A new advertising format based on time and attention could save media companies and the display advertising unit. We may finally move away from impression-ba…
I pulled together some of the financial data on Twitter plus some other data on the company. The data doesn’t look compelling to me. They are really selling the future of the company, which is based on monetizing their dual screen audience.
NewsRoom Sign Ups Demonstrate Value Of Direct Email Channel To Reach New Users
Two weeks ago NewsCred launched the NewsRoom. We dedicated significant efforts to outreach and PR. We were able to capture data on where our applicants heard about the product. This demonstrates that directly emailing people was the most successful technique for reaching our writers. It was even more successful than all of the traffic that originated from the 3 very positive articles that covered the launch.
If you are building a content site, you need to focus on your distribution strategy
All data used in this post can be found here
The success of a media company depends on its ability to deliver its content to a receptive audience. Distribution is an extremely important part of any content strategy, and it determines which sites grow into successful media brands.
The Huffington Post was worth $315mm because it became the master of delivering content via search engines. BuzzFeed and Upworthy will be more valuable than the Huffington Post because they’re mastering a newer and more potent content distribution channel – Facebook. Building a successful content business depends on adopting a unique distribution strategy and focusing on that one strategy.
Many content sites try to optimize for different methods of distribution, but to be successful, a company must place a bet on a specific strategy. Older content sites trying to adapt to a new distribution channel face an Innovator’s Dilemma. The older content companies are optimized for specific channels, but when a new one emerges, they face a choice – abandon the old channel for the new or continue to grow revenue incrementally through the current channel. As the Innovator’s Dilemma predicts, most choose the latter. This leaves a gap for new content companies to grow and take advantage of the emerging distribution channel.
The changing landscape of online media brands is an example of the Innovator’s Dilemma at work on content distribution. The Huffington Post, which launched in 2005, was built to deliver content through Google Search. The technical engines that power the Huffington Post are extraordinary at optimizing content for search engines. Whereas, Upworthy and BuzzFeed, which were founded during the Facebook era, continue to optimize their site and content specifically for social sharing. The Huffington Post is falling victim to the Innovator’s Dilemma as growth slows and its customers find content through the increasingly dominant Facebook channel.
*Huffington Post data starts after the merger with Aol
Download the data file here
This trend repeats whenever a new distribution channel emerges. Newspapers built on delivering dailies via local newsboys were disrupted by regional media companies that built sophisticated distribution networks based on cars, trucks, and highways. These media companies were then disrupted by newer publishers that focused on distribution via the internet and later via search engine optimization. As evidence of this, the Washington Post and Boston Globe (media companies built on sophisticated regional delivery networks) were both sold for much less than the Huffington Post. This trend is also happening in TV production. Since the 1960s, TV producers have hitched their product to distribution via TV channels, but as Kevin Spacey recently pointed out, this is changing.
The company focused on search engine optimization, the Huffington Post, is losing ground to those that have been built to distribute their content via Facebook. You can see the different distribution strategies of these companies via their incoming traffic sources (data from Comscore).
*Adjusted for Aol incoming traffic
The data clearly demonstrates how these popular sites distribute their content. The faster growing sites (Upworthy may be the fastest growing media company ever) are dependent on Facebook as a distribution channel. Based on internal data, these numbers may be even more extreme. When Aol bought the Huffington Post, internal data showed that 40% of the Huffington Post’s traffic was coming from Google. In a conversation with a BuzzFeed executive, I was told that almost 40% of their traffic comes from Facebook. I’m willing to bet that Upworthy gets an even higher percentage of its traffic from Facebook than the 40% reported by Comscore.
It’s also interesting that, of the companies analyzed, none have a significant amount of traffic coming from Twitter or LinkedIn. I’m guessing that the next great content company will succeed based on optimizing for distribution via Twitter, Linkedin, Instagram, Snapchat, or some future distribution channel.
If you’re building a branded content experience or starting your own publisher, it’s imperative that you figure out your unique distribution strategy. It may be more important than the content your company is producing.
Our friends at the New Organizing Institute let us come to Roots Camp in Washington DC, a great event that provides leadership training and strategic planning opportunities for community organizers. Our fellow attendees really liked our presentation, so we thought you might want to see it too.
Insights from Upworthy on making content viral.
The Most Important Relationship If You Want to Be Acquired
My experience is limited to the time I spent on the corporate development team at Aol and anecdotal conversations, but I want to share what I’ve learned about the process of being acquired.
If you want to be acquired by a large company, your number one goal should be meeting with the senior manager who will sponsor the acquisition and getting her to trust you. You need to have a strong relationship with this senior manager and convince her that you and your company will help her achieve her goals.
Of all the angel-funded companies (already a very select group of companies) that received funding between 2004-2008, less than 0.7% were acquired between 2008-2012 (these are very rough estimates based on combining two datasets from the NVCA and Center for Venture Research that may not use equivalent criteria). The odds are against you, so you need to know the best path to acquisition is through trusted relationships at a strategic buyer.
The path to acquisition at Aol was similar for almost every company we acquired between 2010 – 2011 (that’s when I worked there). During this time, Aol acquired 9 companies. While I was on the team, we executed and/or integrated 7 of these acquisitions. Additionally, we came close to acquiring 3 or 4 other small companies, but didn’t close those transactions. The two acquisitions I worked closely on were Pictela and the Huffington Post. These two, along with all of the other acquisitions, followed a very similar path.
At Aol, there is a senior management team that is responsible for specific products or brands at the company. In order to be acquired by Aol, a startup needed one of these senior managers to be its internal champion – the one exception being the Huffington Post, which due to the transformative nature of the acquisition and its impact on the organizational structure of Aol was championed by Tim Armstrong.
It’s absolutely essential that the CEO of a startup understands how important this internal champion is to the acquisition.
Essentially, at the time of the acquisition, the senior manager must vouch for the acquisition and commit to a budget that your little startup is supposed to affect. For this reason, the senior manager must believe that you and your company aren’t as risky as they are and that you’re either going to help her achieve her goals or make her job more difficult if you remain independent or are acquired by a competitor.
Of the companies we acquired, I saw four strategies that seemed to convince the internal champion that a company deserved her trust.
- Companies made themselves known as thought leaders in the industry. The founder spoke at conferences and made sure that his product was featured at those conferences. Sometimes, if you get a senior manager to like you enough, she can help get you featured at the conference.
- Founders began a conversation with the senior manager as a business deal and made her realize that she needed the company to drive innovation internally.
- Founders networked and established relationships with the senior managers at every potential acquirer. Senior managers are similar to VCs - they’d rather invest in lines than dots, and they gossip about companies and products.
- The CEO convinced the senior manager that she needed him to lead her new initiatives and execute on an innovative plan within the company. This is a typical path for an “acquihire”.
Once you get the senior manager excited about an acquisition, it’s almost impossible for a corporate development team to derail it. If the senior manager believes you’re the key to her success, she will push the acquisition process and the corporate development team to execute it.
There are times where diligence stops an acquisition, but this is almost always the fault of the entrepreneur not setting realistic expectations of the state of his business during the initial conversations with the senior manager. A good corporate development team will quickly find where your business problems exist. If you set the expectations properly prior to the signing of a Letter of Intent (LOI) to acquire the company, there won’t be a surprise later. Even if sharing these expectations result in a lower valuation, it’s much better to share that information upfront. I assure you the corporate development team will find the problems and lower your valuation later or terminate the process. Surprises are very bad during an acquisition; it means you just violated the most important part of getting acquired – the senior manager’s trust.
So, in my opinion, if you want to be acquired, your number one goal should be to convince a senior manager at a company with the budget to acquire you that she can trust you and your company to make her job easier.
The Real Value of Stock Options
Simple stock option calculator – I used this for all of the calculations in this blog post
Several of my friends have been considering job opportunities at startups in New York. Typically, their job offers have included below-market salaries and option grants. When I chat with them about their offers, they’ve been attributing way too much value to the stock options offered. I’ve generally explained to each of them why stock options are nice, but are worth much less than may think. I don’t persuade them against accepting the offer because I think you should be willing to take a pay cut to learn and do more at a startup than you would learn and do at a big company. I just tell my friends that they should never optimize for options, but optimize for an experience. Mark Suster wrote something similar to this in a post – Is It Time for You to Earn or to Learn. Throughout the rest of this post, I’ll explore the math behind the value of a stock option in a seed-funded startup and explain why those options aren’t as valuable as you may think.
Many companies convince engineers and other talent to join those companies at a below-market salary in exchange for stock options. I believe stock options are valuable, but only in that they make everyone an owner of a company. Owners work harder and put up with more to make a business successful. I brought up the fallacy of the value of stock options at a VC-panel, and was quickly shot-down by this panel. Since they didn’t answer my questions, I thought I’d do some research and present the mathematical case as to why the monetary value of an option is much less than you might expect.
For simplicity, I made some very important assumptions (below) that anyone who is reading this should be aware of. Generally, I tried to choose the assumption that would make an option more valuable at the time of an exit to over-emphasize the value of stock options. All of the calculations in this post can be found in this file – you can also download and customize it for your own use. I invite you to change the assumptions to fit your specific situation. On a side note, please let me know if you find any errors in the file – thanks.
I’ll quickly explain why your options aren’t worth very much even if you’re one of the top 10 employees at a seed-funded company. You would be very lucky to receive much more than 50 basis points of a company (0.5%) when you join after a seed round. That 50 basis points will be diluted by future funding rounds. At the time of the unlikely large M&A acquisition or IPO, you will have to buy your options at the valuation those options had when they were granted (the strike price). Additionally, since you’re going to exercise those options and immediately sell them, the gain in value will be taxed as ordinary income. Finally, this all assumes that you will stay with the company that granted those options for more than 4-years. You will lose any options that didn’t vest if you left earlier. How many of you have worked for a company for more than 4 years?
If you assume the company you work for is the average seed-funded startup that has an average M&A exit (defined by the assumptions listed below), your 50 basis points will be worth approximately $179,000 (after taxes) in 4 years. Unfortunately, the probability of this happening is low – in fact, it’s about 10% for seed-funded companies. So the expected value of that option is really only $17,600 in 4 years or presently valued at $10,100 with a 15% cost of capital.
Now, let’s assume you really hit it big, and your company IPOs in 7 years. Your 50 basis points at an average seed-funded startup with an average IPO (again, defined below) would be worth approximately $2,354,000 (after taxes). Again this is a very rare outcome. It only happens to about 1.4% of seed-funded startups. So the expected value of that big payday is only $33,700. Unfortunately, an IPO usually takes longer than an M&A exit, so you’ve now held onto those options for 7 years. The present value of those options with a 15% cost of capital is approximately $11,800.
So your company has hit the jackpot; congratulations! You’ve probably done more and learned 1000x more than you would have if you chose a different job. On the flip-side, despite that exit, those options you were counting on changing your life aren’t worth as much as you dreamed. In the IPO case, you’ve just taken home approximately $2mm. That’s a huge payday, but the expected value is so much less because of how rare this is. If you combine the present value of an M&A exit and an IPO, the expected value of the options granted on your first day are $21,900. You would be indifferent if you accepted a pay raise of approximately $7,700 for the next four years.
Again, I believe options are very important to generating a great culture in a startup where everyone is an owner and feels strongly about accomplishing the mission of the company. Just don’t accept a big pay-cut for those options. Accept that pay-cut because you’re about to embark on a rare opportunity to grow your career at a startup.
Assumptions and Important Data
- The number of seed funded companies from 2000-2012 and the average investment in those companies was obtained from the most recent PWC MoneyTree Report.
- The average IPO market valuation, age of a company at the time of an IPO, and the number of companies that IPO each year from 2008-2012 were collected from the NVCA 2013 Yearbook.
- At each stage, the VC investment has a 1x liquidation preference and has participating preferred equity.
- None of the VCs in a company receive anti-dilution protection.
- At the time of investment, the seed investor receives 30% ownership; the 2nd round receives 25% ownership; the 3rd round receives 20% ownership; and the 4th round investor receives 15% ownership.
- The employee receives 0.5% of the company in the form of 4-year vesting stock options at the valuation following the seed investment.
- The employee fully vests prior to an acquisition or IPO.
- The employee’s effective income tax rate is 40%.
- The employee’s cost of capital is 15%.
- The employee doesn’t receive another option grant in the future.
- The employee exercises his stock options 6 months after the IPO – Fyi, most companies lock-up their option holders for 6 months following an IPO.
- An average acquisition happens 4 years after the seed funding of a company. Fyi, I had to guess this number.
- Prior to an acquisition a company receives 2 rounds of financing similar to an “Early Stage” and “Expansion Stage” investment as defined by the MoneyTree Report.
- The average disclosed M&A deal is worth $134mm. This is way higher than reality because of right-skewed data as well as the majority of unannounced M&A deals being on the small-side.
- An average IPO happens 7 years after the seed funding of a company – NVCA 2013 Yearbook.
- Prior to an acquisition a company receives 3 rounds of financing similar to an “Early Stage,” “Expansion Stage,” and “Late Stage” investment as defined by the MoneyTree Report.
- The average market valuation of a VC-backed IPO on the first day of trading from 2008-2012 was $1.44Bn – again, very right-skewed thanks to Facebook and a couple other huge IPOs in the past couple of years.
- The 6-month average return on a VC-backed stock following an IPO is 10.5% - Ernst & Young.
The Future Shortage of Industrial Designers
The Stratasys acquisition of Makerbot demonstrates that 3D printing is quickly gaining momentum. To help you visualize the importance of this merger, let’s use an analogy to the early days of the computer industry. Makerbot is like Apple (the leading personal computing company) and Stratasys is like IBM (the leader in mainframes at that time). If that’s true, these big players are preparing to dominate the New Industrial Revolution. Unfortunately, a story that isn’t being told is the impending shortage of people who can actually design the products that will be printed.
Allowing individuals to create and design their own products will enable the long-tail of things similar to the long-tail of content on the internet. There are literally millions of blogs and tens of billions of webpages. When 3D printing reaches maturity, there will be a similar explosion in the availability of long-tail products as there is long-tail content.
If you pay attention to the current job situation in the US, it’s easy to recognize a very strong trend. If you can ‘code’ (i.e build a website/web application), you possess one of the most valuable forms of human capital today. There’s an epic shortage of software developers - that’s why some are getting paid millions of dollars to stay in their current jobs. According to the 2010 US Census, there were 1.3 million software developers and programmers and 458 thousand database and system administrators and network architects. These numbers are obviously imprecise and probably don’t capture the total number of ‘hackers’ and ‘coders’, but they provide some directional information.
That same census reported that there were 41 thousand industrial and commercial designers. If that’s true, there’s is going to be a drastic shortage of people who can actually turn the nascent 3D printing industry into a personal and local manufacturing revolution. Again, it’s important to recognize that there are plenty of people not counted in the census with these skills, but this directional information is alarming.
I truly believe we are on the verge of something great with 3D printing, but we need to address this shortage of skills immediately. There needs to be an effort to educate students in CAD software. If we bring back a modern version of shop class to our schools, we’ll start addressing this problem before it’s too late. Soon people will add “I wish I could design” to the common statement “I wish I could code.”
Notes from Give and Take
I recently read Give and Take by Adam Grant. I took a lot of notes, and copied and pasted a lot of quotes from the book. I’m sharing them for anyone interested in the lessons from the book. I highly recommend that you read the book. I learned a lot from this fantastic book.
Fyi, these notes poorly organized and were primarily written on my iPhone. The notes are in order from page 1 to the end.
Teams are extremely important to the success of individuals. Frank Lloyd wright struggled when he secluded himself, surgeons only get better as they get more familiar with particular teams, research analysts that were stars and moved to other fits struggle unless they bring their whole team. Givers recognize this and make sure they work with people. Interdependence is key to success. Not independence. Takers think its independence.
“how givers collaborate: they take on the tasks that are in the group’s best interest, not necessarily their own personal interests. This makes their groups better off: studies show that on average, from sales teams to paper mill crews to restaurants, the more giving group members do, the higher the quantity and quality of their groups’ products and services”
Givers take on the unpopular task
“By taking on tasks that his colleagues didn’t want, Meyer was able to dazzle them with his wit and humor without eliciting envy.”
Perspective gap - when you don’t feel the pain you are inflicting you don’t take the other persons feelings into account. Givers bridge the perspective gap and empathize with the other person
“Spotting and cultivating talent are essential skills in just about every industry; it’s difficult to overstate the value of surrounding ourselves with stars. As with networking and collaboration, when it comes to discovering the potential in others, reciprocity styles shape our approaches and effectiveness”
If you believe individuals you oversee will perform better than others, it becomes a self fulfilling prophecy. You give them more attention and focus on helping them achieve.
“By recognizing that anyone can be a bloomer, givers focus their attention on motivation.”
Givers are less susceptible to sunk cost decisions because they focus on what is a good decision for the company rather than on saving themselves from an embarrassing or bad decision. “When people focus on others, as givers do naturally, they’re less likely to worry about egos and miniscule details; they look at the big picture and prioritize what matters most to others.”
Asking questions and listening while trying to make a sale are giver tendencies. And they work!
“Asking questions is a form of powerless communication that givers adopt naturally. Questions work especially well when the audience is already skeptical of your influence, such as when you lack credibility or status, or when you’re in a highly competitive negotiation situation.”
“By asking people questions about their plans and intentions, we increase the likelihood that they actually act on these plans and intentions. Research shows that if I ask you whether you’re planning to buy a new computer in the next six months, you’ll be 18 percent more likely to go out and get one. But it only works if you already feel good about the intention that the question targets. Studies show that asking questions about your plans to floss your teeth and avoid fatty foods significantly enhances the odds that you will actually floss and eat healthy. These are desirable actions, so questions open the door for you to persuade “yourself to engage in them.* But if I ask about your plans to do something undesirable, questions don’t work. For example, are you planning to eat some chocolate-covered grasshoppers this month?”
When you are persuading someone to do something that they wouldn’t be inclined to do, givers use tentative speech
“Alison Fragale, a professor at the University of North Carolina, is an expert on the form of powerless communication that Don Lane used effectively. Fragale finds that speech styles send signals about who’s a giver and who’s a taker. Takers tend to use powerful speech: they’re assertive and direct. Givers tend to use more powerless speech, talking with tentative markers like these:
“Hesitations: “well,” “um,” “uh,” “you know”
Hedges: “kinda,” “sorta,” “maybe,” “probably,” “I think”
Disclaimers: “this may be a bad idea, but”
Tag questions: “that’s interesting, isn’t it?” or “that’s a good idea, right?”
Intensifiers: “really,” “very,” “quite”
“Whereas powerful communication might be effective in a one-shot job interview, in a team or a service relationship, it loses the respect and admiration of others. Psychologists in Amsterdam have shown that although group members perceive takers as highly effective leaders, takers actually undermine group performance. Speaking dominantly convinces group members that takers are powerful, but it stifles information sharing, preventing members from communicating good ideas. “Teams love it when their leader presents a work product as a collaborative effort. That’s what inspires them to contribute,”
“I found that when most employees in a store are dutiful followers, managers are well served to speak powerfully.”
“When employees were proactive, managers who talked forcefully led their stores to 14 percent lower profits than managers who talked less assertively and more tentatively. By conveying dominance, the powerful speakers discouraged their proactive employees from contributing.”
“When employees were proactive, managers who talked forcefully led their stores to 14 percent lower profits than managers who talked less assertively and more tentatively. By conveying dominance, the powerful speakers discouraged their proactive employees from contributing.”
“New research shows that advice seeking is a surprisingly effective strategy for exercising influence when we lack authority”
“Advice seeking is a form of powerless communication that combines expressing vulnerability, asking questions, and talking tentatively. When we ask others for advice, we’re posing a question that conveys uncertainty and makes us vulnerable.”
“When we give our time, energy, knowledge, or resources to help others, we strive to maintain a belief that they’re worthy and deserving of our help. Seeking advice is a subtle way to invite someone to make a commitment to us.”
“Selfless giving, in the absence of self-preservation instincts, easily becomes overwhelming. Being otherish means being willing to give more than you receive, but still keeping your own interests in sight, using them as a guide for choosing when, where, how, and to whom you give. Instead of seeing self-interest and other-interest as competing, the Caring Canadians found ways to integrate them, so that they could do well by doing good. As you’ll see, when concern for others is coupled with a healthy dose of concern for the self, givers are less prone to burning out and getting burned”
“By encouraging empathy, the photos motivated the radiologists to conduct their diagnoses more carefully. Their reports were 29 percent longer when the CT exams included patient photos. When the radiologists saw a photo of a patient, they felt a stronger connection to the human impact of their work. A patient photo “makes each CT scan unique,” said one radiologist.”
“CEO Bill George told me, “it’s very important that they get out there and see procedures. They can see their impact on patients, which reminds them that they’re here to restore people to full life and health.” Medtronic also holds an annual party for the entire company, more than thirty thousand employees, at which six patients are invited to share their stories about how the company’s products have changed their lives. When they see for the first time how much their work can matter, many employees break down into tears.”
Otherish behavior is giving to others while maintaining your own self interest. Givers who demonstrate otherish behavior way outperform givers who are entirely selfless.
“The chunkers achieved gains in happiness; the sprinklers didn’t. Happiness increased when people performed all five giving acts in a single day, rather than doing one a day. Lyubomirsky and colleagues speculate that “spreading them over the course of a week might have diminished their salience and power or made them less distinguishable from participants’ habitual kind behavior.”
“In contrast, selfless givers are more inclined to sprinkle their giving throughout their days, helping whenever people need them. This can become highly distracting and exhausting, robbing selfless givers of the attention and energy necessary to complete their own work.”
“those who volunteered between one hundred and eight hundred hours per year were happier and more satisfied with their lives than those who volunteered fewer than one hundred or more than eight hundred hours annually. In another study, American adults who volunteered at least one hundred hours in 1998 were more likely to be alive in 2000. There were no benefits of volunteering more than one hundred hours. This is the 100-hour rule of volunteering. It appears to be the range where giving is maximally energizing and minimally draining.”
“Two hours a week in a fresh domain appears to be the sweet spot where people make a meaningful difference without being overwhelmed or sacrificing other priorities. It’s also the range in which volunteering is most likely to strike a healthy balance, offering benefits to the volunteer as well as the recipients.”
Otherish givers give their time but when they are burned out they seek help. Selfless givers are afraid to ask for help. They don’t want to burden people. A natural response to burnout is to give and bond with people in same situation.
“This study pointed to an unexpected possibility: although matchers and takers appear to be less vulnerable to burnout than selfless givers, the greatest resilience may belong to otherish givers.”
Giving makes people happier and evidence shows that it makes people richer too.
“If you spend the money on yourself, your happiness doesn’t change. But if you spend the money on others, you actually report becoming significantly happier. This is otherish giving: you get to choose who you help, and it benefits you by improving your mood.”
“But something much more interesting happened. For every $1 in extra charitable giving, income was $3.75 higher. Giving actually seemed to make people richer.”
“Overall, on average, happier people earn more money, get higher performance ratings, make better decisions, negotiate sweeter deals”
“Studies led by Columbia psychologist Adam Galinsky show that when we empathize at the bargaining table, focusing on our counterparts’ emotions and feelings puts us at risk of giving away too much. But when we engage in perspective taking, considering our counterparts’ thoughts and interests, we’re more likely to find ways to make deals that satisfy our counterparts without sacrificing our own interests.”
“Once successful givers see the value of sincerity screening and begin to spot agreeable takers as potential fakers, they protect themselves by adjusting their behavior accordingly. Peter’s experience offers a clue into how givers avoid getting burned: they become matchers in their exchanges with takers. It’s wise to start out as a giver, since research shows that trust is hard to build but easy to destroy. “But once a counterpart is clearly acting like a taker, it makes sense for givers to flex their reciprocity styles and shift to a matching strategy”
“In generous tit for tat, the rule is “never forget a good turn, but occasionally forgive a bad one.” You start out cooperating and continue cooperating until your counterpart competes. When your counterpart competes, instead of always responding competitively, generous tit for tat usually means competing two thirds of the time, acting cooperatively in response to one of every three defections. “Generous tit for tat can easily wipe out tit for tat and defend itself against being exploited by defectors,” Nowak writes. Generous tit for tat achieves a powerful balance of rewarding giving and discouraging taking, without being overly punitive. It comes with a risk: generous tit for tat encourages most people to act like givers, which opens the door for takers to “rise up again” by competing when everyone else is cooperating. But in a world where relationships and reputations are visible, it’s increasingly difficult for takers to take advantage of givers.”
Givers tend to be pushovers in negotiations. To avoid this they adopt otherish behavior and think about the negotiation as if they are advocating for someone else rather than themselves. A giver has a difficult time sitting down and asking for more money but when they frame it in their mind as advocating for someone else like a mentee or for their family, they end up doing well in the negotiation.
“By thinking of himself as an agent representing his family, Sameer summoned the resolve to make an initial request for a higher salary and tuition reimbursement. This was an otherish strategy. On the one hand, he was doing what givers do naturally: advocating for other people’s interests.”
“when givers are advocating for someone else, pushing is closely aligned with their values of protecting and promoting the interests of others: givers can chalk it up to caring. And by offering relational accounts, givers do more than just think of themselves as agents advocating for others; they present themselves as agents advocating for others, which is a powerful way to maintain their self-images and social images as givers”
Otherish givers look for ways to benefit themselves and others. When making a sale think about it in the shoes of your client. Think how you can help them. Be creative and find ways how helping them helps you.
“By looking for opportunities to benefit others and themselves, otherish givers are able to think in more complex ways and identify win-win solutions that both takers and selfless givers miss. Instead of just giving away value like selfless givers, otherish givers create value first. By the time they give slices of pie away, the entire pie is big enough that there’s plenty left to claim for themselves: they can give more and take more”
When people share a common identity (fans of the same soccer team). They are more likely to act otherish toward that person
People are more likely to five to someone that they share a common identity with
Similarity to the self (sharing a similar name) makes people more likely to connect. But it is much stronger if the similarity is based on something uncommon
If you show a taker that giving is the norm, it has powerful effect on turning then from a taker to a giver in that community
Starting a SaaS Business - 2 Things I’d Do Differently Next Time
Several friends have asked me how I would’ve approached the founding of Arkad today to prevent the mistakes that we made in the past. Hindsight is 20-20, but it’s good to reflect and think about some possibilities. These two examples are specific to Arkad, but if I were to start another enterprise SaaS business, I would definitely focus on launching with these two ideas in mind.
Start as a service business –Arkad was an enterprise software-as-a-service (SaaS) product. The minimum viable product for a SaaS business is actually providing the service manually. Many people shy away from this (as we did), but I think we could’ve learned a lot about our business if we’d started providing investor relations services manually.
With real, paying customers from the start, we would’ve known what features to focus on. While I took the lead on providing this service, Micah and Kenny could’ve focused on productizing the most important aspects of the business. Initially, the products would’ve helped me provide the services better, but eventually, they would’ve replaced me. We didn’t learn that we were building the wrong features until we released our product. Micah and Kenny did an amazing job getting the MVP of Arkad built in four months, but during those four months I could’ve been learning from customers by serving them rather than just pre-selling our product to them.
Focused on the need that matches the incentives – Through our service business, I think we would’ve learned exactly where incentives met our customer needs. In my opinion, a deal flow product that would help investors identify investments before other VC firms would’ve matched the needs and incentives of our first customers. This deal flow product would automatically alert investors that a company they met with was gathering momentum. If you ask many VCs where their best deals originate, they’ll tell you that those deal are proprietary (i.e. they’re the first to hear about the deal and there is some connection to the firm). If they could identify the companies that were getting momentum before other VC firms, they may increase their ability to make an investment before other firms were aware of the round. That initial product would’ve perfectly aligned with our customers’ need and incentive scheme to find and invest in the best deals.
These two points demonstrate how I’ll think about an enterprise software business in the future. I want to be able to test my business with customers on day one: if it’s going to be a SaaS product, offer it as a service. As I’m building my service business, I’ll learn the right features to develop that solve a problem aligned with incentives.