Friday, May 25, 2012

Any Startup Can Fail

I read the sad news this morning that BetterWorks is shutting down. And while I'm sure that the usual haters will come out in the comments, the real lesson here is that any startup can fail.

(Disclosure: Paige and I have been friends and co-investors for a couple of years, and I like him, Zao, and George. I've visited their offices in LA several times, and everyone I met was a first-class individual. In other words, this post is biased.)

BetterWorks began its life with every advantage. In Paige, Zao, and George, it had a truly all-star founding team. I mean, Zao created Farmville, for goodness sake, and George designed Yammer.

It also had what I thought was a great business model: Employee perks for smaller companies. By aggregating demand and offering deals on core, regularly consumed perks like food, it struck me as both lucrative and consistent.

And of course, it had a great group of enormously successful investors, a number of whom are friends, and all of whom probably thought the same things I did.

I don't know what went wrong. I suspect that BetterWorks ran into the double challenge of selling to SMBs and selling locally; both are significant challenges in and of themselves. Together, they could prove insurmountable for any company.

But that, in the end, is the unavoidable truth: The market is smarter than all of us.

Success is never guaranteed, even when you have what I think is easily the best founding team I'd ever seen, as measured on intelligence and accomplishment prior to starting the company.

I know that Paige, Zao, and George will move on and do other great things. I'd still bet on them every time. But the BetterWorks example shows why investors have to assume a high failure rate in their investments.

Tuesday, May 22, 2012

Silicon Valley Has A Short Attention Span

Sometimes people ask me why I'm always writing blog posts and speaking at events. "Simple," I say. "Silicon Valley has a short attention span. If I don't keep my name in front of people, they'll forget who I am."

If they don't believe me, I respond with what I like to call the Yahoo test.

"Can you name Yahoo's first outside CEO? He ran the company from 1995 to 2001."

Almost no one can do it, even if they lived through the Dot Com boom.

Only a tiny fraction of people even hazard a guess, and the vast majority of those guess Terry Semel, which is incorrect.

Remember, from 1995 to 2001, Yahoo was the world's largest Internet company, making its CEO the most powerful man on the Internet. And less than a decade later, the vast majority of people can't even think of his name.

The great thing about Silicon Valley is that you can go from rags to riches in the blink of an eye. But that same feverish pace makes it all too easy for people to forget you, no matter what your accomplishments.

Does it take work to write blog posts, moderate panels, and try desperately to stay in the public eye? You bet. But it beats obscurity.

P.S. Yahoo's first outside CEO was Tim Koogle.

P.P.S. I once shared this story with a prominent Valley figure (who, incidentally, remembered Tim Koogle right away). He countered with what might be an even better story. Apparently, the first time Mark Zuckerberg met Marc Andreessen, Zuck asked Marc, "So, what did Netscape do?"

P.P.P.S. Like this post? Upvote it on Hacker News.