BuzzFeed’s CEO, Jonah Peretti, recently sent out an email to employees and investors summarizing the company’s strategy and progress. I really liked his email so I asked Jonah if I could blog it and he gave me permission. This isn’t just the usual cheerleading email – there is a real strategy here (I especially like the strategy choice in section 3), and it’s working.

I’m an investor in BuzzFeed and friends with Jonah so of course I’m biased. But to me what makes BuzzFeed great is their highly unusual combination of capabilities and sensibilities – the capabilities of a first-rate tech startup with the sensibilities of media industry veterans. I think Jonah’s email captures this well.

From: Jonah Peretti Subject: The Top 7 Reasons BuzzFeed Is Killing It To: BuzzFeed Employees

Hello BuzzFeeders,

As you just heard at the all hands meeting, things are going great at BuzzFeed. We passed 30M unique visitors last month, our revenue is on pace to be more than 3 times what we did in 2011, we have grown from 26 full-timers at the start of last year to 117 today, and we have published entertaining and important stories enjoyed by millions of people. Our revenue is surging as brands shift their budgets to social ads and our recent growth is driven more by revenue than VC funding – an amazing milestone for any startup. We still have a long way to go but it has been a great year so far.

Whenever a company has this kind of success the press, competitors, and the public start asking: “how do they do it??!?” Unfortunately, this speculation is often unkind and unfair. The default assumption is that a company must be cheating somehow or using some trick to grow traffic or revenue.

This skepticism is actually justified because many startups actually do use tricks or shortcuts to succeed. Some companies figure out ways to juice their numbers so they can quickly sell for millions and then a year later it all comes crashing down. The dotcom era was as famous for Geocities, Broadcast.com, and Pets.com as it was for Amazon, Yahoo, or eBay. Based on industry precedent, it is understandable that people are skeptical when a startup starts to really take off.

Nevertheless, BuzzFeed has received a very positive reception from the public, readers, our partners, and the press. But occasionally someone engages in uninformed negative speculation about us, mostly because they are confused about what we are doing. This confusion is likely to increase in the future. As we grow it is important that we help people understand what we are doing and why it is interesting and different.

In that spirit, I want to share some of my thoughts of about why things are going well, why our success is based on hard work and a unique approach, and how you might explain what we are doing to a drunk, misguided hater at a party.

Why BuzzFeed Is Succeeding Right Now?

1) Long Term Focus

When you compare web publishing today with what Hearst and Conde Nast built in the last century, it is clear that online publishing has a long long way to go. As sites like Facebook and Twitter mature, the moment is right to build a defining company for a world where content is distributed through sharing and social media instead of transitional print and broadcast channels. Why shouldn’t we be one of the companies that builds this future?

This big opportunity is why we are focused on building an enduring, independent, and self-sustaining company. Nobody has built a truly great publishing company for the social age and we have a good shot to be the ones who do it. But it means that we can’t take short cuts, we need to always invest in the future, and this is why we spend so much time and money building technology and products that don’t have an immediate impact on the company but will help us down the road.

We could juice our traffic and revenue by dropping everything and focusing entirely on the short term. And that is what companies do when they are trying to flip for a fast payday. But when you are building something enduring, you have to care as much about next year as you do about next week. That is how you build something big and that’s our goal.

2) Respecting our Readers

We care about the experience of people who read BuzzFeed and we don’t try to trick them for short term gain. This approach is surprisingly rare.

How does this matter in practice? First of all, we don’t publish slideshows. Instead we publish scrollable lists so readers don’t have to click a million times and can easily scroll through a post. The primary reason to publish slideshows, as far as I can tell, is to juice page views and banner ad impressions. Slideshows are super annoying and lists are awesome so we do lists!

For the same reason, we don’t show crappy display ads and we make all our revenue from social advertising that users love and share. We never launched one of those “frictionless sharing” apps on Facebook that automatically shares the stories you click because those apps are super annoying. We don’t post deceptive, manipulative headlines that trick people into reading a story. We don’t focus on SEO or gaming search engines or filling our pages with millions of keywords and tags that only a robot will read. We avoid anything that is bad for our readers and can only be justified by short term business interests.

Instead, we focus on publishing content our readers love so much they think it is worth sharing. It sounds simple but it’s hard to do and it is the metric that aligns our company with our readers. In the long term is good for readers and good for business.

3) We Build The Whole Enchilada

Most publishers build their site by stapling together products made by other companies. They get their CMS from one company, their analytics package from another, their ad tech from another, their related content widgets are powered by another, sometimes even their writers are contractors who don’t work for the company. This is why so many publisher sites look the same and also why they can be so amazingly complex and hard to navigate. They are Frankenstein products bolted together by a tech team that integrates other people’s products instead of building their own.

At BuzzFeed we take the exact opposite approach. We manage our own servers, we built our CMS from scratch, we created our own realtime stats system, we have our own data science team, we invented own ad products and our own post formats, and all these products are brought to life by our own editorial team and our own creative services team. We are what you call a “vertically integrated product” which is rare in web publishing. We take responsibility for the technology, the advertising, and the content and that allows us to make a much better product where everything works together.

It is hard to build vertically integrated products because you have to get good at several things instead of just one. This is why for years Microsoft was seen as the smart company for focusing on just one layer and Apple was seen as dumb for trying to do everything. But now Apple is more than twice (!) as valuable as Microsoft and the industry is starting to accept that you need to control every layer to make a really excellent product. Even Microsoft and Google has started to make their own hardware after years of insisting that software is what matters.

BuzzFeed is one of the very few publishers with the resources, talent, and focus to build the whole enchilada. And nothing is tastier than a homemade enchilada.

4) We Are Doing Something Hard

Vertical integration means we have to be good at lots of things which is hard. But doing something hard can actually be an advantage for a business. It means that there are not that many other people trying to do what we do or capable of doing what we do. For example, venture capitalists don’t like funding companies that have reporters on staff. In the early days of BuzzFeed, I had several VCs say they were interested in investing if we could figure out a way to fire all the editors and still run the site. I’m not joking.Tech investors prefer pure platform companies because you can just focus on the tech, have the users produce the content for free, and scale the business globally without having to hire many people. Startups that promise this vision have an easier time attracting funding which is why there are so many startups trying to be the next Twitter or Facebook or the Instagram or Pinterest for X, Y, or Z. Meanwhile, companies that employ reporters, editors, and creative people usually struggle to get funding which is why so few publishing companies or agencies are venture backed.

Fortunately, we have been able to convince a few, smart contrarian investors to back our business including NEA, the biggest venture fund in the world. As one of the few venture backed publishers, we are in a unique position to be one of the leading creators of web content crafted by true professionals. There are lots and lots of things that random, unpaid web users suck at doing. In particular, the best reporting and the most entertaining media is usually created by people who do it for a living – that means us!

5) We Got Lucky!

A big part of our recent success has also been luck. People don’t like to admit it but skill is 63% luck.

In our case, we got very lucky with timing. We were a company focused on making content for people to share just as the social web came of age, at the moment when Facebook and Twitter and other platforms reached scale, and at exactly the moment when it became possible to build a big publishing company through social distribution.

This same lucky shift made our business model work for the first time. A couple years ago, we were trying unsuccessfully to sell social advertising to a market that only wanted to buy banners but things have changed dramatically since then. Now many agencies and brands are refusing to buy banners, companies that rely on traditional display units are suffering, and budgets are shifting rapidly to social advertising. One of our board members, who was initially skeptical of our decision to not run banners, recently said that “social advertising will be the biggest media business since cable television.” Times have changed.

Now we are leading the market, which is a huge opportunity, but it was pure luck that a social advertising market even exists for us to lead. It’s like we happened to start surfing a few minutes before a great wave rolled in. Or we built a locomotive and a few days later the train tracks got built. We were obsessed with social content and ads before anyone else cared and it was extremely lucky that the world shifted toward us when it did. The question now is how well we capitalize on our good fortune.

6) We Don’t Treat Half Our Team Like Losers

BuzzFeed is unique in that we are equally obsessed with 1) entertaining content, 2) substantive content, and 3) social advertising. The teams that focus on each of these areas are equally important which is a key part of our success. We want our cute animals, humor, and animated gifs to be the best of their kind on the web – they aren’t just a cheap way to generate traffic. We want our reporters to have the best scoops, the smartest analysis, and the most talked about items – they aren’t just a hood ornament to lend the site prestige. And we want our advertising to be innovative, inspiring, and lead the shift to social – and not just be a necessary evil that pays the bills.

Some companies only care about journalism and as a result the people focusing on lighter editorial fare or advertising are second class citizens. Some companies only care about traffic which creates an environment where good journalists can’t take the time to talk to sources or do substantive work. Some companies only care about ad revenue and actually force editors to create new sections or content just because brands want to sponsor it.

People don’t do good work when they feel like losers and are second class citizens within their own company. Fortunately we have avoided that problem. We love the silly, we love the substantive, and we love making advertising that is actually compelling. And when we are good at these three things it benefits everyone and the world.

7) Our Awesome Team

This next one will sound a bit cliche and sappy, but a huge reason we are doing well now is…….you. We have an amazing team of extremely talented people who really know what they are doing.

We have a group of culture editors who are insanely tapped into the flow of culture on the web, from 4chan to Reddit to Tumbler to Twitter to Pinterest to blogs to pop culture to memes and know how to add their own ideas to the mix and create entertaining posts that people love to share.

In just the past 6 months (!), we have assembled an incredibly talented group of reporters and writers who are regularly breaking news, unearthing scoops, advancing ideas, and engaging business leaders, US Senators, Presidential candidates, the White House, and leading media outlets. Politics was our first vertical and has already become THE defining outlet of the 2012 presidential campaign and the newer verticals are already on their way to owning there respective areas.

Our teams focused on social advertising are totally killing it, with a consultative sales team full of ideas for clients, a creative services team making incredibly entertaining and sharable ads, a social discovery team expanding campaigns to Facebook, Twitter, and across the web, and an ad ops team that traffics our campaigns with skill, grace, and dogged determination – it’s not surprising we are blowing away all our revenue goals. Gong!

And finally the tech, product, and data teams are inventing and building an unparalleled social publishing platform that powers everything we do, including a massive non-relational realtime stats database that tracks billions of data points for our Social Intelligence Report (launched today!), machine learning system for predicting viral hits, elegant publishing tools for editors, and a beautiful front end design that is continually tested, improved, and evolved with the benefit of smart multivariate testing.

You rock and you keep getting better and better with each passing day. It is really amazing to watch.

But Success Is Fragile…

It’s easy to get excited and arrogant when things are going well but it is important to remember that success is very fragile. Digg sold for $500K after being worth $200 million just a few years ago. In the same time period, RIM, maker of the Blackberry, lost 95% (!) of its value. There is continual disruption in our industry and you are likely to fail if you get complacent or stop evolving.

This is why we met today to discuss our “Next Level” plans and why we are always focused on pushing what we do to the next level. We have done amazing work in the past year and we should all feel proud. But to thrive in the future, we need to stay humble, enjoy the journey, and continually evolve and improve.

I’m really looking forward to the rest of the year.

Thank you all for doing such inspiring work.

The post The Secrets to BuzzFeed’s Success appeared first on The Faster Times.

Social entrepreneurship just got a much-needed dosage of altruism thanks to StartSomeGood. Co-founders Alex Budak and Tom Dawkins launched the crowdfunding website in March of 2011 in an effort to allow young entrepreneurs to get their ventures off the ground. Think of it as Kickstarter for charitable campaigns and nonprofits. 15 months later, StartSomeGood has helped 65 projects raise over $400,000.

Budak and Dawkins originally worked together at Ashoka, a global organization that pioneered the social entrepreneurial movement. When Budak volunteered in India, he wanted to come home and create his own service projects, but he didn’t know how to get the necessary funding.

Then, the light bulb kicked on above his head.

“It’s not going to be one or two organizations that change the world,” Budak said. “Rather, it will be a lot of people doing social good in their own way that’s really going to make social change possible.”

So, Budak called Dawkins, who has founded several nonprofits in Australia including Vibewire, and they began building StartSomeGood. They accepted ten service projects during the initial application process and strategized ways for each venture to appeal to potential donors with social media promotion and multimedia campaigns.

Dawkins said: “We needed to lower the barrier for entry for change makers, particularly when it comes to raising early stage capital to launch new initiatives… Once things have been piloted and success and impact can be proven, there are often other funders, but the greatest challenge is in the earliest stages.”

StartSomeGood took Kickstarter’s crowdfunding platform and made one crucial improvement. Instead of having an all-or-nothing approach where social entrepreneurs either reach an ultimate goal or the funds are returned to investors, Budak and Dawkins instituted a tipping-point model that adds an achievable benchmark for each venture to begin doing social good.“Kickstarter is much more binary. I need ten thousand dollars to shoot this film. I get ten thousand, I can do it, but if I get five thousand, then I really can’t,” Budak said. “With social ventures, there are two goals. The tipping point is the amount of money you need to start doing good in the world, and then there is the dream goal, recognizing that the more you raise, the more good you can do.”

The Center for the New American Dream is an organization that recently used StartSomeGood to successfully fund an ecological sustainability kit called “The Guide to Going Local.” With a tipping-point of $8,000 and an ultimate goal of $12,000, New Dream raised $8,720 and received contributions from close to 160 donors.

Wen Lee, the Communications Associate for New Dream, said the biggest advantage of working with the StartSomeGood team was the diligent line of communication. “They were extremely prompt and personally responded to all of our questions,” she said, “which I feel like we wouldn’t have gotten with KickStarter.”

Budak advised New Dream to focus on producing a compelling short video that would attract donors to the campaign. He sent Lee a link with examples of ten videos from past projects and encouraged New Dream to get experimental. The staff of New Dream took turns narrating lines of dialogue, relating back to the organization’s emphasis on community and resource sharing.

“We have a virtual office with employees in different cities across the country, so we stitched it all together, and I think the video really helped us, because folks got to see that we’re not just an organization. They got to meet us and see the passion we have for what we’re doing.”

StartSomeGood also has a virtual team, with Budak in Washington D.C., Dawkins in Australia, and other staffers in New York, Minneapolis, and California. The goal is to create a world of social interaction that inspires others to initiate their own plans of action.

Celia Neustadt graduated from Pomona College in May and moved to Baltimore to set up The Inner Harbor Project, a collaborative youth summer program that teaches high school students how to conduct qualitative research relating to social activism. Neustadt won a $10,000 grant during her senior year of college, but needed additional funding for the students, so she chose StartSomeGood because of the website’s focus on charitable campaigns.

Neustadt echoed Lee’s comments. “At first, I was shocked by the amount of attention [Alex] gave me…Sometimes we emailed twenty times a day. If there was a specific issue, he would email me back right away.”

The StartSomeGood team also sent Neustadt an ideas checklist to help her advertise her venture. She said the list offered important suggestions such as making sure the Inner Harbor Project had a streamlined online presence that linked Twitter and Facebook to the program website.

“By reaching out to online bloggers, I gained a lot of positive support. I contacted the local media in Baltimore. I got a lot of non-tangible support that I think will turn into money.” The list made Neustadt aware of all the technological steps she should be taking to increase her chances for success. If her venture is successful, she hopes that it will lead to a youth coalition in the near future.

Lee and Neustadt both said the only aspect they would change about the process would be to eliminate PayPal. StartSomeGood uses PayPal as a middleman to handle donations, and a few donors had trouble finalizing their contributions. However, a few technical difficulties are to be expected when a social website of this magnitude is just beginning.

Next on the horizon for StartSomeGood: growth.

“We really want to expand our global footprint, “ Budak said. “Part of our model is to have ventures run second and even third campaigns…We’re working to make the user experience as solid as possible.”

As a startup with good intentions, Budak, Dawkins, and the rest of the team are off to a strong start.

“We want to literally be supporting anyone, anywhere who wants to create change.”

The post If Money Makes the World Go Round, Now You Can Spin It the Right Way appeared first on The Faster Times.

Facebook relies on an old internet business model: display ads. Display ads generally hurt the user experience, and are also not very efficient at producing revenues. Facebookmakes about 1/10th of Google’s revenues even though they have 2x the pageviews.Some estimates put Google’s search revenues per pageviews at 100-200x Facebook’s.

The good news for Facebook is there is a lot of room to target ads more effectively and put ads in more places. The bad news is that, if there is one consistent theme in both online and offline advertising, it’s that ads work dramatically better when consumers havepurchasing intent. Google makes the vast majority of their revenues when people search for something to buy or hire. They don’t have to stoke demand – they simply harvest it. When people use Facebook, they are generally socializing with friends. You can put billboards all over a park, and maybe sometimes you’ll happen to convert people from non-purchasing to purchasing intents. But you end up with a cluttered park, and not very effective advertising.

The key question when trying to value Facebook’s stock is: can they find another business model that generates significantly more revenue per user without hurting the user experience? (And can they do that in an increasingly mobile world where display ads have been even less effective.) Perhaps that business model is sponsored feed entries, as Facebook seems to be hoping (along with Twitter and perhaps Tumblr). The jury is still out on that model. Personally, I have trouble seeing how insertions into the feeds aren’t just more prominent display ads. You still have to stoke demand and convert people from non-purchasing to purchasing intents. A more likely outcome is that Facebook uses their assets – a vast number of extremely engaged users, it’s social graph, Facebook Connect – to monetize through another business model. If they do that, the company is probably worth a lot more than the expected $100B IPO valuation. If they don’t, it’s probably worth a lot less.

Read more at Cdixon.org

The post Why Facebook Needs a New Business Model appeared first on The Faster Times.

2. I don’t know what the product design motivations are for uploading contacts, but I assume there are legitimate ones. [commenters suggest it is mainly to notify users when their friends join the service]. If this or something similar is the goal, you could probably do it in a way that protects privacy by (convergently?) encrypting the phone numbers on the client side (I’m assuming the useful info is the phone numbers and not the names associated with the phone numbers since the names would be inconsistent across users).

3. Many commentators have suggested that a primary security risk is the fact that the data is transmitted in plain text. Encrypting over the wire is always a good idea but in reality “man-in-the-middle” attacks are extremely rare. I would worry primarily about the far more common cases of 1) someone (insider or outsider) stealing in the company’s database, 2) a government subpoena for the company’s database. The best protection against these risks is encrypting the data in such a way that hackers and the company itself can’t unencrypt it (or to not send the data to the servers in the first place).

A bad outcome from this controversy would be to have companies encrypt sensitive data over the network and then not encrypt it on their servers (the simplest way to do this is to switch to https, a technology that is much more about security theater than security reality). This would make it impossible for 3rd parties (e.g. white-hat hackers) to detect that sensitive data is being sent over the network but would keep the data vulnerable to server side breaches / subpeonas. Unless Apple or someone else steps in, I worry that this is what apps will do next. It is the quickest way to preserve product features and minimize PR risk.

4. I worry that by just adding tons of permission dialogs we are going back to the Microsoft IE/Active X model of security. With lots of permission popups, users get fatigued and confused and just end up clicking “Yes” to everything. And then the security model says: If the user says “yes”, and the app uses “best practices” like https, it can do whatever it wants. We saw how this played out with the spyware/adware epidemic on the web from 2001-2006 and it wasn’t pretty.

Read more at cdixon.org

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- Great for Boston. Fairly or not, Boston is often typecast as an infrastructure, B2B, hardware, and biotech town. Between Tripadvisor and Kayak, Boston now has at least two very important consumer internet companies.

- Big win for the “golden age of SEO”. By which I’m referring to roughly 2001-2008 when “demand” for content (people typing in search queries) far outpaced supply (good content). Companies like Yelp and TripAdvisor (along with Wikipedia, IMDB, etc) grew huge during this period, almost entirely through SEO. They did this by getting highly defensible flywheels spinning where more content meant more SEO which meant more users which meant more content. It is now far more difficult to grow a startup primarily through SEO. Almost all monetizable search categories have vast excesses of SEOd content. Moreover, Google is creating their own content (e.g. Google Places) which, at least at times, they have favored in their search results.

- The user experience should improve. MG Siegler and others have criticized TripAdvisor for an excess of ads. I don’t disagree with MG, but I also think this is largely the result of the broken online ad attribution system that punishes intent generators and rewards intent harvestors. Travel reviews are for users at the beginning of the travel research process (which on average takes weeks), but all CPA and CPC ad programs pay only for the last click which usually means when users are purchasing tickets or making reservations. Hence review sites are forced to saturate their website real estate with purchasing widgets and display ads. Hopefully as online ad attribution improves this will no longer be necessary.

- It’s weird how little coverage this IPO got and how the financial press missed the interesting stories. TripAdvisor ended the day at ~$3.5B in market cap, making it the second most valuable East Coast consumer internet company (after Priceline). Every story I saw focused on the share price drop over the day. The fact that the price dropped from its opening price simply means the bankers mispriced the stock and therefore insiders didn’t get the sweetheart deal they thought they were getting.

Update: I interviewed the CEO/founder of TripAdvisor on TechCrunch yesterday. Topics include the company’s origins, relationship with Google, SOPA, and advice to fledgling entrepreneurs.

The post The TripAdvisor.com Success Story appeared first on The Faster Times.

Somewhat counterintuitively, the biggest problem we encountered when pitching Hunch technology to potential partners wasn’t that it wasn’t interesting or useful to them, but that it was so interesting and useful that they considered it “strategic” or “core” and thus felt they needed to own and not rent it. The situation reminded me of the “Goldilocks principle” sometimes referred to in scientific contexts:

The Goldilocks principle states that something must fall within certain margins, as opposed to reaching extremes. It is used, for example, in the Rare Earth hypothesis to state that a planet must neither be too far away from, nor too close to the sun to support life.

Basically, if your technology is “too hot” – or, in business-speak, “strategic” or “core” – then there are three likely outcomes:

1. The potential partner turns you down because they decide to build a similar product themselves. This happened to us a number of times. I think part of the reason was that there was a lot of market buzz around “big data” and machine learning which lead to the perception – rightly or wrongly – that those capabilities needed to be owned and not rented.

2. The potential partner says yes because your assets are so defensible they can’t replicate them. I’m sure Zynga considers the social graph strategic but at least for now they have no choice but to partner with Facebook to access it. It is very rare for startups to have this kind of leverage, but ones that do are extremely valuable.

3. The potential partner wants to own what you do, but thinks you have a sufficiently superior team and technology that acquiring you instead of replicating you makes more sense. This is only possible if the partner is large enough to acquire you and has a philosophy consistent with acquiring versus building everything in-house. (A common tech business term is “NIH” which stands for “Not Invented Here”. It refers to a set of companies that consider anything developed outside of their offices technologically inferior).

At the other extreme, if your technology is “too cold” – perceived as not useful by potential partners – you’re going to have a lot of frustrating meetings. In this case, it is probably wise to reconsider whether there is actually demand for your product.

To build a long-term sustainable business, the best place to be is “just right” – useful to lots of partners but not so strategic that they are unwilling to rent it. This is where I wanted Hunch to be but we never got there. Most companies I know use externally developed products (commercial or open source) for databases, web servers, web analytics, email delivery, payment processors, etc. These are often highly competitive markets but the companies that win in these markets tend to become large and independently sustainable. These “just right” companies – to extend the astronomy analogy – are the planets that support life.

The post B2B Sales and Business Development: What I Learned appeared first on The Faster Times.

REVISIONS TO UNITED STATES PATENT LAW As you may be aware, the Senate passed the America Invents Act (AIA) on September 8, 2011. This act will create sweeping changes in US patent law once signed by President Obama, who has stated his intention to sign this bill.

The AIA will create significant changes to the law, and we wanted to take a moment to inform you of some of its most important provisions.

First to File System:

The United States will move to a first-to-file system instead of a first-to-invent system. This will put the US in closer alignment with rest of the world in determining priority of invention based on the earliest date a patent application was filed with a patent office. There is a limited one-year grace period related to public disclosures made by the inventor.

Further, the long-standing procedure to prove a prior invention, i.e., interference proceedings, will be replaced with “derivation proceedings” to determine whether an inventor of a first-filed patent application derived the claimed subject matter without authorization from an inventor named in a laterfiled application.

Post Grant Review:

There will be a nine-month window for challenging a patent on any ground. Review may be granted upon a showing that it is more likely than not that at least one of the challenged claims is unpatentable. After the window of post-grant review has passed, patents may be challenged on the basis of patents or printed publications only. Under a new transitional post-grant review process that applies to certain business-method patents, only parties who have been sued for infringement or otherwise charged with infringement (the recipient of a cease-and-desist letter, for example), may petition for review.

Patent Related Provisions:

Patents will not be granted to any strategy for reducing, avoiding, or deferring tax liability, or to claims covering human organisms. There will also be a 15% surcharge added to all patent-related fees and patent-maintenance fees, beginning 10 days after the date of the new law’s enactment.

Prioritized Examination:

The USPTO will be authorized to proceed with a program for a fee-based prioritized examination, which may be a useful tool for clients who are interested in an expedited examination for particular patent applications. This will cover applications for original utility or plant patents, and will take effect ten days after the date of the enactment of this Act. Initially, only 10,000 applications will be accepted in any fiscal year. Accordingly, space in this program may be limited, and it may be best to apply for this program earlier in the fiscal year.

My (non-expert) analysis: seems to me this doesn’t fix any of the very serious problems in our current patent system. First-to-file seems to reward companies with the resources to file many patents. The post grant review seems to imply you should to monitor every patent issued and challenge them within 9 months. I don’t see how any organization without massive resources could do this.

The post Patent Firm on The Patent Bill Problem appeared first on The Faster Times.

I sometimes wish that instead of working on internet and software projects, I worked on cleantech or biotech projects. That way, when I came home at night, I’d know that I had literally spent my day trying to cure cancer or prevent global warming. But information technology is what I know, and it’s probably too late for me to learn a new field from scratch.

That doesn’t mean information technology can’t improve people’s lives. Google’s search engine helps people find information, which, for example, makes cancer and cleantech researchers more productive. Skype allows companies to collaborate remotely, and connects people with friends and family around the world. In the area of information technology, we create infrastructure and hope that people use it for more good than bad.

That said, the best entrepreneurs seem to follow a path of increasing gravitas. Scott Heiferman started out selling online ads and is now creating new communities. Jack Dorsey created Twitter and is now democratizing payments so sole proprietors can compete on a level playing field with large companies. Elon Musk started with online payments and is now developing electric cars and space programs.

Founders of large companies sometimes also follow the path of increasing gravitas. Google is developing new energy technologies, self-driving cars and other world-changing technologies. Bill Gates devotes almost all of his time and money to charity.

The tech press is preoccupied with investments, trends, exits, and other “inside baseball” topics. But these are all means to an end. Investments provide fuel for entrepreneurs to convert ideas into products. Trends shape the terrain that entrepreneurs navigate. Exits provide financial incentives for investors and entrepreneurs.

Tim O’Reilly says that entrepreneurs should try to create more value than they capture. You can make money selling people obfuscated financial products, entertaining them with mind-numbing TV shows, or selling them sugar water decorated in elegant designs.

Alternatively, you can make something that matters and — if you are lucky and smart — change the world.

Read More at Cdixon.org

The post Doing Work That Matters appeared first on The Faster Times.

1) Some extremely successful startups. We need PayPals – companies that spin out boatloads of talented entrepreneurs and “smart money” angel investors. Big successes also reinforce the “culture of equity” that is so strong in California – the idea that owning options in a startup is the best path to financial and career success.

2) More web product design talent. This is the scarcest talent of all (more so than engineering). NYC has perhaps the best design community in the world, but most of the designers are trained in non-web design fields (e.g. print design). Most of the good design schools don’t emphasize web product design (some exceptions – e.g. my friend Zach Klein taught an excellent class at theSchool of Visual Arts last semester on web product design). NYU’s ITP stands out as a program that focuses on the intersection of design and technology (e.g. the Foursquare team went to school there). CMU’s HCI program and MIT’s Media Lab are also great. Other schools need similar programs.

3) More engineers. However, this doesn’t mean we need more engineering schools (although that wouldn’t hurt). Like Silicon Valley, NYC is populated mostly by people who moved here from other places. For the right opportunity, it isn’t hard to convince, say, recent MIT grads to move to NYC. The problem is that NYC startups are basically unknown to students at MIT, CMU, Penn, and even (shockingly) to engineering students at NYU and Columbia (big props to HackNY for trying to fix this). East Coast CS students also view startups as a much riskier path than they actually are. I say this having been at dozens of events with East Coast students over the last year or so talking about startups. I’m constantly amazed that most of the students simply don’t realize startups are a viable option. What we have is primarily a marketing, not a supply, problem.

4) High-speed internet throughout all the “startup areas” of Manhattan (Flatiron, Meat Packing, Soho etc) and Brooklyn (Williamsburg, Dumbo, etc). It’s amazing that we have such a fundamental infrastructure problem in a city as advanced as NYC, but I can’t tell you how many startups I know that struggle to get working high-speed internet access that has solid uptime.

5) More marquee tech companies opening large tech offices here. Google has something like 1500 engineers here. This adds a lot of vibrancy to the tech culture and attracts more engineering and design talent to the city.

Some things we don’t need:

1. Government or university organized events that introduce entrepreneurs to other entrepreneurs. There seems to be one such event each week. Entrepreneurs are by nature very good at meeting one another and it’s a small enough community that pretty much everyone already knows each other anyways.

2. Expensive projects like big engineering universities. Again, the more engineers and CS programs in the US the better (even better yet we need more CS majors – which probably means more CS education in high school and earlier), but I can think of far more productive ways to spend $100M to help the NYC startup and tech world.

3. Lower rents. No doubt the rents are too damn high and lower rents would be great. I’ve been living here since college when my room for one year was a hallway in a friend’s apartment. I sympathize with people who say this. But the idea that NYC is unaffordable on a typical startup salary is a complete myth. You can rent a decent place in a cool part of town on a typical startup salary. As to commercial space, for venture-backed startups the difference between rent in NYC and rent in other cities is generally the difference between spending, say, 3% versus 4% of your total financing on rent.

4. More early-stage investment capital. There are plenty of smart angels, seed funds, and VCs who are either based here or are based elsewhere but actively invest here.

Most of all what we need is for our tech and startup scene to reach critical mass (and to sustain that critical mass even if a tech downturn comes). Facebook wasn’t started in Californa and lots of future big successes will be started in all sorts of random places. NYC needs enough tech critical mass that the next Mark Zuckerberg seriously considers relocating to NYC.

The post How New York Can Become a Serious Startup Hub appeared first on The Faster Times.

1. Valuation: Come up with what minimum valuation you’d be happy with but never share that number with any investor. If the number is too low, you’ve set a low ceiling. If your number is too high, you scare people off. Just like on eBay, you only get to your desired price by starting lower and getting a competitive process going. When people ask about price, simply tell them your last round post-money valuation and talk about the progress you’ve made since then.

2. Never tell VCs the names of other VCs that are interested. Reasons: 1) if you are overplaying your hand that could send a negative signal. Most VCs know each other and talk all the time. 2) it is possible they’ll get together and offer a two-handed deal in which case you have less competition.

3. I think the optimal number of VCs to talk to seriously is about 5. That is usually enough to get a sense of market but not so much that you get overwhelmed. You should pick these VCs carefully – this is where trusted, experienced advisors are critical.

4. If there is a VC you really like, have a “buy it now price” and if they hit that valuation (and other terms are clean) do the deal. Otherwise, say you’d like to “run a process” and include them in it.

5. Try to set timelines that are definite enough that investors feel some pressure to move but not so definite that you look dumb if you don’t have a term sheet by then. (Investors have an incentive to wait – “to flip another card over” as they say – whereas entrepreneurs want to get the financing over with asap). Depending on where you are in the process, say things like “we’d like to wrap this up in the next few weeks.”

6. Once you start pitching, the clock starts ticking on your deal looking “tired.” I’d say from your first VC meeting you have about a month before this risk kicks in. You could have a great company but if investors get a sense that other investors have passed, they assume something is wrong with your company and/or they can wait around and invest later at their leisure.

7. The earlier stage your company is the more you should weight quality of investors vs valuation. For a Series A, you are truly partnering with the VCs. You should consider taking a lower valuation from a top tier firm over a non top tier firm (but probably any discount over 20% is too much). If you are doing a post-profitable “momentum round” I’d just optimize for valuation and deal terms.

8. Term sheets: talk about terms in detail over the phone. Only accept a term sheet once you have decided that if it matches what was described you are prepared to sign it. After sending a term sheet VCs get worried you’ll shop it and usually want it signed in 24 hours.

9. Get to know the VCs. Talk to their other portfolio companies, read their blogs, call references, etc. You will be in business with this person for (hopefully) a long time.

10. Timing. While it’s ideal to raise money once you hit the milestones you set out initially, you also need to be opportunistic. Right now, for example, seems to be a really good time to raise a VC round. You could make a ton of progress over the next 6 months but the market could tank and end up in a worse place than you would be today.

Cross posted at cdixon.org

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