• The Case Against Anthony Noto, and Most Other CFOs, Becoming CEO

    Anthony NotoDick Costolo — who is stepping down as CEO of Twitter in July — has, at a couple of recent conferences, described Twitter CFO Anthony Noto as more than an “accountant” and said that Noto was not brought into the company “just be a CFO.”

    Yesterday, the Wall Street Journal even suggested that Noto has emerged as a front-runner to replace Costolo, describing Noto – a former tech banker at Goldman Sachs and a former CFO of the National Football League – as a “take-charge” executive, based on interviews with his supporters at the company.

    But promoting Noto to the top spot may not be such a great idea — not based on the experience of longtime executive recruiter Jon Holman, who says CFOs tend to make lousy CEOs. In fact, of the hundreds of C-level executives that Holman has placed over the last 30-plus years, he says he has “never” placed a CFO as a CEO – “nor would I recommend it to someone.”

    Holman “doesn’t know Noto at all,” he is quick to say. He adds that Noto could become the “second or third guy in history who has gone from CFO to CEO and been successful.” But he’s highly skeptical of the model for a variety of reasons.

    First, it’s likely that until April — when Noto was also put in charge of Twitter’s floundering marketing department — Noto has never managed anything near the roughly 4,000 employees that Twitter has around the world.

    “At Goldman, Noto was an analyst, meaning he was a domain expert who knows a huge amount about various industries,” observes Holman. “But he was never managing large numbers of people,  and the people he was managing [in the several years that Noto spent as co-head of the investment bank’s technology, media and telecommunications group] were analysts – not people in marketing, sales, finance, engineering . . .” notes Holman.

    More, says Holman, while CFOs generally sound like they know everything, they do not. “Because CFOs sit in on board meetings along with the CEO, they speak as if they understand the business.They understand the financials of the business. They know that, ‘We’re spending 33 percent of revenue on sales and marketing.’ But they’ve never run a sales organization, and their job has never been on the line if there’s a revenue shortfall,” he notes.

    Not last, CFOs tend to reign in spending and to generally take the most conservative path possible, notes Holman. That’s probably not ideal at Twitter, which has shied away from making dramatic changes to its platform — and been soundly criticized for it. “Most CEOs are outer directed, while CFOs are inner directed,” says Holman. Using a baseball analogy, he observes that “Most CEO types want to swing for the fences; CFOs want players to hit singles.”

    That’s not to say Twitter should rule out Noto completely, suggests Holman. In fact, he could make sense as CEO in the very short term.

    Among other reasons why a company like Twitter might bring in a CFO is if “you have investors who think the sky is falling, or, in this case, that it’s a big problem that Twitter isn’t converting tweets to revenue. CFOs generally speak in appropriate adult-like tones and can [massage] investors and assure them that a company will get it all figured out.”

    Another argument for promoting the CFO is when a company is just going to sell itself anyway, says Holman. In that case, “What you need is someone who understands how to sell a company, someone who will run a [sales] process, which Noto clearly knows how to do.”

    A third reason a CFO like Noto could make sense right now is “if there’s a perception that what a company needs to do is big-time pruning: laying people off, getting expenses under control, those kinds of things that CFOs tend to be really good at.”

    Of course, all of these scenarios would be a prelude to bringing in someone else, and Twitter already has an interim CEO lined up in co-founder Jack Dorsey.  Could we see the equivalent of two interim CEOs at the company?

    Twitter “can do whatever it wants,” says Holman. “Is it a clever strategy? Probably not.”

  • For Jeff Clavier of SoftTech VC, a New Partner and Some Deja Vu

    Jeff ClavierBeginning next month, the Bay Area venture firm SoftTech VC will undergo a management change, with partner Charles Hudson beginning a transition out of the firm to start his own fund, and a new venture partner, Andy McLoughlin, who cofounded the enterprise collaboration startup Huddle, joining full time to focus on business-to-business opportunities.

    For SoftTech founder Jeff Clavier, it must feel like a bit of déjà vu. It was 11 years ago, working for the venture arm of Reuters, that Clavier decided to gamble on himself and strike out on his own. SoftTech has since grown from a one-man operation into a well-regarded early-stage investment firm with more than 160 investments to its name and four funds, including an $85 million pool that it closed on last year.

    As the firm has evolved, so has its mandate. “Something like 500 companies now ping us every quarter, and we invest in four or five,” Clavier says of the firm, whose average check size today is $750,000. Not only does SoftTech “have the luxury of trying to get the right level of signals before we invest,” he adds, but the firm’s LPs expect it.

    That evolution has made it harder for Hudson to chase the nascent ideas about which he’s most passionate, acknowledges Clavier, who recruited Hudson into SoftTech as a venture partner in 2010 and promoted him to partner in 2013. In fact, says Clavier, Hudson decided several months ago to raise his own, “pre-seed” fund, an effort that Clavier says he fully supports. (Owing to SEC rules, Hudson can’t talk yet about that fund, but we’ve learned that its brand, for now at least, is Precursor VC.)

    It will be a gradual move out of SoftTech for Hudson, who is expected to manage his startups through the end of the current fund’s investing period, in the summer of 2016.

    In the meantime, notes Clavier, McLoughlin brings SoftTech far more expertise in enterprise startups as it looks to shift more of its capital from business-to-consumer startups to businesses catering to other businesses.

    Not only has McLoughlin been scaling his own enterprise business first-hand at Huddle (which remains privately held), but he has made more than 35 investments as an angel investor over the last five years, many of them on exactly the types of companies that SoftTech has grown more interested in funding. Among those bets is Apiary, a San Francisco-based company whose tools help companies build, test, monitor, and document web APIs; and PipeDrive, a maker of sales pipeline software that’s based in Menlo Park, Ca.

    “Charles and I had in mind to bring in a new investment professional [who], on the one side is a SaaS cofounder who has seen different levels [of growth] over many years, and [on the other], is someone who can help set up sales, marketing, and customer success [for our startups],” says Clavier.

    “From that standpoint — and many others — Andy is a score.”

  • Mary Meeker Goes to Bat for Kleiner — and Ellen Pao

    Mary MeekerIn a San Francisco courtroom yesterday, Mary Meeker, the star investment analyst turned general partner at Kleiner Perkins Caufield & Byers, took the stand, testifying that she has not experienced discrimination at Kleiner and calling the firm the “best place to be a woman in the business.”

    Kleiner is currently fighting charges of gender discrimination and retaliation by former junior partner Ellen Pao, and Meeker was called as a witness for its defense. In addition to testifying that she had never personally experienced discrimination at the firm, Meeker said she has not been excluded from Kleiner Perkins events because of her gender. She also said she hasn’t observed any gender discrimination at the firm.

    Meeker likely left an impression on jurors, particularly given her impressive career, from her early days at Morgan Stanley to her 19-year rise within the powerful investment bank, where she ultimately became the head of its global technology research practice.

    “I had a pretty good track record of finding things before others could see them,” said Meeker, pointing to companies she’d covered from almost their outset, including Microsoft, America Online, Google, Netscape, and Alibaba. In fact, Meeker said yesterday, Kleiner had “recruited me off and on for about a decade for a whole host of things.” (She finally joined the firm in December 2010.)

    Defense attorney Lynn Hermle had asked Meeker about her background to highlight the contrast between Meeker’s experience and that of Pao, who says she was denied the opportunity to advance at the firm because of her gender. Pao, who at 45 is roughly 10 years younger than Meeker, has enjoyed an impressive but far less celebrated career, including as a law firm associate, as a business development executive at numerous tech companies, and today, as the interim CEO of the site Reddit.

    Still, Meeker didn’t make as ideal a witness for Kleiner as she might have, volunteering information about Pao’s investing instincts and politely pushing against some of defense attorney Lynn Hermle’s attempts to show Pao in a poor light.

    Hermle, for example, asked Meeker to contrast her experience with Chi-Hua Chien — a former Kleiner investor who was promoted to a more senior role — with that of Pao, who was not promoted at the same time.

    Meeker called Chien “very bright, very intense” and someone who would “sort of get on the edge of his seat and jump up a bit and get really enthusiastic about the business.” Asked afterward to describe Pao in meetings, Meeker called Pao “certainly more passive, but I think thoughtful.”

    She also prefaced her comments by explaining that she had far less interaction with Pao, saying, “I was in a lot of meetings with Chi-Hua – I’d say every week. . . . With Ellen, we worked on a couple of things together.”

    One of those things was the news app Flipboard, which Kleiner’s early-stage fund had backed and whose later-stage, digital growth fund, which Meeker oversees, was also considering funding. (It passed at the time, said Meeker. “It was a little early. The company didn’t have revenue at that point.”)

    Pao also brought Climate Corp. to Meeker’s attention, Meeker said yesterday, occasionally facing Pao – who was seated 50 feet away — as if they were still colleagues. “It’s a company that has done quite well,” said Meeker. “It was acquired by Monsanto. Its founder is quite good, but the company focuses on offering insurance to farmers based on weather trends, which wasn’t an area where I thought any of us had particular expertise because we weren’t in the farming business.” (Climate Corp. went on to raise $107 million from investors; it sold for $930 million in October 2013, seven years after it was founded.)

    Hermle separately asked Meeker if Pao had ever come to Meeker and asked her to mentor her. “Not that I recall,” said Meeker.

    Meeker could have left it at that, but she added, “Bear in mind, I was the new kid on the block in 2011 and we were investing at a very rapid pace in a different area of investments than were core.”

    Hermle pushed the point. “So you were available?”

    “I think I’m around, though I can’t say I’m the most available person at all times,” answered Meeker.

  • Elad Gil on Angel Investing, AngelList, and His New, Stealth Startup

    elad-gilBy Semil Shah

    In 2009, Elad Gil sold his company, Mixer Labs, to Twitter, where he worked another two-and-a-half years as a VP before plunging back into the world of startups — and startup investing. Recently we talked with Gil about how, more precisely, he’s spending his time these days.

    ​As an individual investor — what stage do you prefer to invest in today, and how has that changed over time?

    I’ve always been pretty stage agnostic as an investor, which I think is a bit contrarian in the individual angel market. Most of my investments have been seed rounds, but I’ve also invested in a reasonable number of Series A, B and C rounds.

    One of the reasons I’ve always invested in a broader range of companies is my background as an operator. My role at Twitter was effectively to help scale the company. Since I was involved in a lot of aspects of managing hockey-stick growth — internationalization, user growth, scaling recruiting process, M&A, analytics, product, etc. — a number of later-stage breakout companies have asked me to get involved as an investor or advisor as I have been through the same terrifying growth curve they are now seeing.

    From a purely financial perspective, I only invest invest in companies that I think may have anywhere from 10x to 1000x upside left. Obviously that’s easier as an early-stage investor.

    How do you plan to use a platform like AngelList in the future, if at all?

    AngelList is going to transform whether branded individual angels eventually transition to larger firms. If an individual angel has the access and deal flow, we’re very close to the day where they can effectively run a fund in a friction-free manner on top of AngelList. AngelList helps with the fundraising, as well as takes care of the ongoing back office — accounting, legal, fund set-up, carry management, etc. — for the angel. Already, you see people like Scott and Cyan Bannister and Gil Penchina making use of AngelList as an LP and back-office platform.

    For newer angels, AngelList provides any angel the opportunity to have an instant fund — in other words, the syndicate — back the angel. The angel can take carry this on, while AngelList manages that person’s back office. So it may also create the opportunity for new angels, with much less personal capital, to start effectively a micro-VC firm. I wouldn’t be surprised if some interesting dynamics emerged on the platform, like if every YC batch had one founder who raised an AngelList-based fund to invest in all of his or her YC batch mates. Maybe [AngelList] turns YC into an inadvertent launching pad for micro-VCs as well.

    You’re working on a new startup. Without giving up too many details, can you share what space you’re working in and what you anticipate happening in the industry over the next three to five years?​

    My prior startup was a developer platform product that Twitter acquired. More recently I co-founded a genomics company and, in particular, software to make genetic testing and genomics widely available. This industry has seen a 10,000x drop in cost over the last few years, but software and other aspects of these services haven’t kept up. While I’m skeptical that anything fundamental has shifted in biotech as a whole to make it more attractive investing-wise, I’m very bullish on the shifts occurring in genomics.

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  • Elad Gil on the Angel Investing Lifecycle

    Elad GilBy Semil Shah

    Elad Gil is like a lot like other smart, accomplished Silicon Valley angel investors. His credentials include an advanced degree from M.I.T. He has worked at both small and big companies, from Plaxo to Google (where the mobile wireless team he started acquired Android). He’s also an entrepreneur himself, starting Mixer Labs, a service that helped developers build geo-location apps.

    When Twitter acquired the company in 2009, Gil stayed on as a Twitter VP for two-and-a-half years, becoming an active angel investor — or a “startup helper,” as he describes himself on LinkedIn — more than two years ago. Unlike a lot of his peers, Gil is content to remain an angel investor for the foreseeable future, too, for a variety of reasons. We’ll delve into some of them early next week. In the meantime, here’s Gil on why angel investors tend to pursue certain, predictable trajectories.

    There aren’t many true individual angels left. Why is that?

    It seems like there is a natural lifecycle to individual angel investors, especially if they stop being operators. At some point many individual angels who were successful investing chose one of two paths — raise your own fund, or join a traditional venture firm. This isn’t something I’m planning on, but many have, and I think this transition has a few drivers:

    1.) People want leverage on time or run out of capital. If you’re an individual angel writing small checks, eventually you may realize you are investing an enormous amount of time working hard for your portfolio companies. But you may not have a lot of skin in the game relative to other, less engaged investors. In my own case, there are a number of companies I am involved with where I have put in a lot more work then people with 10X or even 100X the financial position. At some point, angels may want to have more leverage on their time. If an angel is putting in so much work, why not also participate more in the upside by investing a larger amount? Or, an angel may want to expand their role to be able to lead seed or larger rounds and to set terms. This is actually starting to be enabled by AngelList.

    Alternatively, you may at some point tap out financially or be too illiquid to keep investing your own money. This supposedly happened to Elon Musk for a period when he had all his capital tied up in SpaceX and Tesla and neither company was public. So raising a fund or joining a VC is a way to keep investing without tying up all your own cash.

    2.) People want to learn or do something new. Some institutional venture capitalists have a really strong process or perspective on investing. Benchmark and Sequoia are two that come to mind. Some individual angels feel they have a lot to learn at these institutions. [It’s also the case] that many individual angels don’t take board seats or get involved with other aspects of a company, and joining a traditional venture firm allows them to do things they have not done before.

    3.) People stop operating. Running a company can be exhausting. Many individual angels are often former operators. Once an entrepreneur or executive gives up their day job, they may want to still to be involved with startups day to day. A firm — either their own or one they join — provides them with a regular outlet and a job without the soul-crushing 24/7 grind of an operating role.

    4.) People get lonely. It’s nice to have other people to bounce ideas off of. As an individual angel, if you spend time bouncing investment ideas off of other angels, you may be violating the confidentiality of the startup — or you may fall into group think. An institution provides people with a framework for tapping into other folks regularly and having a firm and culture to be part of. (That said, I hear that many VCs feel they are “lone wolves” and the job of the VC is not one where you spend a lot of time with your partners. I guess all things are relative.)

    5.) Prestige. Some people are really attracted the societal prestige associated with being a venture capitalist. It is sort of like the people who join Goldman Sachs straight out of school so they can brag about it to their friends.

    One of the cool things about Silicon Valley is the ongoing cycle of capital and talent. The pool of individual angels keeps getting renewed and refreshed as entrepreneurs or early hires at breakout companies make enough money to start angel investing. A small handful of these folks end up either generating a sizable brand or a good return and reputation, many of whom then transition into VC. (Of course many individual angels end up loosing money and dropping out before building a reputation, so there is also the “dark side” of being an angel).

    Y Combinator has its own interesting version of this, where a number of YC alumni cycle back as partners at YC and/or raise their own funds. So YC is functioning as a farm system for its own investors, which reenforces it.

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  • Ryan Sarver on Life as a VC, Twitter’s Future, and Why Startup Spillover Out of SF is Inevitable

    Ryan-Sarver5By Semil Shah

    It’s been nearly a year since Redpoint Ventures appointed Ryan Sarver, Twitter’s former Director of Platform, as a partner. At the time, Sarver was making the occasional angel investment, but he has spent the last 10 months or so getting up to speed as a formal, full-time investor. We caught up with him last week to find out how it’s going.​

    You recently left Twitter for Sand Hill Road. What was the process like talking to VC firms? What about the process do folks on the outside perhaps not fully appreciate?

    Originally my plan when I left Twitter last year was to take three to four months off and then start something on my own. I had a few ideas brewing that I was curious about and if you had asked me, there was no doubt in my mind that was what I was going to do.

    When I signaled that I was leaving Twitter, a few firms reached out to talk — some about EIRing and some about doing investing full time. I was still pretty focused on starting something in the fall, but after spending the summer getting to know the Redpoint team, I started to seriously consider the role. I spent a lot of time thinking back through my career to what I felt most fulfilled by and realized that I most enjoyed the early, foundational days of a company. Team building, vision setting, figuring things out when you have almost no information and no resources. I didn’t enjoy being part of a larger organization as much and realized that venture could be a way for me to do more of the parts that I loved and less of the parts that I didn’t.

    I think the most unique thing about the hiring process is that, unlike a startup, you’re being hired into a partnership which makes the process fairly complicated. There isn’t a single hiring manager but many, and your time horizon is much, much longer. It’s a more complex process in many ways, but rightfully so.

    What are your first few deals as a VC, and how did you go from “interested” to “having conviction” as an investor?

    I’ve done two deals so far, but only one, Secret, has been announced. I think the idea of having and maintaining conviction has been one of the hardest parts for me in the role. It’s much easier when you’re an individual making angel investments to find founders and companies that you get passionate about. It’s a whole other thing to do it as part of a partnership with much bigger checks. To me the difficulty is in the lack of information and time in a deal. Founders are dealing with very imperfect information and they are living and breathing the space. As an investor, you’re getting to spend very little time with a team before you have to make a call. Naturally, I’ve found the deals that I have the most conviction about are the ones where I am coming to the deal with a lot of background in the space. There are a million reasons companies can fail, so you have to find the few things about the team and their approach that you can hang your hat on and that give you optimism that this one is going to beat the odds.

    As someone with deep experience at Twitter, do you believe Twitter can grow its user base?

    I think of it like “could Twitter as a product be valuable to more than 300 million people” and I have no doubt that that’s true. In many ways, I think it can be more widely applicable than Facebook even. Twitter is a real-time information service, similar to news, with messaging layered on top of it. Twitter’s biggest problem is twofold. First, it needs to better explain itself to the masses so that the next billion users know why they should be using Twitter. Everyone has heard of Twitter, but most people have no idea what role it fills in their lives. For those of us who have figured it out, it’s magical, invaluable and addictive.

    Second, the product itself has to be more understandable to the masses without losing its soul. Tons of people have signed up for the service only to churn out because they don’t get value from Twitter. I don’t think this is a reflection of whether or not they can get value from Twitter, but instead a failing of the product to make it easy for the average user to get that value. Really it comes down to helping them find great accounts and delivering relevant content to them quickly. They have a huge challenge in front of them to accomplish those things, and I don’t think there is a silver bullet for them, but I feel strongly that it’s a product that could touch a billion users.

    Give us an idea of how much time you spend in San Francisco versus the Valley.

    I’ve gotten asked this a lot recently and I think the prevailing thought is that all deals have moved up to the city and out of the Valley. While it’s definitely true that there has been a big shift to the city, I’m still seeing some great deals down in the Valley. An overwhelming majority of consumer and mobile deals have moved to the city, so if those are the only deals you’re looking at, then you’re in the city 90 percent of the time. With that being said, we’ve seen some great deals down in the Valley [that] are typically more focused on b2b and infrastructure. RelateIQ and Jaunt, two of our more recent b2b deals, are both based down in the Valley, for example, whereas Secret, Coin, and HomeJoy are three recent consumer deals up in the city. On an average week, I’m probably splitting my time between Menlo [Park] and San Francisco.

    Residential and commercial real estate in the city continues to get crazier and crazier, and I do think you’re going to see that trend push some new companies to open their first offices outside of San Francisco.

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  • VCs and Twitter: A Simple Relationship Turns Complicated

    VCs on TwitterOver the weekend, New York Times reporter Jenna Wortham wrote of Twitter that it “seems to have reached a turning point, a phase in which its contributors have stopped trying to make the service as useful as possible for the crowd, and are instead trying to distinguish themselves from one another.”

    If Wortham is becoming disillusioned with the platform, she’s hardly alone. Even venture capitalists – among Twitter’s savviest and earliest users –no longer view Twitter with the same zeal they once did, with a growing number turning away from the service for longer periods of time, if not logging off altogether.

    Chris Dixon of Andreessen Horowitz talked with investor-entrepreneur Semil Shah last November about why he no longer tweets as actively as he once did. “I actually think Twitter has changed,” said Dixon, whose tweet count is nearing 15,000. “Part of it is Twitter just got more popular…For me, the golden days of Twitter were 2010 maybe, 2011, where it was a bunch of early adopter/startup people…now, everyone realizes that if you say something wrong, it’s going to be excerpted and put on Business Insider…so I just think everyone is vastly more on guard, and it’s just not as fun.”

    On New Year’s Day, another power user, Shervin Pishevar of Sherpa Foundry, announced that after an astonishing 34,777 tweets dating back to 2007, he’d decided to “take a break” – for all of 2014. It was time to “disconnect from this overtly present present and live in the moment more,” Pishevar wrote on Medium, the newest publishing platform launched by Twitter’s cofounders.

    In a more recent renouncement of the platform, Paul Lee, a general partner at Chicago-based Lightbank, tweeted last Wednesday that he was “Going to be taking a break on twitter for a while (at least trying).”

    When afterward, I asked Lee why, he explained that Twitter “ended up taking a lot of mindshare and creating a lot of noise in my head.” Though Lee consumes more than he publishes (over the last six years, he has sent 2,342 tweets), he finds Twitter just as distracting as someone who more actively participates in conversations.

    “Imagine you’re in a meeting and you have eight people sitting on your shoulders,” he said. After logging on, even for brief periods, “It kind of felt like that. My mind was going 100 miles per hour.”

    Plenty of VCs still actively use Twitter, of course. Homebrew cofounder Hunter Walk says that among the ways it helps him as an investor is his ability to share his thoughts, meet new people, and “lazyweb” questions about who is working on what.

    Walker, who says he spends “toooo much” time on the platform (he has composed more than 18,000 tweets), says it doesn’t exhaust him primarily because he tries to use it “as a human being who also happens to be a VC.”

    Josh Felser, a cofounder of Freestyle Capital, similarly says that his approach is not to overthink things but rather “say mostly whatever I want.” Felser (12,600 tweets) also notes that Twitter is “helpful in building my business brand” particularly given that “most entrepreneurs are on it.”

    Lee acknowledges the same value in Twitter that Felser sees. In fact, he says Lightbank has funded two startups that it sourced through Twitter. “So from a branding perspective – meaning branding of [Lightbank] and self-branding – it’s been really effective.”

    Still, Lee says he’s prepared to avoid it for a while, even if he’s uncertain for how long. “It’s only been a few days,” he told me Friday morning. He said he was already feeling “less tied to it, less compelled to check it.” But he was also quick to call it “an experiment. I don’t want to get ahead of myself.”

    Meanwhile, the Twitter fatigued might pay special attention to Marc Andreessen, someone known for the shrewd way in which he has marketed his venture firm. A big fan of “counterprogramming,” Andreessen has taken to Twitter with great relish over just the last month.

    In the six years prior, he sent out two tweets.

    Correction: The original version of this story referred to Wortham by her Twitter handle, @jennydeluxe.

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  • The Origins of Netscape, as Tweeted by Marc Andreessen

    marc-andreessenAs everyone now knows, Marc Andreessen apparently made it a New Year’s resolution to begin tweeting, just as some of the platform’s most prolific users are deciding to dial it down. That’s good news for the roughly 42,000 of us who are following him, given that he usually has plenty of interesting observations to make.

    Sunday afternoon, for example, Andreessen entered into a Twitter conversation with 21-year-old Marcos Villacampa, a self-described “startup addict” in Spain, who tweeted, “It is really, really difficult to find the *real* story of events in the past which involved winners and losers.” Villacampa then tweeted of Andreessen specifically that Mosaic “wasn’t exactly a one-man job…”

    Here’s the history lesson that Andreessen offered Villacampa in turn. (We feel vaguely trollish publishing it, but because it’s useful background, and conversations are so quickly lost on Twitter, we thought we should seize the opportunity to capture the exchange.)












  • A Storyteller Wades Into a Crowded Market

    BevelKitTristan Walker is a rarity in Silicon Valley. He’s a gifted storyteller who intimately understands mobile and social media, having interned at Twitter before joining Foursquare, where he led business development for three years.

    Those talents will come in handy, as Walker pulls the cover off his eight-month-old startup, Walker & Company, revealing its first product to be … a shaving kit.

    Worth mentioning straightaway: This is an exceedingly nice shaving kit. In addition to a pure brass handle and German-made blades, each kit comes with rich pre-shave, shaving, and after-shave lotions, all tucked thoughtfully into an elegant box that’s designed to take 2.5 seconds to open. (It builds anticipation, Walker told me during a recent visit to the company’s offices, located a few miles from Stanford University.)

    Priced as the kit is — a user pays $59 for his first, three-month supply, and $29 per month thereafter — it seems reasonably accessible, too, particularly considering the growing percentage of men willing to spend on grooming. According to the research company Mintel, the share of personal care products designed for men has grown to to 5.6 percent from 4.6 percent over the past five years.

    Still, to break into a crowded market that already features both high-end competitors and affordable alternatives, Walker needs a compelling story, and he has one that he tells well. As he explains it, black, Latino, and Asian men and women have few personal care options beyond the “ethnic aisle of Walgreen’s,” where they’re left to examine which “dust-covered” product might be remotely suited for their hair texture or skin needs. To underscore his point, Walker, who is African-American, shows me an off-the-shelf hair-care product featuring a balding black man wearing a bath towel.

    It’s that underserved market that inspired Walker & Co. The company’s shave kit, for example, has a single blade construction that’s particularly ideal for African-American men, who often struggle with extreme razor burn irritation because their facial hair tends to be curly.

    Yet the kit is just the start, says Walker, who observes that people of color will represent the majority of American in the not-too-distant future, as well as that they tend to spend more than other demographic groups on personal care products. (Black women, who represent just 6 percent of U.S. population today, account for 30 percent of hair care spend, says Walker.)

    Little wonder Walker is already imagining products such as high-end shampoos suited for the dry hair of African-American women, or skin-care products that address hyperpigmentation.

    And none will be relegated to a drugstore aisle, says Walker, who is employing a direct-to-consumer e-tailing strategy, along with reaching people where they gather online. (Among other examples: the urban style blog Street Etiquette will soon begin publishing grooming content co-created with Walker & Co.)

    Eventually, Walker & Co. — whose investors include Andreessen Horowitz, SV Angel, Upfront Ventures, and Sherpa Foundry — will also sell its products offline, says Walker. But telling the story comes first, and the shaving kit is not the story; it’s just the prologue.

    “This is about fundamentally enabling access. It’s about making things more practical and delightful at the same time,” says Walker.

    Traditional consumer packaged goods companies have had their chance, he suggests. Walker & Co. is “going to create the experience that [people of color] deserve.”

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  • Dick Costolo’s Joke Bombs, on Twitter

    Dick-Costolo-002Over the weekend, Twitter CEO Dick Costolo finally did something that millions of Twitter users have done before him: He tweeted a comment that’s attracting unwanted attention

    The tweet was prompted by a New York Times report that Twitter has just one woman among its top officials. The story includes comments from academic Vivek Wadwha, who ascribed Twitter’s gender imbalance to “elite arrogance” and the “same male chauvinistic thinking” that permeates Silicon Valley. Costolo took to Twitter Friday night to call Wadwha the “Carrot Top of academic sources.”


    Coming from anyone else, the tweet might have been mildly amusing if a bit mean-spirited — typical Twitter fare, in short. Coming from Costolo, it was a surprising misstep. Twitter is in its quiet period. Within weeks, it will be a public company. So why not just keep quiet until then?

    In shooting the messenger and not addressing the message itself, Costolo also inadvertently helped feed people’s worst perceptions of Twitter, including that it’s not always a friendly place to hang out. As Josh Constine observed in a recent TechCrunch piece, many users already avoid or abandon Twitter because of its competitive undertones and the pressure they feel to be “thought leaders.”

    Half a day after Costolo published his tweet, one such thought leader, the blogger-entrepreneur Anil Dash, decided to challenge him on it. Tweeting to his 477,525 followers, Dash said that he was “sorely disappointed to see @dickc respond defensively to criticisms of industry sexism. Why not just lead, as Twitter does on free speech?”

    After a few defensive exchanges with Dash and others on the topic, Costolo suggested that he’s very mindful of the gender issue at Twitter, tweeting: “I *think* I have an acute understanding of the topic & host of related issues. Of course, proof is in deeds.”  (In a display of deference to Costolo that has also become de rigueur among Twitter’s most astute users, Dash “favorited” each of Costolo’s responses before responding to them.)


    Whether there will be lingering damage from Costolo’s tweet remains to be seen. Plenty of people have lost their jobs over less, but Twitter doesn’t seem inclined to ditch its star CEO any time soon.

    As for Carrot Top, a comic long known for his red hair and his use of props, no one yet knows how he feels about being dragged into the conversation. His publicity team didn’t respond to questions sent to them yesterday.

    It’s worth noting that Costolo himself once tried to be a stand-up comic, an effort that led to zero job offers, as he shared during an on-stage interview in May. “It was one part of [my career] strategy,” he’d said, as the crowd erupted with laughter.

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