Category: Uncategorized

HR, the complicit org

When I was first asked to take over HR by my co-founder and CEO, it was the furthest function in my mind. My original thoughts about the function were not very positive. I thought they were the police of the organization, and could not do much in impacting organization culture. My CEO convinced me that it was the place to build culture and he needed founder talent and someone he could trust.

I have no doubt that our HR department did phenomenal work in building building the culture for the organization; however, it was only because the CEO allowed me the space as a founder to help shape and build the culture. This is rare in any other organization that does not have founders at the top or at any org.

To this day, whenever I am asked if they should go to HR with a problem, I tell them not if you want the organization to know about it. Reality is that HR is there to represent the company, not fight for you — the employee. Their primary purpose is to reduce risk for the organization. And, only recently has HR been tasked or taken on help with employee effectiveness — at the request of the organization. Reducing risk comes in many forms: employee issues, compliance training, compensation leveling, promotion guidelines, performance reviews etc… — all of this is with the purpose of reducing risk for the organization.

HR departments in America operate under a dubious mandate: Keep workers engaged and happy, but make sure nobody sues the company. (Myth: HR is on your side.)

Sexual harassment complaints are a nightmare for HR, just as much as they are for the victim. Several times, I have had heard the story of a woman who does not want to quit her job but has no choice. And the only way to stop being harassed is to take herself out of the situation.

This does not mean do not make complaints, but it is often seen that HR is incompetent, but the HR is set up to do the bidding of the corporation, it is less incompetent and much more complicit to these issues.

Why competent HR could not save Uber

Many critics fault “incompetent” or bad HR at Uber for letting Susan Fowler’s complaints go unaddressed as well as perpetrating bad behavior. The proper response from HR would be to involve Legal and an investigation should have ensured.

So what if that did happen? If Legal were to find fault with the organization it is up to the business (not HR) to decide to take that risk and how to deal with the risk. If Legal were to find fault with the employee, it is up to the business (not HR) to decide what to do with the employee. HR can only advise. They cannot make hiring or firing decisions, that is up to the manager. They can advise and recommend, but cannot and are not accountable for hiring and firing — just the process around it.

So, if you find yourself frustrated with a nice empathetic HR organization that can’t get anything executed, or an incompetent HR organization that doesn’t listen to you — that’s because the HR org does not work on your behalf, it works on the company’s behalf.

At most companies, HR is an administrative department that has no real authority beyond our four walls. At our best, we are business partners and advisers. At our worst, we are babysitters and police officers.
 (Myth: HR is on your side.)

Even good HR could not have saved Uber (or any company for that matter). Uber failed to scale the people of its organization by continuing to allow bad behavior proliferate. Eventually this type of cultural debt that is rooted in morality and ethics will always disrupt the organization — you just won’t know if it disrupts the part with the high performers or not. By allowing the behavior to continue, HR is complicit.

Hiring HR won’t help stop VC sexual harassment

HR again shows up in the middle of another sexual harassment case within a kissing cousin industry to startups — the VC world. And finally, some traction to a long open complaint (7 years!) and open secret.

In Reid Hoffman’s call for the #Decency Pledge, the root of the lack of outrage is that

…the venture capital industry faces is that it lacks a good HR function that covers what happens between venture capitalists and entrepreneurs.

Thus, on a structural level, venture capitalists unfortunately have no HR department to prevent predatory and inappropriate behavior, and so try to characterize (falsely) their actions as innocent flirtatiousness or banter.

Good HR will not fix the matter for two reasons:

(1) VC firms are too small to have HR. When an org is so small, no amount of HR can help. HR is a way to scale people. When the org is small, it is just a way to not work out people problems and blame someone else for poor behavior.

Also the VC community has too much at stake to self-police. It is currently only about 4% women, and therefore, it naturally tips in favor of men who currently tend to be transgressors in harassment cases.

(2) Good HR cannot fix bad behavior. In fact it might proliferate it. Imagine if Binary Capital had hired HR, they would have their hands busy with non-disparagement agreements trying to clean up his mess and make sure it did not get to the LPs.

The #Decency Pledge (*) has asked a pledge to stop sexual harassment through clearer communications, a reporting to their colleagues “appropriately”, and everyone (entrepreneurs and LPs) stop investing. This is an ideal state upon a power dynamic rooted in gender bias, unfortunately no amount of good HR can help with decency.

So, what can help?

Here are some ideas, for all the fixers in us, where the onus is not on HR. Mostly these are taken from female founder groups, and other great thinkers, like Ellen Pao or Brittany Laughlin, feel free to add more in the comments.

• Allow space to discuss. While a zero tolerance does raise the bar, but can put the onus on the victim to have even more to lose as Brittany points out. Oftentimes, it’s hard to find the language to talk about tough issues. Language has changed to use words such as “bias” rather than “racist” or “sexist”. The only choice is to report and have an investigation — binary policies.
• Game Theory + Tech. An app that uses game theory to reduce rape on college campuses. If two independent nodes report the same person, the system will file a report. In VC world like college world no formal authority or relationship is established until funding is received and even then the rules around this are murky. For Uber or any private organization, HR should be the Callisto.
• Commit to changing the landscape. Instead of a #decencypledge, many women have suggested an #equalitypledge. VCs should hire more women investment partners as well as commit to a certain percentage of portfolio dedicated to women founders. Capital is still the oxygen for any business and it should not be used to curry sexual favors.

(*) While the #Decency Pledge has rallied male allies, are they really allies?Women groups have reported that some male VCs who have signed the pledge are “the most sexist VCs they have met”. One must ask,could it be a way to offset and cover up their behavior?

I am co-founder of Kabam, a billion dollar mobile gaming company that recently exited. These views are my own and do not represent Kabam or any other organization.

The problem with paid acquisition and how to fix it

With the mobile world saturated, great product without thinking about marketing is a way to ensure no one will see your product and your company will not get built.

Acquiring users in the mobile space becomes one of the biggest challenges. Because everyone has a phone, you can’t NOT have a mobile app or some mobile solution to access your mail, social media, etc…

You will fight with everyone else to get on the device.

The noise to signal ratio is high. This forces companies to use paid acquisition as a strategy, but has proven the fastest way to burn cash and in many cases without the highest ROI.

Paid acquisition, especially when the business model monetizes your customers directly, becomes an effective and direct tool to ensure you are working towards an ROI.

While paid acquisition is a necessary evil, what makes it so dangerous — especially when a company solely relies on it? Here are the three largest problems with paid acquisition:

Will these customers be the biggest evangelists?

Most customers that are willing to pay within an app tend to be the most fervent of fans. While fans generally make the best evangelists, the earliest fans may not be.

They may be so ardent that they are so focused on how much the app fulfills their tastes and solutions. Telling others about their experience, may not be their top priority, but rather using the app to solve their issue will be their focus.

Monetary incentives only last so long

Daniel Pink, the author of Drive: The Surprising Truth About What Motivates Us, cited a study to where creatives were incentivized to create something. They found putting monetary rewards as an incentive caused them to take longer to find a solution to the problem:

Rewards, by their very nature, narrow our focus, concentrate the mind; that’s why they work in so many cases. So, for tasks like this, a narrow focus, where you just see the goal right there, zoom straight ahead to it, they work really well.

— Daniel Pink, The Puzzle of Motivation, Ted Talk 2009

Solutions that require creativity rely on other pieces of motivation such as mastery and autonomy. Solely incentivizing creative problems or tasks can lead to de-motivation in an odd way. One could argue this what happened to Vessel.

Vessel

Vessel was a video platform company that was created by Jason Kilar, former CEO and founder of Hulu. There should be no question that Kilar knew video content and how to distribute it. He paid YouTube stars gobs of money to come to their platform.

Their business model was then to make money by charging viewers for early access to the videos by the YouTube star. Sounds like a very logical and good plan — especially if you have gobs of money.

Unfortunately, frequently paying for content may be like paying for friends — when they money dries out, you find out if you have real content. This ultimately led to the selling of Vessel.

Arbitrage is ecosystem and platform dependent

Paid user acquisition is reliant on arbitrage opportunity and arbitrage for acquiring users is usually dependent on the ecosystem and platform.

Kabam Case Study

At Kabam we built our core competency around paid acquisition. This works well when platforms are emerging and growing. The users are cheap and you can calculate ROI easily.

This allowed us to achieve a competitive advantage within the platform markets — on both Facebook as well as mobile. In fact, our decreased reliance on virality helped accelerate our competencies in paid acquisition. We knew how to make it as efficient as possible without leaning into virality.

In many ways, this caused us to be the first Facebook gaming company to expand past Facebook — mainly because we did not depend on virality and its tactics of the platform.

As the platforms began to change and mature, very quickly being great at paid user acquisition was not enough. CPIs became too exorbitantly expensive.

To lower our user acquisition, we had started moving towards traditional methods of marketing such as PR or existing brands for leverage. It went full circle, and eventually, as with almost all mature platforms paid acquisition does not amount to much clear ROI and more influential measures (PR, WOM) becomes more and more impactful but hard to measure.

Like SEO — arbitrage is opportunistic and opportunistic things usually have a window that closes. This does not mean to not to take advantage of these opportunities as they come by. Take advantage and double down! It is cheap (hopefully quality) traffic because the platform is growing and it is the growth that will enable you to market as wide as possible. And in the end for consumer products:

Whoever wins the market, wins.

But to last in the market and to even change the market, a product and marketing strategy that relies solely on paid acquisition will have a very difficult time winning. And, eventually, economics will get the best of you.

It gets expensive

Paid user acquisition can and is incredibly expensive when the platforms are no longer growing. You should always be looking to drive your CAC (Customer Acquisition Costs) down. Over time, it will naturally rise given that you usually convert your most excited or best users first.

Solutions

1. Grow as organically as possible : WOM

The highest compliment is your referral

This is written on many real estate flyers. In cash constrained, small businesses not only do they rely on cheap forms of user acquisition but also require the testimonials. The type of customer that becomes a net promoter (someone who tells others about you) is much better than trying to convince as much as possible.

It is the same reason why people us a wing(wo)man or testimonials. It provides social proof “where people assume the actions of others in an attempt to reflect correct behavior for a given situation”.

The greater the number of people who find any idea correct, the more the idea will be correct.

— Robert Cialdini, Influence: The Psychology of Persuasion

It also removes any ulterior motive a person tooting their own horn may have, causing the conversion to be more sincere. Thus, producing a higher quality user as a result of that net promoter. Furthermore, it reduces costs to zero and creates free marketing and evangelism!

2. Inherently viral , not necessarily network effects

Network effects are things that need a network or someone else to be effective. Classic examples of these are communication devices. Phones are useless unless there is someone else who has a phone to call. This truism has moved into messaging applications as well. A messaging app with no one to message with is useless to the user.

However, when more people have the device or the app, it becomes more and more useful; and people get upset when you do not have one or are not on the same app.

Therefore, expected growth for these applications should always be exponential due to the more people use it, the more configurations of communication that can happen between each app user (or within each node of the graph).

However, inherent virality is something different. Something that is inherently viral focuses on what is being shared rather than the platform. For example, if a parent takes a photo of their baby, they will want to share it with their partner, family or friends.

This is why baby photos, your baby photos are inherently viral — they are made to share. Combine the network effects of a social network like Facebook and the continuous uploads of personal photos; you have an inherent virtuous superhighway loop that reinforces each other.

Of course, as the network matures, these highways can be manipulated for bad — hence fake news or echo chambers.

3. Support paid acquisition — PR pushes, SEO , brand

Now given the maturity of the mobile app economy we have delved into the black arts of influencing. Just because the impact is more influential it does not mean you should not try to measure your channels to see what makes sense.

What you should do is not only measure what you can (using promo codes, time stamps, etc..), but you should also coordinate your influencing efforts with your paid acquisition efforts.

Coupled with your paid acquisition influencing work that supports it can create a halo effect that well timed can increase your reach much farther than paid acquisition can do.

Think of it this way: paid acquisition is great for highly targeted and growing platforms and is like starting a fire; however, adding fuel at the right time can grow the fire and help sustain it — like influencing marketing strategies.

Kabam was able to grow with the ascent of Facebook and later mobile markets. We grew through paid acquisitions on each platform. We know the bruises from moving a business that relied solely on paid acquisition to larger marketing strategy.

I am co-founder and Chief Development Officer at Kabam, which exited for close to $1 billion dollars.

How to climb the app charts

It was 2015. Hardly any new apps had seen movement to the top of the charts, but a new app called musical.ly got there with now over 100 million users.

What is even more amazing is a Chinese team created this app, and their entire market is in the US. How were they able to do this?

Below is based on a conversation between Josh Elman from Greylock Partners and Alex Zhu of musical.ly:

Make compelling content creation super simple

The whole idea behind musical.ly is to easily use music clips and allow users to put a video of themselves lip synching or dancing to the music clip. They focused their product in enabling content creation to be as simple as possible to be done in seconds — milliseconds. 
 
The secret beauty of their product is they helped make the user look better. Who doesn’t want to sing like Katie Perry? All they need to do is provide the dance moves. On top of that, the videos are inherently viral — just like baby videos, you want to share them.

If you make content creation super simple, then you can focus on the sharing and virality side — enabling the content to get out easily.

Exploit growth hacks

In the consumer world, many admired companies grew from being aggressive and some borderline unethical. Facebook famously obtained email lists from Harvard. LinkedIn built an aggressive email importer that caused many people to “spam” their contacts. However, if neither of them were aggressive, arguably, they would not have gotten to where they are today.

Two growth hacks musical.ly exploited were:

1. AppStore naming. They figured out that the AppStore search algorithm weighed the title a lot more than the actual keywords. So they had about a 20 word title with as many keywords as possible. Since then, this hack has been closed.
2. Attribution. They were finding out that people were sharing their lip synch videos on Instagram. It wasn’t until they put an attribution “@[handle] musical.ly” that they saw real growth.

Use the external zeitgeist

Lip Synch Battle. musical.ly also found that their search for the app was the highest after the popular show Lip Synch Battle. They used this to their advantage and put it in the title so people could find it. They used the popularity of the show to market the app and tied it into their app.

Instagram. musical.ly also used existing popular social media to distribute their content. They made it easy to share on the most popular platforms. Everyone wants to build a platform and “own the user”, meaning they want to be the Facebook of apps, but in the mobile consumer environment, it is hard to get the growth you need in the amount of time by not integrating with existing social platforms.

We learned this early on at Kabam when we were called Watercooler. We emailed a bunch of people: friends, family, and targeted leads; however, the most effective was when we went to Facebook.

If the users won’t come to you, go to where the users are.

Offer unique opportunities

How they grew was that they needed to offer something that could not be obtained in mature platforms.

They offered three things:

1. Dead simple content creation that did not require too much thought
2. The content creation made creators look good
3. An eco-system that allowed them to rise and be recognized in a way the mature platforms could not.

Alex likened it to attracting people from a developed country to move to a developing country. It is also a similar analogy of attracting people from the corporate world to the startup world. You must provide unique opportunities they could not get elsewhere.

This is exactly how America was founded. The first immigrants to America left Britain (a developed country) for America (a developing country). The main attraction was fleeing religious persecution, but persecution aside, many political and economic opportunities compared to their status back home.

Bonus: Coordinate spend and marketing efforts

This was not done at musical.ly but something that the gaming industry has pushed forward , which is coordinating spend and marketing efforts.

Because of the difficulties of getting users or discover for your mobile app, it is expensive, and usually, you get very few shots. Make the few shots count. Therefore, many gaming companies will make a three-pronged approach: spend money on marketing, PR push and any offline events they can work around — it could be an event that ties into theirs.

Finding symbiotic events, partners and synergies is always better than trying to do it alone. It’s always better to tack your marketing activities with other events happening in the zeitgeist. Much like musical.ly did with Lip Synch Battle and what Kabam does with the Marvel movies and their game Marvel: Contest of Champions. It’s a missed opportunity that could have you trying to sell ice cream during the winter.

Remember when it comes to distribution — use the buddy system.

While growth of a mobile consumer app is incredibly challenging to find growth in the mature mobile markets, musical.ly found away through these simple steps. Simple, but extremely difficult.

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I am the co-founder and Chief Development Officer of Kabam, these perspectives are my own and do not necessarily represent Kabam.

Read a little closer — and saw the word “never”. I am assuming you are talking about either a life or death situation like an AED or a fully automated situation. If there is any human contact you need to think about usability when it is task oriented and do not care about stickiness in that case. For a fully automated solution — the tech should be so good the user doesn’t need to engage and hence the stickiness is how good the tech is — that it just works is sticky enough. Hope both responses help!

That is true amount of growth depends on markets. But in consumer markets it is true that market dominance plays a large factor in who wins as it is much closer to “winner take all”. Enterprise seemingly is less so and does not necessarily need growth or engagement to win — just renewals.

Lessons learned in going from $0 to $26 billion from LinkedIn Reid Hoffman

The legendary founder and venture capitalist Reid Hoffman shared some pearls of wisdom with an audience of founders and product managers. Here are some pearls of wisdom in building awesomeness…

Product Distribution first, then product definition

One of the biggest failures with SocialNet was that they didn’t have a distribution strategy nor a focused vertical. They spent a week doing a PR blitz and only received about 6 users. They could have better spent their time just going into a phone book (remember those?) and calling users asking them to sign up. Their time at Paypal taught them it was much better to give $5 to the user to acquire new users than spend $45 on acquiring a user through advertising.

Product distribution strategy is even more important than the product itself.

Therefore, when starting LinkedIn they thought hard on how they would distribute and acquire users. They did this by focusing on contacts within a vertical (professional networking). The vertical allows context, and the contacts allows for the network effects. Then they lowered this friction as much as possible — with the import of the address book (remember those?).

In consumer markets, how companies win is via a distribution strategy that has a market advantage

In the early days at LinkedIn, the mantra was GUR (Growth, Usage and Revenue). Focusing first on growth enabled them to build the key engagement metrics that they felt would be incredibly useful to users on LinkedIn. Until LinkedIn got to about a million users, the key features would not kick in, so first growth. Start with a hypothesis on markets first, and build a product that will best map to that theory. Then you can focus on the key engagement features of your product. If you do not have a theory or strategy on how you are going to distribute your product or acquire users, you are flying blind.

If nobody can see your work, it’s not great work.

Fundamental strategy in a startup is a financing strategy

The basis for any startup is how it is financed. You should always be thinking about how to finance your company. It is the basis of the existence of your company and will drive will how early you focus on revenue and monetization. But if you can finance without making revenue, you should do that 😉

There are two types of pitches: one based on data and the other that is based on concept. Often entrepreneurs mix up the two, and this deeply affects valuation. When pitching, be very clear on which pitch it is based on and tell the story that way, or else the supporting stories get too muddled. See LinkedIn Series B pitch.

Org hierarchy is for coordinating and decision making

As LinkedIn grew, he spent at least 40 hours with Jeff Weiner before talking about him possibly taking over the job as CEO. Most of the time was talking about agreements and meeting of minds.

Organization hierarchy mainly exists for coordinating and for decision making / resolution. As long as Reid could still influence the ecosystem without disrupting the purpose of the hierarchy there was no need for him to be a part of the org structure within the organization. And he still has an office at LinkedIn right next to Jeff.

Having a founder as deeply as involved as Reid in the product still be a part of the Board as Chairman enables him to continue to influence the core and soul of the organization, but letting Jeff run the company and product.

Crux of M&A

Going from 0 users and $0 to IPO to a $26 billion M&A exit is not a common journey.

In considering M&A Reid always had a reserve price set in his head for his investors and shareholders as his fiduciary responsibility.

But, the crux was whether or not the activity would be in service to the mission of LinkedIn.

When the opportunity came up for the M&A, he thought about how Microsoft was looking to make offices more productive and it made a lot of sense to partner with the mission of helping people professionally more productive and successful. It felt that the mission could be achieved better together than as a public standalone company.

LinkedIn’s Mission: To connect the world’s professionals to make them more productive and successful.

Thank you Greylock Partners and Josh Elman, for bringing together amazing builders from across the Bay Area to share what they are learning and have learned.

You can learn why posting on mobile at 6:30 PM is a good time via twitter hashtag #productsf

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I am the co-founder and Chief Development Officer of Kabam, these perspectives are my own and do not necessarily represent Kabam.

Maha Ibrahim — Investor and Partner @Canaan Ventures

Do this one thing to make your product sticky

One question I often get asked often is this…

How can I make my product as sticky as a game?

People know that games fall into the realm of entertainment. Therefore, people choose to be glued to their screens and even pay money to complete tasks and quests. Oh, wouldn’t it be great if they did that for your fitness app, your social networking app, homework app, your messaging app, your live streaming app, etc.? Yes, of course! However, the approaches to designing games and designing apps are incredibly different. But, they need not be — especially the parts that make it sticky.
 
Often, many people think that it’s a tactic of leaderboards, badges and points (which is called gamification) that make a game so sticky. But it’s not. Almost all games have this, but only a small percentage of games succeed. So would it be so easy to slap on leaderboards, badges and points and make your product magically sticky? Of course not.

A great game is so much more than just points, badges and leaderboards.

As a product designer for non-entertainment apps, the designer thinks of the interface and experience regarding features and tasks.

Sometimes, these features can be built in silos and separate teams from one another. The features can be released at different times, and sometimes never impact each other. Therefore, they can be bolted on without affecting one another. You can see most of the product requirements document (PRD) within the interface tab or navigation structure.
 
However, for a game designer, it is different. For the game designer, she thinks about the game in regarding story and loops.

Often, you will hear game designers talk about the “core loop”. A core loop is the basic action of the game that people do over and over and is the “main event” of the game. For a fighting game, it is the “fighting”, for a puzzle game, it is “solving”, for an RPG game, it is “your character” and so on and so forth. The game designer works on that core loop to be as fun and as engaging as possible. Then, the game designer builds around the core loop much similar to co-centric circles.Without the core loop, the game has no heart or soul; it is dead.

From there, the game designer makes this core loop a part of a habit, which if successful, turns into a daily habit. In our flagship game Kingdoms of Camelot, a strategy based empire building game, “building” was the core loop. The game required the player to build its resources, which allowed you to build a kingdom and ultimately build your army so you can attack other empires and grow your empire.

When I began to play, the core loop of building began to control my life. I had set my alarm to wake up in the middle of the night so that when a building had finished constructing, I could construct another building and use the next 3 hours to sleep soundly, knowing my kingdom was building every hour I was asleep.

Eventually, this game became a daily ritual in which I did three things in the morning and the afternoon: collect/harvest my resources, train my troops, and build my kingdom.

Think about the core of your product. What is it? Is it micro-blogging? Is it posting? Is it live streaming? Whatever it is, make that feature really, really, really awesome and core to your product. 
 
 Next, build a daily ritual of three habits from that. This forms a sticky daily ritual that translates into a sticky product.
 
Facebook is a great example of this. Their vision is to connect the world. Their core feature is the newsfeed. Every morning I have a daily ritual of checking my newsfeed.

My ritual comprises of:
 1) Checking notifications if there are any new ones (red indicator)
 2) If not, I scroll through my newsfeed
 3) Like/comment on anything interesting. 
 
 These three habits make up my daily ritual with Facebook. Other people may do those things in a different order or check something else first, but I’m sure it revolves around the newsfeed.

So, to make your product sticky…

• Find your core function and work on that really, really well
• Make at least 3 daily habits that the user can do around the core

These three habits become a daily ritual, and in this daily ritual, the user becomes the center of your product experience.

And, only good things can come from that.

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I am the co-founder and Chief Development Officer of Kabam, these perspectives are my own and do not necessarily represent Kabam.

5 crucial questions that lead to great product

There are 5 crucial questions (and a bonus question) to get to a great product, and it actually has been the fundamental and essential questions that most of us were taught in grade school:

Who, What, Where, When, Why, How

Why?

Why should the user be interested in your product?

Pro Tip: This should not be a list of features. This should be a story. 

Inward: Why did you build the product or company? If you answer to make a lot of money –I encourage you to dig deeper and ask “why”? Usually it is because you believe that there is something much deeper that your relationship with money is just an indicator. It could be that you grew up poor and money meant security, and creating that sense of security for other people. But keep asking “why” until you scratch to the core value that is driving it.

“What?”

What do you want people to feel?

This will allow companies to design for motivations rather than a list of features. It will put your product in context. While conventional wisdom tells you to solve a problem. Not all products solve a problem (e.g. entertainment), but ALL products make you feel something (rage, relief, stress, anger, etc..). And that emotional connection and feeling can supersede much more. In fact, an emotional connection is needed to create loyalty.

Inward: What are the core motivations that drive (you) the company? The challenge of solving a problem, the meaning you can derive or the accomplishment you can achieve when the problem is solved?

“How?”

Outward and Inward:

How is your product different?

I remember when we had just started out in social gaming on Facebook, the question was asked how do I prevent someone from stealing my game and doing the same exact thing but better. I answered they can copy the interface, game loops, and systems, but they cannot copy the process or creative minds that created them. 
 
Other people can only see the surface which is everything that can be copied. But, underneath the designer was building towards a vision. Otherwise it is just a product that is an imposter, and has a very little life span unless they start innovating. 
 
The difference isn’t just what the user can see, it is what they can feel. The users see the features, but feel the process it took to make this product.

“Who?”

Who wants this?

This step is the most crucial and cannot be avoided. Most products and companies ultimately fail because the team could not build something that someone (or many people wanted). Answering the why and the what digs at a vision to either enable you to introduce your product and put a foundation to your company. 
 
You cannot rely on the market to tell you who you are but you must rely on the market to tell you how you did.

I had a friend who created a game once and a fellow game designer asked him what is the vision. My friend answered “well we will test it and see what people like and then tweak it”. That is a surefire way to create an imposter game — it will look like a game, walk like a game, talk like a game but really isn’t a game.

When validating, always in the background be aware of the want/desire and motivation behind the action or metric. But, the most important piece of this process is learning. In fact, that is the whole goal is to learn as quickly as possible. Learning is not just book learning but also building intuition which takes time. Then repeat as often as possible.

The most inspiring story about validating and learning is from founder and CEO Miriam Naficy of Minted. When she first released her website, it was crickets. The metrics were horrible, just horrible. But they saw a small flicker of a flame in the product — very small. They decided to tend to this flame and grow it and grow it until it is what it is today.

Check out the video which is so much more inspiring.

https://techcrunch.com/video/fail-story-minteds-mariam-naficy-on-being-trashed-by-the-press/

And,now they have their own storefront in San Francisco:

“When?” and “Where?”

There are thousands of amazing products out there, but if no one discovers your product, does it exist?

Your product will exist, but it will be as if your product had never existed.

The when and where questions focus on the marketing and distribution portion of your product. When are you going to launch it? Where are you going to launch it? (phone, social media, radio, tv?) Where are you going to acquire users? These will all impact your ability for your product to be discovered and in essence if your product will exist. Without the focus on marketing, it will be as if your product never had existed.

Focusing on these 5 questions will prevent your product and company from becoming just another forgotten product — and really stand out.

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☞ Follow me on Twitter Holly Liu

I am the co-founder and Chief Development Officer of Kabam, these perspectives are my own and do not necessarily represent Kabam.

How to Raise Money from China

Whether you are a startup or a fund trying to get overseas money, most likely it will be from China. China is producing the largest middle the class the world has yet to see. The Yuan is a tightly controlled currency that could be in danger of devaluating in the coming years. In August 2015, the stock exchange took a dive causing many retail investors to be impacted. Looking for something less risky, overseas investing looked and continues to look quite appealing.

Knowing that China will be and is a power player, it is never too early to start to learn how to navigate through Chinese waters. Here are some tips to help it “easier”.

Remember “easier” is relative.

It’s always good to start with a warm intro.

China is a highly relational society, meaning things can get done easier, faster, efficiently and more effectively if you know the right people. I know this is true of raising money in the Silicon Valley, but it is even more so in China. I hear a lot of conflicting stories about the current fundraising climate, and it is because you hear that the few that are able to raise money easily is mainly through a personal connection.

If you do not know someone in China it is best to partner. There are many firms that work in deal making and can help. But if you choose a partner be sure to find one that has experience as well as reference check. Reference check by talking to their past clients. Make sure the clients are similar background to yours as well as had experience working with Western (or more than likely American companies). They will be able to help you navigate through legal policies and structures when dealing with international monies.

If the partner is a result of a close intro and you want to reference check, do so carefully. If you reference check via a group of mutual friends, know that this may get back to the partner. In fact know that any reference checking will get back to the partner so be sensitive to make sure it is not like you are digging dirt and heap praise on both parties even though you may very well be doing a reference check.

Also it is customary for the person introducing to be rewarded in the form of a finder’s fee. Most fees will be charged at 3% of the introduction or for services rendered. Do not be surprised and realize it is just the cost of doing business.

Take a haircut from the numbers, and everything else.

When someone says they can get you into a deal or they can get you XX amount in funding take about a 30% haircut and you may only slightly be disappointed.

Or do the triangulation method and take the number they are repping and ask another person how much they think they can get, the real number is somewhere in between.

The reason is that documentation does not serve as an audit trail or as a third party verification system (a la media systems in the US), therefore everyone produces their own numbers which always come with their own motivation. Therefore, it’s best to take a haircut from the numbers in your head and then triangulate.

Choose one: valuation or terms.

You set the price, I’ll set the terms.

In most deals that I see from China, the fund/company sets the price and China sets the terms. This means they are willing to pay extra money to set terms that enable them to have more control in the deal or operation. To the Westerner, it will seem strange what they care about or even ludicrous what they ask for. But, you will have to try to educate the Chinese investor around how things are done in Silicon Valley and find some way to meet in the middle.

Sometimes it will feel like explaining to my grandfather (who was born in 1918 in China) why Safeway does not allow you to bargain the price on a head of lettuce — it just is not set up for such customized pricing.

I have seen investors ask for a hurdle rate to be met on VC funds, investors ask for money returned before another round is raised. Sometimes the investor will be insistent and put in their terms as contingency of their money. And they have money to be able to do this.

It’s good to be king.

Most of the time the Chinese investor will be optimizing around control. If they had a choice between rich (and very little control, but a lot bigger pie) or king (not as much money but a lot of control), the king scenario appeals to many Chinese investors — especially if the source of money is from an individual or family entity.

Even most Chinese funds and entities are ran like a family business, where decisions are made by one person and no one moves until that person — most likely the boss’s son — approves of the deal. When the de jure culture is optimized around the boss’s son, decisions are focused around control.

This also means that the investor my come in later with expectations for you to follow through with their suggestions and advice. It is important to figure out the best way to work with them not just before the deal is signed but even after. Oftentimes, the deal works fine, but the integration is problematic. I’ve seen situations where the investor or buyer would say yes to everything before the deal was done, and then nickel and dime all the smaller, but important pieces in the integration phase, afterwards.

Cash is king, so it is not over until the money is in the bank.

It is still a cash-based society. Even though China has gone over to mobile payments it is still connected to a debit card. This means that their thinking of returns tends to be around cash. As a company or fund, you should think about how their money can be locked up for the shorter period of time. And as protection, some parties will hold money in escrow until a milestone is reached or they will call down a larger percentage of the commitment earlier on — being sensitive to the cash based society. This also means for the company or fund — it isn’t over until money is in the bank.

Bonus: Communication is faster over Wechat than email, and fastest face to face.

Silicon Valley sometimes treats email like an instant messenger; however, China actually has an instant messenger that is used like an instant messenger — it’s called WeChat. One thing to note is that business and personal communication (and social networking/media) is done over Wechat.

Within our Beijing Office there will be days where people do not check their email (our company is on Google which is blocked in China and needs a VPN), but they will check Wechat several times a day. Therefore we have had to make important announcements over WeChat.

This means if you are looking for a faster response from your Chinese counterparts, it may be best to go over to Wechat. And if they are slow to respond on email, it may be because they do not check it several times a day like we do in Silicon Valley.

☞ Follow me on Twitter Holly Liu

I am the co-founder and Chief Development Officer of Kabam, living in Beijing, China for over a year. Kabam raised $120MM USD from Alibaba, and sold their first generation mobile games to Chinese mobile publisher, Gaea. These perspectives are my own and do not necessarily represent Kabam.