Eric Friedman

I view companies and entrepreneurs through my own lens, and have been developing my investment thesis for some time. Recently I have been thinking more about the software (vs. the wetware). Specifically, thinking through services that use algorithms as a “lock in” mechanism. This started at the end of last year when I received the incredible summary from Spotify that shows minutes, songs, artists and more (see the official Spotify Wrapped if you use the service). This is a great example of algorithmically locking me into the service.  The more I use it, the more interesting data (or value) the service can return back.

So, can a algorithm keep you locked into a services? To answer this question I was thinking about all the services that actually become better the more you use them. Spotify is a good example, as is Last.fm which “scrobbles” (my listening history for 10 years at the right) your music from every other services, arguably making their recommendations better. I believe the same is true for Netflix, which uses ratings and reviews and obviously watching habits to keep making better recommendations. In fact, every action within the service probably is an indicator of what you want to watch, when you want to watch it, and how to deliver more value. The development patterns at Netflix reflect this with the advent of “skip intro” and auto-playing a movie/show when you hover over a choice – keeping you constantly engaged with the service. The other big example here is Facebook, with its now famous algorithmic newsfeed change. The same is true for Instagram. Gone are the chronological feeds of yesteryear – probably proved with data from product teams that show activity and engagement jumps because of the change. I am sure there are countless other services that exist that do the same. Some of the less loved include banks that have high switching costs to get off their platform. This arguably provides no value, but does have the intended effect. 

What is most interesting about platforms that have a data lock in (no export capability) thinking they are keeping customers from churning are actually doing themselves a disservice. It turns out that platforms that have an enterprise client requirement to have data portability and archive or export capabilities have a happier customer base because they know they have the “option” to move but may never do so. A good example of this is the Google Takeout service that lets you export and take your Google data, including all archives anywhere. The interesting fact is that it’s hard to find a better free provider than gmail, but you are trading some of your privacy and data exhaust towards Google. I have seen a handful of enterprise examples where large clients didn’t want to be “locked in” to a platform without future portability – upon building this out they signed up, only never to use the feature.

This brings me to exploring the thesis that systems that return value based on continued usage compound the value to the user over time. Although dark patterns exist that abuse this, when used for good they definitely deepen the competitive moat of a platform or service.

Algorithmic Lock In is another example of data exhaust being used effectively.

In a world that is moving towards distributed and decentralized platforms, those experiences that get better over time definitely keep you on that service or platform.

I attended a great breakfast session with former Mayor Michael Bloomberg, put on by TechNYC, and it was a great reminder of the title of this post. During breakfast he talked about the MTA, and the governance of the system. If you have been following things at home you know it is a mess and has been for quite some time. Between the city of New York getting the brunt of commuter complaints, the governors actual responsibility, and the federal governments meek involvement – this trifecta has not gotten things done.

This reminded me of early stage teams that make reporting decisions based on small size and flat reporting structures. Many choose to “have a dotted line” dual reporting structure or “two managers for now” mentality. Sometimes this is a temporary solution and founders think they are doing their team a favor for “cross comminication” and “team dynamics”.

I struggle to think of a single case where someone with two managers was successful. I have made this mistake and vowed not to repeat it. The 1:1s are setup for failure from the start, there is a lack of leadership and mentoring that happens, and responsibility is shirked. In my case the decision was made based on fast moving parts and thinking about “coping for now” – in hindsight a poor decision for the manager and their team member. It’s unfair to all parties involved.

Our former mayor also talked about delegation and responsibility – two key components of a manager to convey. With two managers I always ask (because folks end up doing it anyways) “who has the final decision here?” Since nobody knows the answer when there are two bosses you can solve things faster.

Leadership and management is hard. You have to work at it like any other relationship. If you don’t have a clear manager, it’s hard to communicate what is working and what is not – let alone building your career.

If you find yourself about to green light a dual reporting strategy think twice. If you find yourself reporting to two people, change things up or move on.

I hesitate to be so direct, but if all else fails let the New York City subway be your example; no clear decision maker and owner leads to failure.

Coming to the end of the last year with so many meetings, I wanted to make focus one of my themes for 2018. One easy way to do this is to focus on less. I wanted to set a “goal” of only doing a certain number of things, but that seemed like spending time on the negative vs. the positive. In this case, a theme of focus accomplishes my macro goal; make the things I am working on successful.

Focus is about saying “no” more often. Focus is about being an editor with your time, and allowing for time to think vs filling it with meetings. Focus means spending time on future planning for your self, team, company in a way you may not have in the past. With the filter of focus, I can cut things out while prioritizing the things that matter in a positive way.

A helpful filter is the question; Does the following meeting, call, or task match up with one of my short-medium-long term goals? If not, don’t focus on it.

Sometimes this means saying no. I have heard it put nicely that saying “no” is a muscle you have use regularly, otherwise it withers. It also becomes easier the more you use it. This also means clear follow ups and declines vs. ignoring a request. You would be surprised at how well people respond when you clarify your focus as the reason you won’t do the thing they are asking you for.

The best example of actually making this happen is within your calendar. At a team offsite some years ago, I got a great piece of advice on how to dig into things founders are having trouble with. A common issue is always recruiting. To dig into the problem you can ask see someones calendar, and find out what kind of time they are carving out to screen, interview, and actually hire. More times than not (and in my experience as well) calendars are filled with 1:1s, planning sessions, product sessions, fundraising sessions and the like. So the parable goes that while the biggest “issue” is hiring – the time and focus is actually somewhere else entirely.

Using this function on the above problem, the focus should be spent on hiring by carving out actual time on your calendar. This can lead to more thoughtful job specs that match the needs of the business, alignment internally on what to do before, during and after the hiring happens, and the on-boarding and retention of the person.

By making focus a priority the things you spend time on will benefit, you will get more things over the finish line, and spend time on the things that matter. The downside is that you may miss some opportunities, folks may take things personally (it’s not you it’s me!), and you may not have as many “busy” days.

This also helps to prioritize more maker time, something I am trying to do more of this year. An orthogonal theme this year is to spend my time being the best advisor to the startups I work with possible, so if I am focus on other things – don’t take it personally.

The only startup analogy I like to make is to the real life Tyrannosaurus Rex – a giant carnivore, awesomely represented in Jurassic Park running after Jeff Goldblum and co. In the movie, Dr. Ian Malcolm utters the semi infamous phrase “Must go faster” and I love it. For those playing at home, this line is also in Independence Day (but not really)It represents everything to me in the fast paced world of early stage companies and a constant reminder of what you need to do to stay alive.

Here is the full clip which is worth a watch:

When folks compare startups to mythical creatures and made up animals, it always gives me a laugh.  Instead, I like to keep my head down and remember this phrase because its the only thing that matters. When times are tough, the competition appears to be doing something awesome, or you are running out of money – actions will help over deliberations and paralyzing “what if” conversations. Shipping + Actions solve problems. Commiserating and focussing on what you *think* is going on does not.

Perception can be reality, but what is happening behind closed doors is usually vastly different from the latest tech press. When in doubt, look around and find the people taking action, and going faster.

This is not to say that go at a untenable speed and break things, but rather to make sure you are taking action. I have always loved the expression that exemplifies this well “slow is smooth, smooth is fast” (Navy SEAL origins)

I like this manifestation, because it takes the best parts of going fast and ensures that they are also going well.

So as a reminder to those founders I work with and myself; Must. Go. Faster.

(A huge thanks to my friend and the founder and CEO of Andie –  Melanie Travis who prompted me to finally write up my thoughts on this topic and was nice enough to let me guest post. – this something I have been only talking to people about over the years, and excited to share publicly below.)

I talk to a lot of folks at interesting crossroads in their careers and many times the topic of getting an MBA comes up.  I have formed a pretty strong opinion on this after being the host to many top tier MBA programs doing a “trek” to NYC to visit companies (thanks for visiting Foursquare!), interviewing many MBA candidates (pre, mid, and post), and from hiring folks (pre, mid, post) for both full time, part time, and internship roles. As with many topics since I have had this conversation with groups and strangers, I wanted to share my thoughts publicly to clarify and learn from others on this topic.

Let me start off by saying that I don’t have an MBA. I thought about it after college but never found that it made any sense to me. I also spent some years at USV, and Fred Wilson calls that time a practical MBA, and I tend to agree – he says

“I like to think of this two year stint as the USV MBA. We don’t issue diplomas but we pay salaries instead of charging tuition. You learn similar things but the cases are real time, not after the fact. And I would assert with a fair amount of pride that a USV Analyst stint on your resume is worth as much as a top tier MBA, maybe more. And the alumni network, while small, is fantastic.”

Given that caveat, I didn’t come to the decision lightly.  I spent a lot of time speaking to folks who went through various programs, some who loved them and some not.  I spoke to those looking to change careers and how programs helped them.  I spoke to many VC partners (most with MBAs) and got their opinions and advice.  I also have Phin Barnes of FRC to thank for getting me in touch with a Columbia MBA professor who took the time to chat with me about going through their program. When all my research was done, I formed my thesis, and started to share it around (including following the advice myself).  My last caveat is that I tend to spend time with people with a high risk tolerance that tend to be entrepreneurs.

My thesis is as follows: You should go and get an MBA if you do not have two out these three things:

1. A Network (people)
2. A Direction (career/life)
3. A Business Education

If you have all 3, don’t go. If you have 2 out of 3 don’t go. If you have 1 out of 3 it might make sense to go.

My rationale is that you will be $180K (now more? Originally from 2010) in debt, out of the operating job market for 2 years, and still need to find something afterwards.

However, if you are searching for 2 out of these 3 I would encourage you to weigh the pros and cons and potentially go to get your MBA. It has to make sense for what you want to do – or better yet, what is NEXT after your MBA.

A few examples will help explain this further;

A Network:

Having a group of people that you can start a business with, find your first customers, simply enjoy being around, and can build your career with all contribute to your network. Some folks find that after college they go into roles that surround them with people they don’t like (or want to be like!) – and they want to “pivot” their careers.  Let me be the first to say that this is totally fine and I commend you for wanting to make a change.  I have seen this happen with folks in fine fields that are just not a fit for them such as finance, banking, medicine, law, etc…

The people you connect with during an MBA program can be instrumental in what you do next.  In fact many of the founders I know met their co-founders while in a program or in the surrounding companies and internships they were involved in.

A Direction:

Knowing what you want to do when you grow up is hard.  Everybody seems to ask this question, yet nobody really seems to have the answer.  Knowing that you want to go down the road of entrepreneurship is great – but then you have to learn the skills either on the job or in a structured program.  Going through the new entrepreneurship tracks at top tier programs is a great way to find this direction (or discover it’s NOT for you!).  While similar to the above roles that I have seem people come out of, some folks just don’t know what they want to do next and this 2 year program can give you the space you need to explore. Again, this is a high cost way to figure it out but nonetheless it can help.

A Business Education

I have met folks who want to start a business, but perhaps didn’t get the education necessary or have the business skills to do so.  Perhaps they studied something else in school, went for other reasons, or don’t have the business background they need.  This is a great reason to complete and “finish” your education and learn about these parts of business. Some good examples of this are folks that study different topics in school, or think they are going down a different path (spoiler alert: that is perfectly fine to change your mind later!).

While others still want to learn about the business side of the world + grow their network to find the right people to work with.  They know they want to work in a sector, start a co, join a startup, etc.. but not sure how to get that done.  They have a great business education but need a network and a direction = potentially go!

My approach may not work for all but it has served me well.  Personally, I built up a great network and knew what I wanted to do – direction (work with/in/around startups), however didn’t have the business education but thought I got some pretty great exposure to real life case studies while at Union Square Ventures = Don’t go!

Today I have a great hybrid role between investing and operating at Expa. It’s a great place that combines two things I love, and overlaps nicely with where I want to be spending my time.

Ultimately this has provided a helpful framework for many folks to make a decision and potentially save a lot of time and money.  I would love to hear from those who have chosen the path of an MBA and those who have not.

I have been sitting down with many smart folks via Expa, and the latest is with Brent Tworetzky, EVP Product from XO Group.

I published the full interview on Medium, head on over and give it a read there.

At the beginning of last year I jokingly said that one of my resolutions was to try to always be positive with startups I hear about. Fast forward to a year+ later and I am still sticking with this resolution – staying positive in a sea of what can sometimes seem like endless negativity. It has become all too common to quickly dismiss or make fun of the “new thing” and I wanted to stop the trend. I have stuck with it and wanted to share some results, which have been amazing at seeing the optimistic/glass half full side of things.

Again reminded today to Always Be Positive

— Eric Friedman (@EricFriedman) August 22, 2017

At first, it was just seeing the bright side – an optimists view. I would take the glass half full side of the post launch conversations.  I would try to be on the opposing side every time I heard one of the following quips:

“Did you see X launch? That’s stupid!”
“Y launched this feature? – it’s never going to work”
“Z raised how much for their dumb idea?”

And of course the infamous:

“I could build that in a weekend”.

It is all too easy to sit on the sidelines while someone else put themselves out there, in the arena, and launch something. Every time I heard someone go off on a company from a press release/feature release or launch I would always course correct back to something positive – it is hard sometimes but after awhile it became almost a game with those around me. The exercise got my brain flexing a muscle that we often forget about – empathy.  Putting yourself in the founders/employees shoes that day can lead to some interesting thinking. Sure there are things that seem silly, but I agree that the next big thing will start out looking like a toy.

So now over a year later, most around me know that I will take the positive side to a startup conversation. This is actually quite hard sometimes but underscores a lot of what I try to instill in entrepreneurs I work with. There are a few times that I may have made a comment or two, but now it’s pointed out to me – it’s great to be known as someone that is positive. The opposite happens as well, having someone come up to me and ask “how can this possibly work?”  These contrarian discussions are a great training mechanism to see things differently.  Debating the opposing side has been a great

There are a few takeaways worth sharing that I try to instill in those I work with;

• A sound bite of your company can tell your story quickly but your company is not defined by your sound bite. Too often companies get shoehorned into their “its x for y” which doesn’t show much beneath the surface. The problem here is that this is great for VC and pitch meetings, but not always great for consumers or press. The problem is most founders have done way more investor interviews so the narrative from those slides bleeds out into the verbiage in a press interview. A press interview is not a VC pitch which is not a candidate selling conversation which is not a family explanation which is not a vision blog post – each of these things are different.
• The mission, vision and values of your company may get lost in a press interview and the outcome or written version is a great way to see if it’s clear to others. I bring this up often because most companies do not have or set a mission, vision, and vales definition early enough.
• If the definition of your company involves another company – you are doing it wrong. As mentioned above if every time you tel your story you are mentioning another well known startup you make the cognitive load too high for the other party. Here are a few examples:
  • “Airbnb for cats” – you have to know what airbnb is, then think about why it should be applied to cats.
  • “X but for mobile” this one happens a lot. Again, you have to know what X is and they already have this solve for mobile. So what are you building? There is clearly something going on (being positive!) but the story is not coming out

Finally, I encourage anyone else who wants to be positive around startups to join me. It’s too easy to pile on when a company is having a bad day, so take the high road and see what is like to throw some support to those who need it.

Also published on Medium

The fight has been underway for some time by hardware and platform companies to get into homes for more data, more control, and more share of wallet. The attack vectors have been things like home entertainment systems (think Xbox or Playstation), smart appliances, smart TVs, IoT (think smart light bulbs), and now voice assistants (Amazon, Google, Apple).

For the first time after getting the following email from Amazon announcing Alexa calling, directly following the launch of the Amazon Echo Show, I think Amazon has a real shot and pulling ahead in this race.

The below image helps explain why — they are connected your address book to the hardware system that you maybe use with a few other devices and your music service.

You see, the real Trojan horse (voice, get it?) is putting a handy device that is novel and cool, that has marginal utility and building on it piece by piece.

Every week I get another email from Amazon announcing a new skill that does something on the Alexa. The novelty and wow factor make the Amazon Alexa appear exactly as it should at first glance — a toy.

A few choice reactions after seeing an Amazon Alexa for the first time (I was an early adopter)

“That’s dumb” — a friend who how never seen it before

“I’m not using that” — friends before I hooked up Phillips Hue to it.

“Do we need it in the middle of the living room” — my wife before I integrated Spotify

With the smart upgrade Amazon now has an incredible missing link that closes the loop on many levels — my address book and contact list (good news they added call blocking). Now Amazon can know who I am connected to, who I communicate with most often, and who I spend my time talking to.

Convinced this is genius yet? Or are you totally creeped out?

The reason I think Amazon is a tech titan ready to take out so many startups are moves like this. How many have tried to link up a social network + hardware device + purchase ability all in one? Who has a chance against Amazon?

Now with an Amazon Echo Video + my address book + my order history = the time for owning homes is upon us.

I thought some time ago that the trojan horse to home automation was the Amazon Dash buttons but I was wrong. The adoption of integrated buttons into washing machines for Tide never materialized. The world of other buttons showing up to control my home never came out. Instead and hardware device that is perfect for Father’s Day, now has the added capability to be useful everyday.

This move feels like the beginning of the ecosystem that became Prime Shipping and Prime Video.

Prime Video as an add on was a no brainer to “test and try” for Prime customers. Now however you have people signing up for Amazon Video and testing Prime! This has to be the greatest trick Amazon has ever pulled…until now.

My hypothesis around this is that Amazon is aiming to be the central entertainment and commerce hub we were promised in the late 90s.

Anyone remember the AT&T You Will campaign?

Nobody could pull this off until now because there was no utility. Back then it felt like trying to sell the first fax machines — sure one day when everyone has one I’ll get one too. The Networks effects of voice hardware are finally kicking in.

They did it by getting a marginally helpful voice controlled hub connected with everything you love then sprinkling in features you can’t live without.

In my thinking on Team, Time, and Tech — Amazon have nailed all three and my prediction is Amazon is trying own the “Home as a Platform” or “Home OS”.

Playing catch up here are Microsoft, Google and a distant Apple.

Let’s get the fun part out of the way: the word coachability auto corrects to “coach ability” or “coach-ability” but I like it combined so I am running with it.

I mentioned that this attribute is now towards the top of my list in what I look for in entrepreneurs in my lessons learned for Expa Labs 2016 and I wanted to elaborate more on why. You see when I sat down to really think about what to look for and research what has worked with a founding team, I made up a list of what appears to be the (almost cliched) list of traits. These traits are things like: execution abilities, category expertise, leadership, technical abilities, ability to hire and retain great teams, clear vision, etc… What I underestimated when working so closely with entrepreneurs every day is how much being coachable mattered.

This was exemplified when a team we were working with at Expa Labs took a bunch of feedback (some harsh criticisms too) and incorporated and summarized what happened into their own roadmap. Their vision and mission stayed true, and they were not influenced out of anything they knew they already wanted to build. However, they were able to take feedback, talk through how and why they made decisions, and understand where we were coming from. It’s hard to take feedback, especially when it is something that you built. The best part was that they came back and delineated all the thoughts down together and stated what they heard and what they were going to do about it. They carved out parts they didn’t agree with, explained how some parts were wrong and had a plan to do what was next. The best part? This was unprompted by us.

One problem that others have brought up when I share this trait is that it could be seen as a weakness. I disagree and find that [strong views loosely held] is a great way of describing the ideal personality. Perhaps the other factor in play is that this may not work for all because the Expa Labs program is 6 months of in-person help, advising and coaching. This may not be the right trait for a founder that is working hard on a problem in their own space.

One reason I write up a lot of my thoughts since I started writing is to ask for help when I need it. The hardest part of searching for this trait is identifying questions that can help judge someone’s coachability. To date, I have a few, but I am interested in learning more. The best outcome is that I can have an in-person session with a team, hopefully, get excited about the idea and give feedback and see what happens. Unfortunately, that doesn’t scale very well and there isn’t much time for that. Instead, I use my previous pattern recognition across the written responses and videos in the applications.

This is one of the reasons that Expa Labs hosts a select number of events for applicants. These have been beneficial to dig into an idea, meet folks, and generally just spend more time together. If you are interested fill out an application at Expa.com/labs. For the most part trying to figure out if a team/company can use our kind of help is the main goal. I am also first to admit that this type of program may not be right for everyone.

Back to coachability — I do not have it all figured out 🙂 Since evolving my own thesis for early stage founders for 2017 you will have to look back on the Expa Labs companies started  in 2016 to judge whether or not this system worked. One interesting point someone brought up to me is that while true performance can be measured against the IRR of the capital we deploy, there are more nuanced paths to success that a place like Expa offers such as career paths for people, Expa Studio companies that can yield interesting opportunities for founders and of course the experience itself which can help people.

While my primary goal with Expa Labs is to help build amazing companies, a close second is helping the people that run them. For that reason, I am spending my time identifying those that are most coachable.