Creative products born from a mountain of data

I’m a regular reader of my friend Brad Feld’s blog.

As usual, his post today, I Want More Information, Not Less, got me thinking. I just read it a few moments ago on this flight that I’m on from SFO to Boston.

Brad’s post is about information and data. Brad addresses the typical sentiment about data overflow and how can we manage all of this data. It’s a great post.

Some of my favorite services start by collecting a crazy amount of data. But the reason they are valuable to me is because of the creative products they offer with that data.

Few examples:

Last.fm

When I listen to music on my laptop, sonos or iphone, the history of my music streams are recorded or scrobbled to my last.fm profile. Since I joined the service, last.fm has scrobbled over 19,000 tracks which is about 18 tracks per day. Thats a ton of data.

But that data set isn’t the interesting part. The interesting part is that if you are a last.fm user and you come to my profile you can see if we have similar listening habbits or not.  Here’s what happens when I goto Mo’s profile on last.fm

Also, last.fm uses all of that data and offers me a personalized radio station based on my friends and my personal preference.

Twitter

There is a ton of data on Twitter. I make best use of all of that data by

a) following people that are interesting to me (some I know personally and some I’ve never met). But I care about what they have to say.

b) Twitter search. At this point, I probably use Twitter search 3-5x a day. Sometimes way more than that. It helps me filter the data for just what I need at that moment.

c) Another way to deal with the data is by the new Lists feature. Robert Scoble has post about Lists today and how it changed his consumption model for Twitter.

Foursquare

Foursquare is a lot of things to a lot of people. The service captures a ton of data about me and my friends. Every single day we ‘check-in’ & tell foursquare where we are at any moment.

There is a fun game play that uses that data by earning badges, earning Mayorships, and scoring on the leaderboard. There is also a real utlitity that comes from that dataset as well. I receive tips from the service and I have a history of where I’ve been that is super helpful to me.

Plus, I get implicit restaurant recommendations because I can see where my friends are dining, etc.

Fitness

My iPhone collects a ton of my fitness information thanks to apps like RunKeeper and Nike+. I’m planning on getting Fitbit to collect even more of my phsyical data. I love the applications that come from all of this information.

Brad is spot on when he says in his post:

I don’t believe the issue is too much information.  This is an independent variable that we can’t control.  For the foreseeable future, there will be a continuous and rapid increase of information as more of the world gets digitized, more individuals become content creators, more systems open up and provide access to their data, and more infrastructure for creating, storing, and transmitting information (and data) gets built.

Now comes the fun part. What other creative products will be born from this mountain of realtime and non-realtime data.

There are plenty of things to do in the world of filtering, analytics, search, aggregation, curation, entertainment, recommendations, and discovery. And the best part is the stuff we haven’t even considered yet.

Long live data.

I’m making this post because I know the design of this feature will be somewhat controversial. People understandably have expectations of how the retweet function should work. And I want to show some of the thinking that’s gone into it. I’ve been a big proponent of this particular design internally at Twitter, because, while it won’t serve every use case, I think it offers something new and powerful.

Laid Off 2.0

Over the years in the tech world, I have unfortunately seen many people either fired (for performance issues) or laid off as part of a broader company move.

It always sucks.

And I’m sure to that individual it sucks more than I can imagine.

It’s typical when a company asks an employee to go that it is handled quietly and respectfully. Usually the employee leaving asks for a transition time to find the next job and to not let the world know the circumstances of the separation.

Last week Microsoft laid off Don Dodge. I saw the news spread like wildfire all over Twitter because Don wrote about getting laid off that very day on his personal blog.

That’s not fairly typical at all.

But it was open and honest. Just like Don.

The result: an outpouring of support from friends, colleagues, blogs, tweets etc.

I saw Don the next day and while he was disappointed about the layoff and he was glowing from all of the support and opportunities and looking forward. I have no doubt that Don will do something great in the very near future and I’m happy for him.

Imagine if he didn’t talk about it. Don is a talented person so he still would have opportunities but at a much different scale and different way. And this way was much more revealing about the individual.

And in my opinion, i think it’s a better way to deal with being laid off.

Open & direct.

When someone amazing leaves the company

There is a saying inside of companies that is often repeated, namely: “no one is irreplaceable”

It may sound harsh but its meant to clarify that a company needs to be strong enough to succeed and innovate even if someone amazing leaves the company. If a company grows and depends on a single person than something is wrong.

Of course, that is easier said than done.

When someone amazing leaves the company it can become a big challenge on many levels.

1 – Morale. The existing employees wonder inside and outloud, ‘hey, is this a good place to work? Why is he/she leaving?’

2 – Amazing people are hard to find regardless of the macro economic conditions.

3 – Things slow down. All of sudden the amazing person who got shit done or provided leadership isn’t in the boat and stuff doesn’t happen as fast or efficient or with as much quality.

(keep in mind I’m not talking about the person that suffers from the smartest guy in the room disease. I don’t have much love for those folks and i don’t consider them amazing.)

I’ve seen “amazing people” leave companies for a few reasons. Some are avoidable and some aren’t even with the best intentions.

Here are a few things founders and senior managers at companies should keep in mind to avoid losing amazing people.

1 – Assume they are getting calls all the time. Don’t carry the arrogant “where are they going to go” syndrome where you convince yourself that you are paying them a lot or they have a ton of stock or a great title or whatever. These folks are always getting calls from other companies and founders.

2 – Loyalty is earned. It’s a two way street with relationships. Don’t expect people to be loyal if you don’t have the same feelings in return. It also takes time and shared experiences.

3 – Avoid doing anything unnatural.  Its awkward and uncomfortable for everyone when an amazing person says they are leaving and then management comes in with a killer counter offer. I’ve seen startups do this. Amazing person is about to leave and suddenly they get the keys to the kingdom. Big companies do this all the time as well. What does that say to existing employees? What does it say to the individual involved.

4 – Get proactive. Think about how to get your amazing people involved in more things not less. Give them more challenges. Get their feedback. Get their advise. Take their suggestions to heart. Compensate them properly. Put in a performance plan so they know you appreciate how they are doing and why they deserve more.

After all, they are amazing for a reason :)

Stock options: vesting & change of control

Fred has a post about option pools and their impact on valuation this morning. It’s a great post and will be very helpful to many folks without a doubt. I share the same point of view and it’s one of many reasons I like co-investing with USV.

Once you set up a pool there are some typical and different ways to structure the terms and rights associated with them. There are number of issues but for this post I want to talk about vesting & change of control.

Vesting

Vesting is important for retention but more importantly it allows the company to put the equity in the hands of the folks that have put in significant time & value into the company.

We have a vesting schedule with our team at Spark Capital and I’ve had a vesting schedule everywhere I’ve worked previously.

Since startups require a fairly long time to create & build the company most options have a 4 yr vesting schedule (or less especially if the team has been working for some time) with some sort of initial hurdle period – also known as a cliff.

The structure I’ve seen the most is one that requires the employee to work at the company for a year before vesting any options. At the one year anniversary they vest ¼ of their option grant on the spot. After that they vest the balance of their options on a monthly basis.

I’ve seen cliffs as low as 6months and in some cases I’ve seen zero cliff. But the latter is extremely rare and I don’t like it much.

Change of Control

This is a term that describes what happens to the employee vesting schedule if the company is acquired by another company.

Let’s say you work at a company for 2 years, vested half of your options, and the company is acquired.

If the company option plan doesn’t have a change of control provision then either:

a) everyone lives with their original deal. You own what you vested. If you remain with the new company you vest the balance as you continue to work

b) a new deal is cut between the company/employees and the acquirer. The terms become jump ball at that point. New compensation, new vesting, retention bonus’, etc.

Founders like to have some sort of change of control acceleration. I’ve seem partial or full acceleration upon a change of control. That means at the time of the company sale some/all the invested options vest.

The challlenge with the change of control acceleration clause is that the buyer (acquirer) most of the time is buying the company because of the people that created the value. So if the employees are fully vested at the time of sale it will impact the purchase pice of the company.

One compromise I’ve seen is a “double trigger change of control” clause. That means the acceleration only happens if the company is acquired and the employee is fired without cause.

It’s a reasonale compromise. Although the double trigger will impact price and will make the acquistopm a bit more complex. The other issue is that it sets precedent. If you give it to yourself as founders and your senior team this right, than most likely you will have to give it to everyone in the company. You don’t have to of course but it can become complicated when everyone has a different set of terms.

Keep it clean & simple

I believe startups should adopt a clean and simple stock option plan. The cleanest way to do this is to make sure everyone has the same terms and rights (not everyone will have the same strike price which is expected and fair). And its a plan that you can live with as the company grows and won’t cause complexities in the future.