Yearly Archives: 2013

Is Aereo legal but doomed?

BVG1KrxCAAAfQI6This afternoon the folks from Aereo invited me and several other early adopters to lunch at the Ritz for their Dallas launch. The company has found a perfectly legal way of retransmitting over-the-air television via the internet to subscribers. The company is facing legal challenges by content providers, but they have successfully fought back each one time after time. The bad news? Content providers don’t make money when Aereo sells subscriptions to consumers.

My business partner at HAUL, Robert Bennett, met with Chasey Carey the COO at FOX who indicated that they will end over the air broadcasts if they can’t protect their over the air broadcast rights. Over the past decade content creators’ business models have changed whereby their revenues have transitioned from advertising to broadcasting rights. Content creators don’t make any money from OTA and make all of their money from OTT. What does this mean? If companies like Aereo make it easier for consumer to fire Time Warner, Comcast and Direct TV – over the air transmission will end. Ouch.

The good news is the Aereo has built an amazing product – basically a cloud based DVR for TV consumers. Basically TIVO without the box. To exist longterm they will simply need to enter into licensing agreement for content. The bad news? The service will cost more – likely driving down the cost of cable and satellite TV. In the meantime? Enjoy low cost content. I’m considering firing Time Warner. Maybe as soon as this month. I’ll let you know.

When should you raise money? NOW! [updated]

Garrett Camp, the co-founder of Stumbleupon, recommends, “Stay self-funded as long as possible.” I think I have been quoted saying the same thing, but over the past few years I have come to realize that you can wait too long to raise outside capital.

When I founded LayerOne I raised money first and then built the company. Since then I have been starting companies using my own money including my last company – ShopSavvy. Our investment strategy was to look at the company each month and determine if it makes sense to keep investing. While we had the resources to grow the business, there was a limit to those resources and I think we should have raised outside capital to increase the pace of growth. Ironically our success in user growth and engagement made it more difficult to raise money from early stage investors. It was not uncommon to hear a VC suggest that he wishes he talked to us earlier.

We grew a lot on a small amount of money, but sometimes I wonder if it would have been smart to raise outside capital earlier. Raising outside capital provides credibility to your business giving you instant access to the blogosphere (TechCrunch, VentureBeat and so on) and access to potential employees who pay attention to what deals investors are betting on. Using your own money doesn’t win you any access, credibility or friends.

The upside to not raising outside money? You don’t have to raise money, period. Tim O’Reilly said, “Money is like gasoline during a road trip. You don’t want to run out of gas on your trip, but you’re not doing a tour of gas stations.” Raising money makes me feel like I am visiting LOTS of gas stations – usually not getting any gas.

Now that I am doing it all over again with my latest startup, HAUL, we have decided to go ahead and raise a small amount of money ($750K) from a few smart angels (Dave McClure, Christine Tsai, Dave Matthews, Joel Fontenot). These early investors are valuable for a few reasons a) potentially ability to refer clients, b) potentially able to refer potential hires, c) potentially able to make referrals to VC firms for the Series A and (perhaps most importantly) d) social proof that the deal is smart. Within a short period of time, perhaps 6 months our plan is to raise a $5M series A investment from one tier one firm (perhaps with a co-investment from a strategic). The idea is to get everyone in the same boat together until it makes sense to raise the huge round or do a strategic deal.

When I was updating this post I realized that I wrote on this topic last year in November in a post titled, “When should you raise money?” (hmmm, I’m not too creative with titles). I suggested that when I started my next deal I’d do a few things…

  • participate in an early stage accelerator
  • raise a small angel round from Dave McClure
  • raise a series A from First Round, Benchmark or Andreessen Horowitz

Turns out we did the first two. After the holidays we will try to do the third. Go back and read that post (it was a lot better).

Coffee with Assistant City Manager Joey Zapata

JoeyZapataShortly after the City Council meeting on Wednesday I was surprised to get an email from Assistant City Manager Joey Zapata suggesting we meet for coffee. We met at Ascension yesterday afternoon and had an in depth conversation about the proposed updates to the section of the City’s code which regulates limousines and taxis. I began the conversation by asking him to explain the ‘goal’ of the City’s limo and taxi ordinances. Joey explained the City’s goal was twofold:

  • to promote the safety of the public
  • to provide consumers protection from unscrupulous actors.

I then asked how the updates proposed in his addendum helped the City meet these goals. He was unable to articulate a line of reasoning that would justify the proposed updates. I pressed him asking if knew of any instance where Uber negatively impacted public safety or consumer protection. He could not cite any instances.

However, in Joey’s letter to the City Council he indicated that the new updates he was proposing would actually “better regulate safe, reliable and fair transportation-for-hire services” i.e. help the city meet the two primary goals of the City’s ordinance related to limo and taxis. I’ve read and reread the proposed changes to the ordinance and I can’t possibly see how they positively or negatively impact the goal’s of the City. In reality the only thing Joey’s changes do is placate Yellow Cab and make it impossible for Uber to exist.

In my opinion I think the City Council needs to give the City Managers one additional goal:

  • to allow for the greatest possible consumer choice in transportation

If Joey and his team had this additional goal they would have had the authority to modify the existing ordinances to allow for new entrants like Uber to enter the marketplace. Joey spent considerable time explaining that the big issue with Uber is that the customer’s receipt does not include the name of the licensed operating authority (i.e. the limo company’s name). It is on this basis that the City has issued more than 60 citations to Uber and limo drivers around Dallas. If Joey and his team were directed to promote customer choice and competition they could have simply proposed modifications to the existing ordinance to allow for third-parties like Uber to bill for services provided by a licensed operating authority.

To be honest, even after an hour with Joey, I still don’t really understand why this option wasn’t considered. It is NOT in the interest of the City or the citizens of Dallas to stop Uber from operating.

Interestingly I reiterated my previous suggestion that we turn this problem into an opportunity for Dallas (see below) and Joey seemed positive about the idea, but indicated that it was not his place to make policy – that was the role of the council. Note to City Council – get busy and fix this…

From my previous post:

“Now that the Council has moved the matter to committee it is the perfect time for Dallas to consider overhauling the City Code related to taxis and limos – the ordinances are woefully out of date and do not reflect the reality of the world we live in. There are LOTS of really innovative startups experimenting in the transportation space given the prevalence of mobile technology – Uber is just one of the companies causing disruption. Cities across the country are fighting these startups in court making it very expensive to launch. What if Dallas took the time to figure out how to make it easy for ALL of these companies to do business in Dallas while at the same time protecting the interests of the citizens of Dallas? How many jobs might we bring to Dallas if we became the go-to city for technology driven innovation?

The committee needs to really take time to study how all of the various technology enabled transportation models work. They need to talk to Uber, HailO, LeCab, Zypsee, Lyft, Sidecar, InstantCab, Flywheel, GetTaxi, Zimride, Local Motion to find out how we can make it easier for them to come to Dallas. Instead of fighting them we need to take the time to understand them and square our need to protect the citizens with the need to allow for innovation, competition and choice.

When and if the City does overhaul the Code related to taxis and limos we need to ensure that those regulations do not pick winners and losers. The regulations should ONLY serve to protect the interests of the citizens of Dallas. I believe it is in the best interest of the citizens of Dallas to have as much choice as possible. Lets make Dallas THE place for innovative startups and ideas. #DallasNeedsUber could be the perfect catalyst… To that end I am going to host a small group of concerned citizens at my home sometime in the next week or two to discuss how we might be able to help make this a reality. If you would like to join me send me an email at amuse@startupmuse.com.”

#DallasNeedsUber Could be an Opportunity for Dallas

BSuwcW4IcAAAgKV.jpg_largeI’ve lived in Dallas almost my entire adult life, but until today I had never attended a City Council meeting. The meeting started off with a bang as a woman dressed in traditional African costume (along with an accompanist on drums) serenaded Mayor Mike Rawlings just before she accused the Sergent at Arms of ‘wanting’ to rape her. Of course I have no way of knowing for sure, but I don’t think he wanted to rape her. Shortly after the entertainment concluded the Mayor asked the members of the council if they had a motion on addendum 5 (the language that would have made it impossible for Uber to do business in Dallas). The motion was brought by Councilmen Sheffie Kadane to move the matter to the transportation committee and then back to the full Council for a briefing. Councilmen Philip Kingston proposed an alternative motion that a full investigation of the entire matter, with subpoena power, be conducted. Some general arguing ensued and the Mayor suggested they go into private session to come to an agreement. When they all returned the original motion was agreed to with the amendment that the Mayor would be responsible for defining the investigation. Then the mayor thanked us for coming and continued with the rest of the agenda. No comments from the public were allowed. Almost the entire room stood to leave causing quite a ruckus so much so that the Mayor had to ask us to leave quietly.

I was on the agenda to speak about the issue and had I spoke I was going to explain how I thought we could turn this unfortunate event into something positive for Dallas. Whenever government picks winners and loser in business we all lose in the end. Regulations designed to favor one business over another are abhorrent. Regulations should be enacted to solve problems that exist and yet no one has ever given me a cogent argument as to what problem Uber causes the citizens of Dallas.

Now that the Council has moved the matter to committee it is the perfect time for Dallas to consider overhauling the City Code related to taxis and limos – the ordinances are woefully out of date and do not reflect the reality of the world we live in. There are LOTS of really innovative startups experimenting in the transportation space given the prevalence of mobile technology – Uber is just one of the companies causing disruption. Cities across the country are fighting these startups in court making it very expensive to launch. What if Dallas took the time to figure out how to make it easy for ALL of these companies to do business in Dallas while at the same time protecting the interests of the citizens of Dallas? How many jobs might we bring to Dallas if we became the go-to city for technology driven innovation?

The committee needs to really take time to study how all of the various technology enabled transportation models work. They need to talk to Uber, HailO, LeCab, Zypsee, Lyft, Sidecar, InstantCab, Flywheel, GetTaxi, Zimride, Local Motion to find out how we can make it easier for them to come to Dallas. Instead of fighting them we need to take the time to understand them and square our need to protect the citizens with the need to allow for innovation, competition and choice.

When and if the City does overhaul the Code related to taxis and limos we need to ensure that those regulations do not pick winners and losers. The regulations should ONLY serve to protect the interests of the citizens of Dallas. I believe it is in the best interest of the citizens of Dallas to have as much choice as possible. Lets make Dallas THE place for innovative startups and ideas. #DallasNeedsUber could be the perfect catalyst… To that end I am going to host a small group of concerned citizens at my home sometime in the next week or two to discuss how we might be able to help make this a reality. If you would like to join me send me an email at amuse@startupmuse.com.

Don’t ignore the elephant in the room

elephantintheroom-ckI’ve had the opportunity to speak hundreds of times to large and small audiences all over the world and I assumed I had seen everything – that was until today. When I arrived at the Samsung Mobile App Academy I learned that the event organizer had Photoshopped my slides to remove images of the Apple devices in favor of Samsung devices (the sponsor of the event). IMHO, not cool. It was so surreal I didn’t really know what to say. In one slide I showed a graphic of ShopSavvy on iOS, Android and Windows Phone 7 – the point of the slide was to demonstrate to the audience how different platforms require different UI/UX. They made each of the phones Samsung devices – seriously confusing the point I was trying to make. The representatives were VERY concerned that we not show non-Samsung devices to the students since Samsung was the sponsor of the Academy. They also asked me to minimize any mention of the iPhone.

photoI considered not going on, but at the end of the day I was already there and the only ones who I’d really punish would be the kids. Here is the back story: Several months ago I was approached to be a guest speaker at the 2013 Samsung Mobile App Academy. They wanted me to prepare a 30-45 minute presentation detailing our experiences building ShopSavvy that would be appropriate for high school students. Normally I would have turned down this sort of speaking engagement because it was going to require that I build a presentation and essentially give up one or two days of my time, but since it was for high school students I decided to go ahead and help out. The program provides high school students an opportunity to work with industry leaders in the mobile application space and the opportunity to win various scholarships. Students interested in the program had to prepare app concepts and based on those submissions the best were invited to attend the Academy.

At the end of the day everyone at the event was very nice and apologetic, but I can’t help but think that this isn’t the way to protect your brand. Apple is ALWAYS the elephant in the room if you are talking about mobile applications – Samsung ignoring them seems disingenuous at best. On one hand Samsung’s participation makes this event possible – and it is a great way to inspire kids to build applications. On the other hand hiding the fact that iOS exists is downright silly. It’s like having a conversation about racism in America without being able to mention African Americans – it’s not intellectually honest. Samsung owns the event, but if you invite unpaid volunteers (i.e. people like me) to come talk about their experience building mobile apps you shouldn’t be surprised they are going to talk about Apple AND Android. Samsung is the big winner here, why sully the victory by creating a story like this? Samsung is now the largest smartphone maker on the planet – they should be comfortable with their leadership position. Oh please don’t Photoshop my slides moments before my presentation.

Are Accelerators Derailing Entrepreneurs?

Generic 1960s pic of a father and son scene.What if the advice entrepreneurs are getting from mentors/investors who participate in accelerators is wrong? How is an entrepreneur to know which advice to follow and which advice to ignore?

Fred Wilson is talking about mentor/investor whiplash in context to accelerator programs in his latest blog post. In it he answers the age old question of how much an entrepreneur “react to the feedback they are getting advising them to do things differently, pivot, change the product, change the strategy, etc.”

For the last few years I’ve been on the ‘mentor’ side of the equation and I’m always concerned that the startups I advise will actually take my advice. Whenever I warn entrepreneurs that I don’t really know what I am talking about they can’t help but chuckle, but the sad fact is that I’ve spent almost NO time actually working on or in their business.

My advice when it comes to advice? Listen to it. Absorb it. Evaluate it. Then either incorporate it or reject it. Whatever you do, don’t do anything immediately. Reflect on advice and consider the source. Fred’s advice is likely better than mine so take a minute and go read his post.

Mark Cuban’s Sharktank Deals

mark_cuban_sharktankIn 2001 a television program called the Tiger of Money aired on Japanese television that featured entrepreneurs pitching their business ideas to a panel of investors. The format, called SharkTank in the US, has become wildly popular around the world. While I have seen the show a few times my son watches it religiously stoking his interest in entrepreneurial ventures. When Mark Cuban joined Sharktank in season two the rest of my family became avid viewers of the show. I’ve been doing a little research into the companies that Mark has invested in from the show and you might be surprised by some of the numbers*:

  • Number of Investments: 35
  • Total Invested Capital: $7.7M
  • Average Invested Capital Per Deal: $219K
  • Average Equity Stake Per Deal: 34.8%

Here is a breakdown of the deals:

*note – in some cases Mark co-invests with another shark and in some cases the deal might have fallen through prior to close.

HAUL Update & Help Wanted

Haul-New-LogoIt has been a big week here at HAUL. We are firmly ensconced in the now open DEC (Dallas Entrepreneur Center) and have a team of five (along with a gaggle of contractors). We received noticed that we were accepted into an early stage startup accelerator (they have yet to announce so I won’t steal their thunder). Finally, we were selected to represent the Dallas startup scene at the Grow Conference being help in Vancouver next month to compete in their startup pitch competition.

We are now beginning work on our MVP – a marketplace for haulers and we need to start beefing up the team. For now we are working with third-party contractors, but we would love to bring design and development in house. If you are looking to join a fast growing startup lead by experienced entrepreneurs (Robert Bennett, Molly Cain and me) let me know and we’ll see if there is a place for you on the team. At HAUL you’ll get to work with hundreds of really talented video content creators and celebrities – think Hollywood meets the Valley meets QVC – and it all will be happening right here in Dallas.

Open positions include:

  • CTO (strong experience with agile development & building teams)
  • Developers (PHP, iOS, Java, Git, agile) (4)
  • YouTube Experts (SEO, API, OAuth) (1)
  • Designers (UX, UI, Dribble) (2)
  • Project Managers (scrum, agile) (1)
  • QA Analyst (1)

If you would like apply please send me your LinkedIn profile (required), your Github account for developers and your Dribble account for designers. Email to amuse@startupmuse.com. Thanks!

 

 

 

 

One Word: Video

In the Graduate Mr. McGuire told Ben, “I just want to say one word to you, just one word, PLASTICS. There is a great future in plastics…” Here is the clip for those of you who missed it the first time:

Assuming Mr. McGuire were alive today I suspect he would replace plastics with video. Video is huge and it is getting bigger, fast. The statistics from just last month are simply staggering. More than 180 million Americans watched more than 41 billion online videos last month (that is 85% of the total US Internet audience)! Online video advertising is exploding as well with more than 15.8 billion video ad views last month (53% of the total US population saw an average of 96 video ads). Also, if you think all if this is attributable to YouTube you might be surprised to learn that YouTube only represents about a third of the market. In fact, YouTube isn’t the biggest ad platform – BrightRoll is with 2.6 billion ad impressions last month.

 

Video Production Coworking Space in Dallas

Yesterday I sent out a very informal Tweet and Facebook message asking if anyone would be interested in being a part of coworking facility with studio space for video (green screen, whisper room, edit bays). Basically a place where you could have rent a few desks AND access video production facilities. Located in the Dallas Design District. Much like YouTube’s Space:

The interest was overwhelming. We are considering a few options including building something on our own or partnering with an existing coworking facility (The DEC, Common Desk or WELD). I got all of your FB messages and DMs indicating your interest, but I need a little more information. How about sending me an email with the following information:

Send to: amuse@startupmuse.com

1. Level of interest: 1-10 (1 being keep me posted and 10 being I am definitely moving in)

2. Production facilities needed: (please describe what you would need in the facility)

3. Office space needed: (please describe if you would work from the space full-time or just when you were using the production facilities, would you need an office, a permanent desk or a common desk – please indicate number of humans you will have working in the space)

4. What is your monthly budget: (how much could you afford to pay if you got the facilities and space that you needed to operate)

5. Other: (anything I should know, would you be willing to loan the facility any equipment – lights, cameras etc)

6. Name of Company

7. Phone Number

I’ll create a mailing list to keep you in the loop on the status of the idea. My goal isn’t to run this facility – it is simply to find a space that is affordable and fun for my own startup (HAUL). If you are of a like mind let me know.