I like the idea of Quartz, the new business magazine from the Atlantic Group, but I’m not convinced they have a plan in place to reach the people they need to reach. Maybe they do, but I haven’t heard about it yet. Instead, Quartz Editor-in-Chief Kevin Delaney, in an interview with the Nieman Journalism Lab, responds to a question about distribution mostly by citing the quality and accessibility of his content. These are good things to have, but they aren’t the same as a distribution strategy.
Nieman’s Justin Ellis asks, “You aren’t on a print newsstand and you’re not in an app store. How are people going to find Quartz?” Delaney responds by saying Quartz’s content is (a) free, (b) multiplatform, and (c) “made to share.”
That’s not an answer that satisfies me Continue reading
Entrepreneur, investor, and “data guy” Mike Greenfield has a nice post on how AngelList quantitatively changes the investing game, which lines up nicely with a few of the points I was trying to make in my recent post on whether startup valuations are overinflated as a result of programs like Y Combinator.
Mike finds that startups funded through AngelList end up with a more diverse pool of investors than those that locate investors through more traditional word-of-mouth channels. This is not necessarily a surprise, given that AngelList seems designed to flatten the world of private equity financing and give more people on either side of the table a look at more deals — but it is a nicely crunched set of numbers. And to my eye it’s another indication that the private equity markets — or at least the corner of the market that tech startups and venture capitalists inhabit — is passing into a phase of greater maturity, where more information is available to more players, and the playing field is leveled a bit in comparison to periods that have come before. As Mike puts it, “As AngelList and crowdsourcing grow, the impact of the old boys’ clubs will shrink. For companies, the pool of investors is growing.” Not a bad result.
The public company — at least in its current form — may be on the wane, according to economist Nancy Folbre. Folbre, who specializes in the interesting-sounding discipline of the economics of care, argues in The New York Times that “public corporations . . . are now waning in significance.”
Quantitatively, Folbre notes that there were twice as many public companies in the US in 1997 as there are today, an eye-opening statistic in itself.
She also cites a number of studies and trends, including the increasing concentration of public equity in the hands of investment funds, and the rise of private equity firms. This last makes it easier for companies to raise money outside the public stock markets, and is interesting to me in part because it matches up with financing trends I noted in an earlier post here.
Is the public company dead? Probably not. But sources of corporate financing are diversifying, and it’s likely that the landscape going forward will contain a larger proportion of privately financed companies competing on the same level with public companies. There are a lot of implications in this shift, but here are two I find interesting:
- individual investors will need new ways to participate in the financing of private companies
- regulatory regimes will likely need to be updated in order to provide some of the same protections to private investors as are enjoyed by public investors today, even if those protections take slightly different form
It will be interesting to see if the courts and agencies can solve the regulatory question in a way that retains some differentiation between the public and private equity markets, while at the same time broadening access to the private markets so that more people can participate. It’s possible that a third class of company will need to arise. I’ll save any speculations on that for a later post, but I’m interested to see what happens and hear what people think.
I can’t subscribe to the view — put forth in a recent Business Insider piece on startup valuations — that the Y Combinator program is driving startup valuations higher across the board. And in fact, the article strikes me as a fairly shallow take on the issue. It collects a mess of unattributed quotes (as well as quotes from one or two attributable sources), and does very little of the due diligence you’d hope to get out of a journalist with a calculator and/or a Google spreadsheet to hand. Math aside, it completely fails to take any kind of close look at the startup market itself, and instead slavishly regurgitates the (again: overwhelmingly unattributed) quotes that the reporter has collected.
If you take a little time to assess the market, a different picture emerges. Continue reading
A young entrepreneur I met recently asked me how to think about advisory boards and I ended up writing him a long email, which forms the basis of this post.
The biggest value-add I can impart here is a piece of advice that was passed along to me by an associate at the VC firm that funded my first startup, and it’s this: define success for each of your advisory relationships. Don’t just sign someone up as an advisor and then start leaving them messages asking what they think of the latest site design. Instead, be very specific about the kind and amount of assistance you want to get from this person, and then hold them to it. This entails some personnel management on your part, but it’s the best way to know you’re getting your equity’s worth from them. Advisors don’t get a very big slice of the pie, but as an entrepreneur, any slice is a big slice, so you want to know you’re getting an appropriate amount of value out of the relationship in return.
So define what success is in each case. From one person, you might expect to get an hour-long conference call every month in which you can seek feedback on the latest site design. From another, you might expect a steady flow of meetings with potential investors (one a month? one a week? depends in part on where you are in your funding cycle). Or you might have an advisor you’ve recruited because they’re well connected to engineering managers, so your criteria for success here is, help us land our Director of Engineering within the next three months. Continue reading