Jay Zalowitz: We were going to go on that theme of the traditional Jewish Day of Atonement and talk about some of the mistakes we make as both founders and entrepreneurs and all that fun stuff.
David Smooke: We make plenty of mistakes.
Jay Zalowitz: Oy vey.
David Smooke: Important day today.
Over the last year you founded a company. Now you’re back as an engineer at another company. What mistakes are on top of mind today?
Jay Zalowitz: Oh man, dude, deciding to wear dress clothes on an 80-degree day, top of my mind, but we’ll go with …
David Smooke: Yeah, that was questionable. Required though, right?
Jay Zalowitz: Well, I mean, you’ve got to keep up appearances, so you’ve got to look nice in the thing where everyone shows up.
David Smooke: I really like that cartoon where they’re like, what a start-up, really?
We’ll watch … You can’t trust the cabs. Cabs I always have to look in the eye. I don’t trust the little walking man.
Jay Zalowitz: Cabs do not play. I’d like to pause to thank some of our sponsors of getting rid of cabs to Travis [inaudible 00:01:33] and John Zimmer. Thank you.
David Smooke: I actually also have to acknowledge a sponsor, contractual obligation, Nike is the sponsor of David Walks.
Jay Zalowitz: Nike is an actual sponsor? Nice.
David Smooke: An actual sponsor … contractually obligated to say that.
Jay Zalowitz: I was only partially kidding. I don’t think Uber are sponsors of you … yet.
David Smooke: The problem with them sponsoring me is that …
Jay Zalowitz: It’s a walking thing?
David Smooke: Yeah, I promote walking, and they promote driving.
Jay Zalowitz: You need to get like … well, I guess Nike works then.
David Smooke: The cartoon I was going to bring up is where, what a start-up looks like, and they do the up-and-down graph, like what it actually looks like, and the founder’s doing this extreme highs and lows every day along with his team.
Jay Zalowitz: There’s a guy on a trapeze there.
David Smooke: Yeah, exactly, and then what everyone thinks it looks like, and it’s just steadily going uphill. This is keeping up appearances. That’s what made me think of this image.
Jay Zalowitz: Yeah, there’s definitely something to be said for being a founder and not actually … I’ll put it to you this way, and this may not necessarily be reflective of my last start up, but I also advise multiple incubators and spend a lot of time just getting to experience other start-ups from slightly on the outside, which I highly recommend.
What I see a lot is founders have no effective person to talk to, so founders are like, if you’re a founder and you’re talking to your employees about how bad things are in reality, they get discouraged. If you’re a founder and you talk to your advisers or investors, that can come back to haunt you. Overall, you just have to …
There’s actually something that somebody came up to describe Zooey Deschanel in all of her movies. It’s the manic pixie dream girl. She just swoops in from outside of the main character’s life, improves it, and whisks away.
David Smooke: Wow. I would like to meet her.
Jay Zalowitz: I mean, yes, but the big point of this is founders nowadays are sort of required to be manic pixie dream founders. They have to constantly have this air of everything’s going perfect, let’s deliver, work really, really hard, and then go back to the insane schedule of founder-dom. It’s really weird, but I don’t know how we got on that subject.
David Smooke: You know, it’s a long walk. There’s a lot of different ways we can go. I see it with founders. They’re just trying to be the most positive person in the room. They have to use so much of their energy to pick everybody else up. The reality is, you have to really pick your moments wisely whenever it’s really truly discouraging, and how much you can share that with other people, the reality of how difficult it is to make what you want to make.
Jay Zalowitz: Oh yeah, the cartoon.
This is Yom Kippur. It is a fast day, and we’ve somehow chosen the only continuous street in the city with nothing but restaurants and bars and everything we could’ve walked into and had food. Choices!
David Smooke: Yeah, this is exercising our right not to choose.
Jay Zalowitz: Let’s go ahead and talk about some of the choices founders make really early on, or something like that.
David Smooke: You have funding, hiring, business model. The order of hiring’s always interesting. I saw Reid Hoffman tell it … He’s always looking for companies to invest in that are … He looks at the initial four teams, four people. Basically you have vision-slash-business development-slash-marketing, the CEO, the CTO, probably back-end, then you have your head of front-end and your lead designer, and this is how he looks at four-men team building new products. I don’t know exactly how much weight to put in all that, but it is very tough to choose who to work with.
Jay Zalowitz: I’m going to explicitly disagree with Reid Hoffman on the record. That seems like a really horrible idea.
David Smooke: What’s wrong with it?
Jay Zalowitz: First off, if you can, you need to try to get a little bit of crossover between some of those. The big expectation that I have for a lot of the start ups I advise is they stay a really small team until the moment they absolutely can’t. Mind you, there are some services where you need to step on the gas very quickly, and those are definitely venture countable, but until you have a really good sense of what your product market fit, don’t hire. I love meeting my designers, don’t get me wrong, but if you can get a [inaudible 00:07:11] and designer who are technically unicorns, but we’ll go with it … Even if you get them part of the time, it will really help you do that. I’ve seen companies blow through tens of millions of dollars focusing on design too, and they might be right …
David Smooke: Did you see Clinkle launched finally?
Jay Zalowitz: Yeah, I saw that.
David Smooke: I think it’s like a Visa Debit Card?
Jay Zalowitz: I actually … you laugh. I’ve got a [Clinkle 00:07:47] card sitting in my wallet.
David Smooke: Wow. It’s plain white. Let me take a picture of this, and post these numbers to the Internet.
Jay Zalowitz: Don’t do that. I don’t think …
David Smooke: It’s cool that it’s plain white though. No nothing.
Jay Zalowitz: Yeah. They are really awesome at style, and I will say if you ever get the card and activate it, it is a really cool experience. They are doing a really good job at delivering a product. It’s just I think their biggest issue was — and I guess this is another, since we’re talking about cardinal sins of founder-dom — another thing I see happen a lot is, in a pursuit of perfection, people don’t launch … Not even launch. Launch is a bad word, and I had to get that beaten out of me when I had a start-up.
David Smooke: There is no V1, V2, V3, V4. It’s just one thing.
Jay Zalowitz: Yeah.
David Smooke: … Is the way, and whenever I meet these other people that try and talk about it like, ‘Oh, we’re going to come out with V3, and it’s going to be entirely brand new,’ it’s like, no, it’s not. It’s just building on top of what we already have, and we’ll see how much we can get done in this sprint, and that’s what we’ll have, and you’ll call this the new V.
Jay Zalowitz: Yeah.
David Smooke: It’s the same fucking thing.
Jay Zalowitz: Yeah. I see a lot of founders … There’s two sides to that issue. Some of them are … go ahead.
David Smooke: What are we doing?
Jay Zalowitz: I’d like to take back my sponsorship joke about [inaudible 00:09:25]. [crosstalk 00:09:28].
David Smooke: I will have to say this is the riskiest podcast that’s up there.
Jay Zalowitz: It’s up there?
David Smooke: It’s up there, because you know, you’re walking, I’m trying to hold my iPhone. It’s like …
Jay Zalowitz: I thought we we were supposed to be doing all this walking?
David Smooke: Yeah, that’s exactly, but we just have to really develop our motor skills and our awareness skills.
Jay Zalowitz: I’m an engineer. I don’t have any of those.
David Smooke: Sorry to hear that.
Jay Zalowitz: I kid.
I used to play rugby in college, actually.
David Smooke: Oh wow.
Jay Zalowitz: Yeah, which, if anyone listening to this ever gets a look at a photo of me, that’s funny. I do not look like I play any sports at all.
David Smooke: We’ll give you a link there. We’ll find the right picture.
Back to who to pick in the beginning. I’ve been trying to learn more about the Paypal model.
Jay Zalowitz: Bringing in all your friends?
David Smooke: Not just all your friends. The smartest people you have ever met.
Jay Zalowitz: So like, I should bring in Elon Musk?
David Smooke: You know, if you know Elon Musk, and you don’t have a job that fits whatever the job description is, you should probably just hire him anyway.
Jay Zalowitz: Yeah, good point.
David Smooke: Part of me is just like, recruiting is just who are the most talented people I can get on my team? Make up a job title later.
Jay Zalowitz: Yeah, that’s definitely the way to go, and that’s one of the big reasons I was disagreeing with Reid Hoffman. If you have people that verticalized early on, you’re going to hit …
David Smooke: You’ve got to think about it from an investor point of view too. He sees, all right, if I’m going to say to someone ,what are the four job titles? And I want to reduce my risk, I’m looking for these type of skills in a tech company. He may even put it as just two engineers, as opposed to front-end, back-end.
Jay Zalowitz: Yeah, but the thing is, there are never four job titles in a start up. Everyone wears a bajillion fricking hats. There is no limit to the amount of work that a start up is faced with, and if people are that vertically focused instead of being able to add and subtract bandwidth … well, not subtract, just add bandwidth to each other as they’re needed, it’s just not a good thing. The best teams I’ve seen are complementary to each other, and additive when they need to be. Sure, they might theoretically be all those four things individually if you look at them, but in reality, a lot of the times, the designer can really help with new business development, or a whole bunch of things like that.
David Smooke: Yeah.
Jay Zalowitz: I’ve seen some really smart teams pull off a lot faster, and I’ve been on incubators for at least forty or so teams now, and the ones that do the best seem to have the biggest set of … They’re T-shaped people, to steal something from, I believe that was [inaudible 00:12:40] that did T-shaped employees, and they have a wide amount of knowledge with a deep expertise in something.
David Smooke: That’s cool. I really like that way of looking at talent.
Jay Zalowitz: There’s a link I’ll send you later you can send people listening to the podcast too. There’s a really great write-up on T-shaped employees.
David Smooke: As a founder, what mistakes stick in your mind?
Jay Zalowitz: Being stingy with equity … Not me necessarily, and I’ve got to preface this ahead of time for the rest of this conversation: This isn’t just me, this is looking across a whole bunch of things. I’ll tell you when it’s me, I promise.
Founders are really stingy with early employee equity. To me, it’s a big mistake, especially when you have vesting. If you have vesting over a four-year period of time, if your company’s still around in four years, you’re not going to really care that you gave away two percent of it earlier when you still had … You know, take 10 percent away for the employees, you still have 90 split between the founders, and then you’ll get diluted a little, but you’re still probably going to have over 50 percent of the company that’s worth something in four years. That’s nice. That means you didn’t fail, which is a really hard thing to not do, believe it or not.
There’s this perception that everyone’s going to succeed immediately, and everything just takes off, and that just does not happen. It’s this long fricking grind, so if you want to work with somebody for four years, and they are your first employee, shit, give them between two and five percent. Give the next one one and two, and give the ones after that less, but you really got to get the best people on early on, because A-grade teams hire A-grade [inaudible 00:14:50]. If you start with a B-grade team … Ignore the founders, because the founders are going to be the founders, but the team that comes on after that can be either very good, or enough to help you get it done early. There are a lot of companies that do that whole … I’m not going to name names here, but there are companies that explicitly try to fire people before the cliff, and use people up, and then cycle through until they really take off. There are some well-known companies that are sitting on Market Street, for example, that have done this.
David Smooke: But they’ve already made it to Market Street, right?
Jay Zalowitz: They’re on Market Street now.
David Smooke: The path to Market Street.
Jay Zalowitz: There are a lot of companies on Market Street, so … I get to get away with that one. I mean, that’s the entire thing. Mind you, there is definitely the concept of ‘You should hire fast and fire fast,’ but at the exact same time, once they make it past that initial hump … I hate seeing companies forcing people out like that, who definitely use them as a [inaudible 00:16:07] to success, but even so, don’t be really stingy with your first employees.
David Smooke: It’s just another way of the rich getting richer. The investors and the founders have all the weight in the beginning …
Jay Zalowitz: The founders take the vast majority of the risk, but yeah, there’s still no reason to be stingy. You argued with your co-founder over points and points between each other.
It really is a risky walk.
David Smooke: Yeah, it is.
Jay Zalowitz: You argue with your co-founder over points and points, and then you get to employee number six, and then you’re arguing with them over .1 and .25. What? These are the people you’re going to have to deal with for the next four years that ensure the survival of your company. They’re going to make you far more if they’re good at their jobs than you’re paying them, even if you’re giving them one percent. What the hell? Founder stinginess. That’s a big sin.
David Smooke: Founder stinginess.
Jay Zalowitz: Yeah.
David Smooke: Yeah. Part of it’s like, they’re supposed to be the top negotiator, and part of it, I recently met this very old, very wealthy person, and he’s still negotiating over everything, like complaining about the cost of lunch, even though it absolutely makes no impact whatsoever on any of his daily activities if it’s a five-dollar lunch or a fifty-dollar lunch. It’s still just the purpose of, I am the best businessman here. I will negotiate the best price, and I know how to get the best price, and when you do something else that is not the best price, I feel upset, even if it’s a good deal. This is part of that alpha male, super negotiator, that you see a lot of these type of people just become very, very successful, and this same trait comes out in things like the cost of lunch, when it is irrelevant to them.
Jay Zalowitz: Basically, the general rule should be you shouldn’t fund a founder that really wants to go to an expensive place to eat … unless you’re paying for it. Nevermind, that doesn’t work.
David Smooke: No, no, this guy, it was like it didn’t matter who was paying. It was just the principle of what he thinks lunch should cost, how much he could get lunch for, and nothing to do with the actual lunch itself. It was just, I think I can get it for less. This is the mentality that a lot of CEO’s have, and so if they are the people that are going to negotiate for .1, and .15 and .12.
Jay Zalowitz: I’m not saying that you shouldn’t negotiate. I get the question all the time, we’re trying to hire this person. He has this, this, and this skill set, and this many years of experience. What kind of equity should we arrange with him?
David Smooke: Yeah, tough spot.
Jay Zalowitz: What they don’t realize is if they bargain too well, they’re not going to keep that person.
David Smooke: It’s really looking at duration of employment as part of your …
Jay Zalowitz: Calculation.
David Smooke: Yeah.
Jay Zalowitz: Bear in mind, by the way, when you’re trying to give a new engineer .1 percent of the company, and they’re your first or second hire, which I’ve seen happen a lot, at the tiniest amount ever, their engineers are going to be infinitely employable in the next couple years, but to follow onto that, four years in, they’re going to be engineers with four-plus more years of experience.
David Smooke: Yeah.
Jay Zalowitz: You’re going to be paying to keep them in cash.
David Smooke: Yeah.
Jay Zalowitz: … Unless you’re Twitter, and then you’ve got plenty of [inaudible 00:20:18]. That’s now worth $15 million.
David Smooke: You think Twitter’s going to take over as the top social network?
Jay Zalowitz: No.
David Smooke: Did you get on Ello this week?
Jay Zalowitz: I did. I got on Ello like two or three weeks ago.
David Smooke: Oh, how are you liking it?
Jay Zalowitz: It’s so cool. Pretty good. I spent part of the week experimenting with a script to auto-follow people [crosstalk 00:20:47] …
David Smooke: I saw the founder post on Ello …
Jay Zalowitz: That wasn’t me.
David Smooke: People are doing this and we’re working our hardest to cut it down. Okay, so it wasn’t you he was calling out?
Jay Zalowitz: It wasn’t me he was calling out. I did 2,000, and I did it once every two seconds. That didn’t affect the server. What they’re big thing actually is …
David Smooke: Do you now have 4,000 friends on there?
Jay Zalowitz: I have 2,000, yeah. Ello is a rails app build on top of [inaudible 00:21:15], and they wouldn’t be on fire as much if they were using a different system for the feed, but as they fan out to get all of these people’s feeds, that join becomes a much larger read against the database, and is way, way computationally more expensive. People like Robert Scoble, for example, very recently aren’t basically allowed to post for the next bit.
David Smooke: Huh.
Jay Zalowitz: Let’s take a left on the other side of the street, because I think we’re close enough to …
David Smooke: Yeah.
Jay Zalowitz: People are walking by with Popsicles, and I just can’t take that right now.
David Smooke: I read a great interview with the founder, and it was really cool to hear his perspective on monetization.
Jay Zalowitz: What is his perspective on monetization?
David Smooke: He thinks the user that gains value will pay. He thinks if you offer customized keyboards, if you offer customized page … Basically, as you make a better webpage, you buy little things for a dollar and two dollars, so all in-app purchases by the people that are gaining the most from the network. One of the fun examples he cites … To give some background, he had a toy company where he hired only street artists to make the toys, and he sold them all to adults as collectors’ items, ranging like 10 to 100 dollars-ish, so not that expensive, but very profitable business, helped him get to this business, and one of his examples is street artists can design a keyboard. You want to buy that keyboard? Here it is. You want to buy their symbols and use their symbols on our site? Purchase. I don’t know if it will work, but I admire cutting out the advertiser in that way, and I admire just being direct about where the money’s being made.
Jay Zalowitz: I thought they were selling all the data, which I’m perfectly fine with. I’m serious, I’m perfectly fine with … If you’re honest about it, and if your users log on and you’re like, we’re going to sell your friendship data and the things that you like, but we’re being straightforward with it, there are no advertisements on this site, you’re going to be advertised to other places anyway. You might as well get the advertisements that you want. Hell.
David Smooke: A real statement for native ads.
Jay Zalowitz: Well, yeah, basically. Here’s the thing though. I don’t want to see — what is it? — the Summer’s Eve stuff? That’s not a good targeted advertisement for me. You will get zero conversions unless I’m randomly sent to a convenience store.
David Smooke: In one of his reasons, the founder says, ‘I was on Tumblr and I saw my first ad.’ This was shortly after the Yahoo! acquisition, and he’s like, ‘It was for pantyhose at J.C. Penney’s. At this moment, I was like, why? Why am I here at this site? Why am I looking at this?’ I don’t want to see any ads for J.C. Penney’s, but at the same time, maybe this is considered a smart targeted ad for them, because maybe they’re trying to get me to buy for my girlfriend. I don’t know. Advertisers try dumb things. It’s like picking a demographic. Sometimes you just test it out and it doesn’t look targeted, but it could actually be more profitable for them.
Jay Zalowitz: Oh yeah.
David Smooke: The native ad that works can still be very annoying, is basically my over-arching thing here.
Jay Zalowitz: Yeah, but you’re going to click on it if you were going to click on it. I will say on Yahoo!, their contributor network will explode to over 100 million monthly active users within the next two years.
David Smooke: Well Tumblr’s already more than that, right?
Jay Zalowitz: There will be a branded contributor network.
David Smooke: Okay.
Jay Zalowitz: … Which is the same way you think of the Youtube partners. People get paid for some of their advertisements.
David Smooke: Yeah.
Jay Zalowitz: That’s [inaudible 00:25:30] probably using Tumblr, and it will have over 100 million …
David Smooke: Paid people?
Jay Zalowitz: Well, paid visitors, basically, not visitors paying, but money will be extracted out of them, their advertising dollars. Because Alibaba is the full value of Yahoo! at the moment, I would buy the living hell out of Yahoo! as a stock.
David Smooke: Slightly irrational. They’re in different markets, but just because of the value you perceive Yahoo! as being worth …
Jay Zalowitz: No, no, no. Yahoo! owns a significant portion of Alibaba.
David Smooke: Oh yeah, I think they’re still at 15 percent.
Jay Zalowitz: The value of Yahoo! right now is at or near or less than the value of the stake in Alibaba that they have.
David Smooke: Yeah, that’s kind of funny.
Jay Zalowitz: Given that …
David Smooke: It’s like they have this anchor.
Jay Zalowitz: Given that they have this anchor that is Alibaba, and if Alibaba keeps going up, great. You still win.
David Smooke: But it didn’t go up that much after the Alibaba IPO, and they sold, I want to say, 7 or 8 percent of it.
Jay Zalowitz: I’m just saying, I believe the value of Yahoo to go up …
David Smooke: Why not just go right to the source and buy Alibaba?
Jay Zalowitz: Because I’d much rather have two winning companies than one in a stock.
David Smooke: Yeah.
Jay Zalowitz: You can win twice, and you can only downside one of them at a time.
David Smooke: It’s also like betting parlays versus just betting a game. You’ll bet, oh, they’ll score over 50 points and the Steelers will win, as opposed to I just want to bet that the Steelers will win. I think that’s a simpler safer bet. Alibaba seems …
Jay Zalowitz: Yeah, but you could end up even, which is, in my opinion … This does not constitute investment advice, by the way, do not sue me. I wrote for [inaudible 00:27:29], but that’s about the only finance thing I did, other than being a project [inaudible 00:27:32] … I did a lot of finance things. When did that happen?
David Smooke: Did it leave you boatloads of cash?
Jay Zalowitz: No it didn’t.
David Smooke: What about a yacht? Where’s your yacht?
Jay Zalowitz: I’ve often thought of that to myself. I do go competitively sailing every Friday during the South Beach Yacht Club season.
David Smooke: Oh wow, you kind of are on the other half of society.
Jay Zalowitz: No, I don’t pay a thing for it, and I’m even quite stingy about the beer afterwards. It’s actually, the South Beach Yacht Club, given that it’s next door to Giants Park, the AT&T Park, there’s pitchers for $11, but you have to be with a member, so it’s like the cheapest, I just want to join that yacht club and go to Giants games a lot, because that would actually be fun.
I think in the worst-case scenario, Yahoo! stays flat, and in the best case scenario, Alibaba and Yahoo! do well next year, and the stock basically doubles. I’m going to pull this out right now, take a look at what Yahoo!’s price is at and get this on the record … By next Yom Kippur.
David Smooke: Who do you think made the biggest …
Jay Zalowitz: I think it’ll be 80 by next year.
David Smooke: What is it now?
Jay Zalowitz: 40.
David Smooke: Wow.
Jay Zalowitz: That’s a really, really bullish call, and basically, it’s dollar per billion dollars in worth, so it’d have to grow $40 billion in worth, which is going to be a massive challenge … so probably more like 60, but I’m going to say 80, because if I’m right …
David Smooke: It’s fun to get a home run on the record.
Jay Zalowitz: If I’m right and it does hit 80, I sound brilliant, and then people are going to point to this part of the conversation, and say actually, you thought it was more like 60, and I’m going to be like, yes I did.
David Smooke: Don’t worry. I’ll give you the nice bold headline.
Jay Zalowitz: If that happens next year, I will be ecstatic, because I’ll probably have gone long before that point.
David Smooke: What tech companies do you think made the biggest mistakes over the last year?
One inconvenience I have, and I use inconvenience because I understand why they did it, but it’s making you have an identity when you log into Youtube. I get it. Monitoring viewing habits, forming this … Youtube’s the second most searched site. Getting people’s information tied to names on the site is great. I just think it’s just another step closer to Comcast, and away from an internet where you can find the best things in the world of what you’re looking for. It’s a very small moment, and it just annoys me.
Jay Zalowitz: I mean, yeah, partially, but … Two anecdotes: Zynga, if you spend the dollar ever on any one of their games, your value as a customer is more likely to be 500 than the normal users, which I think is lifetime value of like five or something … so at least 100 X.
David Smooke: Once you spend the first dollar.
Jay Zalowitz: Once you spend the first dollar, so if you have much better information on people to drive conversions on a lot of things, I think, I wouldn’t be surprised, even if Google had lost half of the audience on Youtube by doing that, even if they had lost half of the audience, I’m willing to bet they would make more money from it.
David Smooke: Definitely in the short term.
Jay Zalowitz: I think in the long term too, because I don’t think … Facebook, for example, has pissed off enough people over and over again with massive, and then people just end up back on there. The Newsfeed was a big deal. Everyone hated the Newsfeed.
David Smooke: It’s now where you consume most of your consumption.
Jay Zalowitz: Yeah. I don’t believe that to be a mistake as much.
David Smooke: What would you point to for a mistake by a major tech company over the last year?
Jay Zalowitz: I’m not going to talk about anyone in the hiring space, because that’s just too close to home. I’m going to say Samsung, LG, and a few of the other phone makers — we’re finally getting to Golden Gate Park, nice! — a few of the other phone makers not updating their Android OS enough. There’s no care for the old phones, and they’re too busy trying to put junk on the user experience of the new ones. I think the only reason Apple’s still around is because everyone’s so slow because of that. By the way, I think Apple is a great company filled with great people, but they’re going to have to have a meeting-with-God moment, who might be Steve Jobs at this point, but they’re going to have to meet with Jobs, and really examine what they’re building, because what they put out with the iPhone 6 is about to be crushed, for example, by the Galaxy 6 … like doubled.
David Smooke: Probably. I’m actually, I think I’m a little higher on the watch than other people. For example, this conversation would be more convenient if I was just holding out my watch hand.
Jay Zalowitz: Have you seen the new Android watches?
David Smooke: A little bit, a little bit.
Jay Zalowitz: For all the stuff [inaudible 00:33:46] had said about how beautiful the iWatch was, I think it’s LG’s that’s a circular one, it’s gorgeous, absolutely gorgeous.
David Smooke: I do think the winner of the watch market is beauty first and function second.
Jay Zalowitz: Yes, definitely.
David Smooke: You know, beauty’s a tougher one to win. You don’t know what’s going to trend. You’re basically now in the fashion business instead of the tech business, which is not the same type of talent, not the same type of people that win.
Jay Zalowitz: I will say this though: Looking at it like a venture capital investor, and a lot of what they do is taking the shotgun approach, like I don’t know which one is the right one, but I’m going to put money everywhere in case one of them’s the next Google. The iWatch, I think is what they call it, Apple watch, is it the iWatch? I don’t know.
David Smooke: I don’t know.
Jay Zalowitz: Whatever, Apple’s watch …
Walk this way or that way?
David Smooke: Which way do you want to loop back? Are you going to loop back at some point?
Jay Zalowitz: I’m probably going to Lyft because I know you wanted to stay here.
David Smooke: Yeah, yeah I do.
Jay Zalowitz: Okay.
David Smooke: We can go another block or two, maybe some final thoughts.
Jay Zalowitz: Yeah, no, there are going to be like 10 Android watches coming out to the one iWatch, and if it truly is about looks, somebody’s going to nail it before Apple does, just because of the [inaudible 00:35:16] looping process. Apple’s first thing, which comes out next year, and not even in time for Christmas, which Android has …
David Smooke: Yeah, that was kind of a funky decision.
Jay Zalowitz: I’m willing to bet it’s just because they had to put so much into getting the regular Android.
Do you want chips? I can’t eat them.
David Smooke: No, I’m good.
Jay Zalowitz: Are you sure? Eat a chip for me. I’m quite sad.
I just think Android’s going to win the watch battle, and it might get the internet [inaudible 00:35:49] with it.
Big mistakes: Founders being stingy with equity, not hiring the right people early on and making sure you’re doing that the right way. Fundraising in some shitty markets can kill you. I’ve seen funders trying to get dividends back on start-ups … Not like Shark Tank B.S., but like startups, where they’re like, I want dividends back, and you’re sucking money back out of the founders at that point. Oh, not scaling fast enough, like making their decisions like, I need to build it in such a way so that when we have a million users, it costs less. When you have a million users, don’t worry about cost anymore. It will get taken care of until you can sort that out. Ello’s going to be fine. They’re going to do awesomely, and they didn’t build a great database scheme out. Guess what?
David Smooke: It doesn’t matter.
Jay Zalowitz: It doesn’t matter. Build it to get it shipped out the door, ship early, ship often in the Chicago Mayor Gray Davis, I think? Although that was about voting. He wanted you to vote early and often, so I think that was a little less reputable.
David Smooke: Yeah, I don’t think we should get on voting today. I have some not popular issues on the value of the vote.
Jay Zalowitz: Oh, so I’m coming out with, probably some time soon, and I’m not going to detail it here, something called a non-occupancy tax, which is basically, if you’re not going to live in a crowded city, and you have an apartment there, you should pay for that right.
David Smooke: You’re getting into political activism here?
Jay Zalowitz: No, I’m just writing an article and hoping everyone else takes care of it.
David Smooke: That’s what I’m talking about.
Jay Zalowitz: I’m taking the [inaudible 00:37:57] hyperloop. I’m going to hyperloop my non-occupancy tax.
David Smooke: Here’s the vision. Run with it.
Jay Zalowitz: Here’s the vision. You’ll see, it’s going to blow up. By that, I actually mean societally, not the hyperloop.
David Smooke: I would like to ride in the hyperloop. That’s one I would vote for.
Jay Zalowitz: I’m so excited, I’m actually making a trip around the world, basically, because I had a Priceline fare screw-up on a Norwegian Air thing, so I’m getting direct flights all around the world, and they’re $200. I’m like okay. This is going to be fun, so I don’t feel like I need a hyper loop in California. If I can get something underneath the ocean, I’ll take that.
David Smooke: Oh, that would be cool.
Jay Zalowitz: Although sharks, realize sharks.
David Smooke: Yeah, “Pacific Subway”?
Jay Zalowitz: Yeah, I want to see that.
David Smooke: I guess it’d probably start with the Atlantic, right? Smaller ocean?
Jay Zalowitz: You know, where actually would make sense is if you did something from Maine to [inaudible 00:39:08].
David Smooke: For shipping purposes?
Jay Zalowitz: Well, if you do it underneath the polar icecaps, it’s actually a very short route, in reality.
David Smooke: Yeah, but building under the polar icecaps and through the polar icecaps … I think that’s quite another variable.
Jay Zalowitz: You can tunnel in ice. Just tunnel it, right?
David Smooke: No …
Jay Zalowitz: That kills people?
David Smooke: That stuff will move, man. That stuff’s moving right now. This kills the rider.
Jay Zalowitz: Hiring bad, stingy, preparing for scale when you don’t need to prepare for scale, and marketing. Final of the four cardinal sins of founder-dom that you should repent for … not just on Yom Kippur, all the year.
David Smooke: What do you think the marketing mistakes are?
Jay Zalowitz: Every marketing campaign you launch should tell you something you didn’t know, especially early on. If you’re trying to get a lot of likes on your Facebook page, A/B test your company’s name, tagline, and description, and imagery. While you’re getting those likes, you find out what’s going to perform best. I met with the Series B founder last month, spending no money, and I don’t know how he’s getting away with this, but Series B founder, he wouldn’t even like optimize or anything on that site, because he couldn’t get statistical relevance, and he’s not using an advertising campaign. Use the advertising campaign not only to test a whole bunch of things, but when you drag people on, A/B test it. There are ways to solve for these things. Yeah, if you’re advertising as a start-up, and I don’t know that you necessarily should, but it might just be the way your market operates, and if you can find that you can put one dollar in an advertisement and get $10 back, you’re going to get funded really quickly, but learn on every advertisement campaign. If you are outsourcing your advertisement to another firm, get a report back. I’ve seen people outsource their …
David Smooke: I don’t think you should outsource really.
Jay Zalowitz: I don’t think you should at all, but sometimes people do that for equity.
David Smooke: Yeah, and that’s an interesting trade. [inaudible 00:41:32] going into marketing, I don’t think people host enough of their ideas. I think they have a lot of ideas and messages, and there’s a lot of things they can comment on, and they say, we don’t have the time to blog, and it’s like, you can really say here’s my two sentences on the new issue, and click through to the issue, and you’ve added value, commentary … You’re showing that you understand the news, and you’re showing that you understand the market, and where your place is in it. I would really, on that idea of mistakes, I think enough people aren’t publicly commenting on what’s happening in the news, and that’s how you gain trust and authority.
Jay Zalowitz: I think, likewise to what I was saying earlier, [inaudible 00:42:16] provides SmartRecruiters that are really good sent a signal back, like this is what’s performing well. This is what our users tend to care about in actuality, so if we start building new features, people really really really don’t like company X, and how they’re approaching problem Y … I’m being really good about not being specific today … You’re giving them some of the best signal that they can get, and helping inform product decisions just by having a smart blogger and content manager. You can really serve to make the company better.
David Smooke: Cool. Well, I’ll let you get back to it. You’ve got a busy night ahead of you until sundown.
Jay Zalowitz: Yeah, I’ve got to go back to … I can’t do this. This is …
David Smooke: I understand, but we can get a picture in front of you here.
Jay Zalowitz: Yeah.
David Smooke: It’ll be a classy picture.
Jay Zalowitz: It will be, and I look fancy. I am a lot better looking than normal, and put together.
David Smooke: Glad we had the time to walk today.
Jay Zalowitz: Yeah, it’s been fun. Thank you.