I am very happy to announce that Fred McIntyre has joined awe.sm, the company I founded and have led for the last 4 years, as CEO (read more about it on TechCrunch). My new role is Head of Product Development in which I will continue to lead product, strategy, and engineering.
This is at once one of the hardest and best things I’ve ever done.
There’s a lot of great writing out there on hiring non-founder CEOs from a business perspective: if you don’t want to have to do it, do these things (I definitely didn’t do enough of them); if you think you might need to do it, think about these things; and if you’re going to do it, try to do it like this. So what I really want to talk about is the personal side of this process from my perspective as the founding CEO.
I wish I could say this was my idea, but frankly I wasn’t self-aware enough to come up with it. To be an entrepreneur I believe one must have a somewhat irrational belief in your own capabilities, otherwise you’d never be dumb enough to start a company. Regardless of any perceived glamor, most entrepreneurs I know will tell you that starting and running a company is fucking hard and there’s often more misery than joy. But there’s just something broken in us that makes the prospect of doing anything else seem even worse. For those of us with this particular defect, I think the Peace Corps slogan sums it up: entrepreneurship is “the toughest job you’ll ever love.” The thing in me that drove me to quit my job, move in with my parents, and start awe.sm is the same thing that kept me going through incredible stress and the lowest of lows to make it to our Series A and it’s the same thing that kept me from asking for the help it was clear to everyone around me that I needed.
I put hiring a CEO in the same category as taking an acqui-hire or just closing up shop and moving on — things I would think about at 4am in the office on those darkest nights when I’d have a bout of sobriety about the insanity I’d turned my life into. And ultimately, things that represented the one unacceptable option motivating me to push even further beyond my limits I’d long surpassed: failure. In the early days, the only way for me to keep awe.sm from failing was to tie my fate with the company’s. If awe.sm failed, I failed. But as we switched from lean startup to growth company, I didn’t fully realize how making my ego a shareholder went from being necessary for survival to being a limitation on what we could achieve.
Fortunately, I have an amazing Board that cares about me as a person as well as an investment. Mark, Ian, and Ryan took the time to help me see why something needed to change, and, to their great credit, gave me the decision of what to do. I will never forget the emotional tornado (roller-coaster doesn’t do it justice) of that day. After 3 and a half years of fusing my self-worth with the success of the company in the crucible of startup survival, it was impossible to tear them apart without pain. But while my first reaction was disappointment and failure, it was almost immediately washed away by a wave of relief. I knew everything they were saying was true, arguably better than they did, and I knew change was inevitable, but I had no idea how stressful and exhausting maintaining my internal reality distortion field had been until they gave me permission to turn it off.
The basic choice we had in front of us was to sell the company or hire a CEO. We had plenty of money in the bank, a great engineering team in an impossible hiring market, and real valuable hard-to-build technology, so we were in a better position for a sale than many acqui-hires. Personally, I still owned 30% of the company outright and selling would have kept me from having to give up the CEO role. On the flip-side, we would be starting from scratch on the CEO search and it would ultimately mean signing up for a Series B (i.e. more dilution) and several more years of awe.sm. The Board said they would support either decision, but only I could make it. Talk about a gut-check!
Guess which one I picked . It was far from an easy decision, I agonized over it for weeks and got advice from a lot of smart and experienced people (thanks everyone!). I made the choice and told the Board; they asked me if I was sure and I told them I was; I had second thoughts and talked about it with a bunch more people; the Board asked me again if I was sure, I said I wasn’t but I was committed. And all this was before we even started recruiting a CEO! I ran the search process, screened all the candidates, and ultimately had the final say on who we hired.
I chose not to sell because I believe the opportunity for awe.sm is too big to ignore, and I chose Fred because he shares that belief. When Fred accepted his offer, Mark Suster said that he thought this would be the best year of my career. I hope he’s right, but I’m at least certain it will be the best year of my life since starting the company.
Spear phishing is an extremely potent hacking vector that combines social engineering with phishing. Basically, an attacker tries to learn enough about a specific victim to inform the design of a fake email that the victim is more likely to think is legitimate and thus open and engage with. For a detailed example of spear phishing in action, see this account of how the Onion’s Twitter account was hacked.
Standard phishing is generally thought of as a brute force attack in which the attacker crafts fake emails meant to fool the broadest set of people possible (e.g., you’re much more likely to see a phishing email claiming to be from a large national bank, like Chase or Bank of America, than a small regional bank). Whereas spear phishing has conventionally been viewed as a more bespoke approach that is targeted at a specific individual or organization. So the current conventional wisdom is that normal phishing attacks are relatively easy to spot, and only relatively sophisticated attackers going after high-value targets, like access to government or corporate systems, use spear phishing. But what if that’s changing?
Over the last several months, I have been the target of what might be a new, more scalable, approach to spear phishing. I have been receiving phishing emails that are sent using the names of people I know but not their email addresses (see below).
I was at first confused at how the attackers were coming up with these names. My first fear was that they had hacked my email account and thus had access to my address book, but I have 2-step verification enabled and I didn’t see any suspicious access in the Last account activity.
Then as I was looking through my spam folder this week, I noticed a pattern: the names being used were all people who had recently commented on my Facebook posts. This is just a hypothesis and there’s a lot I still don’t understand about the attack, like how they associated my email address with my Facebook profile, how they are scraping the comments on my Facebook posts, and most of all why they would target me.
But if in fact they are scraping Facebook activity to come up with the names to use as senders, this opens up a much more scalable (and thus dangerous) vector for spear phishing. I’m very curious to hear if anyone else has experienced similar attacks and/or has any other information to add.
Last month, I had the honor of participating in the inaugural Foundry Group portfolio CEO summit where we had an enlightening discussion on leadership. To kick-off the conversation, one of the other CEOs volunteered the story of a time he felt he failed as a leader: he had a disagreement with some of the engineers on his team about the complexity of a given feature; and when their conversations reached an impasse, he took matters into his own hands and coded the feature himself.
I found the most interesting part of the ensuing discussion to be the disagreement over whether this CEO’s act of digging in and coding the feature himself was a leadership success or failure. We didn’t do a formal survey, but the group appeared to be divided into two camps: one that felt he should have focused on solving the communication and process (and possibly staffing) issues that prevented his team from executing as he desired; and the other that saw value in the example he set by showing he was capable of and prepared to do what he asked of others.
Earlier this week I read Zach Bruhnke’s excellent post You’re not the CEO – you’re the Fucking Janitor, and it took my mind back to that discussion about what good leadership looks like in a startup. My answer: it depends. It seemed to me that the folks at the summit who felt this CEO failed by doing instead of managing were leaders of more mature companies, while the ones who admired his leadership by example tended to be running earlier stage startups. As someone running a company that had recently raised our Series A and was growing from a team of 5 in January to 14 today, I found myself agreeing with both sides of the debate.
For a boot-strapped or even seed-funded startup, I think Zach’s post is spot on. The “CEO” in Zach’s story is a total douche, and my business cards say “Co-founder” precisely because calling myself the Chief Executive over 4 of my friends made me think of Yertle the Turtle. My dad always told me “the fish stinks from the head”, which is just his graphic way of saying great leaders lead by example. In my relatively short leadership career thus far, I’ve taken this to heart and always jump at the opportunity to do things myself.
In addition to the mutual respect and motivation Zach mentions in his post, one of the greatest advantages I’ve found in this approach is the intimate understanding a leader attains of how things are done within their team. Across the many failures of leadership I’ve observed (I was at Yahoo! for 4 years ), there’s a recurring theme of the leader being too removed from the actual doing. Especially in the technology world, the means of production can be just as important as the output. I can’t tell you the number of product and business leaders I’ve dealt with who treat engineering like a commodity instead of a potential competitive advantage. You only need to look to the world’s most valuable company to see what great supply chain management (i.e. caring how the sausage gets made) can do for your business. And when you’re a software company, every architectural decision your team makes has a bearing on essential business considerations like performance, reliability, time-to-market, and agility in responding to new threats and opportunities. That’s why awe.sm is, above all else, an engineering-driven organization (and looking for even more great engineers ).
Never trust a “startup” CEO who doesn’t know how their product is built.
— J-Strizzle (@jstrauss) March 10, 2012
But in a later stage company, the leadership challenge is greater because you need to figure out more scalable ways of achieving these same goals. There was one particular line of Zach’s post that stuck out for me in this regard:
If you want to be a CEO in the sense that you dream of then you should remember to be the Fucking Janitor too.
A couple months after raising our Series A, I was washing dishes in the office and caught myself feeling self-satisfied because here I was, CEO of a company that had just raised millions of dollars, doing the dishes. I thought about my dad’s smelly fish saying and how he’d be proud of me. Then I thought about our investors and what they’d think of this…and it struck me they’d be pissed. Here I was, CEO of a company in which they’d just invested millions of dollars, doing the dishes instead of the dozens of other things only I could be doing to make their investment successful.
In the few months since then, my leadership focus has shifted. I still do the dishes when it’s my turn; when AWS shits the bed at some inhuman hour, I’m in our IRC room doing what little I can to help; and I always want to understand the gory details about why we made one architectural decision over another even if I wouldn’t know how to implement either of them myself. I am proud to continue to be a colleague to my team above all else. But leadership in a larger organization requires more than that. Our goal is to achieve on a scale bigger than what one person can achieve alone, and that means the leader needs to lead not just do. Doing is good, but when it turns you into a micro-manager or takes you away from leading, it can be counter-productive.
Delegation is hard. I’m finding delegating well to be much more challenging than doing things myself. Leading purely by example just requires effort and a willingness to do things that aren’t fun or glamorous, and as the leader you’re usually the most incentivized to get those things done. But effective delegation requires much more than mere will, it is a skill set developed with patience and learning and painful trial and error. It requires finding great people, training them in the skills you need them to have, motivating them to share your goals, empowering them with the resources and information to be successful, trusting them to do their jobs, and then giving them feedback on how to improve. I have come to believe my primary job as a leader is to enable the members of our team to deliver what the company needs from them, and that’s a lot harder and even less glamorous than being the Fucking Janitor.
Ironically, Dan Martell is one of the most genuine friends I’ve made in the startup world. I say ironically because he is a caricature – the guy literally uses hashtags when he speaks . But none of that can take away from how legitimately passionate he is about helping others, in particular other entrepreneurs.
Dan doesn’t talk about it much, but his path to the #leanstartup celebrity all his Twitter followers know today was a pretty long and unglamorous road compared to a lot of today’s entrepreneurs (including myself). Though he doesn’t remember it, Dan and I first met on the Internet back in 2009 when I was trying to do some early content marketing for awe.sm and he was, as always, building his personal brand by explaining how he got to 595 Twitter followers (how quaint! ). At the time, I believe Dan was still living in Canada having sold the professional services business he had built over years of unglamorously quotidian hard work, and, like me, was trying to break into the Silicon Valley in-crowd. I wrote him off as YASMDB (yet-another-social-media-douchebag), albeit one with amazing hair and actually pretty good advice, and forgot about @danmartell.
About a year later, awe.sm got its first “office” in San Francisco courtesy of some desks Klout was subletting in their space, where Flowtown was already subletting a conference room. Over the following 2.5 years I got to know Dan as we worked side-by-side there and later at the new office we moved to with Flowtown and Plancast. In such close quarters for such an extended period of time in such often-times stressful circumstances, you learn a lot about anyone. And what I learned about Dan is that his enthusiasm and passion and child-like love of startups are unimpugnably genuine. But in Dan’s case, I found myself learning a lot not just about him but from him as well. I learned from his example as well as his mentorship, with which he was always generous to everyone – those of us in the office just were fortunate enough to have access to the firehose. He has one of the best product senses I’ve ever seen because he has the rare ability to assume the veil of ignorance of a real user. And his belief that creativity and hard-work (aka #hustle) can solve any problem enables him to turn whatever challenge you bring him into an opportunity.
Even though we’ve talked about it several times over the last few months, what Dan is doing with Clarity.fm wasn’t truly clear to me until today when I started reading the (impressive) press coverage of their launch. Until this morning, I saw it as Dan building a product to solve a pain point Dan had and thought enough other people have to make it a viable business. Then I read the following quote Dan gave in the TechCrunch post:
For the first years of my working career, I was still living in my native Canada and I was desperate for advice. I emailed the minister of my province there, he respected that I was a young entrepreneur, and he introduced me to three guys that had built hundred million dollar companies. That was the reason that I moved to San Francisco in the first place,” Martell said. “I know that getting the right advice at the right time can dramatically change an entrepreneur’s life.
Only then did I realize this isn’t purely a convenience product for Dan, it’s a passion product. And when an entrepreneur and product person as talented as Dan is passionate about something, you know it is going to be great. So that is why I’m excited Clarity is being built by Dan.
As for why I am (and I think you should be) excited about Clarity in general, my friend Hunter says it better (and more concisely) than I can:
Excited by @getmoreclarity bec expert networks are another example of individuals unbundling from corporations to be their own business
— Hunter Walk (@hunterwalk) May 3, 2012
That money in politics you’re always complaining about, it’s yours. Take it back!
Our government is way broken. As citizens, we need to fix it fundamentally. And until then, the Internet industry needs to get better at playing by today’s broken rules. But in the case of SOPA/PIPA (also see this great infographic), there isn’t time to fight lobbying fire with lobbying fire, and the notion that emailing and Tweeting at Congress is our best shot of battling entrenched special interests is naive IMHO.
Yesterday we saw a great example of how grassroots online organization can focus our collective economic leverage into influence and results. But before we all go patting ourselves on our collective backs, let’s be honest: this was a gimme — an Internet business dumb enough to thumb their nose at their core customers, and who could ultimately be swayed by a chorus of angry digerati. I applaud the spirit of the GoDaddy boycott, and even participated, but I want us to parlay this small win into something much more meaningful. Let’s not stop at the pawns, let’s strike at the root of support for SOPA/PIPA: the entertainment industry.
More specifically, we need to kneecap the MPAA. Once you understand the motivations of the players involved, the logic of how we can put an end to this nonsense is relatively straightforward. The MPAA is a trade group that represents and is funded by the 6 major film studios (Disney, Warner Brothers, Universal, Fox, Sony, and Paramount). It has an annual budget, determined by its members, that has been shrinking since 2009. The recently appointed new head of the MPAA, former Senator Chris Dodd, is pulling down more than $2 million a year to turn the organization around, which means convincing the studios that they should increase its funding. Not to be overly-cynical here, but it doesn’t seem like too much of a stretch that a former Senator being paid a ton of money in the private sector might seize on Congressional legislation highly favorable to the industry he now represents as the quickest way to prove his (and his organization’s) worth.
I am convinced that the management of the studios don’t really care that much about SOPA/PIPA. If they thought anti-piracy legislation was important, they wouldn’t have been slashing the budget of their lobbying organization over the last several years: in 2007 the MPAA’s overall annual budget was $93 million, in 2009 it was down to $64 million; and within the MPAA itself, the money spent on lobbying went from $2.7 million in 2008 to $1.7 million in 2010. This legislation is even worse than what everyone thinks — it’s not being driven by the needs of a single industry, it’s being driven by the needs of a single industry *trade group*. The studios support it because they’ve been told it will be good for them (even though anyone who knows anything about technology knows it will do little to actually stop piracy) and because there’s no additional cost to them other than what they’ve already sunk into the MPAA’s annual budget. Let’s change that!
If we can show the studios that this ineffective legislation that only succeeds in being hostile to their customers is going to cost them money, I believe they’ll rein in Dodd and the MPAA right quick and that would be the end for SOPA/PIPA. The good news is we have a clear path for demonstrating that cost because, even though these guys may not read the bills they’re paying to have written, they watch their weekend box office receipts like hawks. The bad news is I don’t think the usual online activist base will be enough — in order for this to work, we need to get real people to take real action by changing their offline behavior (i.e. it only works if people who normally go to theaters don’t go when we ask them).
So, here’s what I propose:
- We pick a weekend far enough from now that we have time to adequately mobilize mass support
- We educate our non-geek family and friends (aka muggles ) about how SOPA/PIPA will impact the Internet in ways they care about (e.g. censoring YouTube and Facebook)
- *Then* we start making noise online to get as many people as possible to join the boycott on the appointed weekend and to make clear to the studios that the dip in revenue they’re going to see that weekend is a direct result of their support of SOPA/PIPA
That’s my idea. I think it can work, but only if enough other people think it makes sense and want to help. I’m open to suggestions on how to move forward and happy to help however I can in making this a reality. You can reach me at jonathan [at] jonathanhstrauss.com and @jhstrauss on Twitter.
And in the meantime, I’ll be that guy annoying his girlfriend’s family about the evils of Internet censorship at Christmas dinner .
Apple’s acquisition of Lala yesterday is the coda to an interesting chapter in the evolution of the music industry. It comes on the heels of MySpace’s acquisitions of iLike and iMeem (both at similarly distressed prices to the reported ~50% discount in the Lala deal) as well as the launch of (nearly) inline streaming music in Google’s search results. Talk about mixed messages: the business of on-demand streaming music (vs. streaming radio like Pandora) is broadly being conceded as a failure just as the user experience is finally hitting the mainstream.
In the last 24hrs, I’ve read a lot of analysis across the spectrum and heard the thoughts of friends in various segments of the music industry. Here are some of the big issues that are front of my mind.
Whither the MP3 of streaming music?
Most of the people I respect in online music have been opining for on-demand streaming music for years. So, their first reaction has echoed that of my friend Lucas: music in the cloud will now be a reality. But *how* it will become a reality matters too, and I think that’s been lost a bit in the discussion so far.
In the download world, an open format (MP3) pre-dated Apple’s entry. So, they had no choice but to support it in order to make their software and devices backwards compatible. In fact, it’s easy to forget today that the market for iTunes and the iPod was largely built around satisfying the needs of consumers of illegally acquired music (the iTunes Music Store was actually launched over 2 years after iTunes debuted). If not for that pre-existing market condition, I don’t think it’s hard to believe the iPod would only play AAC music files (Apple’s proprietary format). Remember that no one could compete with the iTunes Music Store as a legitimate storefront for online music until less than two years ago, when the labels agreed to let Amazon and others sell in MP3 format so that customers could play the songs sold by retailers other than Apple on iPods. (This in itself was an interesting saga with Jobs publicly justifying why Apple would never support someone else’s proprietary format on their software/devices and why they would never license Apple’s DRM to others. In the end, the labels’ fear of Apple’s growing control of the online music value chain was greater than their fear of piracy and they called Jobs’s bluff by actually licensing MP3 sales.)
The relevance here is that there is no MP3 equivalent for streaming music — no pre-existing open standard that consumers will require Apple to support before they buy a wifi-enabled iPod (aka iPod Touch). Just like there is no (legitimate) way to play films or tv shows not downloaded from the iTunes Store on your Apple TV, there will be no way to consume on-demand streaming music from other sources in the native player on your iPod. You will of course continue to be able to install separate third-party applications, like Pandora or Spotify, to manage and play streaming music you acquire through those services. But, that silo will continue to be incompatible with iTunes and the rest of your music library while the native player will offer you an integrated consumption experience across downloaded and streaming music. Maybe this will still be good enough for the small number of power-users who care enough to want an alternative to the Apple offering (like those of us today who install the eMusic or Amazon download manager to have a somewhat equivalent purchase alternative to the iTunes Music Store).
However the segment for whom I think the lack of an open streaming music standard is potentially most harmful is the actual artists and the growing industry of direct-to-fan enablers, including my good friends at Topspin. Direct-to-fan sales are better for the artist because they get to own the customer relationship with the people who are *their* fans to begin with (see my boy Ian explaining to Wired how important this is) and they can have more control of the offering and better margins by cutting out middle-men like Apple. Today, I can buy an album directly from Topspin artists like Get Busy Committee or Fitz & The Tantrums (two of my current faves) in MP3 format and play it in iTunes and on my iPod. How exactly are they going to sell me streaming music outside of iTunes (or a 3rd-party service)? There are products like MobileRoadie, which artists can use to create their own branded iPhone/iPod app. But, I don’t foresee consumers being willing to switch apps every time they want to hear a new artist (and forget about a streaming playlist with multiple artists).
Several commentators on the Lala deal have noted that their licenses with the labels expire in the case of an acquisition. And I hear from insiders that Apple has already had requests for streaming licenses denied by at least some labels. Here’s why neither of those things matter.
Apple is going to build a kick-ass streaming experience natively integrated into their service/software/device stack of the iTunes Music Store, iTunes, and the iPod. They are going to get the thousands of independent labels, aggregators like TuneCore who represent individual artists, and at least one or two major labels (my bet is EMI will be first) to give them streaming licenses on a critical mass of music. Then, they are going to use the iTunes Music Store to promote the shit out of both downloads and streaming (most likely bundled) from the artists for whom they have streaming licenses while at the same time freezing out promotions for any hold-outs.
This is a non-issue IMHO and every song you can buy as a download from the iTunes Music Store today will be available for streaming within a year of launch (just ask NBC how well playing chicken with Apple works).
Sustaining innovation doesn’t work.
This post is already way longer than I intended, so I’ll leave this point as more of a footnote. On-demand streaming music is the future. Everyone I respect believes it, Apple believes it, it is the logical conclusion of the path the music consumer experience has been on since Napster. And yet it is a business widely viewed as “toxic” by investors, several of whom in recent months have demonstrated they think so little of its future potential that they are willing to take steep losses on their investments to get out. What gives?
Not only were these businesses endorsed by the major labels, both iMeem and Lala actually had labels as investors (as does Spotify). The reason that on-demand streaming music is a great product but shitty business is because the license fees demanded by the labels make it impossible to make money with any kind of offering that consumers will think is reasonable. It’s somewhat counter-intuitive that a vendor who is an investor wouldn’t be willing to adjust their pricing in order to preserve the value of their investment. But Warner Records, in particular, made it clear that are happy to spend tens of millions of dollars co-opting companies they see as potential threats and running them out of business in order to prevent hundreds of millions of dollars in (perceived) cannibalization.
This is Clayton Christensen 101:
By only pursuing ‘sustaining innovations’ that perpetuate what has historically helped them succeed, companies unwittingly open the door to ‘disruptive innovations’.
In other words, by trying to take an innovation and use it only to perpetuate and/or protect legacy business models, incumbents give new entrants the opportunity to do things the way the market actually wants them to be done regardless of how they have been done in the past. By trying to force LaLa from being a potentially disruptive innovation into a sustaining innovation, Warner Music and the other major labels unintentionally drove them into the arms of Apple, still the biggest threat to the legacy model the labels are trying to preserve. (Studios and networks trying to “de-fang” Hulu, take note.)
The Ringers are an LA band fronted by Joe Hursley (aka White Gold). I first caught them opening for Fool’s Gold at one of Little Radio‘s Summercamps in August (see 3rd video below) and they stole the show. The music has started to grow on me, but the performance is pure LA punk and cannot be ignored. If you like to rock, don’t miss a chance to see them live.
“Beaver Fever” and “Keepin’ Your Head Up” at The Viper Room on October 16, 2009 (Joe takes my camera on stage about 2min in):
“Scene You See” at The Viper Room on October 16, 2009:
“Scene You See” at Little Radio Summercamp on August 30, 2009: