Thinking About Thinking

When Founders Refer To Their Company As “I”

Posted in Founder-Owned Businesses, Technology by larrycheng on November 14, 2011

Given Volition’s focus on bootstrapped high growth technology companies, we meet company founders every week that have built amazing companies with very little resources.  It never gets old hearing stories of how founders put companies on their backs and will them to survive and succeed.

Yet, in the process of meeting with founders week-in and week-out, I have begun to notice that with some regularity, certain founders refer to their company as “I”.  Often, I will hear phrases like, “I will reach $20M of revenue,” or “I will grow 100% next year and hit breakeven,” or “I will have the best technology platform in the market.”  On the face of it, it might seem objectionable to refer to the collective efforts of many people in a company with a first person, singular pronoun.  Yet, candidly, I don’t entirely begrudge the practice, but it also reflects a company that is still in the process of maturing.

I don’t begrudge it because there was a point in time when the company was quite literally just the founder.  If anything was going to get done, the founder was going to do it.  Even in the early days of a company where there are other employees, it’s not uncommon to have the founder be the senior person for every functional aspect of the business.  The founder is both the head of sales and by default the top salesperson.  The founder is the product visionary, product developer, and only QA person.  The founder is effectively the chief financial officer and the chief financier of the company.  And, of course the founder is the energy and spirit of the company.  I don’t begrudge use of the term “I” to refer to the company because for many of these companies, without the founder, there would be no company.

But, it also refers to a company that has some maturing to do.  Even if a founder is seemingly indispensable to a company –  like Steve Jobs, Jeff Bezos, or Sergey Brin –  a company must grow to the point where the center of the company isn’t the founder, but the center of the company is in fact the company itself, and its mission for its customers.  Ironically, the person best positioned to help drive this transition in a company is the founder.

Some founders adopt a mentality to keep things comfortable for themselves –  the strategy, people, and practices of the company stay within the comfort zone of the founder.  The founder structurally builds a company where they are at the center and in many ways the company exists not only because of the founder, but to serve the founder as well.  Other founders aim to build something bigger than themselves.  The company is not defined by their own comfort zone, but by the vision of what the company can achieve.   The company exists not for any single individual, but for its greater mission and purpose.  The company transitions from an “I” to a “we”. This can be an uncomfortable process for some founders, but often times it’s a necessary one in order for the company to reach its fullest potential.

I have immeasurable respect for founders.  Day-in and day-out, I’m rooting for the founders of companies that we invest in and even the founders of companies that we don’t invest in.  There are many people that work at a company, but only one founder or founding team.  It’s a special and unchangeable position.  But, for companies to truly succeed, they can’t just be about the founder.  They need to be about something more.  And, that’s perhaps a goal all founders can aspire towards.

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Google’s Spidering Rate Is 3000 Times Faster Than Bing In The First Month

Posted in Founder-Owned Businesses, Pop Culture, Technology by larrycheng on September 7, 2011

This is only one data point but I thought it was interesting.  About a month ago, my wife launched a website called Activity Yard.  It’s a website community where parents rate and review activities for their kids.  The URL was submitted to Google and Bing on the same day in August.  Out of sheer curiosity, I started to check the rate at which the two search engines spidered the site.  Fast forward about 4 weeks, and the results are interesting – Google spidered 3,000 times more pages than Bing.

You can see in this image – Google has spidered “about 12,000″ pages on a site search of Activity Yard.

Now, here’s Bing’s result taken on exactly the same day (today).  It only registers “4 results” for the same site search of Activity Yard.  It would have almost been better if Bing’s result was at 0.  Again, only one data point, but if this data point is directionally correct – Bing’s not even in the same galaxy as Google when it comes to spidering pace.

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How CSN Stores Is Educating And Transforming Boston

Posted in Organizations, Technology by larrycheng on May 10, 2011

With increasing frequency, I hear about people in the Boston community going to work at CSN Stores.  This is the mega furniture and home goods e-commerce company that everybody likes to describe as “the biggest e-commerce company you’ve never heard of” – even though now I think everyone’s heard about them.  It used to be once every 6 months, I’d come across someone joining the Boston-based company.  But, over the past 2 years, it’s increased to about once every 3-4 weeks.

Interestingly, there are some common characteristics of the people joining CSN Stores.  They are young, bright, well-educated – and perhaps most conspicuously, they have no e-commerce experience (how could they being in Boston?).  And, that’s why CSN Stores could be transformative for this town.  You have former private equity professionals, recent college grads, rising stars in corporate america, and other walks of life all going to CSN Stores to learn the nitty gritty of building an e-commerce business from a company that is succeeding to the tune of $380M of revenue growing 56% per year. 

In the same way DoubleClick taught a generation of New Yorkers about online advertising and fundamentally transformed the start-up community in that region, CSN Stores could teach a generation of Bostonians about e-commerce.  I say “could” because the story of CSN Stores is still being written.  If CSN Stores stays independent, goes public, and grows from ~1,000 employees to 10,000+ employees.  I fully expect that 5-10 years from now, the legacy of CSN Stores will be a vibrant community of next-generation e-commerce companies started by CSN alumni.  And, that’s exactly what Boston needs.

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Groupon Has Called Every Business In The United States

Posted in Economy, Growth Equity, Technology by larrycheng on February 8, 2011

I believe this could be a true statement by the end of 2011 if it was Groupon’s intent to do so (which it may not be). 

It’s very simple math.  Many industry sources put the number of Groupon sales reps at 3,000+.  The high end of the range is 4,000. 

A typical rep using an auto-dialer will probably call 250–300 companies a day.  You have to use an auto-dialer to get those kinds of numbers, which I have to presume Groupon uses. 

Usually of those calls, the rep connects with a live person 40–50 times per day.  Most of the calls result in a short conversation leading to a hang-up, but that’s the life of an inside sales rep. 

Figure that there are 225 business days in a year when you subtract out weekends and holidays. 

So the math is: 3,000 reps x 40 connects/day x 225 business days = 27 million businesses called.

According to business databases like Cortera and the US Census, there are about 27 million business establishments in the United States.  This is a generous number as only about 7.4 million businesses have payroll – but either way you look at it Groupon could very well call every company in the US this year, if they wanted to. 

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Venture Capital (VC) Blog Directory – 2011 Edition

Posted in Technology, Venture Capital by larrycheng on January 19, 2011

This is the 4th edition of the Venture Capital Blog Directory (1st edition, 2nd edition, 3rd edition).  This directory includes 149 venture capital, microVC/seed, and growth equity blogs.  The imperfect statistic used to rank these blogs is their average monthly uniques in Q410 from Compete (more methodology info below).  Blogs that have seen increased traffic over Q409 by 1,000+ uniques/month are highlighted in bold.  There is an additional list below of VC blogs below that had insufficient Compete data.  To subscribe to the top 15 VC blogs through Google Reader, click here: Top 15 VC Blogs.  As always, if there is any information missing or incorrect, please leave it in the comment field.  Many thanks to my colleagues at Volition Capital for their assistance with this directory - we hope it’s a useful service for everyone.   

The Global VC Blog Directory (Q410 Avg. Monthly Uniques)  

  1. Paul Graham (@paulg), YCombinator, Essays (97,227)
  2. Fred Wilson (@fredwilson), Union Square Ventures, A VC (81,483)
  3. Mark Suster (@msuster), GRP Partners, Both Sides of the Table (53,655)
  4. Brad Feld (@bradfeld), Foundry Group, Feld Thoughts (38,821)
  5. Chris Dixon (@cdixon), Founder Collective, cdixon.org (20,988)
  6. David Skok (@bostonvc), Matrix Partners, For Entrepreneurs (14,173)
  7. Charlie O’Donnell (@ceonyc), First Round Capital, This is Going to be Big (13,970)
  8. Larry Cheng (@larryvc), Volition Capital, Thinking About Thinking (13,215)
  9. Dave McClure (@davemcclure), 500 Startups, Master of 500 Hats (11,127)
  10. Ben Horowitz (@bhorowitz), Andreesen Horowitz, Ben’s Blog (10,686)
  11. Jeremy Liew (@jeremysliew), Lightspeed Ventures Partners, LSVP (9,344)
  12. Bijan Sabet (@bijan), Spark Capital, Bijan Sabet (8,256)
  13. Ryan Spoon (@ryanspoon), Polaris Venture Partners, ryanspoon.com (7,828)
  14. Albert Wenger (@albertwenger), Union Square Ventures, Continuations (7,469)
  15. Roger Ehrenberg (@infoarbitrage), IA Capital Ventures, Information Arbitrage (7,182)
  16. Rob Go (@robgo), NextView Ventures, robgo.org (6,934)
  17. Josh Kopelman (@joshk), First Round Capital, Redeye VC (6,778)
  18. David Cowan (@davidcowan), Bessemer Venture Partners, Who Has Time For This? (5,993)
  19. Mendelson/Feld (@foundrygroup), Foundry Group, Ask The VC (5,963)
  20. Bill Gurley (@bgurley), Benchmark Capital, Above The Crowd (5,428)
  21. Jeff Bussgang (@bussgang), Flybridge Capital Partners, Seeing Both Sides (5,223)
  22. David Hornik (@davidhornik), August Capital, VentureBlog (5,157)
  23. Seth Levine (@sether), Foundry Group, VC Adventure (4,858)
  24. Eric Friedman (@ericfriedman), Union Square Ventures, Marketing.fm (4,706)
  25. Andrew Parker (@andrewparker), Union Square Ventures, The Gong Show (3,854)
  26. Mark Peter Davis(@markpeterdavis), DFJ Gotham Ventures, Venture Made Transparent (3,602)
  27. Lee Hower (@leehower), NextView Ventures, AgileVC (3,459)
  28. Christine Herron (@christine), Intel Capital, Christine.net (2,484)
  29. Will Price, Hummer Winblad, Will Price (2,348)
  30. Jon Steinberg (@jonsteinberg), Polaris Venture Partners, Jon Steinberg (2,318)
  31. Jason Mendelson (@jasonmendelson), Foundry Group, Mendelson’s Musings (2,171)
  32. Marc Andreesen (@pmarcablog), Andressen Horowitz, Blog.pmarca.com (2,151)
  33. Jon O’Shaughnessy (@j_oshaughnessy), Dace Ventures, jonoshaughnessy.org (2,095)
  34. Sarah Tavel (@sarahtavel), Bessemer Venture Partners, Adventurista (1,968)
  35. Ed Sim (@edsim), Dawntreader Ventures, Beyond VC (1,948)
  36. Mike Hirshland (@vcmike), Polaris Venture Partners, VC Mike’s Blog (1,910)
  37. Dan Rua (@danrua), Inflexion Partners, Florida Venture Blog (1,510)
  38. Rob Hayes (@robhayes), First Round Capital, Permanent Record (1,509)
  39. Matt McCall, DFJ Portage Venture Partners, VC Confidential (1,430)
  40. Mo Koyfman (@mokoyfman), Spark Capital, Mo Koyfman (1,422)
  41. Fred Destin (@fdestin), Atlas Venture, Fred Destin’s Blog (1,405)
  42. David Feinleib (@vcdave), Mohr Davidow Ventures, Tech, Startups, Capital, Ideas. (1,353)
  43. Rick Segal (@ricksegal), JLA Ventures, The Post Money Value (1,308)
  44. Alex Taussig (@ataussig), Highland Capital, Infinite to Venture (1,239)
  45. Christopher Allen (@christophera), Alacrity Ventures, Life With Alacrity (1,188)
  46. Nic Brisbourne (@brisbourne), Esprit Capital Partners, The Equity Kicker (994)
  47. Chris Fralic (@chrisfralic), First Round Capital, Nothing To Say (844)
  48. Ouriel Ohayon (@ourielohayon), Isai.fr, MYBLOG by Ouriel (799)
  49. Multiple Authors, Highway 12 Ventures, Highway 12 Ventures Group (780)
  50. Martin Tobias (@martingtobias), Ignition Partners, Deep Green Crystals (723)
  51. David B. Lerner (@davidblerner), Columbia Seed Fund, David B. Lerner (716)
  52. Baris Karadogan, ComVentures, From Istanbul to Sand Hill Road (615)
  53. Dan Grossman, Venrock Associates, A Venture Forth (614)
  54. Jason Caplain (@jcaplain), Southern Capitol Ventures, Southeast VC (599)
  55. David Aronoff (@dba), Flybridge Capital Partners, Diary of a Geek VC (539)
  56. Mike Speiser, SutterHill Ventures, Laserlike (490)
  57. Tomas Tunguz (@ttunguz), Redpoint Ventures, Ex Post Facto (441)
  58. David Beisel (@davidbeisel), NextView Ventures, GenuineVC (427)
  59. Eric Ver Ploeg (@everploeg), Metric Ventures, Pocket Watch (403)
  60. Allan Veeck (@aveeck), Pittsburgh Ventures, Pittsburgh Ventures (353)
  61. Ryan McIntyre (@ryan_mcintyre), Foundry Group, McInblog (314)
  62. Satya Patel (@satyap), Battery Ventures, Venture Generated Content (310)
  63. Saul Klein (@cape), Index Ventures, LocalGlo.be (306)
  64. John Ludwig (@jhludwig), Ignition Partners, A Little Ludwig Goes A Long Way (296)
  65. Pascal Levensohn (@plevensohn), Levensohn Venture Partners, pascalsview (251)
  66. Derek Pilling, Meritage Funds, Non-Linear VC (250)
  67. Kent Goldman (@kentgoldman), First Round Capital, The Cornice (217)
  68. Rob Finn (@robfinn), Edison Venture, Ventureblogalist (215)
  69. Rich Tong (@richtong), Ignition Partners, Tongfamily (190)
  70. Jeff Joseph (@venturepopulist), Prescient Capital Partners, Venture Populist (137)
  71. Chip Hazard (@chazard), Flybridge Capital Partners, Hazard Lights (131)
  72. Paul Fisher, Advent Venture Partners, The Coffee Shops of Mayfair (122) 
  73. Jason Ball (@jasonball), Qualcomm Ventures Europe, TechBytes (47)
  74. Ted Rogers (@vcbrazil), PPI Ventures, Venture Capital Brazil (35)
  75. Greg Foster, Chrysalis Ventures, SouthernVC (15)
  76. Michael Cichowski (@mcichows), Edison Venture Fund, Digital Goggles (14)

Other VC Blogs

This list includes other VC blogs that didn’t make the primary directory for one of the following reasons: (1) They don’t have any Q410 Compete data due to insufficient traffic, (2) There was insufficient data on the blog subdomain, or (3) They are a hybrid blog/corporate website meaning the actual blog traffic is hard to decipher.  They are in no particular order.

(Methodology:  We aggregated the unique visitors for each blog on Compete.com for Oct-Dec 2010, and then divided by three to get a monthly unique traffic score.   If blogs only had data for one or two of the months, it was presumed that the missing months had no traffic and the aggregate number was still divided by three.)

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The Great Divide In Technology Stocks

Posted in Economy, Technology by larrycheng on January 14, 2011

There is a great divide taking place in the land of technology stocks.  The “New Guard” of technology companies have a cloud computing, recurring or transactional revenue story with promotional leaders and great spin.  The “Old Guard” of technology companies have big brands and huge presence among customers, but are viewed by some as stodgy and tired.  Here’s how the public markets are valuing these two sets of companies from a P/E ratio perspective:

The New Guard

  • Salesforce.com – 259
  • VMware – 136
  • Rackspace – 107
  • RedHat – 91
  • F5 Networks – 77
  • Amazon.com – 74
  • Netflix – 72
  • Akamai – 60

Median P/E ratio of “New Guard” Companies: 84

The Old Guard

  • Oracle – 23
  • Cisco – 15
  • eBay – 14
  • IBM – 13
  • Dell – 13
  • Microsoft – 12
  • Intel – 11
  • Hewlett-Packard – 12

Median P/E ratio of “Old Guard” Companies: 13

Is it fair for the New Guard to trade at a median P/E ratio that is 6.5 times higher than the Old Guard?  I don’t think so – it will not last.  It’s not to say that the Old Guard is undervalued, but eventually, the New Guard will come back to earth.  Eventually, the New Guard companies will trade at less than a 25 P/E ratio – it’s the law of gravity in stocks (consider that even Apple trades at a 23 P/E).  Given that, in the case of Salesforce.com, that means its P/E ratio will decline by 90% from where it is today.  The question is whether that multiple compression happens because earnings actually grow by 10 times, or because investors get more valuation conscious, or both.  Only time will tell.

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Why Volition Capital Invested In Globaltranz

Posted in Founder-Owned Businesses, Growth Equity, Technology, Volition Capital by larrycheng on January 13, 2011

Volition Capital announced a $10M investment in Globaltranz this week.  We couldn’t be more excited about the investment so I thought I’d share a little bit about why.  Globaltranz enables small businesses to go online to comparison shop and procure freight capacity – most notably trucking and other modes of transport.  It is somewhat analogous to how consumers use Expedia or Orbitz for airline travel, but in Globaltranz’s case, the end customers are businesses that are procuring freight.  Next time you’re driving on the road, look around at the trucks on the road – Globaltranz probably had a hand in putting cargo on that truck. 

The value proposition is very simple.  Globaltranz offers more selection and better rates to small businesses that ship goods.  In tougher economic times, the ability to save money on non-core functions like shipping is really valuable to small businesses.  On the flip-side, Globaltranz offers freight carriers (e.g. trucking companies) a low cost way to reach the small business customer.  It’s too expensive for carriers to sell small businesses direct, yet they certainly value additional volume given the fixed-cost nature of their business.  The value is very clear to all parties which is probably why the company is growing so aggressively. 

Globaltranz represents exactly the kind of company that Volition loves to invest in.  They are high growth: ~100% year-over-year growth for a number of years in a row.  They have a sizable and diversified revenue base.  They are bootstrapped: having never raised any institutional capital throughout the company’s history.  They are led by an experienced and dedicated management team.  And they have aspirations for greatness: their stated goal is $1 billion in revenue which given the size of this market is attainable.  They have accomplished a lot without any investment, and it is our hope that through our partnership and capital, the company will achieve even greater heights going forward. 

Needless to say, we are very pleased to be the first institutional investor in Globaltranz. 

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The Companies Worth Less Than Facebook

Posted in Technology by larrycheng on January 12, 2011

I was curious about which companies are worth less than Facebook’s purported $50 billion valuation – so I decided to look it up.  Here are some of the blue chip names (and market caps) you can get at a lower valuation than Facebook without paying Goldman Sachs’ exorbitant transaction fees:

  • EMC – $47.2B
  • Bristol-Myers Squibb – $45.1B
  • France Telecom – $42.5B
  • Target – $42.5B
  • BMW – $42.4B
  • Grainger – $42.3B
  • Nike – $41.6B
  • Morgan Stanley – $41.4B
  • Dow Chemical – $39.9B
  • UnitedHealth Group – $39.4B
  • News Corp – $39.2B
  • Colgate-Palmolive – $39.1B
  • Eli Lillly – $38.9B
  • Nokia – $38.0B
  • AIG – $37.3B
  • Halliburton -$36.7B
  • VMWare – $36.6B
  • BlackRock – $36.3B
  • Walgreen – $36.1B
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12 comments

Talking Technology On Fox News

Posted in Growth Equity, Technology, Volition Capital by larrycheng on September 17, 2010

2 comments

How Many Unique bit.ly Combinations Are There?

Posted in Pop Culture, Technology by larrycheng on August 16, 2010

I was thinking randomly about how many bit.ly combinations there are and how much unique shortened URLs they can generate given their current construct.  Here’s their construct:

  • Up to 6 characters after bit.ly/
  • Any mix of capitalized letters, lowercase letters, and numbers

If you limit the combinations to only ones where bit.ly is the domain (and not partner domains), and you presume they can go up to 6 characters (i.e. 1–6) as opposed to exactly 6 characters – how many total combinations are there?  Any math whiz out there who can figure it out pretty quickly and enlighten us in the comments section?  My small math brain was getting cramps thinking about it. 

Given that they shorten 40–50 million URLS per day, I also wonder how long they can last on this construct.  Probably a long time I suspect even including their growth.  Random thought for the day, and thanks for the help. 

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