Restarting a StartUp

I have been at my new company for 4 months and that’s a good time to reflect on what’s happened and what we might be able to learn about startups from this experience.   We’ve pruned the team, secured new capital, improved our board, hired new blood, and changed the company name from Poptok to AnyClip.  Why?

1.  Strategy matters.  When I got to Poptok the company was focused on creating an emoticons company out of movie clips.  Maybe this is an amazing idea, but betting a whole company on it?  There were many risk factors including a violation of one of my favorite rules — the Penchina Maxim.  Gil Penchina (CEO of Wikia, former Ebay Executive) once told me that Internet products should improve the user experiences of an already established widespread consumer behavior.

Was Poptok solving a consumer problem?  There is little data to suggest that consumers want to send clips as emoticons. It’s an interesting hunch, but unproven.   On the other hand, the newly created AnyClip solves two huge problems.  First, people are watching billions of movie scenes on YouTube annually.  The quality of these clips is consistently inconsistent.  Many of these scenes are shot with handheld cameras that are filming a television.  We are betting that consumers actually care about quality.  That’s a bet I’m willing to make.

The second problem AnyClip solves is the inefficiency of the clip marketplace.  Poptok found out that licensing movie clips is an expensive, cumbersome process.  And guess what? Because the process is painful and economically inefficient the market for movie moments is small.  But the movie industry is huge ($40 bn/year) and people watch movie moments all over the Internet right now with no measurable value creation tranferring to the owners or creators of this content.

2.  Enter with a Hypothesis.  During my discussions with Nate Westheimer before we arrived at what would become AnyClip we developed a hypothesis about what the consumer wanted.  When we started working we set about validating our theories.    We knew what we wanted to do, but we were not sure it was possible for many reasons including the legal landscape in the movie industry.   We were moving forward immediately.  This is not always possible, but Nate and I did considerable unpaid work trying to decide if this was an interesting opportunity for us.  The results of that work gave us confidence to join the company and enabled AnyClip to have new management that hit the ground running.

3.  Embrace DNA Change.  There were some dedicated, well-intentioned, experienced  people in charge of managing the team at PopTok.  But unfortunately they had gone through cycles of executive change and disappointment.  Morale was low.  Cynicism about a variety of issues was palpable as was a dangerous lowering of standards for evaluating success.   Early in my tenure, I was concerned about this teamearly,  but I took 6 weeks to make an informed decision, and 2 weeks to prepare for the changes.  This is never fun, but it has proven to be a crucial decision because it took the friction away from the massive changes we were trying to make.

4.  Earn Your Team’s Trust.  Lots of managers take trust for granted and I did this all the time earlier in my career.  employees of companies that change directions every couple of months start to doubt management.  This is very understandable.  Realize that words are parsed and people don’t automatically believe you will do what you say you will do.  We have a very fine team now.  They need to know that we are in the trenches with them if we expect them to join us for each AnyClip battle.   More than anything this means be transparent, consistent, and fair in all of your interactions with your team.

5.  Recognize that you will never fully understand what really happened before you arrived.  One of the challenges of the turnaround is that you inherit a series of issues  that must be addressed.  Contractual and organzational  baggage created by your predecessors transfers to new management.  PopTok did not have a particularly productive relationship with its Hollywood partners, but AnyClip must have an intimate real value-added partnership.  Of course for Hollywood dealmakers, Poptok and AnyClip are the same and a name change doesn’t obscure that the shareholders, legal agreements and corporate history all remain the same.  This is the baggage that needs to be addressed and put to rest.

6.  Walk before you run, but make sure you run quickly.  When taking on a restart, the first thing you have to do is stabilize.  As the great entrepreneur and my friend  Howard Tullman taught me a decade ago, “there is only one crime in a startup and that’s running out of cash.”  We cut the burn by nearly 50% at AnyClip so we are walking, but time is of the essence.

AnyClip needs to demonstrate significant vaule to content owners, consumers, and application developers this fall.   We will be presenting a massive transition from the old to the new in September only six months after we arrived and only 4 months after we started building software.  It’s as if this venture financed company 15 person operation was operating at the speed of a Y-Combinator seed stage startup.  Maintaining this velocity with productive, thoughtful improvements will probably determine whether this turnaround succeeds.

Bring InfoArbitrage Back

Roger Ehrenberg wrote a revealing post yesterday about his waning interest in blogging.  He listed a myriad of reasons — from his inablity to be heard in Washington to the amount of time it takes to teach two sons to pitch.  While I understand (I coached baseball and am stepping up to Pop Warner Football in the fall),  I quickly wrote him that I would be crushed if Fred Wilson stopped writing and that I was not happy he had abandoned us during what I have worried was a confusing economic recovery  I missed his insights on the economy and realized Roger was influencing how I think about my professional life and AnyClip’s business model.

Look, Roger has a massive portfolio and no partners.  He’s busy.  But the reality is this community of blogger/writers in New York Fred, Roger, Steven Johnson, Jeff Jarvis , and Paul Graham ( honorary New Yorker even though he might be offended) are part of a select  circle of intellectuals that are knitting together our internet culture with politics, economics, culture, media studies and a variety of other disciplines. Hardcore, Hardworking tech intellectuals  Mike Arrington and Om Malik just don’t do these things as well and that hasn’t been their role.

Roger plays a vital role in this ecosystem and it weakens without his contribution.  I feel bad that I didn’t write him to ask what was up, but I’m sure glad he posted on it.  I wish I had a twitter petition tool right now to circulate and motivate him, but in the absence of that go to his blog or twitter  him and tell him what you think.

The Hangover, AnyClip and the Clip Window

I laughed my face off last night.

Several times a  year  a high-quality comdedy cuts through the media fragmentation and captures enough momentum through word-of mouth to create a big audience at the boxoffice. You know what I’m talking about:  Last year it was Superbad,  The Hangover is that movie right now.  Paul Blart:  Mall Cop got there earlier this year, Superbad in 2007 and Wedding Crashers in 2005 are other excellent exmaples.

The Hangover is that movie right now.  And there are numerous moments I want to watch again from last night’s screening.  When I cruise around the Internet I can find various versions of the Electronic Promotional Kit on YouTube or Apple Trailers.  But I cannot find the “stungun scene” or the various tigers scenes.  or if I search Mike Tyson the results take me to YouTube’s Hangover page and a link to a trailer.

Even the clip above doesn’t give me what I want.  I wanted to watch Ed Helms’ at the piano, but instead the marketers recut the scene for promotional purposes.  Actually I enjoyed the clip, but it’s not what I wanted.

Why do we have to wait for the DVD window (which is months and months later) to relive these hilarious moments?  The answer is simple.  That’s the way it always has been.  Meanwhile the Hangover was so funny that I would buy several scenes right now just to watch them again.  Especially if they aren’t different versions of the marketing materials that are meant to drive you to theaters.

Clips allow you to relive moments.  The EPKs that studio marketers create are designed to put “butts in seats” as they say in Hollywood.

Theatrical Release is a first time experience.  DVDs cater to second timers and potential first timers.  The marketers are torn.  But at AnyClip we are the “reliving experience.”

Welcoming Nate Westheimer

I’m excited to announce that Nate has joined our new company AnyClip as the VP of Product.  He has posted a great account of how he and I have come to work together and you should definitely read it here.  Nate is one of the NY tech scene’s favorite people, but I’m making a big bet on his product development skills and I’ve never been more confident.  We have our work cut out for us. Nate is taking on the Herculean task of building a platform to take new movie clips where they have never gone before.  He will need all you to contribute killer ideas.

AnyClip grew out of an Israeli company called MyHollywood which launched a proof-of-concept product called PopTok.  From the time we started talking about movie applications, Nate and I were thinking about a database of movie clips for application developers.

Imagine every movie ever made available to be clipped for legal consumption and use.    That is our dream.  We have already released our API to a few product companies and hope to see more and more products in the coming months.

At AnyClip, we will create a legal, licensable asset for developers to access. We already have signed agreements with Paramount, Universal, Warner Bros and are close to a slew of new annoucements.

Naturally, we all have a series of ideas for application creation.  You can see Nate’s first attempt at CastingCouch on Facebook.   Finally, one of the great bonuses of AnyClip is  that Nate and I are sitting in Jerusalem as we write these posts.  Here, we have a really sharp, passionate team of developers and movie lovers and we will continue to add people here in Israel.  We also have a few needs in the United States which Nate detailed in his post.

We’ll keep you posted when we launch AnyClip.

Aaron

Stunning Anecdotal Data from NYU Class

NYU Media Class:  All Facebook, No Myspace, Twitter?  sort of.

NYU Media Class: All Facebook, No Myspace, Twitter? sort of.

I had a great conversation at NYU today with 50 Media Studies undergrads.  Here are things we found out:

1.  Not one of them had been on Myspace in 2009.  Not one.  When I reminded them about Myspace Music a few hands went up

2.  All of them used Facebook in the same period

3.  Only 20%ish had a twitter account

4.  For the most part they did not know what an API was, but they all knew what apps were.

5.  None of them had heard of Tweetdeck

6.  All of them remembered Xanga, but none of them use it.

7.  35% of them had bought some music on Itunes.  66% admitted to pirating music.

Brands come and go.  Twitter is so rare.  But the decline of Myspace will probably happen faster than we realize.

Finally, they stayed 15 minutes after the allotted time on a Friday and laughed at The AaronCohens trailer 7 times out loud.  How does this movie not get financed?

Getting Ahead in Digital Media

Like most new CEOs at the beginning of a new assignment, I spend significant time evaluating my current team  and looking for ways to improve it.   At this particular moment in the economic cycle, I have been innundated with requests for informational interviews, resumes, and LinkedIn invitations.  Several years ago, people would demand a signing bonus when they joined Bolt and once somebody left for another job after arriving only two months earlier.

The market has changed.

But it will get better, and then worse, and then better.   Like the stock market itself, you can’t really time it.  So people whether they are 22, 32, or 42 need to really spend time thinking about themselves and what they want in life.  It sounds simple, and may even sound self-absorbed, but I really recommend it because it might help some of you start to see your career as a journey and not a paycheck.   It’s good to dream, but it’s just important to assess what it will take to get there.

Let’s specifically discuss the 20-something employee.  Some of you have little to no work experience and some of you have a couple years.  Either way, if companies are doing their job right you should not be paid very much.  Entry level people now are getting hired for less than 30k all over the industry and the broader media landscape of television, advertising etc.  Substantial Raises are hard to come by.   Yet, some of these very same people will be making 100k or more within the next few years.  Why will this happen?

In two  words ,hardcore commitment.   When you are in your 20s you generally don’t have children, aren’t married, and don’t have a ton of other commitments.  This means you can focus on your career and much more importantly the education that you can get to make yourself more valuable.  This is simple stuff, but the fact is some of you will choose to put in minimal time for a paycheck that finances your life as an artist or  your social life.  That’s totally cool, but don’t kid yourself.  You will not get ahead as a professional doing that.  If you want your career to move forward with velocity you need to be all in.  You need to be thinking about how to make your company better all the time.  You might even wake up in the middle of the night with a new idea.  That’s a good thing.  It show’s you’re all in.

Good entrepreneurs or Digital Media CEOs use simple litmus tests to evaluate employees.  Do they use the service that they are working for?  How about competitors?  I wonder if  Facebook has a culture of evaluating employees’ use of Facebook and others.    How many times a day does a Twitter employee twitter?  So make sure you use the web service you are desinging or coding.

And make sure you spend some of your hectic nightlife getting educated.  There are countless meetups where good people educate the general public on techniques from everything to ad sales to user interface design.  You could go to school for free with what’s out there.  Of course, it will mean you have to meet your friends a little later or go the gym in the morning.  If you want your career to grow you have to make choices.

Here’s a more controversial suggestion.  Sleep less.  Push yourself to do more. And catch up on the weekends.  If you sleep less you can have much more of “it all.”

Right now there are 500 people who want your job.  That’s not say they would be better, but it is to say the market is competitive.  But hiring is time consuming, unpredictable, and new people have a learning curve.  No managers want to manage personnel change,  but they also don’t want to lead people who don’t share their passion and commitment.

So if you want to be a star and get more responsibility and compensation, you have to work to become one.  You decide what’s important.  Your boss can’t make that decision for you.  Only you can.  But trust me, when I sit around with other executives, recuriters, investors or whoever — we talk about stars.  Nobody else even comes up.  Unless they need to go.

Speaking at TechAviv

Hey thanks for all the warm wishes on PopTok.  I appreciate it.  If you want to know what my first two weeks have been like and here me evolve my thinking in front of a pull no punches  New York/Israeli see if you can attend Yaron Samid’s TechAviv meetup tonight.

My epic last month

During the past 30 days,  I spent three weeks abroad in Jerusalem, Tel Aviv, Stockholm, and London. Many people are wondering why and now I can tell you.

I turned 41 last year and realized that my Internet career was getting stale. I was a little bored.  This shocked me. For most of the previous 10 years, I was remarkably engaged by the sea change going on around those of us in the Internet industry.  Life has been a roller coaster. I’ve sold three companies, parts of two others, and witnessed two bankruptcies. I’ve had unbelievable highs and terrible lows.  Often, I would tell people that the Internet roller coaster was not necessarily month to month, or week to week, but day to day and sometimes hour by hour. Exhilirating? Yes. Anxiety-provoking? You bet. Boring? Never.

Aaron before Cafe Grumpy stop this morning

Aaron before Cafe Grumpy stop this morning

So as MenuPages was sold to New York Magazine last summer, I wondered what I would do next and I struggled to envision that work. Yaron Samid and I spent some significant time trying to form an Israeli Y-Combinator. We started the day Lehman collapsed so our timing was less than ideal. Having lived through a q4 like the one we just experienced (panic, closed capital markets, doom and gloom) in the aftermath of 9/11 I was prepared this time and I decided to shut down my Internet work and pursue a dream.

That dream is now well underway at TheAaronCohens.com a film about 100 Aaron Cohens and their mothers. Some people understandably doubt my commitment to the project –“Aaron, everybody wants to make a movie.”  Fair enough, but I’m really doing it and you will see new content throughout the Spring on our site.

Still, when January rolled around, I got a few phone calls from recruiters and realized that I wanted to explore companies again,  but I knew that things would have to change for me to stay reinvigorated.   I did not want to run  a business that would be solely dependent on advertising for its revenue.  This ad-only business model did not excite me and, candidly, felt a bit soulless. At the same time, I needed to be close to the consumer. I love people and I love to design products/services or places that make them happy.  The world is a big place and I had spent most of my Internet career focused on American projects. I wanted that to change. I wanted to run a company with markets/employees elsewhere . Perhaps Israel, India, or somewhere in Europe.

So when a few companies with incredibly cool software designed to enhance the video that plays on the web came calling, it was hard for me to muster enthusiasm during the interview process. I don’t really want to sell software to Fox or NBC. I know how to, but couldn’t get excited. To their credit, they detected this and nothing materialized.

Then one of the grandest, oldest brands of Silicon Alley called me – Nerve.com. I have known Nerve’s founder Rufus Griscom for 10 years. I really wanted to work with Nerve, a small, but nevertheless committed creative company with diverse revenue (subscriptions, advertising, book sales, singles ads) and a big international audience. So I had breakfast with Nate Westheimer to discuss Nerve among other things. Nate is a highly connected man-about-Silicon Alley. He had never heard of Nerve.   I thought this was both very bad news, but also a great opportunity.

Rufus kept telling me that the fastest way to grow the business was to sell more advertising and I just couldn’t bring myself to fight for the job. Rufus wanted me to like it more and I wanted to, but in the end he decided I was the wrong guy. And he was right.  BTW, I think this is a great job, but I would warn whoever takes it that he or she will face bias against the company simply because it is old. One of the dumbest things about our Internet culture is that we do not value the old, slow growth companies. We think it’s cooler to be , say Outside.In instead of  Nerve.    Nerve may not be revolutionary  but it could be a very solid company. Rufus and Nerve have survived two economic downturns with only a couple million in capital ever. It’s an impressive story.

I ended up interviewing in a real way with a half dozen companies and spending probably 100 hours trying to understand a few of them that focused on making money from consumers. I have always loved retail. After all, my Mother (it’s always about mothers!) founded and owns one of the best bookstores in the world Politics and Prose.

I focused in on a handful of Israeli startups and one fascinating New York startup.  I got close to a couple, before settling on a company called PopTok.  My friends at betaworks invest in companies that structure unstructured data as an investing theme.    Poptok has a chance to be a major player in the entertainment business.  The company serves consumers who wish to remember and share great moments in entertainment and sports.  We are talking about clips, scenes, plays — the micro moments etched in our brains.  They are emotional, visceral memories.    Founded by Erel Margalit, Mickey Schulhof, and Illy Edry, PopTok has three core values.

1.  Provide us with iconic moments in entertainment and sports history.

2.  Enable us to watch and share these moments with anybody, anywhere on any platform

3.  Ensure that the owners of these moment are appropriately and fairly compensated for the creation of these moments.

The people-driven, consumer-centric, transparent Internet revolution clashes with the centuries old tradition of intellectual property ownership and an even longer history of patronage and cultivation of arts and culture.  The Internet industry was and continues to be the vehicle for my own creative and intellectual revolution.  It has sustained and nourished my development as a professional and a person.  It has given me so much more than I could ever hope to give back.

However much I bleed net neutrality and social media, I care equally for our creative class.  These are my values and the mesh with  our mandate at PT:   Connect audiences to the iconic entertainment moments of their lives and ensure that the people who have created everything from Apocalyspe Now to The Wire get paid for what they gave us.

I have gotten so much out of my travels through Europe and Israel. I have rediscovered my creativity and my passion for startups. And if you don’t have that, I think you have no chance. It’s hard enough when you’re gung ho about your business. If you are just punching the clock, your company is dead and you’re dying inside.

It feels good to be alive.

Umair Crushes Gurley

Wow.  Umair  Haque really called out a TechMemed piece by Bill Gurley.  Both pieces were well worth reading.  One of the reasons, I love reading Umair is that I had a different take on Gurley’s article.  I’ve been fascinated by digital goods for some time, but Umair hits home it up when he says.

We can’t reinvent the economy without, well, investing in reinventing the economy. So here’s a distinction you might want to draw. VC 1.0: “monetizing”, aka selling the same old mass-produced junk to tuned-out “consumers”. VC 2.0: seeding better economies, industries, and markets for a 21st century bereft of value creation, aka radical structural transformation.

The Ways of Washington

As I write this, I’m listening to the President’s weekly address. He says we will get new teachers in math and science,  modernize  healthcare systems, construct a new electronic grid,  rebuild our crumbling roads.  All of this creates 3mm new jobs,  He also outlined his commitment to transparency with this incredibly engaging idea of recovery.gov.  But unfortunately for America, most people, especially people in high office, don’t have President Obama’s values.

Those that serve often want to get paid when they leave offce.  Call it the high-office entitlement.  Obviously people have a right to maximize their earnings.   President Obama will have a very difficult time enacting tougher legislation for lobbyists because so many powerful politicos in washington have a vested economic interest in protecting the status quo.  To his credit, Obama has made members of his administration sign contracts that forbid them from lobbying for a period of time, but I think it’s only a year or two.   But Washington is a place where ideology often fades as those young people that show up have children that they need to send to private school.  Those ideologues decide they want a house on the Chesapeake Bay.  Tom Daschle was one of them.

Tom Daschle traded on his long and distinguished tenure in Washington to make money and enjoy life in the private sector.  He was surprised to lose his senate seat and his consolation prize became getting rich by helping a number of companies that we would not typically associate with Daschle influence legislation.  Daschle’s early support for Obama helped legitimize his candidacy.  Daschle is a good guy who always lead the senate with a thoughtfulness and integrity.  And now he’s out.  Simply because he let Leo Hindery provide him with the good life that he used to have as a Senate Majority Leader without paying for it.

I’m at a point where I want to stop giving the political death penalty to distinguished civil servants who would help the country.  Daschle owed about $150k in taxes.  Couldn’t he just pay a triple penalty on that and we could let him back onto the team.  Maybe it should be a 10x penalty.  Too many good people,  will never serve in our government for a variety of reasons that just don’t seem like that big a deal.   Shouldn’t I have some ability to pay a hefty fine for my sins in order to try and take a job as a civil servant?

The irony is people can serve the government, then leave it, and trade on their connections and knowledge to benefit just about anybody they want including foreign governments and  companies they may or may not have America’s best interests in mind.

Maybe we should show a little more flexibility in the confirmation process and bolster the limitations on ex-government officials as they depart.

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