z on life

I have mad respect for the Xobni guys. I think they have more courage than almost every other YC company combined. Though I don’t know anything about the cap table, I would guess Matt and Adam could have walked away with something like $5MM each. And hey, is a year or two at Microsoft that bad? These guys took an outcome that many other YC companies would die for and told MS to stick it. Walking away now means a lot, and these guys are definitely ballsy.

So what’s next for Xobni? It feels like there are three main issues to address. First, they need to get out from a position where the only logical buyer is Microsoft. Second, they need to grow the business either by generating revenue, or by becoming far more strategic in both the depth of their product and breadth of their domain. Third, since they have asserted their defiance, do they create an IPO roadmap?

So what would I do if I were running Xobni?

1. Support a whole range of email clients and become the de facto email analytics plug-in across the board. By doing so, Xobni will escape the Microsoft-only trap and will increase their pool of potential users. They have already started doing this with Pine (yes, joke acknowledged) and I am sure others are to come. So, this one is no surprise.

2. Produce an email client themselves when their value proposition gets good enough. As a middle ground, you could simply have Xobni synchronize all of your mail with its own Xobni webmail service (for sure in certain setups, a little technical magic might be needed, but its doable). In this way, anyone with Xobni installed could start to use a Xobni webmail service as a standalone client with all of their messages, contacts, and the like pre-populated. Because they can control the messages, there are lots of powerful things they can do with viral user acquisition strategies a la Hotmail (or even pull some strategies from the Facebook app community since Xobni is a slightly social being). If they get in the door with a plug-in, wean people off with a webmail or local client that has all their existing information pre-populated, and spread like wildfire with some finely tuned viral processes, they could do some serious damage.

3. Don’t build a social network, just make email fun to use and make it easy for people to see what their email graph looks like. While Bill Gates said Xobni is the next-generation of social network, I think this is hardly the place to take that literally and incorporate pictures, walls, and pokes. The communication stack is a hard thing to challenge, and because people have pre-existing and quite different notions of how they use email and social networks, it will be quite the uphill battle to merge those together. People need to feel that each thing they use has identity, and when you blur the lines too much, they get confused or turned off. I would stick to making a fun and useful layer of tools that leverage the social graph instead of becoming the medium on which the graph is built. People love rankings, quantifying friendships, and colorful behavior graphs enough as is. The temptation to be the next Facebook is one to ignore.

4. Become the all-in-one contact threshold tool, and by that I mean users should be able to see their activity across all aspects of communication and set personal alerts for when their interaction level with somebody drops below or goes above a certain level. Efficient networking in the business (and sometimes social) world means knowing exactly how much time to spend with each different person. This sounds cold and impersonal, but if your network is large and sheer efficiency is your game, then it is crucial to have your thresholds just right. If Xobni monitors the whole spectrum of communication, they are in a unique position to do just that. Imagine a day when in Xobni you can set person A to a level 1 contact, person B to a 3, etc and then give weights to different communication types to ensure the level of interaction you are engaging in with someone is not too much or too little given how important they are to you. This is the next level of streamlining your life.

5. Sell employee analytics to HR departments via the huge amount of mailbox data that they can parse and interpret. What if Xobni did some natural language processing on the tone of intra-company emails to sense employee happiness? What if they could sense conflict within an organization before things got serious? What if they could see the exact structure of communication within the company from an organizational behavior perspective to see who really talks to whom, how often, and how decisions are really made? This reminds me in a way of services like those from Success Factors, a company that recently IPOed and now has a market cap of around $500MM. Businesses will pay through the nose to understand their employees and keep things going as a well-oiled-machine. Xobni could be the oil-filter of big business.

6. Attack other verticals on the local machine like the media player, the instant messenger, the file system, the browser, etc. Xobni as a company is clearly good with data, and there’s ways to enhance all of these areas with some kind of data play. I can think of a few right off the top of my head. It’s clear that these guys have the DNA to think of data-driven enhancements, so I am sure they would be able to crack at least a few more verticals on the local machine. If they can unify this data in the right way, they could do anything from building the cross-domain uber-recommendation engine to selling the most detailed, parsed, and dissected consumer data to analytics companies and others. This sounds like ‘Big Brother’, but as long as Xobni adds enough value to those who install, users simply will not care.

X. I wanted to throw a fun one in the mix just for kicks, and that is to implement premium email delivery. Imagine anyone with Xobni could set a price for which they would have any email auto-bubble to the top of their inbox. You as the sender who also has Xobni could certify an email as premium and actually pay money (revenue shared between Xobni and the receiver) to get that email at the top of the receiver’s inbox. You essentially create an open market for everyone’s prime inbox space. How much would you pay to guarantee a super-important business email gets read ASAP? Could sending a premium email be the new ‘virtual box of chocolates’? Would you pay $100 to get your email at the top of Barack Obama, Perez Hilton, or Tiger Woods’s inbox? Sounds like a joke, but maybe just maybe there is a business in there.

So what would you do if you were running Xobni? Would you have taken the money to begin with? If so, why, and why not go big? If not, what would be your strategy now? I would love to hear some thoughts in comments or email.

Let’s say you’re a brilliant hacker or any other breed of wild intelligence. You’re young, maybe high school, college, or shortly after, and show the potential to achieve enormous success and to make huge sums of money. You haven’t made it yet, though, so you haven’t hit a state of financial security and would obviously like to have more money than you do. You may need money to pay off college, or to quit worrying about paying the bills so you can focus on being entrepreneurial, or just want a bit more of a comfortable life now and pay it off later. So, if you’re in this scenario, would you sell life equity?

What exactly I mean by life equity is the following:

1. You find someone interested in your potential.
2. They give you X dollars up front.
3. You give them in return Y% of your earnings every year for life.

There’s lots of ways to do this like allocated the money in tranches subject to performance, a variable percentage of future earnings, etc. But let’s keep it simple. If a benefactor wanted to give you $1MM right now for 10% of all future money you made, would you do it? If not, what if it was 5% or even 2%? If yes, what if it was 20% or even 50%?

The pros:

1. You can stop worrying about baseline finances.
2. You can earn interest on the money you now have in the bank.
3. You can engage in ventures without seeking early external funding.
4. You can spend money to alleviate stress and increase professional performance.
5. You can get career help from your benefactor who has a vested interest in your success.
6. You can do things, go places, and help people you couldn’t before.

The cons:

1. If you’re really successful, you actually end up losing money on the deal.
2. Every year you have to think about how you traded a one-time gain for an annual loss.
3. If structured wrong, you may have incentive to do nothing after getting the money.
4. Being able to do anything you want is hugely distracting and a career detriment.
5. You are accountable to your benefactor for returning good money to him or her.
6. You now have a much weakened sense of urgency to go far in your career.

So would I do it? The truth is it depends on the numbers. A good deal is a good deal, and certainly money at different points in life has a different value, and for most people that utility curve is monotonically decreasing so money up front can be a rational choice. On the other hand, there is something special about making it on your own, not having things given to you, and having complete control. It should be the process of building success, not the financial reward itself, that is valuable in life. If you’re confident in yourself and have the basic necessities to live, I think the answer has to be no. So would I do it? Probably not, unless the deal was really good.

Cases where I think it does make sense:

1. The person is in abject poverty but shows huge potential. Even if it is just to pay for college, the money could make a huge difference.
2. The cash infusion can raise the expected career value of the person more than the annual percentage payment. This is like the minor league baseball player that recently wanted to do this very thing so he could practice instead of working two side jobs.
3. The person has a valid time-sensitive reason for needing money. Maybe it concerns the health or wellness of a family member or something else where the money loses its value sharply as time goes on.

But before the notion of ‘life equity’ could ever became a common financial product, there’s a couple things that need to be worked out:

1. How do you price such a risky and variable future cash flow?
2. Does equity lead to ‘voting rights’ for life decisions?
3. Is this purely financial? If not, how would intangible achievements (ie: Nobel Prizes) be split up?
4. What are the ramifications of people holding stock in others? Suddenly there can be a quantifiable benefit to favors and business relationships. Would this corrupt the flow of business dealings?

I am not sure this concept of life equity will ever exist above and beyond a few one-off cases. I have been told it has been tried in the past for very special scenarios and has not worked out (I don’t know when and where, but I am looking into that now). If it did, though, would you sell part of yourself? For how much and with what terms? It’s very interesting to think about. I’d love to hear some thoughts.

In the world of startups, everyone seems to have a different definition of ‘winning the game’ or ‘being successful’. With that said, I wanted to write about what I think winning is and is not.

To start, let’s talk about some popular ways to viewpoints on what it means to win that you hear in and around the startup crowd all the time:

1. Making something that millions of people use every day
2. Working with your friends, being comfortable, and having fun
3. Becoming Internet famous
4. Getting to a liquidity event
5. Being massively rich

To different extents, I disagree with every item above. Some of those are merely stepping-stones to real success, and some just have no place in the same sentence with the word ‘winning’.

Making something awesome that a lot of people use everyday is sometimes necessary but never sufficient in building a real business. Unless you can truly extract money from those users in a significant and sustainable way, I don’t see the point. Maybe the purpose of your work life is to just provide cool goods and services to the world. In that scenario, you’re really just running a charity event, in which case you need to acknowledge to yourself and others really what your true intentions are. But if the purpose of your work life is to build big companies, then focus on economic value by thinking about distribution, retention, monetization, strategy, relationships, and market before anything involving the word ‘cool’.

Getting to work with your friends with flexible hours and a low key work environment is great if you want to be a lifestyle business. If you are a disciple of the work-to-live philosophy, then that’s all fine and dandy. By all means, emulate the four-hour workweek. But if you want to build empires like Gates, Jobs, Ellison, Brin and Page, Dell, Bezos, etc, you will never get there if you maintain this type of philosophy. If you want to be funded by Sequoia, KP, Accel and that elite crowd, you’ll never get there in this mindset. When you’re in the office, the more blurry the line between friends and coworkers, between fun and business, between goals and leisure, the worse off you will be.

Becoming Internet famous is a really funny goal that many people have but few will admit. At the end of the day, famousness stands for very little expect maybe a fulfilling feeling inside to someone who needs that. Can you imagine coming to your board and saying “Well we missed earnings and we’re going to have to liquidate at a loss on all of your investments, but at least now people know who I am when I walk down the street.” That sounds absurd and is absurd. If fame comes with the process of being a successful businessperson, then that is what it is. But if you seek out fame for the purpose of fame itself, you actually stand to have less of a chance of succeeding because you will make irrational decisions and spend too much time and effort worrying about the wrong things.

Getting to a liquidity event can be a huge win, but the concept of ‘exiting’ in and of itself is not. Many times startups push forth and push forth and push forth because they just don’t want to die. Amen to not dying, but what is the goal of what you’re doing? Is the point to not fail? Is the point to prove that you were right after all and that “this can work”? Do you need to see the company ‘exit’, even if it is a tiny sum of money with years of handcuffs, just so you can think you “didn’t waste that time” in your life? Does exiting make it somehow worthwhile, even if you could have made more money over those few years working at Google or building new and better startups? Hey, if you’re going to hit it huge and explode with a 10-figure market cap, by all means exit and buy a Ferrari. But if you’re on the other end of the spectrum, are you really being rational, or are you hanging on to the concept of ‘not failing’ instead of focusing effort on a new massive success that could be up for the taking?

Being massively rich, in a self-made way, has correlation with “having won” but does not for sure indicate causality. After all people do get lucky, are benefited by serendipitous events, or find themselves in the right place at the right time. But in the end, most of these people still earned it. In my mind, though, these people have won a battle, not the war. I feel like the key to winning the war is in a process and not in any one result. It’s those people who have built up a methodology, a framework, and a desire to do it again and again and to do it huge. These are the Marc Andreessens of the world. The other side of this coin involves all the people I mentioned earlier Gates, Jobs, etc who have really focused on one company and taken it all the way for many, many years. Instead of doing it again and again, these people are all about extending it further and further. It’s the not the money, it’s the push to always be looking up even after you have the ability to be comfortable for the rest of your life.

So then what is ‘winning’ to me? Here’s a couple definitions or elements that seem much closer to what I would be comfortable with:

• Going from 0 to multi-billion dollar IPOs and beyond
• Putting yourself in a position to work with the best people
• Doing in aggregate what the fewest other people have been able to do

IPOs and huge exits are a good, tangible way to look at things. Money as a scorecard is fine, because virtually everyone who’s at the very top of that scorecard has earned it, either via sustained hard work or a huge string of success after success. Analogously in the non-startup world, you could argue that running a key division of a company or managing a huge fund and growing the earnings or worth by a large multiplier is just as good. I completely agree. There are lots of tangible ways to win.

Being able to work with the best people is an indicator of success. It means that every day, you get to experience the joy of pushing out the most creative, strategic, business-savvy ideas at the fastest possible rate. You get to solve problems that other teams can’t possibly imagine solving. If you think of life in terms of how many interesting experiences you get to have, working with great people can make that number explode. Every minute of every day can be incredible. While others can pay to go anywhere in the world, drive fast cars, and even go to the moon, you can’t pay to work with the best. Sure you can sometimes just set up the economics so that they make sense, but if really good people don’t respect you and see you as a winner, they won’t want to bet some portion of their career on you. If you can get to this point where the best want to be around you, you are on your way to a win.

The last is my personal favorite: measuring the size of your win by how many people have been able to carry out what it is that you did. We as people naturally seek to be different and new things excite us. We love to do what others can’t, not to evoke jealously, but because it is has core appeal. Professional athletes are one a million, same with movie stars, senators, and the like. Being a top of the top businessperson is more on the order of one in a hundred million. Striving for that is exciting, not because you get famous, but because getting there means you solved the most difficult and dynamic problems the world has to offer. Think about your aggregate level of accomplishment and what percentage of the world is at or above it? Chances are, that number is large. How can you get it down an order of magnitude, or how about five orders of magnitude?

Notice I have left out anything besides work. Nothing was stated in here about life, family, friends, fun, none of it, except how it was bad to mix lifestyle and work. The enjoyment of life outside of work as completely and wholly necessary, but it is an even more macro question of balance between the career-facing facts stated here and the elements of fun, happiness, and personal enjoyment elsewhere. What do I mean? You will be on some trajectory to win at some magnitude in the professional sense, and depending on what that is, you will have some portion of time to spend on the rest. The end goal of life on the whole might still be happiness, but the key is deciding how big you will win professionally, how much happiness that generates for you, and how much you will need to seek from other sources such as personal enjoyment of friends, family, leisure, and so forth.

So what should all of this mean to you? Really, it should mean nothing. This is how I look at things, but everyone is different. Winning as defined here isn’t for everyone, and I think it is awesome that not everyone goes down that path. I will say, though, that when I meet people, I am always curious how much they really want to win and win big. The ones who want it bad are the kind of people I enjoy working with.