A Facebook Store?

Anyone heard about the Startup Store in NYC?

“A Startup Store has the point of view of a magazine, but it changes like a gallery and it sells things like a store”  The store will be completely reinvented every four to six weeks, with a different theme guiding every detail. The environment, merchandise, events and story behind everything for sale will be different.

Now could you imagine a Facebook Store?

This is something Facebook should look at doing. I would think they could open “stores” in locations like NY, LA, SF, Boston, etc…

Then, Facebook could sell the spaces to the brands that want to use the exposure for a week, month, whatever. This rotating storefront brings brands to people and helps keep Facebook in the public eye.

Something even cooler would be to highlight & prominently display products per my preferences and profile, just by login in using your mobile phone when entering the store.

Is the web going to go back to brick and mortar, but customized to my needs, preferences and profile?

Google X – A Clandestine Lab

At the end of 2011, the existence of Google X was revealed. A lab and playground for engineers working on the next generation of Google’s wilder projects. However, the company is so secretive about the lab that very few employees are even aware of its existence, with one engineer likening the covert nature of the department to the CIA.

Two teams split between the Mountain View campus and a top-secret location are reportedly toiling over “100 shoot-for-the-stars ideas,” from the driverless car first shown at a TED conference in Long Beach earlier this year, to the next generation of connected devices including smart fridges, light bulbs, and plant pots.

Google’s co-founder Sergey Brin is said to be closely involved with the team, and although the researchers’ remit is often a long way from Google’s core search business, the company’s success in search means that it’s comfortably able to subsidize this work. This ethos ties in well with Google’s famed 20% — for one day a week all staff are allowed time to work on personal projects, which has born products like Reader and Gmail.

The team includes a number of hires from other major technology companies and universities, such as Microsoft, Nokia Labs, Carnegie Mellon, MIT, New York University, Stanford and a number of the brightest robotics experts in the country.

As Rodney Brooks, an MIT Professor emeritus of computer science and AI told the NYT, “They’re pretty far out in front right now. But Google’s not an ordinary company, so almost nothing applies.”

Would be great to work with them!

 

More articles on Google X:
What is Google X? – The Washington Post

At Google X, a Top-Secret Lab Dreaming Up the Future – NYTimes

A lot of data and not much pain to raise venture money!

I wanted to share this great post from Jason Goldberg, serial entrepreneur and founder of FAB.com.

I am impressed with the way Jason worked out a strategy on how to better approach & deal with the VC firms – to make sure that the venture process takes a minimum of time for him and his management to spent while maximizing on the capital, all this using data, a lot of data!

………………………………………….

Let’s face it, fundraising can be a real pain in the ass for the entrepreneur. It takes up a ton of time that can be otherwise spent managing the business.

Sure, it’s a necessary evil, but it’s also typically a big distraction. It’s also a lot like dating. You have to go on a lot of first dates before you can move on the to the second, third, fourth, and then hopefully marriage. The worst thing you can do is slut around. It wastes a ton of time, can damage your reputation, and doesn’t get you far.

When we decided to raise a large round of financing for Fab in October, my biggest concern was that it would divert our management team’s time and attention away from running the business at a critical time, as we were simultaneously scrambling to prepare for our first holiday season at Fab. Yet, our numbers were really good, the business was accelerating exponentially, and the investment climate was strong for businesses with traction like ours. I also feared that Europe could collapse at any moment, so while we didn’t exactly need funding in 2011, waiting to 2012 scared me. So, we decided to wade in.

As our “one thing” at Fab.com is design, I put a lot of thought and consideration into how we might design our fundraising process differently from the norm, so as to optimize around time spent fundraising vs. running the business, and to quickly hone in on who we wanted to marry.

The typical VC dog and pony show goes like this:

  1. VC’s approach company or Company approaches VC’s. Often this starts with an associate at the VC firm pinging the entrepreneur. That’s their job, to build deal pipeline, evaluate companies, and then hopefully engage a partner when they find something interesting.
  2. VC’s ask company to send over a deck by email.
  3. VC’s invite company to pitch at the VC’s offices.
  4. Company presents the deck on the company: vision, market, strategy, progress to-date, plan. It’s mostly high level stuff at first.
  5. VC’s ask questions.
  6. Company responds.
  7. VC considers next steps.
  8. If no, company never hears from VC again.
  9. If yes, interest, company is asked to come visit again and educate more partners.
  10. If yes, interest, company is asked to provide a data dump of financials, models, projections, etc.  An analyst or associate at the VC firm digs in to study the models, poke holes, challenge.
  11. If yes, interest, company is asked to spend many more hours discussing models, providing further analysis.
  12. If yes, interest, company meets with the entire partnership.
  13. Final Yes / No decision.

Now, imagine doing that same process simultaneously with 3 firms for 6 firms or 10 even. The whole process can take A LOT of time and brainpower that otherwise could be spent running the business. The worst part of it is going on a lot of first dates, and then second dates, before really diving into the details that really make up the business.

Having gone through this process a few times in my career as a “serial entrepreneur,” one thing I’ve always been amazed by is that the VC’s typically don’t dig into the hard core numbers behind the business until near the end of the process. It’s mostly a lot of team + vision to start, numbers to follow. That makes sense from the standpoint of it takes a great team and a great vision to build a great business, but the numbers also need to add up.

Here’s what we did differently with Fab’s recent round.

From August through September I received more than a dozen inbound requests from VC’s to meet to get to know me and Fab.  I politely put each of them off with the same message: “Thanks so much for your interest. Sorry, but we’re really heads-down right now running the business. Will circle back to you when we’re ready to have a serious chat about fundraising in the near future.”  (Note to entrepreneurs:  NEVER meet with VC’s unless you are 100% ready to fundraise. They may say they just want to get to know you but they are always evaluating every interaction with you. If you’re not ready, it will show. And it’s a waste of your valuable time to talk to potential investors when you’re not serious about raising.)

In October we decided to get serious about raising our round.

I set out a plan to try to design our fundraising process such that it would:

  1. Take up as little of my time as possible.
  2. Take up almost no time from my management team. I needed them focused on getting people the best design objects in time for the holidays.
  3. Quickly accelerate the process by focusing more on finding the right team to marry vs. going on a lot of dates. I defined a “good marriage” as a firm that really understood and appreciated our business, and who met the 3 criteria below.

We put together a forecast for how much capital we would require. At our current run-rate, it’s no doubt that we’ll hit $100M in revenue fairly soon. The challenge was to model out how much additional investment we’d require to quadruple that in the next few years.  (Note to entrepreneurs: You need to really know your customer acquisition metrics and customer lifetime value equations in order to create a viable model. So much of your model will depend on how much you have to spend to acquire members and then the percentage of them that buy from you over time. You need to be deep in the details on cohort analysis and payback periods for all investments you plan to make).

Before engaging any firms, I then developed a strategy with our board members to identify the 5-8 firms we thought best fit our criteria.  In our case, we were looking for a unique blend of:

  1. Venture Growth Capital.  We needed an investor partner who could write a big check on their own (e.g. $25 – 30M), while still understanding that our business is relatively early stage as we had just launched 6 months prior.
  2. Recently Active in Hot Companies. I really wanted a partner who had a recent track record picking winners. The consumer Internet moves so quickly. I wanted to work with a firm — and particularly a partner at a firm — who was at the forefront of recent trends, not playing catchup.
  3. Got E-Commerce Scaling. We’re a rapidly growing e-commerce company. We needed a partner who understood our business dynamics and could help us scale it up.

We narrowed our list down to about 7 firms.

When we decided in October that we would be raising a large round for Fab.com, one of the things I was most concerned about was spending too much time raising money vs. preparing Fab for the holiday season. The last thing I wanted to be doing going into our first Fab holiday – nor could afford doing without detrimentally impacting our business – was to spend the majority of my time in VC meetings and preparing for VC meetings.

So, we designed a different approach to engaging the VC’s.

The big thing we did differently was to send each of the potential investors a login to our RJ Metrics Dashboard before we agreed to meet with themWe requested that each potential investor login and review our RJ data and decide for themselves if they wanted to learn more about Fab.  

For those of you not familiar with RJ Metrics, you need to be.  Basically, RJ Metrics is the best business intelligence dashboard for startups on the market.  If I were a VC, I would demand that every startup send me their RJ login before meeting with them.

RJ Metrics works as follows. You spend a couple of hours connecting your production database to RJ Metrics and then it spits out the most amazing graphs and charts on all facets of your business. It updates every couple of hours based on your actual production data. As a dashboard it’s fantastic, but the real power of RJ is in its cohort analysis — RJ enables you to effectively monitor each cohort of users by join date and then then evaluate their revenue contribution, payback periods, engagement levels, and lifetime value.


From a fundraising standpoint, providing access to the RJ data basically said to the VC’s, “here we are, here’s the data, we’ve got nothing to hide, take a look and decide for yourself if you want to pursue investing in Fab.”  Effectively, we turned the pitching on its head.  Since the RJ data updates several times per day directly from our database, it was many times more powerful than providing powerpoints and excel spreadsheets. This was the real stuff, auto-updating!  And, since RJ enables all the data to be downloaded into excel, the analysts at the VC firms were able to do all of their own analysis on the front end of the investment process.

This enabled the VC firms to get themselves educated on our progress

And, it then teed up a series of well-educated discussions with the VC’s around the next level of data analysis, e.g. trends amongst cohorts, time to 1st purchase, and repeat purchase rates.

And, it made the vision stuff less of a ppt deck, and more of an expression of what we’re all about:

As you see, the slides became more launching points for discussions, than the meat itself — because we had already served up the entree for the them to digest up front.

In the end, we had many firms that wanted to invest in Fab. The process worked well for us because we were able to pick the partner we wanted to work with to scale our business while not allowing the process itself to disrupt our operations and eat away at our ability to continue executing. And, we cultivated educated VC’s who really understood the fundamentals of our business. Remember those 13 typical steps in the VC process from above? We managed to shrink them down to about 4.

Not every entrepreneur is as comfortable as I am with putting all the data out there. To be honest, I wasn’t this comfortable sharing the data either my first few times raising money.  Having gone through it a few times now though, my philosophy on this today is simple:

The data is the data is the data. If you can’t measure it, it never happened. Any investor worth their salt needs to understand your data before they invest, or you don’t want their money anyway. So, put it all out there. If the data is good, it’ll speak for itself, and then you need to tell the story of how it gets even better. If the data isn’t good, well, then you need to tell a story of how you are going to turn it around. Either way, the data is the data is the data.

One final note. I’m just thrilled that we’re working with Jeff Jordan and the team from Andreessen Horowitz.  Jeff and his partners — more than any other firm we talked to — really jumped right into the data, digested it, analyzed it, and then quickly focused on how they could work with us to realize our big vision.  In the end, we didn’t focus on valuation much at all, rather we picked the firm we really wanted to get married to and work with to grow our business.  Jeff and team met our criteria and then some.

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My daughters following me on twitter!

Yesterday I got an email reading:
KC
@KC
is now following you (@scheikh).

So I taught it was spam, she is 11 years old. On the other hand, she has a Facebook account, but twitter, who would guess? So this morning I wanted to check it out, see what that spam was all about.

So I clicked on K’s profile and what do I discover? Well that its a legit account, I am starting to feel that its really her account and I know it is when I see who K is following:

Her preferred singers:
Rihanna (Talk That Talk in stores now! http://www.smarturl.it/TTT)
Katy Perry (i kissed a girl AND diddled her skittle.)
Miley Ray Cyrus (So come in the submarine….Round the world we’ll go. Does anybody know love….If we’re looking out on the day of another dream.)

Her favorite actors (all Harry Potter related):
Emma Watson (British actress and fair trade supporter
Daniel Radcliffe (Daniel Radcliffe official twitter. I played Harry in @harrypotterfilm and now I’m on Broadway)

The love of her life (also from Harry Potter):
Rupert Grint .NET (RupertGrint.net – A Rupert Grint Fansite. News, pics, videos, and more!)

But that’s not it, who else is she following:
Her sister, L, who never told me she was on Twitter! But she is 13,5 years old, and she is NOT following me! New to the post: L is now following me!

All this came as a surprise obviously. I realize that twitter is also part of a teenagers life, since most celebrities are on twitter.

I also realized how powerful good branding from a twitter account could impact a young user. If you look at the Rihanna twitter account, its reads: “Talk That Talk in stores now!”. Guess what album did my daughter buy last week when we were together!

These days, you have to talk to your teenagers about sex, drugs, people, but you also need to discuss Twitter, Facebook and other social sites, with explanation around advertising, branding, posting and commenting!

Also they need to be careful in who to follow, EXCEPT FOR THEIR FATHER!

Want to sleep at a startup?

Last week, Michael Arrington wrote a provocative post that got lots of mixed reactions: Startups Are Hard. So Work More, Cry Less, And Quit All The Whining.

I started reading some of the comments – and one of them, from Jamie Zawinski, stroke my curiosity: Watch a VC use my name to sell a con.

Jamie Zawinski (not him on the photo above) was one of the founders of Netscape and Mozilla.org, the primary developer and became wealthy when he was bought out. Reading his blog post to counter Michael, hearing “do what you love” from someone who’s been through (some) life inspires hope and confidence.

Although, to be fair, Arrington is a little more than a gold chaser. He started a blog and later sold it to AOL for a lot of money. He’s also pretty famous.

In any case, Jamie’s point stands, VCs never sleep under a desk.

By scheikh Posted in VC

Start of a new era

It all started last week when I got one of those usual email from a friend about online social reputation, and the fact that you had to be careful and always be on top of what’s tied to your name.

So I decided to take a look at the results and Googled “Stephane Cheikh”…

Surprise! Not really…

Most of the results were accurate and legit, most of the results are work related, which is fine, BUT I also discovered old personal content.

Some of the blogs I created over 5 years ago with pictures, PPT presentations I uploaded on a server, old video interview – when I was in a different position and more.

All that old content still attached to your “new” social profile you try to keep as professional as possible. I think that we need to create 2 or 3 profiles during our life, a personal, a professional and another for content not related to the first two!

So I decided to get rid of all that old static content. I kept the picture of my kids, but removed everything else. I had to renew a lot of passwords I did not remembered. I even deleted another blog of mine (enterprisecollab.wordpress.com) where I had 75.000 hits over time. All that, gone in 3 clicks!

Funny enough, it felt good to get rid of all this old content, now I feel fresh again, ready to upload some more junk online!

See you in 5 years, when this post will get deleted for another start!