Memorials in the Digital Age

February 16, 2011 2 Comments

Back in 1994, a high school friend of mine passed away in a tragic accident. It’s been over 16 years since that day but I still think about my friend and every now and then I pull out an old photo album that holds pictures of us goofing around and being kids. Next to one of the pictures I also keep a faded newspaper obituary as a reminder. It’s the only public record of his life–he passed away before digital photos and widespread Internet adoption.

How will you or I be remembered by our friends and family? For a select number of famous people, they might be commemorated in a Time article or a Wikipedia entry. But the majority of people will not have that recognition.

In this day and age we leave digital trails of our lives.  We post photos on Facebook, upload videos on YouTube, write posts on our blogs and update our professional profiles on LinkedIn.  But where will this data go when we’re no longer here? Where will our friends and family go to remember us and the times we shared?

1000 Memories Founders Jonathan Good, Brett Huneycutt and Rudy Adler

The founders of 1000 Memories—Rudy Adler, Jonathan Good and Brett Huneycutt—have built a beautifully designed Web site that allows friends and family, no matter where they live across the globe, to come together online to contribute to the memory of a loved one.  Much richer than a newspaper obituary, memorial pages on 1000Memories allow people to commemorate lives through a vivid collage of digital photos, stories, biographies, videos and songs–free and forever.

When I first met the three founders I was impressed not only by their vision but by their collective character. They are an unusual trio: two former Rhodes Scholars and a gifted designer from an advertising agency. Despite their youth they have all lived through some type of loss that drove them to understand the need for a service like 1000Memories. They figured if they needed something like this, millions of other people might, as well.  Last year they decided to leave great jobs in the middle of a recession to relocate to San Francisco to turn their vision into a reality.

I am happy to announce today that Greylock is leading the company’s Series A round of funding. In connection with the investment, I will be joining the board of directors. I’m honored to partner with Brett, Jonathan and Rudy and am looking forward to helping them build a strong business around this terrific service, which promises to ensure that the colorful lives of everyone’s friends and family are never forgotten.

-David

David Thacker is an associate partner at Greylock. His investment focus areas include mobile, digital media & advertising, and e-commerce.

Filed under Greylock Updates Tagged with , , , , , ,

How E-Commerce Got its Groove Back

February 11, 2011 11 Comments

E-commerce was an innovation wasteland for most of the past decade. While social media companies such as YouTube, LinkedIn, Facebook and Twitter were growing exponentially, breakthrough new commerce start-ups have been few and far between. As our friends at First Round Capital noted in this blog post, 7 out of the top 15 sites on the Web were started in the past decade but only 1 of the top 15 e-commerce sites was started during this same period. Who was that new, major e-commerce entrant? Umm, NewEgg.

There haven’t been many exciting financial outcomes, either. I’m not talking about pioneers such as Amazon or eBay but the start-ups that came later. Sure, there are a few, such as Zappos, Diapers.com and Stubhub, but not many.

Classic e-commerce businesses were mostly saddled with high customer acquisition costs (loads of Google Adwords spend), low customer retention (one-off transactions), and operating models that consumed cash (due to warehouses full of inventory).

But the e-commerce market is big and ripe for innovation. E-commerce is now more than four times the size of the annual online advertising market. Yet it’s only four percent penetrated.

Better Models Emerge

The same trends that have driven innovation elsewhere on the Web – social, local and mobile – are now driving an emerging class of opportunities in e-commerce. A few years ago, a wave of entrepreneurs started engineering new social commerce models and this innovation is paying off in the form of rapidly growing businesses.

This emerging class of companies features Groupon in local commerce, Gilt in private sales and also earlier-stage start-ups in areas including subscription commerce (Shoedazzle), mobile commerce (Shopkick) and next generation marketplaces (Airbnb). Social commerce entrepreneurs have architected fundamentally better models. They’ve replaced consumer experiences that were uninspiring and overwhelming with experiences that are curated, exciting and addictive. They’ve reduced customer acquisition costs through word-of-mouth promotion and improved lifetime customer value by re-engaging customers on a regular basis. They’ve also produced more efficient operating models by holding little-to-no inventory and getting paid by customers before they have to pay vendors.

Now there are hundreds of start-ups racing around the social commerce track. When evaluating new investments at Greylock, we ask ourselves what will be the defining characteristics of the few companies that make it to the winner’s circle?

One company we’re excited about is One Kings Lane, a promising start-up founded in late 2008 and based in San Francisco. We just announced an investment in the company this morning. One Kings Lane is focused on helping people find high-quality products at great values for home and living, such as furniture, accessories, art, kitchenware, food and wine. We think the company illustrates a few characteristics that will be common among successful social commerce start-ups.

Left Brain, Right Brain

The most successful social commerce teams will combine highly-developed right and left brains. The right brain is essential from the earliest days of a company’s life. By right brain I mean the instincts and passion to recognize and deliver an experience that will resonate in a deep, authentic way with the customer. Most v 1.0 e-commerce sites didn’t seem to use much of the right brain. In social commerce the experience starts with identifying great merchandise that’s unique and hard to find—you can’t just get it anywhere. The experience extends to story-telling so that the company describes the merchandise in a compelling way. In the end, it is wrapped up in a brand and experience that customers are excited to identify with and participate in.

In e-commerce operations there are never-ending opportunities for the left brain to test, iterate and improve. The best companies relentlessly crunch data generated from initial customer contacts through to transactions.

The One Kings Lane launch team nailed the initial customer experience. They provided access to “accessible luxury” through a curated selection of unique, high quality products for the home refreshed on a daily basis and sold at reasonable prices. One Kings Lane arrived like a trusted, knowledgeable, stylish friend to help shoppers (mostly women) on their never-ending quest to find great products to decorate their homes and entertain. It was the team’s highly-functioning right brain that recognized and tastefully marketed the truly great finds.

But the One Kings Lane team, including CEO Doug Mack, founders Alison Pincus and Susan Feldman and a management team drawn from Walmart.com, eBay, Amazon, Zappos and Netflix, also represents some of the more highly-tuned left brains in online retail today.

Some teams’ brains are strong on the right or the left, but the magic comes when they’re strong on both sides.

Addicts and Evangelists

In the past, even the best known e-commerce companies grew at a linear pace and acquired the vast majority of their traffic through a combination of paid marketing and SEO. Commerce didn’t take off right away through Facebook and Twitter because the products and the experiences most people engage with on classic e-commerce sites were engineered for simplicity, speed, and comprehensiveness. They just weren’t exciting, fun or interesting enough to warrant sharing with friends.

What makes a social commerce business work at the core is an experience that is fundamentally worth sharing. The act of sharing involves social capital – you’re withdrawing a deposit from the social capital account with a friend when you share something lame with him, and you’re earning social capital when you share something cool.

Most social commerce companies do spend money on marketing (in some cases lots of it) but the key difference is that their ROI on paid marketing is amplified by high lifetime value customers (addicts) and viral spread (evangelists). This amplification is what’s driving the near exponential growth and increasing defensibility of breakout social commerce companies. When customers are addicted and willingly infect their friends, strong companies get stronger and become ever more difficult to beat.

I first discovered One Kings Lane through my wife and her friends. The women in our neighborhood were showing signs of One King’s Lane addiction. Online products that inspire this kind of daily habit are unusual. One King’s Lane customers are their greatest champions and the company is acquiring the majority of their customers through word of mouth.

Markets, Not Just Mechanics

Social commerce companies are adopting a range of mechanics that have proven successful in driving user behavior in other kinds of existing social products – including invitation-based access, time-limited sales, daily emails, offers tied to friend referrals and achievements. Over time, I think we will see more e-commerce companies attempt to replicate the mechanics of existing players. Some will execute well on these features, most will not.

But the ultimate driver of new valuable social commerce businesses will be based on the potential of the underlying market the company is addressing. Is it a big enough market? Is it poorly served by existing players?

We were attracted to One Kings Lane’s vertical focus. There are very few consumer verticals that aren’t already dominated by an existing online brand. The market for home décor products is under served and massive: $150 billion. Think about this question: Who is the defining Web-native e-commerce brand today for home décor products? It doesn’t exist. Williams Sonoma generates billions in annual revenue but lacks unique selection. There’s a huge amount of vendor fragmentation in the space, which makes it hard for consumers to discover new brands.

One Kings Lane is emerging as the leading e-commerce player in the home décor vertical and the business opportunity is about more than just daily emails or events – it’s about successfully addressing a massive, under served market.

A new generation of breakout social commerce companies is emerging. It’s an exciting time to shop!

*Disclosure: Greylock Partners is invested in some of the companies mentioned in this post: Airbnb, Facebook, Groupon, LinkedIn, One Kings Lane and Shopkick.

*This article also appeared in TechCrunch here.

-James

James Slavet is a partner at Greylock. His primary areas of investment focus are e-commerce, online advertising, and Web-enabled consumer services. James leads Greylock’s investments in Auditude, High Gear Media, One Kings Lane, Redfin, Revision 3 and TellApart and is actively involved with Groupon and LinkedIn. He previously represented Greylock in its investments in Farecast (acquired by Microsoft) and Kongregate (acquired by Gamestop) His complete profile can be found at LinkedIn here.

Filed under E-Commerce, Industry Insights Tagged with , , , , , , ,

The Entrepreneur Questionnaire: Glenn Kelman, CEO of Redfin

February 10, 2011 2 Comments

Glenn Kelman is the CEO of Redfin, the industry’s first online real estate brokerage — think of it as a cross between Century 21 and E-Trade. Redfin is a Greylock-backed company and it has completed more than $2 billion in home sales with a customer-satisfaction rating of 97%.

Glenn Kelman, CEO of Redfin

-Describe your business in 10 words or fewer. Zappos for Real Estate. It used to be “E-Trade for Real Estate,” but we want to emphasize Redfin’s customer service. Which is awesome by the way.

-What is the big idea behind your business? For almost everyone in the real estate industry, the agent is the customer. We decided to focus on the consumer instead. This means that we publish data that real estate agents hide, and that we hire and pay our own agents to put customers, not commissions, first.

-Why are you excited about the future for this company? Our mission — to change the whole real estate game in consumers’ favor — is so obvious and good that everyone can get behind it. And our source of competitive advantage in a $60-billion market is deep and strange: agents and engineers working together to serve customers directly. It makes us feel unstoppable.

-Why did you become an entrepreneur? I don’t think of myself as an entrepreneur, just as someone lucky enough to be in situations where I could be entrepreneurial. I’ve always looked for those situations, so I could pour myself into them. When I was a kid it was the chess team, Dungeons & Dragons, a TRS-80, debate camp. But then I’d realize it was just a game, and noticed the utter lack of girls, and felt a bit silly. A startup offers the same camaraderie, but in a battle for life and death. It’s sort of like becoming a real fighter-magic user-thief.

-What was the most difficult lesson you have learned as an entrepreneur? Just to be nice and encouraging to people, always. You can be very driven and still be nice. At my wedding, the people from an earlier startup, Plumtree, asked the folks at Redfin if I’d made anyone cry yet, a question that really embarrassed me. I also remember falling in love with a product idea at Plumtree that was a total flop. When you really believe in something, you’ve stopped thinking about it. You have to keep thinking.

-What has surprised you about being an entrepreneur? I’ve been surprised at what has made me happy and unhappy. The day of Plumtree’s 2002 IPO wasn’t much of a triumph; my mother sent me a chocolate cake. I was happiest just working on cool stuff & eating Indian take-out in the conference room with all my friends.

-What five adjectives would you use to describe yourself? Sexy, sexy, modest, sexy, sexy.

-What is the best business advice you’ve ever heard? Jim Barksdale once told a friend that you don’t have to have the job. This means that you can quit if you don’t like it, or you can be fired too. With all the talk about how hard it is to run a startup, we can forget how lucky we are to be here.

-What is your motto? Who has a motto?

-Which living person do you most admire? If you exclude my family? I really admire the fact that whenever Marc Singer gets a call from someone running late, he says he’s running late too. I don’t admit that even when it’s true. Small, unnoticeable acts of generosity are sometimes the most impressive.

-What are you passionate about? Almost everything is interesting, if you work at it.

-What motivates you? Not letting down my colleagues.

-What was your first paying job? Washing dishes for Rax Roast Beef.

-What do you like most about being an entrepreneur/CEO? Not being able to blame anyone else. We spend our wholes lives campaigning, backseat-driving, second-guessing. But it makes you a better person seeing how things turn out when you do get your way.

-What do you like least about being an entrepreneur/CEO? The tendency it creates to evaluate people as a means to an end, rather than an end in themselves. If you compared me to my identical twin brother, and heard how carefully he analyzes whether he might have hurt anyone’s feelings in a meeting at the EPA, you’d see how the pressure to hit $100M in less than seven years changes someone.

-If you could change one thing about yourself, what would it be? Sometimes I wish I was less of a maniac, sometimes I wish I was more.

-What do you consider your greatest achievement? Getting my wife to say I do! And just how the companies I’ve worked at have made people feel.

-What is the last book you read? A River Runs Through It, which I can’t recommend enough.

-What values are important to you as an entrepreneur? When asked what rules an artist must follow, Henry James said there were none except this: “be generous, be delicate, and always pursue the prize.” What I like about that advice is its combination of carefulness and impatience.

-What advice would you give on how to build a great business? To build a great business, you have to do something hard, just to be able to withstand all the competition that will later come your way.  And since that usually takes time, you need a mission larger than just making money, otherwise everyone will quit once he has enough money or decides he doesn’t have enough; it’s like trying to tame a lion by starving him, but not so much that he eats you.

-Interviewed by Erika Brown Ekiel

Filed under Advice for Entrepreneurs, Entrepreneur Interviews Tagged with , , , , ,

Stanford GSB Talk on Mozilla and Scaling

February 4, 2011 1 Comment

Last week I got to attend a class at Stanford Business School taught by one of my favorites, Huggy Rao. The course is on “scaling” — an over-used word, but one that Huggy’s been really digging into lately — resulting in some great insights. This particular class covered a case study authored by Huggy with Bob Sutton on the rise of Mozilla and Firefox, so it was fun to participate in.

Huggy asked me to do a quick 10 minute introduction to the class. I chose to talk about the differences between then and now — how much has changed in the 5.5 years since Firefox’s initial 1.0, and what the new challenges of scaling are. So, naturally, my first comment to the students was that most of the case was irrelevant to today’s world. That Mozilla was amazing and unique and special — for lots of reasons that include (1) breaking the MS/IE monopoly distribution and usage of the browser, (2) doing it in a way that enabled lots of innovation and competition that we’re seeing now, and (3) finding our own way through the journey — not behaving like anyone else in the market ever really has. So that’s cool. In that battle, though, access to users was probably the biggest challenge — it looked impossible when Mozilla started, and it’s remarkable — incredible, really – that we ultimately have gotten the reach we have.

But fast forward to today’s world, where we have more than 600M users on Facebook, more than 400M users of Firefox, and networks like LinkedIn and Twitter with global reach of a hundred million or more. Combine that with the rise of the Apple App Store and mobile devices — with something approaching 200M user accounts that all have credit cards associated with them. (And if there’s any doubt, these numbers are truly huge. I put in some cultural references in my talk — about 100M people will watch the SuperBowl. And only about 20M watch the nightly news in America; 30M listen to NPR. We think of these institutions as huge, but they’re nowhere near Internet scale at this point. The new networks have left them behind, quite handily.)

So now a huge part of the world is accessible, a huge part of the world is ready and able to download an app or click on a shared link. Which means that access is no longer the chief initial obstacle to scaling. That means you can see companies like Zynga or Groupon rise from nothing to massive practically overnight. Clearly, the initial challenge is about rising above the noise of an increasingly crowded field of ways for people to spend their time and money, but it’s very, very possible to get to tens or hundreds of millions of users quickly. Which means that now you’ve got companies that are dealing with huge, complex, global user bases at an extremely early point in their history. My view is that scaling successfully — which means sustaining that scale over time — will be dependent on figuring out how to make the teams and processes in rocket ship organizations operate effectively.

I know not all the analogies in the slides are apples-to-apples, but what’s clear is that we’re living in an era of hyper-distribution, where things can change very, very quickly. I’m really glad that smart people like Huggy and Bob are thinking about how to help us all learn how to manage these in the future.

Fun conversation, thanks to Huggy for the invitation! My few slides are below — they’re very incomplete and mostly served to provoke some interesting discussion. (PS — the deck is sort of a tweener deck graphically between my Mozilla-style slides and what I’ll use here at Greylock — haven’t been here long enough to monkey with the Greylock slides yet. :-) )

-John

John Lilly is a venture partner at Greylock Partners and former CEO of Mozilla.

 

 


Filed under Advice for Entrepreneurs, Social Media, Zero to a Billion Tagged with , , , , , , ,

Workday’s Year of Transformation

February 2, 2011 3 Comments

Now that we’ve closed last year’s books and are several weeks into 2011, I want to share some thoughts on Workday’s accomplishments and where we’re headed. But where do I start? How about with this indisputable fact: 2010 was a transformational year for Workday.

We exited the start-up phase and emerged as the leader of SaaS HCM solutions for large and medium-sized companies. The economic downturn—if anything—boosted the momentum of Workday and other cloud-based providers, as organizations realized the cost savings of SaaS. That helped Workday enter 2010 as a strong company and emerge from it as an even stronger one, with customer bookings growing 90 percent and revenues up more than 160 percent from 2009.

The past year also exposed the huge lead cloud providers have over on-premise vendors in their ability to innovate for exciting new platforms, such as Apple’s iPad. The multi-tenant, modern architecture of cloud computing lets real SaaS providers more quickly develop and deliver highly relevant, modern-day products. Nothing personal against the legacy on-premise vendors—once upon a time I was part of one—but there’s no way they can match our pace of innovation. Their outdated model is just inferior.

I’m also delighted that even with our nearly doubled bookings growth, our customers let us know that we took care of them. Our surveys revealed a 99 percent customer-satisfaction level, which is extremely important to me, Dave, and the rest of us here at Workday. That’s a hard level to reach for on-premise vendors because—once again—their outdated, inferior model prohibits customer intimacy.

There were many exciting product deliveries in 2010, including the first phase of talent capabilities in Workday Human Capital Management and maturation of Workday Payroll. In the area of Workday Financials, we saw good uptake in our spend-management offering and a new product, Initiatives, that lets customers plan and track the progress of work and align it to company goals, and to search and group employees based on attributes such as skills and experience. These innovations helped Workday win top honors at the HR Demo show in December.

Looking into 2011, I believe the momentum behind our human resources products will continue to build, and we’ll further extend our position as the clear leader of unified HCM, which brings together core HR, payroll, and talent management for large and medium-sized companies. Our pipeline is very strong, so the outlook is great for this goal.

For Workday Financials, we have signed 16 medium-sized companies. By year end 2011, we hope to grow that number significantly and add five or six flagship accounts. We believe that our work with these customers will pave the way for us to start aggressively selling Financials to the broader marketplace in 2012.

We landed our first wave of public sector customers in 2010, and will further penetrate the public sector market with Workday HCM and Payroll, followed by Financials in 2012. In terms of geographic reach, we ended 2010 as a U.S.-centered company with good growth in Canada and the U.K. We’ll continue to extend our reach in those regions and will begin expansion into other parts of Europe and Asia in 2011.

As you can see, we have a busy year ahead. Before I sign off, here’s a snapshot of some of our best numbers at the end of 2010:

3 Feature-packed Workday updates
177 Companies that have selected Workday
1 million + Workday users under contract
99% Workday customer satisfaction rate
99.92% Workday system availability in 2010 (uptime)
800 Attendees at Workday Rising User Conference (up 60%)
160% GAAP revenue growth
90% Growth in three-year bookings
599 Employees (up 55%)
No. 1 Business Application (Private Company), San Francisco Business Times’ Technology and Innovation Awards
No. 1 HR Application, HR Demo Tektonic Awards
No. 1 Professional Services Organization (out of 214 firms), receiving perfect scores in all five categories of SPI Research’s “The 2011 Professional Services Maturity Model Benchmark“

I’m proud of everyone’s contributions at Workday in 2010, as each person played a part in making it possible for me to share such great numbers. And while Workday is no longer a “start-up,” in many ways, this is only the beginning.

Now back to work! ☺

­ – Aneel

Aneel Bhusri is Co-Founder and Co-Chief Executive at Workday and a partner at Greylock. Formerly he was Vice Chairman and a Senior Vice President at PeopleSoft.  Aneel was also the former Chairman at Data Domain and is a current board member at Cloudera, Data Robotics, Proferi and Pure Storage.


Filed under Industry Insights, SaaS/Cloud, Start-up Updates Tagged with , , , ,

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