Why Twitter Is an Important Weapon for Startup CEOs

Posted on May 24, 2012 by Jeff Richards

I admit it, I am a Twitter junkie.

As a venture capitalist, the breaking news, opinions and insights I get from Twitter are invaluable.  But there are only a few thousand VCs in the world (cue joke about that being a few thousand too many), so what are the other 200 million people doing?

They’re engaging in the dialogue.  What dialogue, you ask?  Dialogue on topics that are meaningful to them. And therein lies the opportunity for startup CEOs.  Being engaged in the dialogue around your company, your industry, your competition, your people – is really, really important.  Especially as you scale.

Below are four reasons why I think Twitter is an absolutely critical weapon in the arsenal of today’s great startup CEOs.

To provide a few anecdotes, I tapped into the wisdom of three very successful Silicon Valley execs: Brian Grey, CEO of Bleacher Report;  Narinder Singh, Co-Founder of Appirio; and Tom Bedecarre, CEO of well-known media agency AQKA. Brian and Narinder are running really successful companies with hundreds of employees, and Tom is both a frequent user of Twitter and the CEO of a firm that provides advice to major brands on how to leverage social media.

1) Recognition.  Trust me, a short tweet saying “Engineering team is rocking it today with our new release!!!” means a hell of a lot more than the old, tired 500 word email with too many bullet points.  Twitter is meant for short, broad messages.  If you make a typo, it’s ok!  As Narinder points out, “Connecting to talent is more important than ever.  It’s incredibly competitive out there.  With Twitter, I can stay connected in a scalable and personal way with both current and future employees in a way I just can’t with any other medium.”

2) Personality.  People want to work for companies that have a personality, that have a soul.  This often starts with the CEO.  The best CEOs I know who tweet don’t just tweet about their companies.  They tweet about interesting articles they’ve read.  Or funny stuff their kids did.  Or goofups by their competition.  Or their favorite sports teams.  The bottom line – they’re letting the people in their company and in their ecosystem know they have a personality, that they care about certain topics, and that they’re active.  If you want an example, check out Marc Benioff’s Twitter feed.  He’s active, and oh by the way he’s also running a $20B market cap company.  If he has time to tweet, you have time.

3) Influence.  Twitter is a free medium to engage with more than 100 million active users.  You can’t abuse it (don’t just keep tweeting links to press releases) or people will tune you out.  Done well, however, you can be an influencer – in your company, in your industry, etc.  Brian says it well: “I use Twitter to listen.  See what the conversation is, the sentiment with respect to our brand.”  By listening, you’ll find opportunities to add to the conversation or even influence the conversation – whether it’s that one employee who needs to know you care or the 100′s of customers who rely on your service every day.  They’re tweeting, and they’ll know when you’re listening.

4) Engagement.  It’s about being part of the conversation – whether it be among employees, your industry, your investors, the media, etc.  ”It’s free, it’s widely used, and it enables you to tap into the zeitgeist of your industry on a real-time basis,” says Tom.  For more on this subject, read Gary Vaynerchuk’s terrific book The Thank You Economy.  I can’t do it justice here, but Gary describes how everyone – from global brands to the local dentist – are using Twitter and social media to engage and getting MASSIVE benefits from it.

CEOs must be good at a lot of things to succeed.  Communication has traditionally been considered one of them.  With Twitter and social media at large, I’d argue that communication is more important than ever.  If you’re a startup CEO and you’re not using Twitter, GET STARTED NOW.

It takes time to earn the benefits, but they’ll be there over time.  #promise!

(No, GGV is not an investor in Twitter.  Kinda wish we were, though…)

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One of the Best Companies You’ve Never Heard Of (Until Now)

Posted on May 18, 2012 by Jeff Richards

Really fired up to see a terrific article from Hamish Mckenzie (Pando Daily) on China’s Mobile Internet leader UCWeb.

Two thoughts:

First, we (GGV Capital) have been saying for several years now that it is only a matter of time until the US tech community becomes aware of innovative technology and business models invented in China.  UCWeb is one example, YY is another (both are GGV portfolio companies).

Innovation in China is taking pace at a blistering pace.  We are now seeing a second generation of web entrepreneurs, having built incredibly successful companies like Alibaba, Baidu, TenCent, Sina, raising venture capital and launching new companies that will be hitting US radar screens a few years down the road.

I might add – by the way – that we are also seeing a massive uptick in active dialogue and efforts by US companies to do business in China.  I met with two US players in the mobile space this past week who now have 10% and 16% of their business in China, respectively (and both are still in the “startup” phase – <$20M in revenue).

Second, I was really impressed that Hamish took the time to understand UCWeb.  Many US writers will instantly look to write a story that says “______ is the ______ of China…” and not take the time to understand the nuances of the company and its business that are actually radically different from anything in the US (Tudou/Youku is not the “YouTube of China,” RenRen is not the “Facebook of China,” etc.).  Kudos to Hamish for a great article.

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Not All “Venture Capitalists Turn Their Backs on China”

Posted on May 9, 2012 by Jeff Richards

Saw this article in VentureBeat this morning: “As Venture Capitalists Turn Their Backs on China, Funding Dries Up.”

Spurred a few thoughts:

1) Good investors invest in good and bad markets.  They do their homework and focus on finding the best entrepreneurs even when the markets are cloudy.  We invested in Alibaba Group in the early 2000′s when most investors were scared to death of China, and it’s been one of the greatest venture investments of all time – anywhere.  We consistently put $100M+ to work each year in China and the US, and we will again this year.  We’ve been doing it for 12 years – consistently – and entrepreneurs know they can count on GGV to support them regardless of what the public markets are doing.

2) The bar has been raised.  In hot markets, VC’s can throw money at copycat concepts and weak businesses in hopes they can “flip” them to the next set of investors (note: this happens in all markets, not just China).  This never works over the long run.  The bar raises, and VC’s have to work hard to find the best companies.  I am of course biased, but I believe firms that have been investing locally in China for the long term will have an advantage.  They have seen up and down markets, have the strongest relationships with the best entrepreneurs, and have built the infrastructure and teams to do their homework and find the best companies.  I know my Partners at GGV – as well as many of our strongest, long-term competitors in the market – have never been more excited.

3) The trends don’t lie.  There are still 500 million Internet users in China.  Android and iOS are taking the mobile phone market – 1 billion strong – by storm.  Consumers are rapidly turning China into the #1 market for every luxury goods maker in the world – from Mercedes to Apple to Coach.  If you want disruption on a massive scale, there is no better market than China.  Entrepreneurs know it, and the long term VC’s know it.

4) There are risks.  I won’t go into all the details, but yes there are major risks to investing in China (as there are in any emerging market).  They include competitive, regulatory, legal, currency, etc.  Some of these risks are why investors have pulled back on China.  It can be scary to invest in a new market.  Local investors with local knowledge, local relationships and deep industry knowledge tend to win when markets get scary.  As the saying goes “the tourists go home.”

There are Chinese companies which went public in 2010 and 2011 which never should have.  They were subscale without long term, sustainable business models.  But that doesn’t mean all Chinese companies fit that profile.  Ever heard of Qunar, 360Buy or YY?  They are very real companies with very real business models and massive user bases.  As it has on the VC side, the bar has been raised for IPOs, and we think that is a good thing.

But make no mistake – despite the headline at VentureBeat – not all venture capitalists are turning their backs on China.  The long term investors are hunkering down, backing the best entrepreneurs, and looking forward to the challenges and opportunities ahead.

Disclosure: GGV is an investor in Qunar and YY.

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Citrus Lane Raises $5.1M from GGV and Greylock

Posted on April 24, 2012 by Jeff Richards

Today subscription e-commerce site for moms Citrus Lane announced its new round of funding, $5.1M led by GGV Capital and existing investor Greylock Partners (read John Lilly’s post about Greylock’s 2011 investment in Citrus Lane here).

Citrus Lane, launched in 2011 by entrepreneur and former EBAY exec Mauria Finley, has quickly built a loyal following of thousands of moms who anxiously await each month for their Citrus Lane box to arrive (it’s not uncommon to see “We can’t wait!” and “We’re stalking the mailman waiting for our Citrus Lane box!” posts on Facebook).

Needless to say we think the business Mauria and her team are building is well on its way to being a huge success.  We love the category ($40B is spent annually on babies in the US).  We love the business model (subscription, which provides major advantages in merchandising and inventory management, two areas where e-commerce businesses often struggle as they scale).  And social media is completely changing the game for both customer acquisition and engagement.

But what we love most is…the mindset Mauria and her team have towards building a long-term, sustainable brand and business.  We’ve met more than 80 e-commerce businesses in the US in the last 18 months, and while we loved many of them, it was rare to find a team that was thinking about their business 5 years down the road.

Doing so requires a different approach, and it’s not for everyone.

-          It requires rational growth (you may have noticed a “Sold Out” sign on the Citrus Lane web site last month).    Rational growth means all of the key areas of the business can ramp accordingly (things like merchandising, supply chain and customer care, which sometimes get left in the dust while Marketing and customer acquisition ramp uncontrollably).  Don’t get me wrong – Citrus Lane has phenomenal growth – but they’re managing it to ensure a great experience for their customers.

-          It requires a deep focus on engaging with customers and the community.  Visit Citrus Lane’s Facebook, Twitter or Pinterest pages and you’ll see a constant dialogue with a growing community of mothers (and some awesome photos of babies loving their Citrus Lane boxes).  High quality companies are leveraging social media in this respect like never before (read Gary Vaynerchuk’s The Thank You Economy for more examples).

-          It requires a smart approach to financing and capital.  Mauria had plenty of opportunities to raise more than she did in this round.  She chose to raise “the right amount of capital at the right time.”  We think it’s a smart approach.

We love Citrus Lane for many reasons – not the least of which are business and metrics-oriented reasons that we believe will make it a great investment for our firm – but as always it comes down to the team.  Mauria, Claire, Terra, Victoria and the rest of the team are building something special.

We’re thrilled to be a part of it!

ADDITION: Here are a few of the articles covering the financing:

Techcrunch ”Citrus Lane Lands $5.1M”

VentureBeat ”Oh Baby!”

AdWeek ”Citrus Lane Wins Over New Moms”

 

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The Startup Cycle According to an 8 Year Old

Posted on April 23, 2012 by Jeff Richards

Had a lot of fun this past weekend helping my daughter pull together her speech for this week.   This is her version of what the process looks like to build a great company: Idea -> Startup -> Raise Money -> Hard Work -> Success.  She was very focused on Apple and Google, but I was able to slide an Appirio photo in there (middle of board, photo from Appirio’s company meeting in Napa).

If only it were this easy…:)

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8 tips for entrepreneurs from a founder-turned-VC

Posted on February 18, 2012 by Jeff Richards

Reblogged from VentureBeat:

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A friend of mine recently asked me a simple question: “After four years as a VC, knowing what you know now, what basic tips do you have for guys like me who are growing venture-backed businesses?” It got me thinking about what I’ve learned being on the other side of the fence – and though I don’t profess to be an expert on how to be the perfect entrepreneur, I thought my own experiences might help some founders out in the trenches today.

Read more… 893 more words

Article I wrote this week for VentureBeat: "8 Tips for Entrepreneurs from a Founder-Turned-VC"

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VC Tips: Qualifying the Buyer

Posted on February 17, 2012 by Jeff Richards

I recently had an email exchange with a CEO that I was impressed with, and thought I would share.  I have eliminated some of the details that are proprietary to the conversation and the company, but you’ll get the point.  It highlights a key part of the fundraising process – qualifying your “buyer.”

I wrote a post a few months ago titled “Sell  Burgers to Meat Eaters,” which highlighted the importance of meeting with investors who know and have demonstrated success in your space.

Along these lines, it is just as important to ensure you are meeting with venture investors who a) have capital to invest, b) invest on the kinds of terms you are thinking of (stage, amount, valuation, etc.), and c) can move in the timeframe you’d like them to.  Experienced sales reps qualify their buyers all the time, but it’s an important part of the fundraising process as well.

Here’s the email exchange.  The first email was sent after our first meeting, and prior to our second meeting.  The CEO’s key email is highlighted.

———————————————————————

From: CEO
Sent: Monday, February 13, 2012 6:46 PM
To: Jeff Richards
Cc: Adam Altman
Subject: Re: Thank you

Adam/Jeff

A polite ping on what you are looking for us to cover tomorrow. Thanks.

CEO

———————————————————————

From: Jeff Richards
Sent: Monday, February 13, 2012 10:22 PM
To: CEO
Cc: Adam Altman
Subject: Re: Thank you

First meeting covered a lot of key details.  In tomorrow’s discussion we’d like to dive deeper on a) product roadmap, b) go to market plan (sales in particular), and c) competitive landscape.  Hope this helps.

Jeff

———————————————————————

From: CEO
Sent: Monday, February 13, 2012 10:30 PM
To: Jeff Richards
Cc: Adam Altman
Subject: Re: Thank you

It does, Jeff. Thanks. Before we spend more time further covering our business,  one question on my side, what is your appetite to invest in our next round of funding, which we are looking to do before end of this quarter?

CEO

———————————————————————

From: Jeff Richards
Sent: Tuesday, February 14, 2012 7:00 AM
To: CEO
Cc: Adam Altman
Subject: Re: Thank you

Great question.  We wouldn’t ask for the follow-up meeting if we didn’t have an appetite to invest.  I spent 10 years as an entrepreneur and raised more than $100M for my companies before joining a VC firm, so I know what fundraising is like and I am very focused on not wasting your time.

We’ve been tracking the space and the company for a year, and are looking to make an investment in this area.  My primary concerns center around XXXX, XXXX and XXXX (redacted).  The XXXX have existing relationships with customers and are clearly focused on the XXXX arena.  They shouldn’t own it, in my opinion, but my checks with XXXX tell me they are aggressively pitching your story.

Being direct here to try and facilitate open conversation.

Jeff

———————————————————————

From: CEO
Sent: Tuesday, February 14, 2012 7:16 AM
To: Jeff Richards
Subject: Re: Thank you

Jeff. I really appreciate the perspective. This is just what I want from an investor, especially one who has sat on my side of the table. I came from the XXXX space and can talk to your viewpoint. I look forward to a spirited discussion this morning.

CEO

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Job Creation

Posted on February 3, 2012 by Jeff Richards

I had three board meetings this week – for BlueKai, Buddy Media and Appirio.  Arguably three of the fastest growing companies in the US (all are growing at 100% or more per year), with terrific CEOs and company cultures.

A funny thing occurred to me as I looked back on my notes from these meetings: THIS IS WHERE JOB CREATION IS HAPPENING!

These three companies have added approximately 1,000 jobs in the last three years.   Yes, they’ve raised about $100M to do so, but it’s a solid bet that they’ll probably add another 1,000 jobs over the next 3-5 years as well (the combined revenue of the companies is close to $200M, and all have plans to continue hiring aggressively).  And – I can assure you these are high paying jobs with great benefits.

I don’t want to make a political statement here, but I think it’s safe to say the various programs the US government has put in place over the last 5 years to stimulate job creation haven’t worked.  They certainly haven’t created 1,000 jobs for every $100M spent.

I guess this is my subtle way of encouraging us to focus on what matters as a country – new business and job creation (see my interview a few months ago with Kym McNicholas from Forbes on the same subject).  Private sector job creation needs to be the #1 focus for us as a nation.  Period.  And we should be taking a page from the Silicon Valley playbook.

I had a chance to have lunch with Steve Case a few months ago at the Techonomy Conference in Tucson.  I was really impressed by Steve and what he is trying to do with StartupAmerica.  My guess is his biggest challenge is getting our notoriously slow moving elected officials in Washington, DC to work together and a) support causes like StartupAmerica and b) pass legislation that is helpful to small business (hint: short-term tax breaks and public business-bashing do not help).

To our elected officials: Please take time every day to ask yourself “Am I working on something today that encourages new business and job creation?”  At the very least, you should be asking “Are we creating 1,000 jobs for every $100M we invest?”

To our citizens: Start a company!  There is plenty of funding available, with historical industry shifts taking place across many industries.  If you need encouragement, read Buddy Media CEO Mike Lazerow’s article in Inc Magazine “Start a Company!”

(And yes, I realize I am simplifying the argument here, but no one likes long blog posts or political rants)

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Recently Read: Boomerang by Michael Lewis

Posted on January 30, 2012 by Jeff Richards

I’ll admit I’m a sucker for a new Michael Lewis book.  He’s written several of my all time favorites, including Liar’s Poker, Moneyball, The Big Short and the New New Thing.

Boomerang is a quick – but scary – read about the recent economic meltdowns in Iceland, Greece, Ireland, Germany and the US.  Boomerang doesn’t go into nearly as much detail as a book like Too Big To Fail (highly recommended read), but it does provide some high level insight into the origins of the issues (it wasn’t all the housing meltdown), the players involved, and, in most cases, the incompetence that led to where we are today.

Sample scary stat from Lewis’ section on California (“Too Fat to Fly”): “This year the state will directly spend $32 billion on employee pay and benefits, up 65% over the past 10 years.  Compare that to spending on higher education (down 5%), health and human services (up just 5%), and parks and recreation (flat), all crowded out in large part by rising employment costs.”

If you like Michael Lewis’ writing style and are interested in what’s happening in our global economy, Boomerang is worth the read.

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Building a Great Culture at Appirio, 2012 Edition

Posted on January 19, 2012 by Jeff Richards

Had a blast with the team from Appirio this week in Napa – all 350 of them!  So much fun to see a company growing by leaps and bounds, and no surprise the company has been named one of the best places to work in the Bay Area for several years running.  Just for fun I pasted in both this year’s picture and last year’s (and couldn’t help but include the founder bobbleheads…).  Same location, twice the number of people!  And yes, Appirio is hiring…

Appirio 2012

Appirio 2011

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