Monthly Archives: July 2009

best birthday present ever — dina kaplan and how she contacted barry schwartz — and thoughts on gifting

If you know me and you've sat down
with me for over a few hours, inevitably you'll hear about the Paradox of
.  The book, by author Barry Schwartz, was recommended to me a few years
ago by Esther Dyson … it is a great book with many non-obvious thoughts.   I've since read many articles and papers by
Schwartz who I think is one of the most interesting minds I have come
across.   While I don’t always agree with
him, he always makes me think.


Fast forward to April this year when
I got an email from Dina Kaplan.  That,
in itself, isn’t big news … Dina is a dear friend of mine who I talk to
regularly.   But the content was
interesting … Dina had gotten me a unique birthday present … a lunch with Barry Schwartz.  


Before last week, I had never met
Professor Schwartz but constantly talked about his work.   I assumed Dina (who is the most connected
person I know) knew Schwartz and called in a favor to have him go to lunch with
me.   What I only found out later is that
she cold emailed him, told him I was a big fan, and convinced him to have lunch
with me.


Well last week Schwartz and I sat
down for a great lunch.   I was like a
kid in the candy store peppering him with questions, asking him about his
theories (many of which had to do with hiring and motivating employees …
something I am very focused on right now), and hearing his thoughts about


It turns out that it was, by far,
the best birthday present I have ever received.   And it set a new standard for giving


Gifting can be really powerful if it
is super personalized.  And the best gift
isn't a thing, it is an experience.   And
it isn’t the dollar amount you spend on someone (at least it shouldn't be), but
the thought and effort.  


Dina did a few things that earn her
the gold medal in gift giving:


1. she thought a lot about the
recipient.   99.9% of people would not
appreciate a gift of lunch with a random professor from Swarthmore College
… so it was obvious the gift was targeted to me.


2. she did her research.  She dug up Schwartz's email address … she
thought of a clever pitch … and she convinced him to go to lunch with me.


3. she was persistent.   Who knows how many people she
contacted.   Maybe Schwartz was the first
person she contacted but maybe he was the tenth.


If gifting is an art and a science,
then Dina Kaplan wins its Nobel Prize.  
Thank you Dina!



netflix values “we are a professional sports team, not a family”

this is one of my favorite descriptions of a company.   it is from Netflix and came to me via Matthew Monahan (CEO of People Search Media):

We're a high-performance team, not a family.

A strong family is together forever – no matter what. A strong company, on the other hand, is more like a pro sports team: it is built to win. Management at every level has the responsibility that professional coaches have – to recruit the players and forge the teamwork that makes great performance possible.

To accomplish this, we seek to fill every position in our company with exceptional performers. In many companies, adequate performance gets a modest raise. At Netflix, adequate performance gets a generous severance package.

For us, the cost of having adequate in any position is simply too large, when we could have extraordinary. Extraordinary performance means excellence in the nine values described below. Plentiful extraordinary talent makes for a high-functioning company.

The benefit of a high-performance culture is you experience the exhilaration of working with consistently outstanding colleagues. You do your best work, you learn the most, and you achieve the highest professional satisfaction, when you're surrounded by excellence.

A great workplace is not how many perks are offered; it is how stunning are the colleagues.

worst phrase – TMI — Too Much Information

Scott Faber, the founder of Ingenio, likes to say that the worst phrase in the English language is “TMI” (Too Much Information).

often someone is telling a story to a group and one of the group members blurts out “TMI” right when the story is getting good. And, of course, the “TMI” stops the story dead in its tracks … and that is usually the point where everyone is really interested.

The best stories are often ones that are a little over-the-top. So eliminate “TMI” from your vocabulary.

official ban of AT&T mobile from our office

It turns out that AT&T wireless does not work well on Mission St between 2nd and 3rd in San Francisco.

(and … on another note … it does not work in my home in SOMA).

So we at Rapleaf have officially banned new sales and BD employees from having mobile phones on the AT&T network. Yes, that means no iphones.

Why does it really need to come to this? How come Verizon and Sprint have so much better service in SF that AT&T??


Someone who wants an iphone but cant have one because I also need to make calls occasionally

A Second(ary) Chance for Venture Capital

note: the article below was first published yesterday in BusinessWeek — please check it out.

Troubled VCs need to rethink how long they invest in startups; many
should fund early and then sell to a secondary firm after a few years

There's plenty of fretting in Silicon Valley and beyond over the
venture capital industry, how broken it has become, and what needs to
be done about it. Proposed solutions abound, with some favoring a
government bailout, others saying the ranks of venture capitalists need
to be slashed dramatically, and some proposing the creation of a market
where equity in startups is bought or sold like shares of publicly
traded companies. Each has its merits and weaknesses.

But in my view, what's needed is a fundamental rethink in the way
startups get backing. VCs need to take a fresh look at when they
invest, and for how long. VCs and other investors that have expertise
in early-stage companies ought to invest at the outset for a few years,
but then sell to companies that specialize in—and have more to
offer—more mature companies. To understand why this approach makes
sense, consider the shortcomings of the existing model.

Currently, many investors buy stakes early on and then add to those
investments in later years. For instance, a typical early-stage firm
might invest $3 million to $5 million in what's known as an A or B
round. Then over the life of a startup, they'll put in another $3
million to $5 million to maintain their share of ownership and the
rights that come with it. The model has been sacrosanct for the past 30

A 10-Year Life But the wait for an exit, through an
initial share sale or a buyout, can take a decade from the time of the
A round. Remember that most VCs have a "life" of about 10 years. And
if, say, a VC invests in a company in year three of its fund, there's a
good chance the firm will be managing the investment past the life of
the fund.

What's more, the time to exit is getting longer, not shorter. Companies like YouTube, purchased by Google (GOOG) for $1.65 billion less than two years after it was founded, are rare. In the future, big wins will more closely resemble Zappos,
an online apparel retailer. Zappos is incredibly well run, and all VCs
wish it were in their portfolio. But Zappos is having its 10-year
anniversary this year, and it might be another few years before its

Longer waits are bad not just for the VC calculating the return on
investment (ROI). They also result in impatience on the part of limited
partners such as university endowments that invest in venture firms.
It's also demoralizing for individual venture capitalists. There are
many well-regarded VC partners that have never had an exit. Some
venture capitalists are leaving the profession altogether and firms are shrinking.

Here's where secondary VCs can play a vital role. These firms, most of
which did not exist 10 years ago, specialize in buying stakes in
private companies from VC firms. Some examples include Saints Ventures and W Capital Partners,
which are among the most successful firms this decade. Secondary firms
now account for roughly 3% of the VC market, but their clout is
increasing as they do more deals. San Francisco-based Saints now has
more A-list portfolio companies than most traditional VC firms. Its
investments include Facebook, eHarmony, and QuinStreet.

Increased Return It helps that increasingly, many VCs are open to
selling their positions to secondary firms. While selling early will
lessen the long-term value of investments that become hits, it could
increase a VC's actual return on investment by letting them realize
returns much faster—say, three years rather than 10 years.

What's more, increased dependence on secondary investors will let VC
partners focus on what they do best. Different skills are required for
an A-round investor than for a late-stage investor. A venture capital
firm should deliver and focus on its core competency and move on. Just
like startups change CEOs as they mature, shouldn't companies change
VCs as they mature? If there is a good startup CEO, shouldn't there
also be good startup VCs? Some people can take a company from startup
idea to billion-dollar business, but most need to be replaced along the
way—this is true for both management teams and board members.

Early-stage VCs could focus on early-stage issues and later-stage
VCs could focus on later-stage issues. Their investing timelines could
be shorter, they can better plan for the future, and they'll need to
keep less undeployed capital, or "dry powder," on reserve. They'll
probably also do more deals.

My guess is that firms that invest in an A round might not
necessarily invest in the B round. Instead, they might look to unload
some or all of their shares in the C round.

Take Gains Early

I know a few angels who already follow this model. One sold half his
interest to a particular VC in the C round and later sold the rest of
his interest to that same VC. He made about 250% in three years. That's
not bad—especially when compared with the current market. Sure, he may
miss a big pop in share price. But he's become a very successful
investor through his strategy of taking gains early.

Why don't more VCs and angels follow this strategy? As an angel, I
have a lot of good advice for a company that's just getting off the
ground, but if I'm intellectually honest, I don't usually add much
value after the second venture round. Still, I haven't followed the
model I outline here. Maybe it's time I should.

group dinners and collecting money

If you go to dinner wit 6 people or more, you’re in for an interesting lesson in utility, economics, and social convention. Here are some random thoughts:

Some people at group dinners are always takers while others are always givers. If you don’t drink much wine, you’re a giver. Because the check is pretty much always divided equally and wine is often one of the biggest expenses. Also, if you’re not a big eater, then you are a giver. And, if you often pass on dessert, then you’re definitely a giver.

Givers subsidize takers.

And what about the etiquette of ordering something expensive? I was out with 5 other people at a technology conference when one of the people (a former MySpace Europe executive) ordered a bottle of champagne. Not being much of a drinker, I had a few sips and gave the rest of my glass to the guy that ordered it. None of us thought much about it and when the check came, the guy calmly collected all our credit cards and gave them to the waiter. Not until after they were all charged did he disclose that he had ordered a $3000 bottle of champagne ($600/person). One of the people who was with us started crying.

And collecting money is always interesting. There are some friends that when I collect money, I’m somehow down an additional $50. there are other friends where I am somehow up and additional $50. (I prefer hanging with the latter). this is especially true when people leave early. Some people overpay and others underpay.

I was at a group dinner recently with Mark Pincus (CEO of Zynga). Mark had to leave early and left $100 (the dinner came out to $60 … I still owe Mark the extra $40). Mark is a good example of a giver. This week I was at another dinner when another CEO (who will remain nameless) had to leave early. He left $17 (why seventeen??) and the dinner came out to about $50/person (we won’t be inviting that guy to dinner again).