time I hired uncomfortably was when I hired Court Cunningham as COO of Community Connect.  Court had more experience than me and is both an amazing strategic thinker and operator.  Court later went on to run Yodle which has been a very successful local marketing services company based here in NY.  Having Court around elevated my game because he pushed me in ways that I had not been pushed in the 8 years prior running the business.  I learned a valuable lesson at that point.  If you are not hiring uncomfortably, you are probably not hiring well.

I have a friend that was recently promoted to manage a team at a large media company.  She recently hired someone senior at her team and she said that she was intimidated by him because she said “he can probably do the job better than me”.  I told her hiring uncomfortably was a demonstration that she was hiring well which is one of the most important attributes in being a great manager.  As an investor, I see this hesitancy happen all the time with first time entrepreneurs.  To be a great entrepreneur, you need to embrace hiring uncomfortably and push your managers to do the same.  By doing so, you will constantly raise the bar and create an environment of excellence.

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To Be a Great Start Up, Set Up Your Core Values Early!

So you launch your start up and you are more than busy ever in your life with tasks such as delivering an MVP, establishing product market fit and speaking to potential investors.  The last thing that you are thinking about is putting together your Company’s Core Values.  Core Values are essentially a formalized description of your company’s culture.  What’s the rush in doing them now?  Aren’t they for big corporations?  Like Tony Hsieh of Zappos has reflected, putting together Core Values should be done at the beginning.  They are the guiding principles on how you plan to run your business.  How you and your co-founders work together, who you hire and how you treat your customers are all based on your Core Values.  You need to make sure it is clear what they are and are adhered to.  It was not something we did at Community Connect until 5 or 6 years after we started the company.  Not only did we do them too late but in really reflecting on it, we didn’t do a lot of things right in putting them together.  In working with start ups, I have a couple guiding principles in putting together Core Values:

1. They need to be incredibly important.  The rule here is that you need to be able to hire and fire based on your Core Values regardless of performance.  So for example, you may have an incredible mobile app developer which finding is like finding a unicorn.  However, if she/he doesn’t live up to any of your Core Values you need to fire that person right away.   Is that hard?  It should be.  That’s how big of a deal these Values are.

2. They need to inspire.  Be careful here.  You need to make sure  that they don’t get watered down and sound incredibly generic and corporate like “Teamwork”, “Integrity” and “Excellence” .  Zzzzzzz…..oh sorry, I fell asleep just writing them out.    Your values need to inspire and ideally feel different.  Think about what makes a cult a cult.  It is a group of people that is inspired by certain values or beliefs which they feel are different from how others think.  If you can get to a cult like level……you just crushed it with inspiration!

3. Ideally 3.  No more than 5.  Look.  Good Christians can’t even remember all ten commandments.  They do remember a few of them like “Thou shall not kill” and that was probably more important than “Remember the Sabbath day”.   So limit them to the few that most people can remember.  If people can’t remember then what is the point of having them!

4. Run Your Company on Them.  Always ask yourself in your hiring process and employee feedback or performance reviews whether or not the person lives up to your Core Values.  If you are not sure, make sure you find out.  Having just one person at your company who doesn’t live up to your Core Values will completely compromise your company culture.   This is a real discipline and needs to be driven by example from the top.  Bom Kim who is the founder and CEO of Coupang is the best entrepreneur I have ever worked with.  One of the key reasons why is that he is so disciplined at adhering to the Core Values.  I have talked to him about certain people that I thought were smart and talented and he would not have them in his company because he won’t risk compromising the culture at Coupang.  If your employees are making a Harlem Shake video (in Korea by the way) and feel compelled to put up signs of the company’s core values……I think that is a sign that you did a really good job.

When joining High Peaks Venture Partners, I realized that Core Values for the firm were never established.  Brad and I agreed that we need to have them in place as the basis of how we run the firm.  We did it with the entire team collaboratively and since then have used it incredibly often as we reflect on the direction that we want to take High Peaks.  Here are our Core Values:

1. No A–holes

2. Be the First Call

3. Do the Work

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The Things We Think and Do Not Say

Who had I become? Just another shark in business casual wear? Two days later after yet another demo day from yet another accelerator, a breakthrough. Breakdown? Breakthrough. I couldn’t escape one simple thought: I hated myself. No, no, no, here’s what it was: I hated my place in the world. I had so much to say and no one to listen. And then it happened. It was the oddest, most unexpected thing. I began writing what they call a mission statement. Not a memo, a mission statement. You know, a suggestion for the future of our company. A night like this doesn’t come along very often. I seized it. What started out as one page became twenty-five. Suddenly, I was my father’s son again. I was remembering the simple pleasures of working at a start up, how I ended up here after hating investment banking, the way you feel when someone tells you that they love what you built. The way we are meant to feel when creating something new and adding value to the world. With so many deals, we had forgotten what was important.

I wrote and wrote and wrote and wrote and I’m not even a writer. I was remembering even the words of the original NY angel investor, my mentor, the late great Dickie Fox who said: ‘The key to this business is personal relationships.’ Suddenly, it was all pretty clear. The answer was fewer portfolio companies. Smaller funds. More attention. Caring for them, caring for ourselves and the industry, too. Just starting our lives, really. Hey – I’ll be the first to admit, what I was writing was somewhat touchy feely. I didn’t care. I have lost the ability to bullshit. It was the me I’d always wanted to be. I posted it in the middle of the night and tweeted about it, facebook shared it and even instragammed the post. I even photoshopped an image that looked like the cover of  The Catcher in the Rye. I entitled it ‘The Things We Think and Do Not Say: The Future of Our Business.’…Everybody could see it…I was 39. I had started my life.

The truth about the Venture Capital industry……it is broken.  There, I said it.  For those of you think VCs make a lot of money…..think again.  Almost all VCs really don’t make that much money because the performance has been lousy.  Don’t believe me?  Look at this post by Fred Wilson.  Venture Capital has been a shit asset class.  Why is this?  It’s pretty simple.  Venture Capital provides little more than money.  Start ups are begun primarily by first time entrepreneurs who face immense challenges and need tons of help and frankly VCs really don’t offer it.  I was asking a well known entrepreneur turned VC what he thinks.  He said that “VCs go at their jobs like they are chasing pu**y”.  All they care about is getting the next hot deal.  I knew this.  I raised $20 million for my company that I started and couldn’t believe at 23 years old I raised all this money and left to figure out what to do all by myself.  I would be lucky if I spoke to my VCs for more than 5 hours a year.  And when I did, they weren’t thinking about me after.  They were out chasing the next deal.  As a fellow entrepreneur once said to me  “The CEO job of a start up is the loneliest job in the world.”  Why are entrepreneurs not demanding more help?  Why are VCs not insisting on being more helpful? We only have ourselves to blame.  We have come to accept this behavior and our industry will crater beneath our feet.

I want to change this.

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Venture Capital Apprenticeship Opportunity

*Update – we received an amazing but overwhelming response.  We are no longer taking any applicants.  Thank you.*

High Peaks Venture Partners is an early stage venture capital firm based in New York City.  We are seeking Associates to work  at minimum 20 hours per week to work along side Partner, Ben Sun.  This is a 4 month apprenticeship.  Ben is a serial entrepreneur having started his first company, Community Connect (published BlackPlanet.com, AsianAvenue.com and MiGente.com)  which had a successful exit in 2008.   Since then Ben has invested and/or helped start a number of companies including CoupangHowAboutWeYipitKontagentFundedBuyThinkNearPlum DistrictJump Ramp Games, DerbyJackpot, BounceExchange and Noom.  Ben has recently joined High Peaks as a Partner with a focus on leading investments in the E-commerce sector.  Recent investments include Fashion Project and Greats.

So what are you going to do:

  1. Sit in Company pitch and due diligence sessions and take copious notes.
  2. Participate in the discussion of our assessment of those investment opportunities
  3. Help gather follow up market information, competitive data and other due diligence items
  4. Enter information in our CRM system
  5. Help with Deal write ups for the Partner meeting reviews
  6. Assist portfolio companies – hiring, networking, researching best practices, getting market intel, etc.
  7. Learn a ton!
  8. Network like crazy!

What you get out of it

  1. A great learning experience.  Ben takes mentorship very seriously and will make sure that this is an incredibly rewarding experience if you put in the effort!
  2. Help with pursuing a career in venture capital or working at a great start up
  3. Sorry this is not paid but will definitely help you seek other opportunities across our network of other VCs and Start Up Companies when your internship with us is over.

Qualifications

  1. Strong business acumen.  Ideal candidates come from an investment banking, business consulting or operating background.  A strong interest in E-commerce really helps.   This is beyond having an Amazon Prime account!
  2. You love being in the trenches.  Need to be able to dig in to a business and understand industry dynamics and can find the devil in the details.
  3. You work hard.  Hustle is your middle name.
  4. You are not an A—hole.  You might be a superstar genius but if people don’t always refer to you as a “really nice person” then you definitely don’t belong here.
  5. You figure sh*t out and can work independently.   We don’t need to hold your hand to figure out what you have to do next.

Timing and other details

  1. Need to hire ASAP.  Will last at minimum until the end of the year.
  2. Need to come in one full day per week.  These are days designated for company pitch sessions to the firm.  Our office is at Charlton and Varick in West Soho.

Email me your resume or LinkedIn Profile link at

Ben@HPVP.com

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HowAboutWe – Product Analyst Opportunity

We (LaunchTime) are investors in HowAboutWe which is really redefining the online dating experience. Aaron and Brian who are the co-founders are two of the most impressive entrepreneurs I have met in NYC and are really excited about the direction they are taking the company. If you know someone that is looking into breaking into a Product Management career path at a fast paced start up, please pass along this opportunity.

Product Analyst – HowAboutWe

Who We Are
HowAboutWe makes it faster, easier and more fun than ever to get offline on
awesome dates. We are the offline dating site. We’re a well-funded ($18.5mm), rapidly-growing startup with headquarters in Brooklyn, NY. We build breathtaking products that transform people’s lives. You
can read more about us here. In addition to our core dating product, we are currently focused on creating the
world’s most innovative mobile/tablet dating applications and a new application focused on helping couples discover and buy amazing date experiences.

Who You Are
You want to help build the most beautiful and best performing web and mobile experiences in the world. In this role, you are on a career path to becoming a skilled Product Manager. You are a smart, creative, and independent thinker. You are innovative and, at the same time, fanatical about details. People want you on their project because they know you will increase its chances of success. You are a top-notch communicator, even-keeled under stress, and generally positive.

You:
• 1-3 years of work experience in a fast-paced environment
• Prior exposure to product development – and particularly to collaboration with designers and developers – a major plus (but not required)
• Very smart, very quick, and very thoughtful
• Exceptional communication skills
• A learner and contributor by nature
• Love the internet, mobile products, tech, start-ups, and making things

The Job
You will:
• Help to define new features for our web and mobile products.
• Support our Product Manager in writing thoughtful and thorough user stories for designers and developers.
• Conduct user research, facilitate on-going feedback from our users, and gather inspiration for new features.• Do quality assurance testing on all our products. This is detail-oriented work and will be a major part of your responsibilities.
• Manage communication with our customer service team.

Benefits
• Competitive Salaries and Stock Options — We pay highly competitive salaries in addition to significant stock options.
• Sustainable Pace — Our whole team is committed to a full workday of energized work that includes an hour lunch break and leaving at a reasonable hour. Really.
• Health Insurance — Exceptional Health Benefits.
• Ten Paid Holidays — Our office closes for all standard paid holidays.
• Fifteen PTO Days — We encourage all team members to take vacation and recharge.
• Food & Drink — Stocked fridge, some team meals, etc.
To apply please first check out our site and make sure you love what we’re doing. Then please send a resume and cover letter to Ruti Wajnberg, Product Manager at ruti@howaboutwe.com.

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AMAZING OPPORTUNITY TO WORK IN KOREA

As some of you know, I am an early investor and board member of Coupang.com. We are the leading flash/deal site in Korea. The company has experienced amazing growth getting to a $700 million+ revenue run rate, full net income profitable with over 12 million subscribers and more than 700 employees – all done in less than 2 years. The opportunity for the next great ecommerce company is wide open in Korea and were are excited to lead the way.

We are looking for Korean Americans who are interested in going back to Korea (hq is in Seoul) and working for Coupang in senior roles. Ideally they are bilingual and have come from Internet/ecommerce backgrounds. However, we also are hiring people that are looking to leave investment banking or consulting gigs. We are hiring for all different types of roles from strategy and BD to marketing and product and are just looking for smart and driven folks.

Honestly, I think this is an amazing opportunity. If you know of anyone, please send them my way. You can reach me at ben@bensun.net. Happy to give them more background.

Thanks again!

-Ben

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Coupang is looking for Strategy and Biz Dev Talent

Coupang is one of the fastest growing e-Commerce companies in Korea. With over 11 million users, the Company has already achieved an annual revenue run rate of $700 million to date.

Opportunity

Coupang is looking to build a team of top talents and provide them with an unparalleled experience in eCommerce with the longer-term objective of creating the next generation of leaders for Coupang’s future businesses. For more detailed information on Coupang, please visit our website at http://www.coupang.com .

Job Title

Senior Manager : Strategy and Corporate Development

Job Description

Business Development Team will be responsible for developing and executing strategic initiatives for Coupang.

Take responsibility and drive all activities required to launch a new businesses, including:

  • Verify business case and conduct market analysis
  • Develop and implement organizational structure
  • Develop and execute on marketing and PR strategy
  • Implement IT setup
  • Key accounts management
  • Other company-wide strategic initiatives

Skills/Qualifications

• Self motivation and multitask capabilities

• Excellent leadership and interpersonal skills

• Strong ability to prioritize and organize

• Strong ability to analyze market trends and business models

• Quantitative skills to interpret business data and draw conclusions / implementation plans

• More than 3 years of experience in business development / management consulting, overseeing
major projects and leading teams or working with senior executives

• Must be able to communicate well in both Korean and English

Contact information
For more details please contact Kevin Chung at kevin@coupang.com

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Social Commerce or Ecommerce Facebook Spam?

So I read this morning about FirstMark Capital leading a $7.5 million round in social shopping start up, Sneakpeeq.  I decided to go to the site and check it out.  Sneakpeeq aims to replicate the experience of flipping over a price tag when shopping for items in a retail store.  Sneakpeeq doesn’t tell you the price instantly when you visit a product’s landing page instead you have to click a “Peeq” button to find the price. The site features items that are similar to what you would find at Fab.com.  At first I couldn’t figure out why they would have you “Peeq” each time you wanted to see a price.  Why would you want to replicate an experience of fishing for a price tag?  That is a barrier to a purchase decision not an enabler.   And then the light bulb went off!  They were using the Peeq button to basically get you to post to your Facebook feed to create virality.  Let me walk you through what they are doing:

Step 1 – You have to use Facebook Connect to Join SneakPeeq.  No other option!

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Step 2 – You are then told that you are going to get Discounts for Sharing with your Friends

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Step 3 – They give you a Badge that gives you a $10 Credit once you join.

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Step 4 – You have to hit the “Peeq” button to see the price.  Since you just got a  $10 credit, you want to see what you can get for super cheap.  I check out 10 products just to see how cheap I can get it.

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Step 5 – Everytime I hit the Peeq button, I didn’t realize that I posted it in my Facebook feed each time!  I just posted 10 items in my feed.  Remember I had to use FB connect to use the site.  Most likely at least 1 of my friends will join and do the same exact thing to their friends.  Let the virality begin!

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If you understand the viral coefficient or K factor, the goal is to get to >1.  That means for every person that you get to use your site, they will refer at least 1 other person who joins.  If you can’t get to >1 then it is not truly viral.  If you get it >1 and especially > 1.3, your site will grow very quickly.  To get there, you need to try to “infect” as many people as possible.  For a site that means you need to get some kind of messaging to as many users as possible as often as possible.  This is the problem with the usual implementation of the “Share” button.  When people shop they rarely share therefore it never really goes viral.  However, in this “Peeq” mechanic they are making you basically share everytime you check out the price.  You are basically sharing whether you really intended to or not (and most likely you didn’t intend to in this mechanic).

So did it work for Sneakpeeq?  Well based on this Compete traffic chart it looks like they made some of these changes at the end of last year and it is working.

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We saw a very similar tactic used by Pinterest.  If you have used Pinterest which most of you have, you had to join by using Facebook Connect.  At that point, everytime you pinned it would show up in your feed.  Probably not a surprise that FirstMark is an investor in both Pinterest and now SneakPeeq and they understand this mechanic very well.  This is not meant to be disparaging to FirstMark.  They are a very good venture capital firm.  I hold them in very high regard.  However, has SneakPeeq crossed the line here?  Is this really social commerce or is this just using Facebook to spam your friends.? I am not saying it’s not a good short tem marketing tactic.  Zynga built their business on spamming Facebook users and getting to a level of scale where when Facebook shut those channels down, they were left as the kings that no one could dethrone.  They are now a $10 billion market cap company so its hard to argue that it wasn’t worth it.  I have a feeling we are going to see a lot more of these type of tactics this year.  Remember seeing Farmville and other games in your feed.  Get ready for tons of ecommerce posts from your friends and they didn’t even realize they were doing it.

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If You Build It, They Probably Won’t Come

I probably have met with over 100 start up entrepreneurs this past year and with each of them I asked “how do you plan to solve distribution?”.  I was incredibly fortunate to have built Community Connect Inc. during a time when you built unique and valuable Web properties then people would just come.  There is so much noise out there now that the strategy of getting to your end customer needs to be well thought out and executed.

A common piece of advice that I offer entrepreneurs is to find distribution opportunities where there is much greater supply of accessing your customer versus the demand.  Time and time again, you see businesses that take advantage of a temporal period of such distribution dynamics and build their companies to scale giving them a long term competitive advantage.  Here are some examples:

1. Zynga – there was once a time when Facebook allowed you to build apps on Facebook and basically massively spam your friends who in turn would spam their friends.  They basically built their business on the largest free and legal spam platforms.  Zynga’s massive success was born from taking advantage of that opportunity and growing Farmville to over 80 million Monthly Active Users.  Eventually, Facebook changed their rules of how you can message users and that SPAM opportunity  quickly went away.  However, with that initial large user base, Zynga has been able to replenish their stable of games and maintain their customer reach.  At the same time, other game publishers are locked out from building their own large customer base.  The Facebook spam window closing has created a massive barrier for other social game providers to penetrate the market!

2. LegalZoom – I had the pleasure of meeting with Brian Lee this past summer.  Brian is a very successful serial entrepreneur who founded LegalZoom and most recently founded ShoeDazzle.  Brian told me a story of when LegalZoom first started that they were one of the first to try PPC advertising on Search Engines.  At that time, GoTo.com was the only player in the space and they were able to buy clicks at $.01.  To give you perspective, I am sure the terms they were bidding on are now fetching PPCs that are well north of $1.00.   GoTo.com was hosting a user group meeting of some of their most active customers.  Brian was sitting next to someone who asked him how many different keywords he was buying.  Brian thinking that he was a pro at SEM (Search Engine Marketing) answered that they were buying dozens.  He then asked back how many that person was buying and he answered “Ten Thousand”.  Brian was shocked.  He asked that person to show him what they were doing.  Luckily, they were not in a competitive businesses so the person showed him.  Brian went home that night and started expanding his keyword campaigns.  LegalZoom invested heavily in SEM including building their own bidding and optimization technology.  LegalZoom became the leading player in online legal documents by taking advantage of incredibly cheap SEM allowing it build to a level of scale that other players are able to match.

The marketing opportunities usually don’t last long because eventually demand catches up with supply.  However those that take advantage of these opportunities usually build their businesses to a level of scale where they now have more resources to invest in the product and service making them superior to their competitors.  With an existing large installed base of customers and strong brand recognition and less friendly distribution opportunities for their competitors, they then are in dominant market positions.  So as you think of your business, keep abreast of what is happening with the new marketing channels.  Look for areas where there has been a ton of growth in supply because it usually means demand hasn’t caught up.

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Why Groupon’s Margins will Hold Up

LaunchTime (the business I am a partner of) is very bullish on the daily deal space.  For full disclosure we are investors and are incubating businesses in this space including Yipit, Coupang.com and DoodleDeals.com.  We were told about Groupon in the middle of 2009 about 7 or 8 months after they launched.  Our initial reaction was that this business was a great idea but the low barriers of entry would force margins of the business to shrink dramatically.  This is what happens in markets with tons of competition.  Competitors compete for business and when there is not enough of a differentiation, they are forced to drop their price in order to compete to try to win the business.  Bidding wars ensue and margins are compressed.  This is what happened in Search Engine Marketing agencies.  They started off with 30 to 40% margins but tons of them both big and small sprouted up and margins got compressed to less than 10%.  So our initial hypothesis is that this would happen to Groupon.  Groupon clones would sprout up like weeds and they would start going to the same merchants and ask for much lower revenue shares and margins would be compressed.  However, it is now 2 years in the business and Groupon’s margins have been firm at 40% to 50% revenue share on the deals they run.  So how have margins remained strong as hundreds of daily deals sites have entered the market?

The reason why the margins of Groupon have held up is because of scale.  When I refer to scale, I mean the size of both their audience (consumers) and merchant network.  Groupon has over 25 million email subscribers giving them the power of being one of the few “rainmakers”.  For businesses that have the capacity and desire to add a lot of new customer, if you are featured on Groupon, they usually deliver enough new customers to completely fill that need.  At this time, very few daily deals site can do that. I would argue that LivingSocial may be the only competitor in the same ball park.  So when people think that Groupon has a lot of competition, in reality, they don’t.  They are working primarily with businesses that want a lot of new customers and the capacity to handle the “firehose” – being featured and getting a ton of new customers.  They are not interested in working with the business that wants a handful of new customers such as the popular restaurant that has a little excess capacity on a Monday night at 5pm.  They want to work with the large new restaurant that needs a lot of new customers right away so their business can quickly have a loyal regular customer base.  If you want the trickle of new customers, you can go to their competitors or just use Groupon StoresGroupon Stores doesn’t even to plan to make money from a revenue share just on breakage of non-redeemed vouchers.  The market for the trickle of customers is competitive and will have low margins.  The market for the firehose will not have low margins because it won’t be nearly as competitive.

Will Groupon be the only player with scale?  No, there are plenty of companies with very large audiences and customer bases that will tap into this model.  However, there are not going to be thousands.  There is just not enough consumer attention to have that many at scale.  People will go to a small handful of very large general market plays – like having a few major prime time major tv networks.  And then there will be a good number of middle tier players that are focused on a certain vertical or niche – like having a bunch of pretty popular cable networks.  And then there will be a ton of very small scale players – like having tons of people handing out paper fliers.  So the small handful of very big players and the good number of middle tier players will be a more competitive market than what we have now but there are millions of merchants to choose from on who to partner with to be their “firehose”.  The most coveted merchants will see more generous revenue shares.  However, there are plenty of good merchants to choose from for these larger scale players to choose from who will play ball at these higher revenue shares.  So if you want to pick the winners in this market – pick those who can get to scale as the very big players or the middle tier players.

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