A Perfect Crime was a perfect time

by Stacie Rabinowitz

Last Monday night Fabrice and I had the pleasure of going to see the longest-running play in New York, “A Perfect Crime.” Although neither of us had heard much about it, as theater and mystery buffs we decided we should form our own opinions. Luckily, we were not disappointed! The plot is a murder mystery that keeps you on your toes till the very end. Although normally I hate excessive plot twists, and usually find them either predictable or gratuitous (sorry David Mamet), in this case each surprise was unique in its execution and built upon clues earlier in the play that were subtle enough to keep us in suspense while still integrated enough that each new development made sense and followed from the data we had been given. In fact, the various twists and turns were so devious that Fabrice and I came up with completely different theories as to what was happening, only to both be proven right at the end!

In addition to an intriguing storyline, the play was just plain fun. The dialogue was witty and well-delivered by an enthusiastic cast. The actors’ timing was superb, and I appreciated their ability to work well with difficult theatrical techniques such as phone conversations, tape and video recordings, and speaking to characters offstage. Clearly the long run of the play allowed these elements to develop into the cohesive piece that we saw before us, and all of the set pieces, lighting, and sound cues flowed into a well-rounded piece of theater. The play is not amazingly intellectual and has no important political statement, nor does it feature famous movie stars to draw a crowd. Sadly, Fabrice counted the people in the theater and hypothesized that it had to be losing money that night. But it is entertaining and amusing, which I’m sure is what has sustained its 23-year run. Go see it soon!

Avatar is underwhelming

Ah, the tyranny of high expectations! I had heard such fantastic things about Avatar that I was really looking forward to seeing it. To maximize my potential viewing pleasure, I waited until I could watch it in IMAX 3D and finally had the opportunity to do so on Friday night.

The movie is extremely well made. The scenery is beautiful, the world is internally consistent, and the 3D which often felt gimmicky in other movies was an integral part of the movie watching experience. It looked fantastic – after a while I forgot I was wearing those silly glasses.

Unfortunately, the story itself does not hold up. The character development is minimal, the dialogue is simplistic and the plot is utterly predictable. It’s a beautifully shot movie well worth watching if only as a precursor of movies to come from a film making experience perspective, but don’t expect it to be the best movie you ever watched.

Blog Setup

A few people have asked me recently how this blog is setup. It is setup as follows:

  • I am using WordPress 2.9.1.
  • The blog is hosted by 1and1.com using the $9.99 / month 1&1 Business package.
  • I am using the fDawn 1.0 theme by Fredrik Fahlstad which I extensively modified.

I am using the following plugins:

  • Askimet for spam control.
  • FD Feedburner Plugin to track the RSS subscription and offer email subscriptions.
  • Recent Posts to display the latest posts.
  • Simple Facebook Share Button to let people share any posts on their Facebook Wall.
  • Subscribe Me to let users subscribe by RSS.
  • Subscribe to Comments to allow readers to receive notifications of new comments on a post they commented on.
  • Topsy Retweet Button to allow users to retweet a post.
  • WP to Twitter to update Twitter when new blog posts are added.

In addition, Facebook automatically imports my posts as Notes. I also connected my Linked In account to Twitter so all my new posts also get promoted on Linked In.

What I have yet to figure out is how to have the comments on Facebook Notes, Twitter and the blog to be unified in all three places (or at the very least on the blog itself).

Happy blogging!

How David beats Goliath

I just came across this great article by Malcolm Gladwell in the New Yorker. He explains why underdogs often beat favorites by breaking the rules. It’s actually relevant for entrepreneurs as it emphasizes that underdogs end up winning because they absolutely want to win and will do whatever it takes to win.

Read the article at: http://www.newyorker.com/reporting/2009/05/11/090511fa_fact_gladwell

The New York Internet community is thriving!

I participated last night in an Internet entrepreneur ping pong tournament organized by Spark Capital. It was incredibly well attended – Fred Wilson, Chris Dixon, Kevin Ryan, Dina Kaplan, Charlie O’Donnell, Dan Allen and many more made an appearance as well as a few West Coasters who happened to be in town including Loic Lemeur.

What is amazing is that as amazing as the event was, this type of event is becoming commonplace in New York. When I started Zingy in New York in 2001, the tech scene was all but dead, but now there are many interesting events happening daily.

Aspiring entrepreneurs can join or attend any of the following:
The Founders Roundtable organized by Amol Sarva, the founder of Peek
New York Tech Meetup
The Hatchery
New York Entrepreneur Week
The Bootstrapper Summit
Web 2.0 Expo
Web2NewYork

Charlie O’Donnell runs a great mailing list with everything noteworthy happening this week in tech. Just sign up for it!

Do not watch The Book of Eli!

I had intended to go watch Avatar 3D in Imax, Up in the Air or Fantastic Mr. Fox, but all three were sold out despite having been out for weeks. I opted instead to watch The Book of Eli which still had openings on opening night. I should have taken that as a sign!

I have extremely eclectic tastes and rarely write negative movie reviews, but in this case I had to. I had actually read favorable reviews of the movie with interesting comparisons to The Road Warrior. However, I hated this movie. It’s self indulgent, bleak and painfully slow. I just could not help feeling that it had all been done before in a much more entertaining form!

Avoid it at all costs. It makes Daybreakers which is an ok B movie with an interesting premise and a good first hour look like a multiple Oscar contender!

New Year's resolution: Have more sex

You would think CNN started writing on my behalf. Right after they wrote an article explaining why girls in their early 20s should date me, they wrote an article explaining the benefits of having sex every day 🙂

In brief, the health benefits of frequent sex are:

1. A longer life
2. A healthier heart
3. Lower blood pressure
4. Lower risk of breast cancer
5. Lower risk of prostate cancer
6. Pain relief
7. A slimmer physique
8. Better testosterone levels
9. Fewer menopause symptoms
10. Healthier semen

The article is interesting and fun and I recommend you all read it at:
http://www.cnn.com/2010/HEALTH/01/07/sex.health.benefits/index.html

French interview about OLX on ITespresso.fr

While I was in Paris for LeWeb, I ran into Philippe Guerrier, a great French IT journalist whom I have known for 11 years. He took the opportunity to ask for a quick update on OLX and my angel investments.

French speakers can watch the interview at:
http://www.itespresso.fr/video-f-grinda-olx-nous-nous-concentrons-sur-les-pays-dans-lesquels-nous-pouvons-etre-leader-32958.html

The average price of a home in Detroit is $15,000!

Given the Big Three’s difficulties it’s not surprising that Detroit is ailing, but the extent of the pain is incredible:

• The population has shrunk from 2 million in 1950 to less than 1 million today
• The average price of a house has shrunk from $98,000 in 2003 to $15,000 in October 2009
• The unemployment rate is 28% and the city faces a $300 million budget deficit

The end may not be nigh – other cities which have faced similar challenges such as Berlin (Germany) are starting to thrive again as extremely low living costs have attracted students and an art community which have given the city a cool edge. There are embryonic signs of a similar revival in Detroit but with 800,000 people spread over 140 square miles served by a city with a shrinking tax base and little viable industry (and no federal government like Berlin to soften the blow), the city faces long odds.

With little to lose, the city is becoming a laboratory. I hope the American entrepreneurial spirit unleashed by opportunity will stem and reverse the decline!

What the Dog Saw is thought provoking

After I read a collection of Tim Hartford’s Financial Times articles in Dear Undercover Economist, it was only logical to follow up with a collection of Malcolm Gladwell’s articles in the New Yorker, especially as I truly loved his last book Outliers.

The book is a compilation of Gladwell’s favorite articles. They are split into three parts:

1. The life stories of obsessives and minor geniuses
2. Theories and ways of organizing experience
3. Thoughts on the predictions we make about people

The first part was actually the worse – Gladwell’s writing is excellent, but I just did not care about some of the stories. I loved some of the biographies as well so it made that section uneven.

The second and third sections were truly thought provoking. He covers a wide range of topics including the Enron blowup, homelessness, the Challenger disaster, how we hire people, how society should best deal with pit bull attacks.

What I loved is that most of his conclusions are counter intuitive yet logical and require thoughtful analysis.

Read the book, it will open your mind!

My friend Einat Wilf is in the Knesset!

I am so incredibly proud of being able to call Einat my friend. She is one of those people with incredible presence. I had barely met her as my officemate at McKinsey 13 years ago (in September 1996) that we engaged in a passionate political economic conversation. I can’t think of a single day in the years we were officemates that we did not spend several hours remaking the world!

You are supposed to work hard in management consulting, but between my mind boggling conversations with Einat and some of my other amazing friends like Amanda Pustilnik, Alok Kshirsagar, Linda Kang, Michael Kahan, Dan Rosenthal, Georgia Lee and Bryan Ellis (with whom I also probably spent at least 30 minutes a day playing foosball in the office), the amazing workshops McKinsey gives you access to improve your oral and written communication skills and your public speaking skills, and with all the documents you can read on anything and everything, it’s a miracle we got anything done! I remember that Jeremy Levine, now a partner at Bessemer and on the board of OLX, who was in the office adjacent to Einat’s and mine at McKinsey would often knock on the door and tell us to keep quiet as he had work to do 🙂

I definitely spent 60-80 hours per week in the office, but I know I only spent half that time really working on whatever project I was assigned to. The good news is that Einat and I were very productive and efficient with the work we had to do so our chatting never got in the way of success. Moreover, McKinsey is really a meritocracy. As long as you deliver, it does not matter how many hours you are truly putting in.

That’s not to say we always slacked off. The KKR studies with Andreas Beroutsos, another super smart and all around amazing McKinsey alum, required tons of work, but Michael Kahan and I had a blast working on them! But enough extolling the genius of McKinsey people and back to Einat 🙂

Einat’s accomplished resume does not even begin do justice to what an amazing person she is. She is Israeli and worked for four years as an officer in military intelligence before going to Harvard where she graduated Magna Cum Laude. She worked in Israeli intelligence for four years before joining McKinsey. After McKinsey she became a partner at Koor in their private equity group in Israel before getting her MBA at Insead. She then served as Shimon Peres’ foreign policy advisor, published two books and became a public intellectual in Israel. At the same time she got her PhD in Political Science at Cambridge. In February 2009, she was 14th on the labor party list and seemed headed for the Knesset. Labor had its worst electoral results ever and only got 13 seats. Einat was like a royal: waiting for someone to die or retire to take her rightful place. Yesterday someone quit and Einat will be in the Knesset starting Monday!

While her resume sounds like a stream of uninterrupted success, it’s easy to underestimate the challenges she has had to go through. It’s extremely hard to enter the political process, especially if you spent many years abroad and in business. Moreover, the opportunity cost of leaving the business world given her experience was huge. Einat could be an extremely successful businesswoman. But it was clear from the minute I met her that it’s not what she wanted. She wanted to make a difference in the lives of the people of Israel and felt the best way she could do that was from partaking in the political process.

There was never a doubt in my mind she was going to be in and succeed in politics. That said, her entry in political life took a lot of effort and patience. She had to give up many of lives simple luxuries, moved in with her mom and slowly but surely built up her public profile. Every step was difficult – from finding an interesting job to getting her first book published, to fundraising for her first (failed) attempt at running for office. Many people with less grit, tenacity, passion and commitment would have given up, but she persevered – she got a politically interesting job, published her book, started to understand the political process and raised her profile as a public intellectual. It all came together and culminated in her joining the Knesset. I know the Knesset is only a first step for her. I can’t wait to be able to boast that I am friends with a Prime Minister!

Beyond her political career, I want to say what an amazing woman she is and how fantastic her family is. She has repeatedly given me invaluable advice. I adore her mom to death – she’s funny, super smart, writes these amazing screenplays and is incredibly adorable. Her mom is very risk averse and I remember fondly taking her out of her comfort zone and making her do crazy things when she came to visit in the south of France. Saar, Einat’s brother, now ranks as one of Israel’s most successful entrepreneurs. Her husband Richard is smart, handsome and all around amazing! In short, I love the entire family!

Einat: Congratulations for your much deserved success. I can’t wait to see what you do next!

You can find out more about Einat on her website at: http://www.wilf.org

Why girls in their early 20s should date me :)

Just when I thought I would have to come up with creative ideas, Simcha Whitehill comes up with all the right reasons for CNN Living 🙂

Here are a few excerpts from the article 10 reasons why dating an older man is awesome:

“Yes, my new man was older than me, much older than me. But I wasn’t some gold digger trying to claw at his cash account, or even a woman with daddy issues. I just thought he was the hottest, funniest man I’d ever met.

He was more exciting to be with than any of the 20-something guys I knew. I was smitten with his wit and the way he filled out a pair of pants. Really, are there better reasons to date someone?

Should I seriously have let 15 years come between me and happiness, just so I could avoid judgment from girls like Sue? I really should have answered her question with the long list of truly great things about dating an older man.

He knows cool stuff you never heard of: Generation gaps can be a good thing culture-wise. He can introduce you to music and movies that are totally awesome classics.

He’s super supportive: He’s got a career and is secure in his work life, so he’s totally supportive of your ambitions. And probs full of good advice! Not to mention the quarter-life crisis is kinda like the mid-life one.

Someone has already “fixed him up”: That relationship didn’t work out. And now you can reap the benefits of nice shoes and hand towels in the bathroom.

He doesn’t stay out late: He might be a ladies’ man, but after a certain age, he’s not out on the prowl every night in da club lookin’ for a fresh piece. He just wants to hang with you.

He knows himself: Nobody’s perfect, and by now, he understands his main foibles. So, he can even communicate them to you to prevent friction.

He doesn’t want to be alone: He’s already hit that point when men realize they don’t want to be all by themselves. Even if they intend to stay confirmed bachelors, they still want company.

No more going Dutch: There won’t be that awkward pause when the check comes; he’ll always take it because a man of his years makes more money. You won’t even feel the slightest bit guilty.

He is going to be this rad forever: Some peeps just lose their lust for life at a certain age, but your dude has still got it! He can not only keep up with your young butt, but he piques your interest. You know for sure that time doesn’t slow him down. He’s always willing to try new things. He’s not going to turn into some couch potato all of a sudden. In another 20 years, he’ll still be l-i-v-i-n’.”

Read the full article at:
http://www.cnn.com/2009/LIVING/personal/12/31/tf.dating.older.man.awesome/index.html

The Power of Two: 2 > 1!

Looking at the most successful Internet and technology companies of the past few decades, it’s shocking to see how many have two or more founders: Google, Apple, Microsoft, Intel, Youtube, Skype, Yahoo to name a few all have multiple founders. Even Oracle which is closely associated with Larry Ellison has multiple founders. It’s much harder to come up with super successful Internet companies which only have one founder. Amazon and eBay seem to be the exception and Jeff Bezos is all the more exceptional as he is still CEO. The same applies to up and coming Internet companies which also seemingly all have multiple founders: Gilt, Yelp, Facebook and Twitter.

I would not have expected this result. Running a successful starting requires clear and rapid decision making: you ask everyone’s opinion and make an informed decision and assess its impact. If it’s a product decision, you A/B test the top few decisions and keep refining. There is no time to find the democratic consensus, the field is too dynamic and competitive and from experience the consensus decision is usually worse than an informed rapid decision followed by rigorous A/B testing with continuous refinement. I would have suspected that having multiple founders would slow down the decision making as the co-founders would have to agree on a decision before it gets taken.

Moreover, most marriages end in divorce. Why would it be any different for business relationships especially given the stress that the two partners are under and the financial stakes involved? In fact, I would have expected that companies with multiple founders to be more likely to fail than companies with one founder for that very reason as two disagreeing founders would tear the company apart.

If someone did the analysis, I would bet that companies with multiple founders are more likely to fail than companies with one founder, but when they succeed, they are more likely to succeed in a bigger way.

There are four reasons why having a partner might make a huge difference:

1. If you can’t convince your friends to join you, you probably should not be starting the business.

Your friends are likely to be your most lenient audience: they have no choice but to listen thoughtfully to your crazy ideas so if you can’t convince them you are in trouble. It might be that your idea is not convincing, maybe it does not meet the 9 business selection criteria? 🙂 Alternatively, you might not be an effective pitchman for the idea. This is even worse, you can always find a better idea, but ultimately a startup CEO is a salesperson: he has to sell his vision of the world to investors, employees, customers, the press and anyone who will listen!

2.Being a startup founder is incredibly lonely and it’s great to have someone to pick you up when you are down and keep you grounded in reality when you become exuberant

As the sole founder you always have to exude confidence in your vision, idea and ability to execute, but the reality is that life in general and startup life in particular is anything but a continuous series of uninterrupted successes. There are countless ups and downs. While at Zingy for the first two years we were continuously on the verge of bankruptcy. We missed payroll countless times and I would raise $25k or $50k at the last minute to belatedly make payroll. Sharing those problems with existing investors, potential investors, partners and employees would have only made them worse. It would have been great to have someone to share my fears with.

Having a partner also makes you much more resilient as you don’t want to let him or her down. There is a magical esprit de corps that forms when you are working intensely with other people. Beyond having someone there to cheer you up when things go wrong, this fear of letting your friends down keeps you going no matter what!

3. It’s necessary to have a strategic sounding board

In a startup, you typically hire people based on their functional expertise: a fantastic VP of Marketing or Head of Engineering. You want to hire the very best at every position which means almost by definition that those people are hyper specialized. They are significantly better than you would be at what they do, but they don’t have the same global perspective and vision. That’s ok, but it’s your job as founder and CEO to define it. However, startup success is so much about effective execution that you can easily get lost in the details and forget the big picture.

It’s important not to lose sight of strategic considerations as they ultimately determine how much value you are creating. In other words, it’s not just important to implement the right billing platform but to make sure we have selected the right business model. Similarly, we need to be cognizant of the macro environment. Valuations may be inflated or the competitive dynamics may be about to shift dramatically suggesting that now is the time to sell.

It’s easy to lose sight of all this while you are busy executing. There are alternatives to having a founder for these roles: throughout my life, I have had the pleasure of having fantastic strategic advisors: my friends from McKinsey like Bryan Ellis, thoughtful businessmen like my dad, other Internet entrepreneurs and more recently my amazing VC board members at OLX: Jeremy Levine and Joel Cutler. However, I know how privileged I am to have been surrounded by such amazing people. Many entrepreneurs don’t have the same business background and network and a co-founder is a fantastic sounding board for strategic ideas.

4. There is so much work to do, it’s good to have someone you completely trust to split it with

Many people imagine that a CEO merely sits in his office thinking big thoughts. I doubt that’s the reality at large corporations and I know it’s not in startups which are perennially under staffed relative to the amount of work they have to do. As a founder you have to be willing to do whatever it takes to succeed. Chances are you will be involved with PR, legal issues, partnerships, product decisions and much more! So much time is spent dealing with fires (we just got sued, this huge company is willing to sign us but we have to be ready by tomorrow, etc.) that it’s good to be able to split the work with!

Not only are there four good reasons to have a partner, but currently having had a Co-Founder and Co-CEO for three and a half years, my aforementioned fear of it slowing down the decision making process was overrated.

My partner is Alec Oxenford. I have known him for 11 years. I met him when his friends and he were considering what to do on the Internet in Latin America and I provided them with the business plan and technology to create Deremate, an adaptation of eBay for the Latin American market.

We have extremely similar backgrounds: he went to Harvard, I went to Princeton. He worked at BCG, I worked at McKinsey. He was CEO of a copy of eBay for Latin America, I was CEO of a copy of eBay for Southern Europe.

You might have argued that our similar backgrounds would lead to conflicts over who does what. What’s interesting is that we never once discussed our respective roles – we fell naturally into them based on geographic location, linguistic ability and personal preferences.

He is based in Buenos Aires where 110 of our 140 employees are based so he takes a much more hands on role in hiring and day to day management. Similarly, his more attuned political skills mean that he takes care of solving conflicts in the company and plays a much bigger role in post-merger integration. Given his linguistic skills, he obviously takes the lead on Spanish and Portuguese related partnerships and PR (public relation) opportunities.

Because I am based in NY closer to where our investors and potential investors are, I take more of a lead in IR (investor relations). Given that I am at a stage in my life where I have an easier time to travel (I am single while he is married with two amazing kids), I take more of a lead in frontline M&A (identifying and speaking with potential acquisition targets in the early stages of the process) and BD (business development). Given my linguistic skills, I take the lead on French and English PR opportunities. Finally, I care deeply about product decisions and involve myself more closely in the product planning process.

What is interesting is that our skill sets are essentially identical. We could actually successfully swap roles and often cover for each other when one of us is at a conference, on vacation or if there is some sort of fire that needs to be put out.

We are equally involved in strategic decision making. It’s the one place where a slight difference emerges, he is much more conservative by nature and I am much more gung-ho. Even there our differences balance each other and let us reach a better outcome. Interestingly enough, our board members also have a similar distinction: Jeremy is more conservative and Joel more aggressive. (BTW this is not to say I prefer Joel to Jeremy – they are both extremely smart and thoughtful and the discussions all four of us have had have proved invaluable). As an aside, Jeremy seemed like a new man in the last board meeting ready to conquer the world and take no prisoners. I was fun to see! I wonder if the rumors that one of his portfolio companies had recently received a $500 million buyout offer had anything to do with it 🙂

Any combination of founders works, but similar people who respect each other is probably best

The common recommendation is for a business founder to join forces with a technical founder. When I look at successful startups though there does not seem to be a rule. If anything there are more teams were all the founders have technical background (e.g.; Google) than mixed teams. From my experience with Alec, I can glean why that might be: if you understand where your partner is coming from, you are in a stronger position to respect his choices and mutual respect and trust is essential to sustain the partnership – just like in a marriage!

I actually once described my relationship to Alec as a good marriage, but he immediately corrected: “it’s much better than a good marriage: we never argue about anything and never fight!” He should know: he has been in a fantastic happy marriage with an amazing girl for over ten years!

The conclusion is clear: if you are creating a startup get at least one partner!

Mortgage modifications have done more harm than good

I argued in a prior post that the best way to deal with a deflating bubble was not to try to reflate that bubble. Instead of letting the real estate market reach equilibrium by letting prices fall to the point where the market clears and letting people who cannot afford their housing move to cheaper rentals, it has tried to keep homeowners in place through a combination of policies: mortgage modifications, subsidized low mortgage rates and tax credits.

The net impact seems that at great cost it has prolonged the agony for existing homeowners who tend to default at a later date anyway and who would have been better off cutting their losses and moving into rentals they could afford.

Not only has it been detrimental to existing homeowners, but it’s also unfair to those who have been wisely renting for many years and are not getting the benefits of lower prices as the market is not being allowed to clear. It’s all the more unfair as many of those people will be bearing a disproportionate share of the bailout burden as they will be taxed to pay for the follies of others.

There is a great article in the NY Times analyzing the early results from the program. Read it at:
http://www.nytimes.com/2010/01/02/business/economy/02modify.html?hp