1 Notes

High baud rate founders

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4 key drivers of “broadband” communications for startups. (Originally posted on my Medium on 1/4/2014.)

Speed of iteration is crucial to the success of any early stage company. What enables that speed to exist, however, is not always clear. So-called “life hackers” will promote their own techniques to get the most out of a 24 hour period. Agile software development practices can also push the envelope on speed. Simply working longer hours than others over a sustained period of time can be incrementally helpful, if you can keep it going without burning out.

Yet, the root cause of reductions in cycle time for startups always comes down to one thing: the rate of information transfer between actual people. We see this over and over again; the early startup teams who communicate most effectively with one and other tend to get the most done in a given period of time.

I call the people who start these companies “high baud rate founders.” They transfer information between one and other at an astoundingly high rate. (Strictly speaking, I should call them “high bit rate founders,” but baud sounds better to me. If you’re a stickler, read more here on the difference.)

A number of factors drive a high baud rate, and I have attempted to list the most important ones here:

1. Raw intelligence

It should not come as too much of a shock that some peoples’ gears turn faster than others’. This is a relative thing, but when I meet founders, I usually ask myself the question, “Is this guy or gal smarter than me?” I can get a sense for this by engaging that person in an intellectual conversation, in an area where I should be on equal footing. Basic math, science, or engineering usually do the trick.

If the whole team exhibits the same elevated pace of thought relative to me, that’s usually a sign of a high raw intelligence factor. It is essential that each founder possess this quality, since the overall processing speed of the group is governed by a min() function.

2. Efficient communication techniques

A processor can run as fast as it wants, but if it throws away cycles on useless tasks it is underperforming. Along those lines, high baud rate founders tend to send short, punchy emails with only the necessary detail. They tend to say a lot with a little. They tend to cluster similar tasks to avoid the penalty of “context switching.” In short, they maximize the amount of signal in their frequent interactions.

As an outsider, it can be hard to observe how founders economize their communication. I often get signals from forwarded email traffic, as well as the configuration of an office. There’s no substitute, however, for spending time at a company and casually observing this phenomenon directly.

3. Unspoken bonds

To deliver a message, the only thing better than an economy of words is none at all. I am always impressed by founding teams that have a bias for action, knowing full well how their colleagues will react, with no need to communicate in a confirmatory fashion. This can only be possible if the company has (A) a clear plan and (B) a strong culture. The former is necessary for the “what,” while the latter is necessary for the “why.” If both of these are solid, then each individual can usually figure out the “how” on his or her own.

I often ask founders about their product plan and what they will do in different contingent situations. Finding consistency in multiple founders’ independent responses is a really good sign.

4. Empathy for each other’s role

It is hard to have a high baud rate interaction with a peer without knowing his role and priorities. The quantity of empathy between founders is therefore strongly correlated with their collective baud rate. Founders with cross functional backgrounds (e.g. eng + product, sales + marketing) tend to be the best at this, but even a little bit of time spent out of one’s core functional area can improve the collective baud rate significantly.

This empathy can often be gleaned just by looking at the team’s background. A stronger signal, however, is the manner in which each founder speaks of the other and his respective contributions to the company. I view a “throwing it over the wall” attitude in an early stage company, for example, as a sign of trouble on this front.

In short, going faster should not be the goal. The goal should be higher throughput of all communications on the team. Getting this right will enable speed, and so much more.

Notes

Drones…in 30 minutes or less.

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Why instant delivery could transform e-commerce. (Originally posted on my Medium on 12/2/2013.)

Last night, Jeff Bezos announced an ambitious new add-on to the popular Amazon Prime service: an option to have an autonomous drone deliver up to a 5-lb. payload directly to your home within 30 minutes. The program called PrimeAir is scheduled to roll out in 4-5 years, and I think it will cause a step function change in e-commerce adoption.

To date, e-commerce has been moderately successful in the U.S., linearly progressing to just under 6% of overall retail sales in Q3-2013. We have seen significant companies built in e-commerce in our own portfolio (e.g. Rent The RunwaythredUP) and others (e.g. Warby ParkerZulily) and continue to get excited about new opportunities.

Yet, the market is transforming more slowly than, say, the breakneck shift from web to mobile. One justification is that instant gratification comes far more easily to pure software than it does to physical products, and as such the e-commerce consumer still suffers from a sub-par experience.

To the contrary, when a consumer product nails instant gratification, it quickly steals market share from its competitors. See, for instance, the effect that page load times have on the way consumers experience the web. Studies like the below are published all the time, the conclusion being that consumers hate to wait and will take their business elsewhere if need be:

imageConversion rates drop by 6.7% for every additional second in page load time. (TagMan study, 2012)

The increasing speed of the web (and now mobile) has definitely contributed to the rise of e-commerce to date. It’s now pretty simple to find what you want. Getting the product to your house as fast, however, is another story.

That’s why I think PrimeAir is such a big deal: it will bring instant gratification to e-commerce. It is that feeling you get after a long day when you see what’s on Netflix and start streaming instantly, or when you download a new audiobook on your walk to the subway, or when you call an Uber after a long night out.

If the delivery bottleneck is broken for e-commerce, it will unleash a whole new wave of innovative companies. When you can get something within 30 minutes of your order, you will start thinking differently about what you buy and where. I have no doubt that the paltry 6% of retail today sold online domestically will at least double as a consequence of getting the consumer experience right with instant delivery.

Drones are a compelling way to implement this vision, but not the only one. What makes them a good starting point is their straightforward potential for autonomy. In many ways, a drone navigating itself between a distribution center and your home has a lot easier time than a Google self-driving car doing the same. Moreover, the economics for small packages must be far in the drone’s favor.

I have to believe, however, that we’re still going to be relying on grounded transportation for those heavier items. My platform bet in that case won’t be Amazon; it will likely be Uber, Google, or another company with a fleet of cars that have excess capacity during the middle of the day. Maybe Amazon itself will get into the ground delivery business, buying a company like UPS or launching its own fleet of trucks and city vehicles.

It is looking more and more like the next battleground in e-commerce will be logistics. The winners in the next 10 years will be the companies that embrace new delivery methods as a means to differentiate and deliver instant gratification to their customers, who will spend more and more of their wallet on online goods…perhaps delivered by your friendly, neighborhood drone.

5 Notes

summerathighland:

Introducing the Summer@Highland Class of 2013!

When we opened our call for Summer@Highland applications a few months ago, the entire Highland investment team pitched in to get the word out. We came bearing pizza to almost 30 university campuses in a little over a month. We held a couple Google+ Hangouts to connect with those we couldn’t meet with in person. Nearly 900 students applied from 85 universities around the globe, and we subsequently pored over each individual application looking for the top student teams to bring into our offices this summer.

Selecting the small number of teams we can host for the summer was an enormous challenge. We were blown away by not only the amount of applications we received, but also by their caliber. The majority of teams not only have a working product, but many of them have users, partners and have achieved some insanely impressive milestones – all while being full-time students.

We ended up selecting the following nine exceptional teams from across the country (PandoDaily also wrote a nice write-up here). Please meet and congratulate the Summer@Highland Class of 2013!

Alpha (Stanford University) – Alpha is a digital university for hackers that teaches experienced developers how to build actual applications for the “real world” through project-based learning in the browser. The team is also a finalist in the BASES (Business Association of Stanford Entrepreneurial Students) 150K Challenge

Butucu (Harvard College) – Butucu, an all-freshman team, aims to help retail stores improve the customer experience by allowing them to push custom, relevant content to in-store shoppers while providing high-level analytics

Connect.com (Harvard Business School) – What if all your connections from Facebook, LinkedIn and Gmail were shown on a map? Connect.com puts all your friends on a map so you can find people when traveling, plan events and visually explore your network. The company is co-founded by Ryan Allis, previously the co-founder and CEO of iContact (acquired by Vocus (NASDAQ: VOCS) for $169 million in 2012)

EagerPanda (MIT) – EagerPanda allows educators to easily build their own custom online courses, and enables learners to connect and communicate around this content

Phyre (Boston College) – Winner of the Boston College Venture Competition, Phyre is building a portable device that makes it easy to wirelessly connect and interact with large displays from any phone, tablet or laptop

Sension (Stanford University) – A computer vision platform that makes online content engaging for the user, Sension works with a simple webcam to let anyone make videos that respond to the viewer

SkylBridge (Wharton School of the University of Pennsylvania) – SkylBridge is an online talent marketplace for businesses to find top-quality yet affordable business freelancers for short-term projects

Splat (Cornell University) – Splat is a small device that transforms a smartphone into the ultimate social-gaming console, letting users play physical, in-person, interactive video games

Technical Machine (Olin College) – Technical Machine is an embeddable platform for developers to make internet-connected physical devices

Congratulations and best of luck to each and every student who applied this year – we couldn’t be happier to now have you as an extension of the Highland family and look forward to working together in some fashion over the course of your career.

And stay tuned to this blog throughout the summer to follow the progress of the Summer@Highland Class of 2013!

- Alex Taussig, Principal, Highland Capital Partners

Announcing the Summer@Highland Class of 2013!

1 Notes

summerathighland:

Yesterday we ventured over the Bay Bridge to visit a university in our farther away backyard, UC Berkeley.
Beyond the info. session we held at the Haas School of Business, we got to meet with a few other student groups that are helping inspire the entrepreneurial spirit on campus. One was the Haas Entrepreneurs Association, which is the largest student organization at UC Berkeley with over 500 members. The other was the CSGE (Computer Science Graduate Entrepreneurs), which is a smaller, more specialized entrepreneurial group that’s focused on solving highly technical challenges.
A lot of questions about Summer@Highland circled around how we evaluate team members, and with our investment focus on technology, many students asked if you have to be technical in order to apply. The answer? It depends. What we look at when we’re evaluating each team is if they have the background and credibility to execute on their idea. So if the idea is highly technical and there are no technical team members, we will likely have less confidence in your company’s success than if you did.
But really at the end of the day you should only apply (and pursue an entrepreneurial venture in general) if you have an idea you’re so passionate about you can’t stop working on it. It gets you out of bed each morning and keeps you up late at night, and feels more like a personal endeavor than a professional one. It’s that sort of drive and excitement we’re really looking for versus strictly what’s on your resume.
And on that note, only 26 days left to get your application in. Have at it!
- Amy White, Director of Marketing, Highland Capital Partners

A good recap of our trip to Berkeley:

summerathighland:

Yesterday we ventured over the Bay Bridge to visit a university in our farther away backyard, UC Berkeley.

Beyond the info. session we held at the Haas School of Business, we got to meet with a few other student groups that are helping inspire the entrepreneurial spirit on campus. One was the Haas Entrepreneurs Association, which is the largest student organization at UC Berkeley with over 500 members. The other was the CSGE (Computer Science Graduate Entrepreneurs), which is a smaller, more specialized entrepreneurial group that’s focused on solving highly technical challenges.

A lot of questions about Summer@Highland circled around how we evaluate team members, and with our investment focus on technology, many students asked if you have to be technical in order to apply. The answer? It depends. What we look at when we’re evaluating each team is if they have the background and credibility to execute on their idea. So if the idea is highly technical and there are no technical team members, we will likely have less confidence in your company’s success than if you did.

But really at the end of the day you should only apply (and pursue an entrepreneurial venture in general) if you have an idea you’re so passionate about you can’t stop working on it. It gets you out of bed each morning and keeps you up late at night, and feels more like a personal endeavor than a professional one. It’s that sort of drive and excitement we’re really looking for versus strictly what’s on your resume.

And on that note, only 26 days left to get your application in. Have at it!

- Amy White, Director of Marketing, Highland Capital Partners

A good recap of our trip to Berkeley:

9 Notes

Nightingale Blog: Highland Capital Easter Egg Hunt

Well, looks like someone found our Summer@Highland easter egg! Go check out his post on how he did it.

nightingaletalk:

So I was hacking away on Nightingale yesterday when Delian mentioned that a few guys from Highland Capital had emailed him, encouraging us to apply for their summer accelerator. I didn’t think much of it until he told me that there was secret easter egg on their site which would get us…

1 Notes

summerathighland:

Last week, we spent some time in our backyard (and my alma mater!) on the Stanford campus (special thanks to SWIB and BASES for helping put this together). Instead of hosting an info. session that only covered Summer@Highland, we thought it would be more fun to have an informal meet and greet with some of our Stanford Summer@Highland alumni, all of whom are either still working on their Summer@Highland projects or have moved on to new ventures – either way, they’re continuing down the path of entrepreneurship.

What most impressed me was the feeling of camaraderie and support among the students who are looking to start their own companies. Many came specifically looking to speak with our alumni about their own startup ideas and learn more from their peers about how they got started. It very much emulates the off-campus startup scene in the Bay Area – there is a sense of mutual respect for what each entrepreneur is going through, and a real sense of community in terms of sharing tips, contacts and forming truly mutually beneficial partnerships.

As someone who works in a people-based business, I’ve come to learn the benefits of building your own network are immeasurable – you never know what someone you meet today may end up doing tomorrow; you may be able to help them down the road or vice versa. It’s exciting to see that Stanford students already recognize this and are taking advantage of everything the campus has to offer. Hopefully, you’re doing the same on your campus, too!

- Manish Patel, Partner, Highland Capital Partners

1 Notes

summerathighland:

Yesterday, we spent time at both MIT and Harvard, hosting five different events at both schools in one day. That’s a lot of free pizza! We met more than 120 students over the course of the day, all of whom are interested in building technology products and are exploring their options for the summer.

What has really resonated with me (Alex) is how much the startup scene has changed over the last few years at MIT and Harvard, both schools I attended. At MIT, the $100K has always been the center of the ecosystem, but now it seems like students have access to greater resources throughout the year. Like most significant changes at universities, this one was driven by students, and now the faculty and administration have co-opted it as their own. A similar situation exists at Harvard, where right around the time I left HBS in 2009, startups became a thing people wanted to do. The creation of the “Startup Tribe” (MBAs) and “Hack Harvard” (undergrads) started a groundswell of interest which now has been bolstered by the administration’s increased support of CS50 (Intro to Computer Science) and an expanded, more engineering-focused curriculum.

Finally, and perhaps most importantly, startups seem to be coming to campus to recruit, which certainly wasn’t the case in my day. My final talk of the day at Harvard Hack Night, which started at 10:10pm (!), was followed by Pooja Sankar of Palo Alto-based Piazza. She did a great job telling her and her company’s story; and it occurred to me, while sitting in the audience, that we would never have convinced a speaker of that quality, at such an early stage in her company’s life, to come all the way from California to present at 11pm on a Tuesday night.

All in all, it’s great to see entrepreneurship alive and well and my alma mater(s). Thanks to all our hosts for their hospitality, and we’re looking forward to visiting more schools to tell the Summer@Highland story. Early deadline’s coming up soon!

Neat summary of our visit to Harvard and MIT this week.

Notes

Is HBS becoming a tech feeder school? I hope so.

I graduated from Harvard Business School in the nuclear winter of job seeking: spring of 2009. I remember quite a few of my classmates thinking they were going to “career transition” into private equity out of consulting or I-Banking being sorely disappointed. We hit a record low for job acceptance, and many of those who accepted were returning to prior employers. Interestingly, a large number of great startups (Rent The Runway, thredUP, VigLink, Cloudflare, etc.) came out of my class, perhaps a slight consequence of the dim traditional job prospects.

I usually follow HBS MBA job stats as something of a curiosity to see how much things have improved since I was there. The school recently released the most recent data for the Classes of 2012 and 2013, and what it shows is a surprising shift towards supplying labor into the tech market:

  • More engineers: 36% of undergrad degrees hold by the Class of 2013 were STEM vs. 33% in 2012.
  • More job seekers: 88% of grads were looking for jobs in 2013 vs. 74% in 2012. 
  • More technology seekers: 19% of 2013 summer internships in technology vs. 12% of 2012 full-time jobs.
  • More Silicon Valley: 15% of 2013 summer internships in Bay Area vs. 12% of 2012 full-time jobs.

Overall, 6% of the Classes of 2012 and 2013 accepted full- or part-time jobs at startups last year. That’s slightly down over the prior year’s statistic of 7%. So while HBS seems to be gaining a tech focus, startups remain roughly flat as a percentage. 

To me, these are good signs. Often the best role out of an MBA isn’t to join something small, but to join something a bit larger with some structure in place. I suspect that’s what is going on, but if you tracked these cohorts of students for 5-7 years, I bet you’d find a high percentage of them in startups. Happy to see HBS growing its influence here.

1 Notes

Jim Cash is a special advisor at Highland and recently paid us a visit in Silicon Valley to speak with a few of our founders and CEOs. Jim’s bio is pretty mind boggling. He has served on 18 public company boards (currently serves on those of Walmart, GE, and Chubb) and taught at Harvard Business School from 1976-2003, where he created much of the technology curriculum and served as Chairman of the MBA Program. He works with companies that spend a minimum of $200 million on IT annually, or up to $6 billion. Jim also runs the Cash Catalyst, an exclusive CIO forum that he created to encourage the sharing of best practices. He views his job as a board member to be the connector between the creators of innovative technology and the ultimate buyer: the large multinational corporation.

Our CEOs asked Jim a few questions, and although it was a closed door session, Jim has graciously allowed me to share a few of his thoughts below. Everything you read below is my paraphrasing of his responses, so please interpret liberally. Enjoy!

How do big companies switch from on premise IT systems to the cloud?

For a large company, the first step in migrating to the cloud is to simplify on premise solutions. You must both consolidate the systems you have, and then standardize across the organization. If you don’t do this first, migrating to the cloud will be a mess. Not everything will eventually get pushed out of the enterprise though. Most big companies are looking at “hybrid clouds,” keeping certain essential resources behind the firewall and centralized.

Is monitoring and visibility increasing on the priority list of customers?

If you asked CIOs that question, they would probably say “yes.” However, until you have a big issue come up, it’s not an actual budget priority. Often, the great driver of monitoring and visibility as an enterprise application is regulation. The type of monitoring is changing, too. More and more, we are moving away from sampling transactions and towards a world in which we process all the data.

How about security? Is that now a top priority too?

It depends on the company. The way I determine a company’s priority is to ask, “Where does the Chief Information Security Officer (CISO) report?” I am pushing the companies I work with to create a reporting relationship similar to internal auditing.  Some companies have a technology subcommittee of the Board of Directors, and could have the CISO report to this subcommittee. The one exception is when there are multiple autonomous business units competing in different industry segments, but otherwise I like this structure.

Can small companies effectively work with big companies?

My strong belief is that the era of centralized R&D is over for most large companies. We’re in the age of “distributed innovation,” which means that large companies must find ways to work with smaller companies to field innovative products and processes. P&G has a program called Connect & Develop, for instance, which is a good model for others.

So, if you believe that too, the real question is, “How does your target partner perceive distributed innovation?” The ones that embrace it will, of course, be more willing to let your startup guide them, and less likely to accidentally get in your way while doing so.

How do big companies decide which cloud applications to adopt?

The thing to understand is that there is a large opportunity cost in top down provisioning. You simply do not know what the best solution is. It used to be the case that you had to pick one and hope you were right. But now, each of your employees can pick what works for him, download the client software (or just open it in a browser), and then the crowd will decide what the right solution is. Big companies need to move away from command and control of the actual software, and focus on owning and securing the data those applications produce. The end play here is an open market for software inside of enterprises.

You’ve been on a lot of boards with legendary CEOs like Bill Gates of Microsoft and Mike Duke of Walmart. What’s the common attribute that you’ve found in great CEOs?

It’s a hard question to answer. The biggest commonality I’ve found is the ability to identify significant talent in other people and challenge them to push their limits. They have the humility and self-awareness to truly hire people that are better than themselves at whatever they do.

What advice do you have on constructing a Board of Directors?

My first tip is to put term limits on outside directors. You can always modify these later, but I think it’s bad to have lifetime appointments. In addition, keep the board small and relevant to the task at hand. We used to run Microsoft with 7 directors when it was a $300 billion market cap company. Why do some private companies have 10-12 directors? Also, don’t confuse advisors and board members. The former is for specific helpful tasks, while the latter is for good governance. If you want to get someone involved with your business, get them involved as an advisor first. The bar should be a lot higher for a director. Finally, the CEO should do a 30 min call with each board member before the meeting. There should be no surprises in a board meeting, and all members should be prepped on the data and key issues before going into the meeting. That way, the actual time of the board meeting is used most efficiently and everyone comes in on the same page.

1 Notes

summerathighland:

On Tuesday, Highland hosted a group of Stanford GSB’ers at the Old Pro in Palo Alto. The backgrounds of the folks we met varied quite a bit from the canonical MBA profile. We met at least three materials engineers, one console gaming market analyst, and a guy who used to build brain/human interfaces. And, above all they wanted to know how to use their skills in the context of a startup. Excited to see what they are going to accomplish this summer!

summerathighland:

On Tuesday, Highland hosted a group of Stanford GSB’ers at the Old Pro in Palo Alto. The backgrounds of the folks we met varied quite a bit from the canonical MBA profile. We met at least three materials engineers, one console gaming market analyst, and a guy who used to build brain/human interfaces. And, above all they wanted to know how to use their skills in the context of a startup. Excited to see what they are going to accomplish this summer!

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