The article focuses on the founder's Hypomania, but here's the elephant in the room that no-one's talking about:
Quote:
"But it is hard to tease out what Norman and Suzanne Priebatsch — a biotech entrepreneur and a financial adviser at SmithBarney, respectively — bequeathed ..."
His parents, who were successful in their fields, took the effort to groom him from childhood. Nurture is definitely at least as important as nature in this case, IMO.
I think that this highlights (perhaps an extreme example of) what is expected by founders. To be workaholics, sacrifice social life, home life, hobbies etc in order to build their companies.
While it's obvious that a lot of people do this and succeed it's not something that I'm sure other people want to do, it's certainly not something that I want to do. While others may see this of lack of commitment and consider me a non-serious business person, I don't.
I want to build a successful business that makes all the other stuff in my life better, more resources, more fun, more people to meet etc, but maybe that makes me a bad investment to VCs.
It's a little strange to see social-networking startups founded by people who seem to have relatively little interest in social life (including the 800-lb gorilla in the market).
It probably makes more sense if you think of people as the product being sold and not as the customers being sold to. Then again, I'm not sure that the people involved would like to be thought of in that way...
My great-to-the-nth grandpappy didn't claw his slimy tetrapod ass out of the Devonian sea just so his no-good descendants could sit in a cube playing Farmville all day!
Er, what? Becoming an actuary is not exactly easy and that seems like the only thing guaranteeing 6 figures quickly once you get through the door in an insurance company. Or am I wildly misinterpreting you?
From the book titled "The Myths of Innovation" by Scott Berkun-
"The talent for taking two unrelated concepts and finding connections between them is called associative ability. Persons with low associative barriers may think to connect ideas or concepts that have very little basis in past experience or that cannot easily be traced logically. Read that last sentence again: it's indistinguishable from various definitions of insanity. The tightrope between being strange and being creative is too narrow to walk without without occasionally landing on both sides, explaining why so many great minds are lampooned as eccentrics. Their willingness to try seemingly illogical ideas or to make connections others struggle to see invariably leads to judgement (and perhaps putting some truth to stereo types of mad scientists and unpredictable artists.) Developing new ideas requires questions and approaches that most people wont understand initially, which leaves many true innovators at the risk of becoming lonely, misunderstood characters."
I think the difference between creativity and insanity is that the former has lots of ideas and hates all of them, and the second can't help but fall in love with every last one.
I see the difference between creativity and insanity as a function of society. If a given society sees the connections as useful, it's creative. If instead, society cannot make sense of the connections, it's insanity.
As an analogy, mentally challenged children were seen as cursed in ancient Sparta and were routinely put to death. On the other hand, Mayan culture viewed mentally challenged children as "divine gifts," and the children could easily rise to positions of religious prominence and status in adulthood.
It's less a matter of the individual than how that individual can fit into society.
I like games. Lots of people do. But it's always the innovative, creative, never-been-done-before games that are the most fun. The common games can be addicting, but I wouldn't necessarily say satisfying.
The concept of corporations designing games for people to play sounds like a more organized and centralized version of what they are already doing. My credit cards give me points, the local Japanese fast food restaurant has a frequent buyer program, and grocery stores give me discounts if I agree to give up information about what I eat.
In general, I don't like these games. I am not going to alter my spending habits just to get 250 more BankPoints. If they give me points anyways, I will of course cash them in, but I don't like the feeling of being manipulated by large corporations via a game.
On the other hand, the companies seem to love it. I haven't seen any data, but considering how popular these 'games' are, they must work. And if they work by themselves, imagine how much better they will work when they're consolidated into a a website, which catches on like a fad and all the cool kids use it. Once the cool factor wears off, the industry has already been transformed to run all games on the defacto gaming website (SCVNGR in this case). So there's really no down-side for companies, and customers will think they're getting even better deals than they used to, because now it's just so easy to play games -- rack up points, earn achievements, get discounts.
I don't look forward to the days foretold by Jesse Schell, but it feels inevitable. The people who like playing corporate consumerism games today will be thrilled to take it to the next level on a popular website where companies are constantly trying to drum up more 'fun' (spend more, save more). I'll try it out, like I try out most new tech, but I'm not expecting to have much fun.
At least we know Seth Priebatsch will be having fun.
I've worked for an entrepreneur who seemed to experience manic episodes. There is an incredibly sad quality to working with such people. Most of the time, these people do not do well. And yet, they are full of potential, and ideas, and energy. They can be charming. You want them to do well. But they fail.
The person I'm thinking of, let's call him P, could be persuasive. He generally made a very good first impression. He lacked technical skills but imagined himself a good designer and eventually got to the point where he could design a page in Dreamweaver (the HTML would often be bad, and we'd have to get someone else to clean it up. For instance, divs with fixed height would have to become more fluid). P had inherited several million dollars from grandparents, and spent nearly all of it trying to build the next Google.
P had amazing amounts of energy. He generally worked 16 to 18 hours a day, sometimes for 7 days a week. He would start work at 10 AM or 11 AM and work till almost dawn, the next day. For a few months I lived at the large residential complex he had. Every meal was a business meeting - breakfast, lunch, dinner, late night snacks. It was exciting to be so wholly focused on work, and to let the rest of life just drift away. It is freeing to give up on a normal life and commit to doing just one thing. The long hours matched my own style, and I had a chance to learn a lot of new things.
P would often fantasize about what life would be like after the startup was world famous. He would talk about what kinds of charities he would donate money to, and how the media would approvingly write about the donations he made. Then he would tell us how each of us was going to get rich, we would all get equity and someday it would be worth billions. We would all own our own tropical islands. He really did talk this way. (I find when I describe this era accurately, people assume I am exaggerating.) The talk about equity slowly lost meaning, as all of us slowly lost faith in the project. It all sounded believable in 2002, less so by 2004.
The downsides to this type of personality is that they tend to get frightened by reality. They want to live inside of their lovely dream, where everything works out amazingly well. When we came up against good competitors, he would freak out. His euphoric episodes mixed with episodes of intense anxiety and guilt. Sometimes he would worry that, rather than building the next Google, he was just wasting away all the money he had inherited, and his parents were going to be mad as hell at him. Which is exactly what happened.
In his fantasies, the startup was suppose to sail smoothly to big success. Building the company was not suppose to involve tough decisions, rather, it was suppose to involve moments of brilliant insight, one after the other, as his company easily leaped in front of any potential competitor. When the years went by and nothing successful devolved, he began smoking a lot of pot, to try to control the anxiety.
I worked with this person, on and off, from 2002 to 2008. We first came up with a CMS to compete with TypePad. But then TypePad got way ahead of us so he switched our focus RSS feeds and podcasting. We started work on something like Odeo, about 6 months before Odeo showed up. When Odeo showed up, P quit working on podcasts. Then we worked on the CMS some more, we were going to sell it and compete with Expression Engine. That would only make sense if we were way better than Expression Engine, which was a moving target. WordPress was also a moving target, and by the end of 2005 it was becoming clear that WordPress was going to be really good. We went back to working with RSS and music and we came up with something very much like Hype Machine. This was early 2006, a few months before Hype Machine started. We gave up on that project for no obvious reason. Then I wanted to work on something like Google Pages, and this was about 6 months before Google Pages came out. I worked on this for a month. I couldn't interest P, so he killed the project after a month or two. Then we did some client work and then we did some web sites devoted to mp3s and videos, but none of these projects were developed enough to be taken seriously. In short, we tended to drift from idea to idea, as P would lose interest in one thing and then get manic and over-excited about the next thing. Then we went back to working with RSS, but the next project was embarrassingly stupid, it didn't amount to much more than grabbing Yahoo Pipes and running it through a PHP script to strip out any mention of Yahoo Pipes. That is about when I left.
On the one hand, working with someone who likes to daydream can be exciting - work becomes a brainstorming session that lasts for several years. On the other hand, as they say, who can live for long in an euphoric dream? There comes a point where you want to get to work. There comes a point where you want to stick it out with something, to try really hard, to take some setbacks but still keep going. Every startup needs to change the plan a few times, but to change the plan every 2 months, year after year, is a good way to burn through several million dollars and accomplish nothing. Which is exactly what happened.
For my part, I mostly had a good time, though the whole thing was like a minor tragic epic. It is rare that you see someone burn through so much money, with such an odd mix of manic intensity and crushing anxiety.
I think you are correct in theory, but it is difficult to put that into practice. The biggest hurtle, regarding money, is the question of when to increase the burnrate? That was an issue that P struggled with. In 2002 and 2003 we mostly just tinkered with stuff. He did not spend serious money on the web at that point. In 2004 it was clear that the music industry was changing in a big way. He had been dabbling with RSS projects, and he had been working with musicians. We played around with some podcasting stuff, we talked late into the night trying to imagine how iTunes would effect things, iPods, free music, FLAC files, more bandwidth, etc. In 2005 he felt it was time to go all in. So he hired a lot of people, so he could pursue some of his more ambitious projects. At that point he was spending maybe $30,000 a month.
At some point, you do need to start thinking about money. It becomes an obsession, I think for nearly any entrepreneur. I see the problem like this:
1.) if you crank up your burnrate too soon, then you will run out of money and fail
2.) if you do not ever crank up your burnrate, then you do not ever build a big business
Obviously, there are some qualifiers that it would be good to add, but I think the above problem covers a situation that maybe 80% of all entrepreneurs must face.
Once you do crank up your burnrate, then you need to think about money. A lot.
By the way, for anyone interested in the question "When should I increase my startup's burnrate?" the best answer I've seen is in the book The Four Steps to the Epiphany:
With a powerful enough vision coupled with a devotion to be the greatest, anything is possible. The world is just boring when we are 'stable' and 'normal' just for the sake of being accepted by people who don't have any dreams.
Are you sure it's a "paywall" and not just an account sign-up? I made a throw away account for NYT years ago and it seems to access the page fine, I wasn't aware they had activated a paywall yet?
For the manic guy, sorry 'bout him. My experience with people who are driven, determined, and brilliant but also unstable psychologically is that the instability is a serious flaw, gives instances of irrationality, and, net, can, from some of the instances, be fatal to whatever effort is being attempted and sometimes also to the person making the attempt.
I don't believe that the article is much about manic entrepreneurs and had another take: The article was from an NYT newsie trying to write something shocking to grab people by the gut to get eyeballs for ad revenue. So, the article is NOT about communicating realistic information about manic entrepreneurs but JUST about getting eyeballs for ads. Or, as in the 1951 movie The Thing from Another World where the newsie character Ned 'Scotty' Scott said about writing a news story: "If it's not good, I'll MAKE it good".
To get some entrepreneurship credibility to help in his eyeball grabbing effort, the NYT newsie went to
Mr. Paul Maeder
General Partner
Highland Capital Partners
There Maeder played along: Maeder seems to have wanted to have his name in the paper to help him get deal flow. And in particular he wanted to suggest that he was open to funding even "crazy" efforts. So, Maeder gave the statement:
“You need to suspend disbelief to start a company, because so many people will tell you that what you’re doing can’t be done, and if it could be done, someone would have done it already,” says Paul Maeder, a general partner at Highland Capital. “There are six billion human beings on this planet, we’ve been around for hundreds of thousands of years, we’re a couple hundred years into the industrial revolution — and nobody has done what you want to do? It’s kind of crazy.”
I flatly do NOT take this statement at face value at all. Instead, the statement is (1) to give the NYT newsie a grabber "crazy" (to go along with the manic part of the article) and (2) again, to suggest to entrepreneurs that all of entrepreneurship is "crazy" and, thus, he, Maeder, is willing to fund even "crazy" ideas from "crazy" people.
On "crazy" ideas:
“There are six billion human beings on this planet, we’ve been around for hundreds of thousands of years, we’re a couple hundred years into the industrial revolution — and nobody has done what you want to do? It’s kind of crazy.”
This statement is DUMB: Maeder is in effect claiming that no one can do original research and discover results that are, and clearly seen to be, new, correct, and powerful for real, practical problems. Nonsense -- totally misinformed and/or uninformed, just plain wrong, dangerous, brain-dead, head in the sand, disconnected NONSENSE. The NSF, NIH, and DoD provide contradictions by the hundreds each year and have for decades.
Any entrepreneur who understands how to find new, correct, powerful, valuable ideas at anywhere near the level of the work of the NSF, NIH, or DoD will have to conclude that Maeder will regard the work as just "crazy" and stay away from Maeder.
Next, anyone familiar with venture capital and the plans approved by the limited partners will know that nearly all venture partners, and likely also Maeder, make Series A venture funding decisions heavily on objectively observable numerical measures of traction and also on the founders and their track records and personalities where being "crazy" is NOT an advantage. That an idea is "crazy" does NOT improve the chances of funding; that there is good traction may permit ignoring that an idea is "crazy". That is, good traction, a "crazy" idea, and a manic founder are not nearly as good as just good traction.
More generally, part of the venture capital sales technique to attract deal flow is to toss out lots of vague cliches about the purpose and criteria of the venture firm. Instead, the purpose is to make money for the limiteds within the 10 year or so life of the fund, and the criteria are nearly all just traction and/or earnings, rapidly growing. There is little role for "crazy".
NYT newsies are at it again, as the NYT finances spiral down from the long river of various kinds of their brain-dead nonsense.
Quote:
"But it is hard to tease out what Norman and Suzanne Priebatsch — a biotech entrepreneur and a financial adviser at SmithBarney, respectively — bequeathed ..."
His parents, who were successful in their fields, took the effort to groom him from childhood. Nurture is definitely at least as important as nature in this case, IMO.