• Posts

    The Y Combinator Startup Index

    In a former life I served as Editor of Seattle 2.0, and one of the most popular pieces of content we produced was the Seattle 2.0 Index – a monthly ranked list of all the local startups. It was a labor of love by Marcelo Calbucci and I was never a part of making it, but I always loved seeing how my favorite companies were doing and discovering new ones. I always thought it would be fun to make something similar for Silicon Valley, but it turns out there are a lot more startups here (I know, I know). To test drive the idea I’m starting with the companies from Y Combinator who haven’t exited, and are still operating.

    There are plenty of flaws with rankings like this because traffic and Facebook monthly active users hardly tell the full story of any company and it compares web to mobile, social to enterprise, and on and on. What is valuable is seeing how things change over time. This is the first index, so it doesn’t have the month over month comparison. What it does reveal is that some companies you might not hear about every day in the press are doing really well.

    Important: This does not include companies in the current YC batch.

    Take a look, let me know what you think, who I missed, or any other feedback. You can read about the methodology at the bottom of this post. I will update this with any corrections and leave an update note.

    Methodology

    The ranking is based on Alexa traffic rankings first, and Facebook monthly active users second. Right now it doesn’t factor in the iOS or Android rankings because the data is very limited. The MAU numbers are weighted as a percentage of the total MAU across all the companies, multiplied by ten, and subtracted from the Alexa rank. It sounds simplistic, but looking at the list it seems to make sense. I’m open to feedback on mkaing it better.

  • Startups

    After the Launch [Founder Fiction]

    Founder Fiction is a new series I have created to express common experiences, thoughts and feelings I discuss with founders using fictional characters and situations that blend my own experiences with stories from others.

    Robert Peterson placed his drink on the slate counter of the bathroom and leaned his forehead against the cool mirrored glass. It was done. After more than year spent hustling together investors, several more months rallying a team to build beyond the original prototype, and a summer spent in Y Combinator getting ready to launch and raise again, he had done it. Today the world had learned about his company, splashed across the pages of the trade and business magazines read by millions, and he knew he should feel satisfied.

    Closing his eyes, the word “should” hung in his mind. So many things he should feel. Like a success, like a winner, like a fucking golden god if his friends drinking in the next room were to be believed. He did feel something, a kind of quiet pride — but it was more like a smooth stone that had settled in the base of his stomach. There was extra gravity there, a weight, maybe even a bit of dread. In all, it was far less exciting than everyone had lead him to expect and while others celebrated all he really wanted to do was go home and sleep for 24 hours straight. Then he would get back to running the company.

    Laughter spilled over from the next room, and he knew he’d have to get back soon, before his cofounder came looking for him. He stepped into a stall and unbuttoned his fly, wanting to prolong the solitude a little bit longer as his mind wandered to the events of the day. The stories had broken at nine in the morning just as they had planned, and the site was inundated with traffic. Then the calls, emails, and texts had started coming in.

    His parents emailed proudly, with a link to the New York Time’s story. His sister had joked he better get her something really nice for Christmas. He’d texted his old boss to tell him how grateful he was for everything and gotten a smiley face back. His girlfriend, who he’d met just a few months ago, squeeled with delight as she told him her office mates were jealous that she was dating a millionaire. She’d hinted pretty blatantly about a ring too, so that was probably another he’d have to deal with after getting 24 hours of straight sleep.

    “Hey Robert!” a voice called from the doorway, jolting him from his reverie. “You okay man?”

    Swinging open the door he ran a hand through his hair and smiled sheepishly at Raf Bell, his favorite angel investor. “Yeah sorry, just not feeling very social I guess” he shrugged.

    Raf smiled knowingly and bent down his salt and pepper head to examine the glass on the counter. Sniffing the contents and discovering it was only soda with lime, he looked back at Robert. “Zip up your fly Rob, I think I should drive you home.”

    They ambled through the big open house, Robert nodding and smiling shyly and Raf shaking hands graciously as he went. “Just taking a little drive,” he said, “Thanks so much for coming.” They climbed into the perfectly maintained white Porsche 911, which was probably about 7 years old, and headed down the 280 toward the city in silence. The car hummed, and with the top down it was impossible to speak or hear anything, so they rode together in roaring silence.

    Photo Credit: jcoterhals on Flickr

    Would you like to read more startup fiction? Let me know in the comments.

  • Posts

    As LinkedIn Passes 1 Billion Profile Endorsements, Has Klout Stagnated?

    Klout, the company that calculates your individual influence score based on your engagement on various social media sites like Twitter and Facebook, feels stagnant. To make matters worse, last week TechCrunch reported that LinkedIn’s new endorsements feature is kicking serious butt. From the article:

    “Today, LinkedIn is announcing that Endorsements has passed the 1 billion milestone — with 58 million members getting recognition on their profiles for different areas of expertise, according to a blog post from Peter Rusev. The marker is a sign that, were LinkedIn so inclined, it could likely give sites likes Klout, which measure influencer status, a run for their money.” – read full article on TechCrunch

    I logged into Klout for the first time in months today, and it felt like a veritable ghost town. Not only have my friends stopped talking about it or sharing their scores in the past few months, but according to Alexa the website is showing slowly declining traffic at a stage when it should be growing — losing most of the ground it appears to have gained since early 2011.

    On the other hand, their Facebook app monthly and daily active user data suggests they’ve recently had some growth following a long plateau period – so maybe people are just more active with Klout on mobile?

    So What’s Going On?

    Klout offers users perks, which are special offers and coupons brands want to give to people with certain behaviors or demographic information. The idea is that I will test out these products and then talk to my friends about them. In the past I’ve been offered awesome perks like a free Nike Fuel Band or free 3-day test drive of the Acura ILX, but logging into is a lot less exciting. My perks include a $5 McDonalds card, $15 off Chilis, and a free Norton Mobile Security pack ($30 value) among others.

    Back in the early days when that was a thing I connected my Facebook and Twitter accounts to Klout because I was curious about my “score” (a number 1 to 100 which tells you how influential you are relative to others), and when they launched their iPhone app I installed it. Now I get mobile push notifications when my score goes up and down and often tap the alert to check it out – which I guess makes me an “active” for that day or month. I’m pretty sure Klout’s sales team goes to big brands and sells them on accessing these active users with their offers… but is it really working?

    Doing the Math

    According this January 2012 funding announcement the company was pre-revenue at that time.

    The company has more than 4,000 API partners, up from around 100 in early 2010. And it has indexed north of 100 million public profiles. A few million people have actively registered on Klout.com in order to tie their various social profiles together (and boost their Klout scores). reported by TechCrunch

    Sources confirm that the company is now doing paid deals and brought on a COO over the summer of 2012 to focus on ramping revenue and improving operational efficiency.

    Brand partnerships with McDonald’s and others probably pay healthy sums (I’m thinking $50-100k month per month or engagement), but if my perks are any indication the offerings to consumers aren’t particularly compelling.

    Klout has raised $40M raised to date, including a strategic investment from Microsoft about 6 months ago. The company is 5 years old with around 80 full time employees. With a big beautiful office, daily catered meals and a substantial sales and biz dev team I could easily see them burning $1M+ a month ($10k per employee fully loaded + $200k G&A), which means they could be nearing halfway through the $30M raised in early 2012.

    What Do You Think?

    Do you regularly use Klout to track your personal influence (daily, weekly, monthly)? Have you worked with them to do a brand placement reaching influencers and seen meaningful ROI? Is the future bright for paid promotions to social media influencers? Let me know why or why not in the comments.

    Danielle is an early Klout adopter, her score is 69.

  • Posts

    Google Reader is Shutting Down, Worst Day Ever

    Google Reader is my most beloved Google app and I thought they’d never shut it down. It is endlessly useful, I would pay for it, and now it is going to be gone.

    Yes, I know there are probably tons of alternatives, but I love my Google Reader setup exactly the way it is and I am pissed. I kind of want to stop using Gmail in protest… but where else is there to go.

    Read the post from Google for the full story, but the bottom line is that it will be gone July 1st.

    I’m just so sad right now, I’m just going to listen to this on repeat:

  • Posts

    Zombie Startups

    To get the full effect, press play on the track above and start reading.

    This post is a more in-depth commentary following our announcement yesterday that Referly will discontinue paying users cash rewards for generating purchases at the end of this month. Referly has pivoted and you can read more about our new direction here.

    My greatest fear as a startup founder isn’t to fail, it is to become a zombie startup. Kind of like in the 6th Sense when Bruce Willis doesn’t realize he is dead and tries to have a nice dinner with his wife, there are startups out there who are still “operating” but might as well not be.

    It can take a long time to die. I’m not going to name any names, but you could simply cross reference yclist.com with alexa.com, and any company that shows little to no growth in web traffic in the past year that claims to still be operating is probably a zombie. Yes, even companies that focus on mobile or enterprise sales should see healthy growth in web traffic at the early stage.

    With just the $150,000 each of my Y Combinator batchmates received last summer, many can continue to work on their company or change direction several times. It has been 6 months since Demo Day and I don’t think anyone has officially died. So I’ll say it. Referly died. It’s not the kind of dead where the website goes dark and everyone gets jobs somewhere else. But the idea that we started with turned out to be the wrong one, so we killed it and yesterday I acknowledged publicly to ourselves and everyone else that we have to change our course.

    Helpful Things Investors Say

    Over the summer when the seed market was hot and we were raising money pre Demo Day like gangbusters I seriously considered raising our Series A, or some kind of Series Seed style equity round. To feel out the situation, I spoke to some investors who had already put money into Referly and asked them what they needed to see from us in order to raise the equity round we were contemplating. I’ll never forget this feedback, which I will paraphrase since I didn’t write it down:

    “The biggest problem we see with early stage companies coming out of YC, or really any program, is that they’ll approach a year or two after they’ve graduated to raise a seed round. It’s exciting to see they’re still alive and pursuing their vision, but then we ask about the growth of the team and the ways they’ve been capturing the opportunity of the business in the time they’ve had… and discover everything is the same. The same 2 or 3 people, the exact same idea, very little growth around key metrics like engagement or revenue. So why should try raise a series A? What have they proved?”

    Ride or Die

    Sometimes I feel caught between two mindsets, one that encourages me to be a cockroach and survive no matter what and another that inspires me to overcome my fear of flying and take it to the next level circumstances be damned.

    The biggest reason to charge ahead is that I don’t want to waste a single moment of my life in denial, in deadlock, in zombie mode waiting for something I can’t control change or expecting magic to happen. It goes beyond not wanting to. I simply can’t, won’t, would never give up precious days, weeks, months, years. And it’s not that I don’t have endurance for the schlep, but I can only summon that super-human power to fight for the right thing.

    Referly Monthly Active Users

    I bet if you showed this graph to investors many would tell you your startup is doing GRRRRRRREAT! For a blogging platform (where we’red headed next) this is awesome – for an affiliate referrals site this doesn’t matter. It’s all about revenue, and it wasn’t climbing at a commensurate pace.

    Is Your Startup a Zombie

    How do you know if you startup is falling into this trap? Here are some hints:

    • You don’t want to get out of bed in the morning
    • You don’t want to go out in public for fear you’ll have to explain what you do
    • You haven’t hit 10% week-over-week growth on any meaningful metric (revenue, active users, etc)
    • You’re working on the same idea after 12+ months and still haven’t launched
    • You’ve launched a consumer service and have less than 2% week-over-week growth in signups
    • You’ve launched an enterprise service and have less than 2% week-over-week growth in revenue pipeline
    • You are the CEO and hole yourself up in the offices so you don’t have to talk to employees and can read TechCrunch
    • You’ve hired consultants to figure out revenue, culture, or product in a company of less than 10 people
    • You’re at SXSW right now reading this post and trying not to cry

    Update: I’m not saying you need to hit 10% growth every week, but you should have hit it at some point like launch or some other PR event.

    Turning Things Around

    Does any of this sound familiar? If so, don’t panic – you can fix this. The first thing you need to do is acknowledge the reality of your situation. From there, figuring out what to do next is a lot harder and a very personal and contextual decision, but you should embrace it with vigor. Don’t waste single moment of your life, or the time of those on your team, to begin plotting the next step. Paralyzed? Yeah, I know that feeling. Just plow through it, there really is no other solution. Along the way you may consume dozen of beers/shots with good friends over long circular discussions they tolerate because they love you. Do that, and then get back to work.

    I’m not an expert at figuring out what to do next, I mean I just changed course on an idea that took me 3 years to start and another year to prove didn’t work. But whatever… the point is that no one is going to tell you that your company is a zombie. Except me. Don’t waste your 20s, or 30s, or 40s being a zombie.

    Worst Case Scenario

    Flame out hard. That’s my only backup plan, because doing the silent fail is for boring. Failing is failing – do it up right!

    Zombie — Photo Credit: jamesrdoe on Flickr