Zynga + OMGPOP

I keep hearing people say that the OMGPOP acquisition ($180mm + $30mm retention) doesn’t make sense or is a sign of bubble prices, or wondering why OMGPOP would sell so quickly after an immediate hit. Without writing a super in-depth post, here’s why I think that it’s a value accretive deal (and good for both parties):

  • First of all, Draw Something has a rumored 15 million Daily Active Users (DAU). That is a ton of active users; by contrast, Zynga’s Q4 earnings report placed it at an equal 15m DAU. With one purchase, Zynga doubled its mobile DAU. Mobile is clearly where casual gaming is going and this solidifies Zynga’s foothold for the future.
  • On OMGPOP’s side, there is no guarantee of a second hit after Draw Something. OMGPOP produced a ton of games before creating Draw Something for iPhone and there is no guarantee that they will ever recreate the phenomenon. The lifecycle of games is such that people get bored of them and go on to the next one. What Zynga and other mobile publishers have done successfully is learn how to move traffic around their networks to keep their DAU when the audience tires of games. If OMGPOP had remained independent and failed to produce another great game, they might lose all the DAU they’d built up from Draw Something.
  • OMGPOP as a company is 6 years old and had failed to achieve success before Draw Something - this is purely speculation but I imagine there was a fairly significant team fatigue and the team was jonesing for an exit.

Seems like a good deal for both parties: Zynga gains dominance in the more profitable mobile games market (compared with Facebook games), and OMGPOP reduces their risk significantly.

What do you think?

Generation Make

In his New York Times opinion piece yesterday, William Deresiewicz calls the Millennial generation, those born roughly between the the end of the 70s and the mid-90s, a generation of salesmen. Emotionless, aspiring to be liked by all, because that is what will attract the most customers. “No anger, no edge, no ego.”

He got some things right. We have a distrust of large organizations. We don’t look down on people creating small businesses. But we’re not emotionless, that couldn’t be further from the truth. We have anger, which flares up to become the Arab Spring and OccupyWallStreet movements. We have ego, which I see in every entrepreneur who thinks their tech startup is the best thing since sliced bread. We have passion, and an intense drive to follow our passions through, immediately.

Our generation is autonomous. It is impatient. We refuse to pay our dues; if we start an entry level job then 6 months later we want to be running the department. We hop from job to job; the average tenure at any job for an American 25 to 34 is just 3 years. We think we can do anything we can imagine, whether it is rise to fame like Deadmau5 for our music or launch a new product on Kickstarter, and hate the idea that we should ever be beholden to someone else.

We do this because we have been abandoned by the institutions that should have embraced us. The past decade has shown us a massively inefficient government that has spent millions in foreign wars, incapacitated by partisan dogma. Politics are controlled by the old, people who don’t understand technology, a situation which seems immutable. Corporations have turned their backs on us: many of us came to age in the 2008 financial crisis, and even though we were promised that a college education was the key to a blessed life we couldn’t find a job post graduation.

So we’re making our own way and making our own jobs. We create our own tech startups, we’re making a living producing videos on Youtube. We’re starting our own non-profits instead of joining stagnant, bureaucratic NGOs. We’re growing and selling our own organic food. We don’t need your jobs, your advice, your instruction. Pretty soon we won’t need your music labels or publishing houses; we’ll be doing it ourselves on iTunes and Amazon. We don’t need you at all, except perhaps as a customer. 

We’re not salesmen, as Deresiewicz states. Selling is just one part of running a functional enterprise, and not the most important part at that. Our hero Steve Jobs knew that without a great product selling is useless, and that’s why he cared about the products above all else, and his showmanship around them was just a reflection of his passion. Before we’re ever selling anything, we have an idea for it, and that is where our love and emotion is revealed. Unlike previous generations, if we’re on the web or at a store and something we want doesn’t exist, our first thought is not "why?" but simply that maybe we should create it ourselves.

This isn’t the first time the Millennial generation has been criticized for what is perceived as shallowness, a lack of connection with others, or just a materialistic nature. David Fincher spent an entire 121 minutes trying to pillory Mark Zuckerberg with a made up fable, and all he did was inspire another generation of would-be entrepreneurs.

We are a generation of makers. A generation of creators. Maybe we don’t have the global idealism of the hippies. Our idealism is more individual: that every person should be able to live their own life, working on what they choose, creating what they choose. If you want to build a company to change the world, go for it. If you want to be an independent knife maker, what is stopping you?

We follow our passions. If we do it as a business, then we can create the ability to support ourselves doing what we love, and with some measure of security and autonomy that no institution is going to grant us. The Millenial path to self-actualization is the individual path, each man to create it for himself.

Is that selling out? We’re just doing what you regret not having the balls to do.

Trouble Hiring? Create a Cult

This article appeared on TechCrunch yesterday

Everyone knows there’s a war going on today in Silicon Valley: a war for talent. Startups are competing for a limited supply of engineering and product design labor, largely constrained by the failure of the US to invest in STEM education and a terribly restrictive immigration process for work visas. Meanwhile, big companies like Facebook and Google are paying out millions to either retain or rehire engineers through talent acquisitions.

This system is under even more pressure from seed funds (Sorry: I’m a part-time partner at Y Combinator, so I’m probably contributing to the problem). Not only do you have to worry about your engineers going to your competition, you have to worry about them getting seeded to run off and start their own company. It’s often hard to compete against the “grass is greener” dream of being a founder, especially when the theoretical upside of doing your own thing is nearly infinite and there are investors ready to write you a convertible note check today. No cap necessary!

If you want to attract and retain the best talent, you’re going to have to work hard at it. Here are a few lessons I’ve learned in the past couple months:

1) Have a vision

When our main product was Justin.tv, no one wanted to work at our company. Well, that’s a slight exaggeration, but few talented engineers said to themselves “Oh my god! My dream has always been to work at a general live video platform: you guys are the perfect fit!” We hired several talented people, but mostly because we were a YC company, had a few interesting technology scaling challenges and we seemed really cool.

When we launched TwitchTV, a community around broadcasting and watching video gaming, everything changed. We started to get a LOT more inbound candidates: it turns out the overlap between programmers and pro-gamers is pretty high. We had a new vision to bring competitive gaming to the masses, and there are many people out there who share that vision and want to be a part of making that world a reality. By communicating a vision that harnesses the passions of a certain group of people, we tapped into a talent pool we wouldn’t otherwise have had access too.

2) Be the only option

If you want a job as a programmer at a social media site, all you have to do is walk down the street in San Francisco waving your front-end engineer resume and you’ll be employed in 30 seconds. The competition to be the best social network, photo sharing platform, event discovery engine, or Facebook for X is fierce… and everyone is losing to Facebook.

I remember reading an Elon Musk interview where he claimed that if you were an engineer that wanted to innovate in rocketry or electric cars, there really wasn’t anywhere else to work but Space X or Tesla. Consequently, they attract the top engineering talent in those industries. For every industry, there are some set of talented people who are passionate about innovating and solving the difficult problems. If you’re the company that happens to be innovating and solving difficult problems, then you’re going to end up the the default “Best place to work in X.” My recommendation: pick an industry where that title will be possible to achieve.

3) Create a cult

The buzz over perks, salary and fancy benefits wears off. Every time you give someone a raise or new title, she feels good… for a week. Soon after, it settles in and becomes a new baseline, and worse still it becomes leverage for her to get a higher paying job somewhere else.

Instead, focus on providing an environment that builds community within your company. Often heard example: provide company lunches. It isn’t just efficient, but it increases opportunities for serendipitous discussion over meal times and employees will be more likely to become friends. The more friends at a company, the more enjoyable the job and the more you want to stay where you are.

My friend Matt Brezina’s company, Sincerely, creators of postcard sharing app Postagram, goes beyond that. The entire company takes week-long workcations in Mexico. They heavily recruit within social circles and when a candidate flies in for an interview they will put him up in an Airbnb in a neighborhood he would be likely to live, and the team will spend the weekend hanging out with him. By building a sense of family, you build lasting connections between your employees that will keep them motivated and around.

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Your talented team is the most vital part of any startup. The way to retain the best talent is by having a clear vision, working in an area where you’re the only company and creating a place where people connect with each other.

Hack Your Culture

This story appeared on TechCrunch on Saturday.

Behavior is a virus. We spread our behavior to those around us, whether passively or on purpose. Pop quiz: what factor most highly correlates with obesity? It isn't income, race, religion, or genetics. It turns out that the best indicator of obesity is your friend group: if you have overweight friends, you are more likely to be overweight yourself. This makes sense, because you develop your behavior set from interactions with those around you. If your friends are physically active and eat well, you'll have more opportunities to be physically active yourself, and spend more time over healthy meals. Alternatively, if your friends are living a real-life version of Super Size Me, you're likely on the express train to type II diabetes.

Given enough exposure to a behavior, that behavior will become normative. This is true for both positive and negative behaviors. One simple behavior I've seen spread through my own friend group is riding motorcycles. I first started riding a few years ago after two of my friends came by on their bikes (having wanted to start for years, but never having a catalyst until that moment). Fast forward four years and both my brothers, two roommates and many other friends are riding, with many more in various stages of taking the rider's test and joining the organ donor's club.

Over the past several years I've been surprised to learn that this is also the case for entrepreneurship. For most people, startups are a risky endeavor and something to be avoided. Many are hesitant to quit their secure jobs and try to start a company from scratch. From an expected value perspective, when factoring in some risk adversity attributable to basic human nature, they are correctly maximizing outcomes. However, for a growing group, I've noticed that startups are a normalized behavior, and that this generally spreads through personal connections.

My brother Daniel is the perfect example of this. When Daniel graduated from college in 2009, the economy was in a horrible recession, and it was extremely difficult for new grads to find jobs. Initially having very little interest in startups, he started doing sales and business development at Uservoice after finding no options in consulting and banking, where the few friends of his fortunate enough to find work were headed. After a couple years of being friends with founders and early employees of startups, hearing about startups everyday and rooming with startup founders, he made the jump himself and recruited a team to launch Appetizely.

An example of culture-hacking at scale is y Combinator. One of the reasons I think Y Combinator is so powerful is because it creates a new social norm, especially for those who come from outside Silicon Valley. When you start at YC, your friends and family think you’re crazy. By the end, you have another friend cohort: other YC entrepreneurs and alumni. These new friends will provide support and advice, but the most important thing that they give you is implicit assurance that you are not crazy.

The lesson here is that through some clever social engineering you can hack your own life to put yourself in the position to accomplish goals you don't even know how to begin. This is also also how ZeroCater started. Over three years ago I was interviewing candidates for a community manager postition at Justin.tv. One interviewee particularly stood out. Arram didn't have any experience or really any qualification; in fact, at the time he had been working as a security guard and had never been to college. But, unlike most of the other candidates, he had thought extensively about what he would do as the community manager and had written down his many ideas in preparation for our interview. He was also passionate about creating his own startup eventually, and his excitement was inspiring. We ended up hiring someone else who had more community management experience for the job, but I was so impressed with Arram's preparation that we hired him anyways to do random office projects.

One of Arram's minor responsibilities ended up being ordering meals for the company. It ended up being such a time saver for the team that one evening I suggested that he offer ordering as a service to a few other YC startups in the neighborhood. That was the last I thought about it, but a month later I was shocked when Arram came back to me and told me he was quitting to grow it as a startup. Two years later, and he's recruited a technical team, built out software to manage the entire workflow and serve companies like MTV, CBS and Verizon.

Arram didn't have the programming or product background that you would expect from someone who would later go on to raise over $1 million in venture capital for a technology startup. He got in the game by doing whatever it took to get into a startup and surrounded himself with startups, making it impossible for him to not think about startups. Just being in the community creates opportunities: how else would you come up with the idea for a food subscription service that solves a very specific company problem?

You can hack your own culture. Surround yourself with people who do what you want to do, and eventually you'll wake up to find yourself doing the same.

Developers, developers, developers

Last week I had the good fortune to travel to Washington DC to participate in the launch of Our Time's Buy Young campaign, which encourages Americans to buy from companies started by founders under 30. It was a great opportunity to meet some entrepreneurs outside of tech, which I don't have an opportunity to do quite as often as I'd like (businesses outside of tech have interesting problems too!). 

I was heartened to see hear many founders in fashion, food and other industries say that programming skills are a foundational necessity for our country. Some even went so far as to say knowledge of programming languages should be required, like a foreign language! It is my belief that more and more of our jobs in the future will require some programming knowledge. The list of industries outside of tech where software projects are a growing and necessary corner stone is rapidly expanding: robotics, industrial processes, biotechnology, finance, the list goes on. In fact, almost every business today can benefit from the application of basic programming skills, whether you are A/B testing conversions for your jewelry company's online store or building smartphone integrations into the cars you manufacture. At my first job as an intern at a law firm almost a decade ago I ended up automating a lot of my trivial day to day tasks with some basic Excel macros (which was viewed by the rest of the firm as black magic).

At the same time, I got the distinct impression that there were some misconceptions in how non-programmers outside of San Francisco / Silicon Valley understood programming. Two things everyone should know about programming:

First, programmers are normal people. Yes, a large number of us are more interested in technology that the average person, and a visible few don't care about adhering in to social norms as strictly as most, but largely programmers have the same motivations and desires as others. There seemed to be the thought that programmers were generally uninterested in founding businesses or being involved outside of staring at a computer screen. This isn't true at all. Google and Facebook's founders prove the first. Further, there are many programmer / entrepreneurs who like to do other things, whether it is owning nightclubs or starting a clothing line.

Second, programming is just a skill. As it turns out, anyone can learn enough about programming to help her in her business. Just like some basic knowledge of math will let you as an entrepreneur figure out your margins and make an annual budget, some basic programming knowledge can help you automate parts of our business or change your online store. When I started my first startup, I was a Physics & Philosophy major and didn't really know anything about building a web application (or really the Internet in general), but I taught myself enough about Javascript and Rails to be useful. You don't have to be a genius to start programming -- I am proof of that.

So, I encourage you non-technical entrepreneurs out there to learn some basic programming, which I'm sure will come in handy for your business. Write a script to automate some of your boring work or figure out how to build a basic website. It's fun; the hardest part is getting started.

Startups don't die, they commit suicide

This post appeared on Techcrunch on Monday. I'm reposting it here for posterity's sake.

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Startups die in many ways, but in the past couple of years I’ve noticed that the most common cause of death is what I call “Startup Suicide”, a phenomenon in which a startup’s founders and its management kill the company while it’s still very much breathing.

Long before startups get to the point of delinquent electricity bills or serious payroll cuts, they implode. The people in them give up and move on to do other things, or they realize that startups are hard and can cause a massive amount of mental and physical exhaustion — or the founders get jobs at other companies, go back to school, or simply move out of the valley and disappear.

I’ll let you in on a dirty little secret: while building and iterating on Justin.tv (long before launching Socialcam), there were many times I came to the brink of packing it up and moving on from the company that bears my name. Shameful? Perhaps, but I know the same thoughts have occurred at times to my co-founders, who are still with the company to this day. The reasons? Take your pick: we need more traction, we need hockey-stick growth, we need more revenue, we need more buzz, we argue about management issues, we have diverging interests. In the past five years I have personally experienced all the startup failure cliches that exist.

But, every time the “suicide” specter reared its head, I turned away and stayed the course. And every time, I would be vindicated. Arguments were worked out, problems solved, revenue generated, traction gained, buzz created. So I’ve struggled on, and every day we’ve continued to win the most important battle for any company: existence. Even more, we’ve been able to grow all the metrics that matter: users, revenue, and team.

When startups commit suicide, often the root problem can be traced back to a lack of product traction — it’s rare to find people willingly quitting companies with exploding metrics. But one thing that many entrepreneurs don’t realize is that patience and iteration are critical in achieving product market fit. Overnight successes might happen fast, but they never actually happen overnight. Facebook lagged Myspace for a couple years before being crowned the top social network. Groupon had to iterate through being ThePoint. If the teams had given up after a single failure (or even many failures), they would never have created the massive companies that capture the public eye today.

My favorite example of persistence is Airbnb. I first met the founders, Brian Chesky and Joe Gebbia, after SXSW 2008, where they had bumped into my co-founder, Michael Seibel. They had launched their site as a marketplace for temporary housing rentals during conferences twice already by that point: once for a design conference in SF, and then again at SXSW in Austin.

These were guys with very little knowledge of the tech industry, two designers who had a programmer working with them part time. Michael was advising them, and every couple of weeks they would come by the office to talk with him (while the rest of us alternated between watching casually, mildly annoyed that Mike wasn’t working, and actually trying to provide helpful advice). The one thing I remember vividly was the time when they first demoed their payment flow to us. It was built on top of Amazon payments, and was quite frankly atrocious and we told them as much (I think it required multiple redundant fields).

That summer, they launched a third time for the Democratic National Convention and achieved some traffic, which promptly went away soon after the conference was over. By fall, almost anyone could have justified throwing in the towel. They had tried to make the product work multiple times, had accumulated tens of thousands in personal credit card debt, and were literally printing cereal boxes to try to make money. Even their lead (and only) engineer had moved back to Boston. As a casual observer from the outside, they appeared isolated and discouraged.

But they didn’t give up. They kept at it. At the end of the year, they were accepted into YC, and immediately started trying to generate revenue and hit profitability. Two years later, Airbnb has a great product, a huge userbase, great revenue and is the the toast of the town in Silicon Valley. They are even a contender for the most valuable YC company created to date.

Persistence isn’t just key — it is everything. Getting in the ring is hard, but staying in the ring is even harder, especially when you feel beaten down, tired and alone. Successful entrepreneurs will readily tell you about the good times, their secrets to success, and even their mistakes (with a ready helping of how they overcame them), but they will rarely mention the times they were ready to throw in the towel and do something else. The truth is that everyone has those moments, and the guys you read about on the cover of Fortune were the ones that didn’t quit at them.

I can’t promise you will succeed if you stick with your startup. What I can promise is that if you give up, you won’t possibly succeed.

Google Calendar redesign: It's goddamn terrible

Normally my policy is not to shit on other people's products. I know how hard it is to take unsolicited negative feedback and how easy it is for some random douche on the Internet to give it. But I feel like I have a special place in my black heart for Google Calendar, so I'm going to break that rule and just lay it out. Here are before and after screenshots of my real calendar from today for comparison.

Old and usable:

New and terrible:

Google Calendar team, did you consider how people use calendars when you redesigned your product? The new design is terrible. Here is why:

  • Search button is a big blue button in the middle of your field of vision. I search on my calendar maybe once a week (I think that is being generous). It is visually distracting and one of only two colored elements on the page. Just because you're a search company doesn't mean that search should be emphasized at all costs. Search is not part of a normal calendar user's work flow.
  • You can now see much less of the My Calendar and Other Calendars boxes. We went from being able to see 10 items to about 3. For someone with multiple calendars, it went from being a usable guide at a glance to an unusable one. This might look fine on cinema display but on my 13" Macbook Air it does not.
  • You can't tell at a glance what fucking day it is. Before it was yellow. Now it is a shade of grey that is pretty close to white. What day it is is important, because you use that info to figure out what appointments you are going to have to show up for.
  • Previously, the blue frame around the calendar draws your attention to the most important part of any calendar app: the fucking calendar. The month box calendar, search, view selectors -- they are all much less important that seeing your appointments for the day/week.
  • Lastly, this might just be because I'm used to the old colors, but I think the white-on-dark-color appointments are much easier to read than the black-on-color appointments. Maybe I'm just being a grumpy asshole here.

Over on the Gmail blog it looks like those guys are about to commit a similar atrocity. Please don't make these changes mandatory for all calendar users. When I was working on our calendar startup Kiko, you brought us in, pumped us for info, and then released your own product and rolled up our early adopters. Despite all that, I eventually came around and switched over to Google Calendar because it worked decently well with Gmail. Now, you're about to pull the trigger of a gun that is pointed at your own head.

Winning Attitude, Losing Attitude

I have a friend who has wanted to start a startup for years. Every time he comes up with an idea, he subsequently talks himself down: the market isn't big enough, the timing isn't right, he can't find a cofounder. The reasons are always different, and are always logical.

This is a loser's attitude, and unfortunately it is shared by millions. It is why our risk-adverse society systematically over-rewards those willing to take perceived risks. When you look for reasons not to do something, you will always find them.

I have another friend who came to the Bay Area with the dream of starting a startup. He had no college, no programming ability and no connections when he got here. He got a job serving ice cream, moved on to join a startup, then started his own company after two years. The company is now doing 2 million in annual revenue a year and a half later.

When you approach a challenge with the foundational belief that you can do it, you have a much different mindset than  when you approach it with the idea that it is impossible. In the former case you almost always figure out a way, in the latter case you almost never do.

Those with a winning attitude get started and figure out how to get things done. Those with a losing attitude worry about failure, and never get started.

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Lead by Example

One Fall day during my senior year at Yale, a friend called me on the phone. An acquaintance of his was having a calendar release party; would I like to come? The calendar was some sort of trashy imports calendar with riced out cars surrounded by girls in bikinis, who would naturally be in attendance at said party. Unfortunately, I couldn't make it; the party was in Seattle, and I was trapped at school in New Haven. So, I did what any entrepreneurial hard-headed kid would do, and resolved to create my own printed calendar, so I could have my own calendar release party.

Thus was born the first ever Men of Branford calendar. Branford was the residential college I was in at Yale. I figured I would honor her by creating a calendar of her finest residents, all nearly naked. I immediately started rounding up volunteers, and pretty quickly recruited a head photographer, someone to do make up, and secured a couple hundred dollars of funding from our college activity fund.

Only one problem remained: the models. For added hilarity, I'd decided to make the calendar feature primarily men. I'd recruited the best looking guys from the college (and some of my uglier friends) to star, but was having trouble getting them to agree to pose for provocative enough photos. I firmly believed that ridiculous, over the top photos would be the key to the calendar's success, so to me it was imperative that we convince those participating that taking photos that could potentially affect their careers for the rest of their lives would be well worth the risk.

I did the only thing I could think of. I went around and told every model that if they did the scene with rose petals on the pool table (or rubbed soap on themselves in the shower, etc) that I personally would do something far more embarrassing and scandalous. Everyone agreed to take the photos I had in mind for them, and after a few months of hard work the calendar was released. The release party was a smashing success.

The point of this inane story is that ultimately you can't ask people to do something unless you're willing to do it yourself. Early on in our company's life, the founders often worked longer to get to deadlines, were willing to do shittier work (testing, fixing problems on weekends, racking servers), and generally did whatever it took regardless of pride to make sure things were completed -- and this attitude spread to the rest of the team. When we were developing the first version of Socialcam, I tried to be in the office any time any of the team was, even though I wasn't the one programming the apps. Sometimes having others present working towards common cause is important for morale, and I couldn't ask the team to grind as hard as possible if I wasn't doing the same.

Would-be leaders: prove your worth and lead from the trenches.

Here's the photo I ended up taking for the calendar:

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