How we think about what we do, with what words, in many ways informs who we are and stylizes the businesses we create.
‘Lifestyle’ as a term is a case in point of this.
A word I rarely use to describe what a business does or its model, but just can’t seem to avoid when out looking for capital.
It’s an interesting conundrum, layered and ambiguous.
I keep wanting to reject the moniker but it sticks around in interesting ways.
Think of it this way.
There are ideas that change our world.
Reinventing how we educate our children, crowd sourcing innovation or rewiring transportation changes our very culture and stylizes how we live. When they succeed, they create enormous wealth that trickles down and reinvigorates the cities where they happen and the ecosystems they touch.
There is no question that what Uber has done for getting around, and what a rock star chef and restaurateur has done to an evening out over an astounding pizza with an approachable wine list are at different ends of the spectrum.
Culturally and financial obviously.
But life and business and intent are more grey, especially early on.
At inception, at a seed stage, what became AirBnB or Kickstarter and a drive to productize your grandmothers Kugel or your mother’s cookies are really starting at the same place.
Not so crazy as you may think.
Did they ever think Shake Shack was going to be a spun off as public company on its own? Or even Etsy?
We dance around this all the time.
We start projects today as we used to have hobbies.
We follow our passions and toil to find structures that platform them, communities that connect them, and invariably capital to support them.
I run into this divide often on the funding front—between concepts of tech and consumer, between future platforms and present satisfactions, between causes that are just damn right to do and things to make money.
What’s interesting is that while it is trivial to start anything today, it is more capital intensive to be successful and grow at any scale.
Sure, some things are by definition go big or go home.
Huge bets, huge wins by design. But even those, often at the first seed stage are so embryonic that it is unclear what they are about.
Some things are by definition, especially around hard goods, all about brand and figuring out how on a small scale they make business sense from a cash flow perspective, but at scale can be game changing home runs.
As a businessperson, I certainly understand that multiples matters and depending on your investment strategy, you determine how big a bet you need to take to make it pay back. As there are obviously markets that scale and cross sectors with more ease.
But this is breaking down quickly both in tech and out of it.
Within tech—or within an explosive network growth reality–the odds of any idea becoming the next Facebook is about the same as winning the lottery.
The belief and the possibility of creating something of value that can become an acquisition target and fit into one of the infrastructure giants that layer out our world—not as crazy.
Some investors, the most successful ones I know, approach this with a theory. Focusing on possibility more that the how of it.
For others, especially at seed stage, it’s just gut feel, looking for the cool and interesting. Invariably and counter intuitively, this group seems to force a model on the idea from the outset. An unnatural act in most circumstances.
On the consumer side, I’m discovering the same bias, the idea that disruption comes from a distribution strategy rather than a brand perspective.
Just not so, tech thinking on consumer realities is a bad mashup.
Are there more or less brands on the consumer side then on the tech side? Does selling pickles by definition create a limitation what with co-packing, franchising and geo distribution possibilities?
Sure—building something that captures human behavior where the users themselves are the content is more explosive than creating something that needs to get made and distributed.
But the maker revolution is cross sectors.
From consumer hard goods to green city guides to software that is a piece of the stack. The odds and the size of success are equal in my mind.
The power of a consumer brand surfacing above the massive din of social noise, an entity that has value equal if not more than many software solutions.
This to me is food for thought, not data for conclusions.
About the reality that capital is needed for the hard goods startup as much as the software company or a community platform.
The fact that solving problems is only a relevant piece of a plan for a very small, often a very limiting approach, to tackling a market.
The truth that bootstrapping is becoming more and more impossible, and I think often, the wrong way to start a business.
And mostly, the idea of defining and finding market traction that speaks to a future model, more and more aspirational if not stifling.
Where does lifestyle play into this?
Lifestyle in our mind’s eye, speaks to the idea dog friendly offices, sushi on Friday, and fully funded insurance plans.
Interestingly, I surfed over to a hot, well funded, huge-burn research start up job page this morning.
They are in SF, but the job page read like the ad copy for leasing a high end condo in the Meat Packing district in NY. All lifestyle and poise and to the P & L, lots of burn.
Light years away from most early startups and small companies living off credit cards and family support, scraping for the first deal to cover cash flow.
This is the take away thought about dangers of encapsulating ideas and possibilities before they are fully market formed.
Worth thinking about when we pitch for funds. Something for investors to ponder as well.
Few things are as pure as a transaction.
It’s the aggregate of factors affecting customer choice.
Where marketing, sales, customer want, brand value and UX mash together.
Where belief and timing intersect. Where trust meets the swipe of a credit card. Where a decision—a vote of commitment–is made.
Marketing generates scads of data. It’s inspired the science of analytics and measurement. We measure reach, build conjectures around engagement and social touch points. We even attempt to measure brand, the purest connection of belief to a market.
This data is really useful and essential to our job. It’s a tool of the trade but all of it is conjecture around behavior. None of it is not as revealing as what we learn from customers during the sales process.
In startups where you are in the business of selling things, putting a price on value, revenue is more a marketing data point than proof of a model. Especially early on.
More an indication of product market fit than anything else.
It is the truest KPI.
Think about your first $1M in revenue.
When you cross it. When you seriously believe that you are on the run rate towards it, it is pure magic. Emotive and primal and a damn epiphany.
It’s also a reality check and bellwether for investors. A gateway to a host of fundraising opportunities.
It’s certainly time to take the team to the bar.
Truth be told though, revenue, especially that first couple of million, has little to do with your future business model. Almost nothing to do with how efficient your model is today.
I’ll take the bet that 90% of the time how you are making money at the $1M mark will look completely different than at $20M, even $10M. The value you are selling at 20x today’s revenue may be the same but how you are delivering it won’t be.
Today you are muscling things into place. Creating consulting services before productizing the value.
You are touching flesh with each and every one who shows interest to find a connection. It’s romance that feels more solid than a fling.
It couldn’t however be more important, more indicative and more valuable.
What early revenue does is give you a glimpse of what your market could possibly look like.
You get the chance to see, maybe for the first time, what your brand looks like to the only individuals that matter, the customer and the superset of them, the market.
Marketers dream of visceral touch points with the market.
The best go out into the world and sell products to understand their customer behaviors at the point of sale. Online we fuss and obsess about every piece of data that implies a connection, a dynamic, or an understanding. But we are always one step removed from reality.
We desperately want to know what the customer thinks and are invariably stymied in that understanding.
The art of business is about creating an environment where sales is a natural process and where it is comfortable for a customer to discover and choose you.
How you do that is what defines success.
Marketing as a discipline builds the touch points and creates the environment for that to happen. Sales manages the timing of that choice, the understanding of how the thing you sell plays into the urgency of the customer to buy.
Revenue early on for startups is where this comes together.
I’ve been at that first $1M revenue mark a bunch of times.
Every time it happens it’s a wonder and invariably I can tell who bought what, when, how they felt about the purchase and where they found us.
This is information to die for.
This is the data to understand the connection between what you are selling and what the customer thinks they are buying. From that data you start to figure out how to scale what you have. How to price, deliver, expand the line and support it.
At my core I’m a brand builder who simply loves numbers, sales data especially.
I love them later on when they are the scorecard for company health and wealth. I love them early as they show you how to get there.
Building a business is all about making decisions.
Often from the gut, invariably through presupposition. Too frequently in the dark.
There is nothing like a transaction, like sales exposure, to make your assumptions and your decisions more concrete and more valuable.
That’s the real definition of a KPI.
I simply couldn’t resist the urge to chronicle the Climate March, held this past Sunday in New York.
I was there and blown away by the sheer magnitude of people and spirit.
As a New Yorker living in the flood plain downtown, climate change is not an abstraction but reality, as two times out of the last three hurricane seasons, our building was evacuated and we were handed a personal warning sign of changes surely to come.
Of course, climate change touches everyone and everything not just us. From the rising level and temperature of the ocean, to how we produce nutrients to feed the world, to the rising alcohol levels in the wines we drink.
This march, even for NYC, with some 400,00 strong participating, was hyper symbolic simply by its density and size.
It was also a wondrous and large-scale mess from the crammed, uncontrollable mass of humanity overcrowding the uptown trains on a lazy Sunday morning to total bedlam at the intersection of 77th Street and Central Park West.
For myself, ever the pragmatic optimist, it was a graphic reinforcement of my personal belief that truly giving a shit about something, and sharing that belief, is a force that can change the world.
I was egged on to write this by a friend’s Facebook comments to my Instagram photos of the march. ‘Does it really matter?’ was her question punctuated with glass-half empty ennui and painted in inevitability of doom and gloom.
My response is undeniably—Yes!
It is the only thing that matters! Without caring nothing gets done.
Let’s be clear that what was united in this sea of chanting humanity at the march was the passion and collective acknowledgement of a real threat. That’s the key point.
Beyond that communion, it was a jumble of slogans, crazily diverse, many misguided, blaming our current state of the planet on everything from Wall Street to Obama, to industrialization to the decay of religion and ethics.
As diverse as the messages was the population. A melting pot of people, seniors and baby boomers aplenty, but way more teenagers acting out awareness, many costumed, dancing with childlike seriousness and pensive joy.
Granted that this march was more expression than platform, more celebration of unity than a coherent coalition or fund raising effort. Some of the secondary offshoots like Flood Wall Street, and Choose Life over Money seem counter productive if not misguided.
But—exultations at this level mollifies most everything else, even the practical, to some extent.
This was a gathering to show solidarity, to cheerlead the fact that people do care and are willing to do something about it.
I never found my group at the march and in my wandering about, two truths struck me, one from my heart and one absolutely from my head as a businessperson.
The largest cultural changes always comes from the heart of the people up, not from legislation and the government down.
This seems to play itself out time after time in my life.
People are the kernels of the largest changes, not government nor certainly institutions. People are in fact where businesses and government get their cue and permission to act.
Think back to the world you lived in the day after you graduated high school. My bet is the largest cultural changes you are living with today are the ones that you personally were part of making happen.
Civil rights, gender equality, the criminalization of bigotry and hate crimes, gay rights, sexual freedoms—even recycling and large scale composting–all started from people, from individual actions atomizing into groups and communities embracing trends that evolved society and eventually impacted government.
In my personal world, the change is really dramatic.
Post high school, no one was out of the closet, gender equality was an aspirational idea, with not even a hint of reality. Racial and religious intolerance was commonplace. Littering wasn’t even a concept and on the health front, lead was a prime ingredient in the paints used in every elementary school. Asbestos was wrapped around every plumbing pipe in NA.
All of these were taken on by the people and to varying degrees moved in the right direction against overwhelming odds. Fueled by the web of course and instantiating a new moral status of transparency and civil customer rights.
The world is hardly perfect but you are wearing blinders if you don’t see this as a better place and time. And even moreso if you don’t think the world’s population can’t tackle the massive issues affecting everyone—climate and equally of how to feed the world’s hungry without killing the planet itself.
I call bullshit on the doom and gloom crowd.
We shall prevail and not only will change happen it will happen in ways that drive our economy, not hurt it.
Saving the earth just may save the world’s economy
This is not a feeling, this is calculated hypothesis. Maybe optimistic but smacks of possibilities.
VCs are now talking about investing to do good. I applaud this but I also know they are following the money as well and investing smartly.
I believe the real money from capital investments over the next decades will come from AgTech more than tech, from logistics ingrained with sustainability and from leveraging science as truly the partner of computer and behavioral sciences.
I believe that projects around carbon footprints, growing more nutrient dense food per acre, water usage, power and land usage generally are ‘good’ as in the realm of stuff for the ‘common good’ but equally, they are where the smart money is going to be made.
The real reason I’m positive on the future is because good intentions and great business will come together here as a perfect wave.
That not only does the mass of people I followed down Central Park West have a heart to push and support change, but it is also the market for the products of change.
This group of 400,000 and the hundreds of millions they touch in their networks across the web, are both the spirit for change and the consumers who will support it with their choices of what to buy and what not.
This is a big deal. Product without markets fail. Markets chanting for products they can love, change the world we live in.
I also agree with Rob LeClerc, CEO of AgFunder, that AgTech as a category is the next major asset class in the capital markets.
If you can solve any one of thousands of critical agricultural supply chain opportunities, the market is already here.
This was the best use of a Sunday afternoon I’ve done a while.
To say that people don’t care is simply not true. The march here and around the world proved that. People seriously are concerned and united around that concern.
To think that world leaders can ignore this—I guess is possible, but not for long as the coming generations will be way less patient that we are. And they were out en mass at the march.
The real power here is that the people who were present were united in spirit and will create the market to support it.
From rose colored,peace-signed glasses on baby boomers to musings on AgTech economics—simply a great day.
I take people pretty much at face value.
I don’t group them by gender, race or religion. I’m basically category and prejudice blind.
A series of posts, one by Fred Wilson on Ageism, caught me off guard around the idea of being locked in and limited by these cultural groupings. Specifically ageism.
What struck me in the comments of Fred’s post was that age was a hard and fast market bracket, something to be overcome.
One commenter asked what the breakdown of his portfolio CEOs by race, background and gender was.
My response was who cares?
What you measure is what you use as a metric for value. The last thing we need are categorical measures that divide and discourage diversity.
Who of what age is doing what is, of course, data, but neither relevant nor I think very useful.
In my naïveté, I was a bit blown away that there was a downward stigma attached to it.
We all know that pro basketball is a younger person’s game, but I didn’t think that carried over to CEO, CFO, marketers, sales people, corporate account managers and on and on.
At the core of this is not age of course, it’s relevance and group dynamics.
Discomfort with age diversity within groups is a trend that, while understandable in some respects, has a rough and stupid side to it.
The rub is that ageism is not about how our parents will get treated. It’s about the 40 year olds in 10 years, the 30 year olds in a decade if they aren’t VPs and the entire turmoil in the fat part of the employment marketplace for whatever group is right of center at the time.
It’s also about how our culture is addressing (or ignoring) the reality that our lives are now 20+ years longer and that extra decade or so of productive work is in the middle, not the end.
And that in a world excitedly embracing entrepreneurship as a mass market occupation identified with youth, ageism is a problematic piece of the puzzle.
One that I never thought about much til a week ago when I read in post after post that in your 50s and 60s, your relevance, except for the exceptionally talented or successful, was fading to grey. Literally.
I challenge those who are funding and staffing this generation of new start ups to think about diversity cross ages and experiences as a plus.
I’m not a head in the sand type of individual.
I’m also potentially not the norm here as I’ve packaged my extensive experience as the very definition of relevance to a new world. That’s what I sell.
Of course age does indeed matter. We see it front and center.
We worry about it from the age of the candidates we elect to public office.
We want to hire young unattached people who will work 24/7 and buy into the dream.
We sit back as executives and think that some spots on our teams are best for the analytical or the creative, the experienced or the just break the wall down types. We know that carrying a bag three times a year for thirty days at a shot is just not suitable to all.
Diversity of age, impacts teams and dynamics and fit. This is as much reality as age itself.
I love New York at dawn now, as that is when I like to begin work, get on Skype with European clients and write.
Back in the day, dawn was breakfast at Lucky Strike in SoHo then heading home after a long night out. As the song so rightly goes–Oh – Blah – Di, Oh – Blah – Da.
To be clear, as an advisor, my clients are invariably younger than I am. Some considerably.
We get along better than fine. We work like maniacs together. We do dinner, and I choose the wine. We even go to the gym, do floor intervals and Burpees.
Afterwards though, they go out to clubs and I grab a movie on my couch with Sam the cat and start the next day at 5 again with purpose and energy.
All is good. This is as it should be.
Do you think layering in people from culturally different backgrounds was not disruptive at one time? No question.
Do you think that layering teams that are as diverse as society itself is a new way to work? Without a doubt.
The market is changing, as is the workforce and the level of talent at a younger and younger age is a reality.
People whom I work with are smarter, more mature and aware of themselves than I certainly was at their age.
Brilliant actually at times, but with a narrower focus as they simply don’t have the exposure and breadth of experience as yet. I provide that. I mentor their teams. More diversity on the teams would not but help.
A while back, in some string on Facebook I made a comment about being in the middle of life. A dear friend (and I know exactly who this is) said ‘In!! middle age’. I told her oh so politely to fuck off.
Age can sometimes be a number with benefits.
Be open to it.
I had a waking dream about a world where our identities were completely decentralized.
Where there was a coin, like Bitcoin, that held securely who we were as we traveled around the web and lived life. Where URLs were irrelevant. Where place online didn’t matter.
Where the web just served me whenever I needed it with a tap on my phone. Where everything was secure and the middlemen across a multitude of industries were burnt toast.
Where democratization of information was not a risk, but a necessity to kick start change.
And where transparency always seemed the right choice without the horrid compromises that certifications and standards demand.
I thank Albert Wenger’s excellent post yesterday for this fueled inspiration and now, Fred Wilson’s post today, for the whisperings of a new and different world. And some telling comments from Brandon Burns on both posts.
I’m listening and can’t stop thinking how this impacts just about everything, from how we live to how we market our companies.
Of course, this idea of a distributed identity, decentralized coined reality and transactions is not the real view from my window today. It’s not something that is really actionable.
Or is it?
Is it behaviorally already there in pieces? Has the market and culture already shifted with technology as the lag?
Usually big shifts like the Internet happen–then culture slowly intersects, verticalizes them to our behavioral needs in every imaginable form.
Bitcoin and transactional systems aside. A protocol of value aside. Even the absolute of decentralized identity aside as well—change in the market is already afoot.
The web and the big identity platforms are unbundling before our eyes. Even the marketplace itself is following suit with transactions part of where we discover what we want, not where we necessarily go to find it.
Do people really make a choice between using Facebook, What’s App, Twitter, Instagram and others? Not at all.
Are our identities really tied to just one of them today? I don’t think so.
All of the platforms are sub- and supersets of each other. How we sign on is not really who we are.
Everyone is on Facebook and Instagram though the communities in each are very distinct. The same picture posted in each will gather a mostly different set of people. This is true from platform to platform and app to app.
Bitcoin or something akin to it will certainly happen. A decentralized identity—maybe—but the change they represent to how we live, work and market is already in process and our common ways of doing things in flux.
I discovered Wollit this morning. A Bitcoin-based, cause-focused fundraising site. It’s scant and early, not well explained yet just felt very right. A Mcluhan-esque approach where indeed it makes sense as form and content become one, feels like a norm that has already become part of us.
Even from an everyday use case, pre the coin becoming tamed and ubiquitous, it’s already a behavioral layer in how we act without understanding a thing about the protocol.
It’s front and center in how groups and communities are formed today.
Most all group structures are horrific, yet we form groups and communities every day. We cut through different platforms forsaking the idea of a centralized place with a basic need in time. (Check out Vintage141 as an antidote.)
The market already understands decentralized realities all to0 well in how we act and connect with people on the web.
I started this rant with a jolt, fueled by a rush of Bitcoin intellectual stimulus with decentralized identity as the chaser.
Bitcoin is a wondrous mess and the most interesting thing happening on the web today. Most don’t understand it, most will ignore it till smart people build services that do something that matter. And just works.
That’s our birthright as consumers to demand this.
When that happens, it will spread like crazy, as people already live a semi-decentralized reality today. Its inefficient, but we are comfortable with it. Most of us simply embrace and incorporate the new when it does the job or sparks the imagination.
When Bitcoin is stable, my bet is we will use it without the need for education. We already understand the idea and act on it in human terms every day.
But the big realization—and the big upside to me—is that everything is yet again going to get turned on its head. A whole generation of new apps and solutions will flood in. A whole new way to market and connect new values with customers will be discovered.
The market will simply take it in stride, and adopt it as their own as it just makes sense.
They did it without fuss or bother when social became platformed because the behaviors were already present and the upside, enormous. They will do it again I think for very similar reasons.