The 40 over 40: Puncturing the myth of older founders

The TechCrunch 40 over 40.

I was slack jawed. Sitting across the table from a very successful thirty-something founder I was listening to him lament the hiring of a fifty+ year old CEO for one of his companies. There is no shame in making a bad hire, but he found only one proximal cause for the poor performance: the guy’s age. Listening to his description of that CEO’s failings, I was thinking what a horrible overall fit for the job this person was. Yet the founder’s conclusion was, “I’m never going to hire anyone over 35 again.” My conclusion was: you made a bad hire.

So it goes in The Valley sometimes. Age is strangely a proxy for performance, reflexively, maddeningly inversely proportional. It is irrelevant that the data say otherwise. I think later that week I saw yet another one of Forbes’s lists. I think this one was “The Ten under Ten.” Yet here I was, over forty and seemingly surrounded by amazing, inspirational, crazy risk-taking, exceptionally excellent over-forty year old doers.

The myth of older founders is pernicious: too comfortable, they don’t think big enough, not hungry enough, etc. Elon Musk doesn’t think big enough? Hadi Partovi is resting on his laurels with the founding of Where does the correlation of age to the myth of The Valley hero/heroine come from? One of the very founders of Silicon Valley itself Robert Noyce founded Intel when he was 41. Might it be that age is an incidental variable in human motivation, behind say, actual motivation? Steve Jobs was forty-two when he re-took the reigns at Apple and invented the iPod.

The data is interesting and while conclusive on the even spread of entrepreneurship across age groups (hint: the average age is 40) it’s inconclusive on value creation. Aileen Lee’s “Unicorn” analysis does a pretty good job on the top end of value creation and suggests that the “twenty something inexperienced founder is an outlier,” with the average age of founders for companies valued over $1B being thirty-four. The third most valuable company on her list had an average founder age of fifty-two. It seems some humans simply hit their stride later in life. Julia Child published her first recipe at forty-nine. Some strike innovation early. Picasso’s never did anything as important as the work in his twenties. So the data is out there but many have simply ignored it.

The week after Brian Acton (42) sold WhatsApp for $19B, I thought: maybe anecdotes are more powerful than data. So here you have a list of anecdotes, inspired by the inimical list of the “under under” set, but this one goes “over.” We give you the TechCrunch 40 over 40. Forty amazing entrepreneurs over forty years old. This list was fun and easy to put together. There is no shortage of over-forties taking big and small risks, changing the world and inspiring many. I hope you enjoy their stories.

(I’m an over 40 entrepreneur and sometimes write guest posts for TechCrunch. You can follow me @frankba)

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Silicon Valley Entitlement Gets Political

Taxes are for old businesses. That seems to be the sentiment coming from the oft-offended Silicon Valley sycophants. I’m not talking about the measured approach of Mayor Ed Lee and Ron Conway who are doing what every major city in American is doing, luring businesses to their neighborhoods by issuing tax breaks for highly attractive growth industries. That has always been good civic policy, and it still is today. I’m talking about the entitled indignation of the fringe bloggers who believe that all businesses touched by technology deserve tax exemptions and that calling something “ridiculous” is the only evidence need to support such a thesis.

I’m a soon to be an Airbnb lister and I’m thrilled about renting out one of my flats for collaborative consumption. When not renting, we’ll have a great place for family and friends to stay. My fiancé has a dream of providing free nights for families of cancer patients at CPMC, just down the street. But what part of any of this entitles me to a blanket amnesty from an occupancy tax that the hotel around the corner pays?

The argument that the technology solipsists make is: Taxes are a burden on innovation and consumers are not businesses. But let’s examine the two central claims of the thesis:

Consumers are not businesses – In the Airbnb case the argument goes that hotels are B2C and Airbnb is C2C. Therefore hotels should be taxed and Airbnb listers should not be taxed. This is not true because as soon as one takes payment for a product or service, one is operating a business. It may be a sole proprietorship, but it is still a business. So what is really being suggested is that one class of business is better than another. I’m perfectly willing to concede that some businesses are better than others. For instance giving tax breaks to attract a company like Twitter downtown is good for the city. But is my rental apartment really the equivalent of Twitter as the writer suggest? If so, I’m going to give my Chihuahua stock options.

Taxes are a burden on innovation – This may be true of some taxes. When I operated a start-up in San Francisco and was hit with a $50K city tax for the pleasure I felt fairly burdened. I would have much rather allocated the $50K to revenue generating activities. But how is a tax on listers in Aribnb a burden on innovation? I’m a lister, and I haven’t innovated anything that I can think of. I painted a few walls, bought some nice furniture at Cost Plus and I’m in business. Sites that enable small businesses to effectively compete with large businesses are innovative, but the businesses themselves are not necessarily innovative. They are just businesses. By the logic, Uber drivers should be exempt from paying gasoline tax and any suggestion otherwise is a burden on innovation. What what?

Lastly, as collaborative consumption models start to gain traction, taxes will be incorporated in the pricing models of the service providers and eventually passed onto the consumers. It is probably inevitable and frankly it’s OK. Temporarily exploiting a tax loophole that a traditional business does not enjoy simply puts the traditional provider at a disadvantage, artificially rigging the marketplace in favor of the individual provider of the same or similar service. There is no innovation there, just artificial leverage. The playing field should be even. And if a review and tax overhaul is happening, great, as long as it applies to all participating parties.

I’d rather compete on a level playing field as that will lead to a more sustainable long-term business. I know I can compete with the hotel around the corner because our apartment is fantastic, we’ll provide superior service and we have a yard that is pet friendly. I’d rather win on those terms than an artificially low price that punishes local businesses.

To sum, all taxes are not created equal and simply using technology as part of your business operations does not entitle one to tax exemption. But using tax exemptions to attract high paying jobs to distressed neighborhoods, is probably good for all involved.

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How Carrier IQ Could Have Avoided Its Dumbest Move

This article first appeared in TechCrunch.

Imagine how differently Carrier IQ’s fortunes would be if instead of engaging lawyers and flaks to address alleged privacy breaches they engaged the actual discoverer of those breaches, security researcher Trevor Eckhart. For those of you not familiar with thestory it is the latest example of a company that let hubris trump transparency and in the process has potentially committed suicide.

When Mr. Eckhart found potential key logging and personal message logging by a supposedly harmless performance data-tracking application built by Carrier IQ and installed on over 100 million phones, the maker had a choice: attack the messenger or attack the problem. They did they the exact wrong thing. They sent a cease-and-desist letter to Eckhart, as if watching data traffic on ones personal mobile phone and fair use of public documents was a violation of some corporate right. They then issued a defensive press release that seemed in direct contradiction to data Eckhart had already publically posted.

They did everything but address the problem. The results? A class action lawsuit, a US Senator asking for information from them and their carrier and handset customers, undoubtedly countless headaches with their customers and tangibly dimmer prospects for the company and their investors,some of Silicon Valley’s most respected. Carrier IQ, in short, made a problem into a story.

Now consider an alternative scenario. Instead of choosing hubris and stonewalling, Carrier IQ could have chosen transparency. They could have attacked the problem by enlisting Eckhart as a partner rather than casting him as an enemy. Instead of sending lawyers and PR flaks, Carrier IQ could have simply invited Eckhart, even paid Eckhart, to come to their offices and help them understand what he saw and how, if necessary, they should fix it. They could have called the EFF and asked for advice on an independent privacy audit. If they truly believed that their software does no evil as their press releases say, they could have very easily opened up the doors to prove it. If there are actual privacy violations due to poor implementations or non-malicious mistakes, they should be looking for all the help they can get,  including Eckharts, in discovering and fixing those errors.

Instead, because they badly flubbed the perception war, the public and lawmakers can only assume they have something to hide. If we take them at their word, they do care about privacy, but their actions indicate the contrary. It’s a mistake that will cost them for years to come and radically change the direction and momentum of their business. We will all eventually know if they were doing malicious things, or they just screwed up, or if Eckhart’s analysis is flawed. But even if we discover they are pristine, the fortunes of the company are probably irreparably damaged.

The lesson in this mess is: openness wins. When someone points out your flaws, or your company’s flaws, that someone is your best friend, not your enemy. CarrierIQ made this a story by attacking the messenger not the problem, and in doing so created countless more problems for themselves. Learn from their hubris.


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TechCrunch Saga: An Acquisition Allegory

If you are in startup land and watching TechCrunch’s very public hiccup/blow-up, behold a feast of lessons for startups. If you haven’t yet experienced first-hand the arc of a startup enjoy it here. A passionate founder hammers away at a business in his apartment. He grows and nurtures it to maturity and shared success. He manages it through uncertainty, and imprints on it his own heroic brand. The brand grows and the business succeeds. It draws the attention of acquirers and, bada-bing, bada-boom, the rest is history right?

This story resonates with us not solely because of the rubber-necker spectacle of a public peek into an often private process. It is, rather, an allegory that fuels our industry.  To abuse Arrington’s own analogy: Pirates met the Navy. Inevitably Arrington was going to leave AOL. He has the heart of a pirate. Pirates don’t do well in the Navy. In the vacuum that follows him of course there would be fear, uncertainty, doubt and sadly blame. How different people react to that vacuum, is, again, on spectacle at TechCrunch.

After an acquisition and the inevitable dissolutions, you’ll see the disgruntled and the full on gruntled. Those who say, “Management are idiots and I didn’t sign up for this,” and those who say, “I love my job and want to try and make this work.” While these changes are all fairly predictable and a completely natural part of the startup process, people in the crucible sometimes loose sight of that process and sadly attack one another. What was a strong cohesive team as a startup can become a high school drama of passing recriminations in a larger company.

If you’re in startup land, you will go through this. As you do, remember that our understanding of history unrolls over time from a seeming straight line today. What looks worthy of contempt today may simply be less than a full understanding and appreciation of events. While your chapter at the company may need to close, others will prefer to go on. Or maybe you prefer to stay on as others leave. Are your peers worthy of contempt? You can’t know your peers’ motivations and, this close to decisions, you can’t know all the facts of what happened.

If you leave, the ones who stay are not betraying you. They are simply wired differently for the transition. The ones that succeed in the new organization, succeed because the skills needed to manage and preserver at a larger entity are entirely different than those needed to create an entity from scratch. If you stay, the ones who leave are not abandoning you.  They weren’t built for the Navy.

The company will change. It may continue its success in a new form. It may not. But everyone involved in this classic startup success story should be glad they were a part of it, and should be thankful they had a balanced team. You needed each other to be successful and you will need balanced teams again at your next startup. You are going to do this again right?

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AT&T Merger Fail Highlights Spectrum Politics

<This post first appeared in TechCrunch.>

Those reveling in the thumb-in-the-eye the DOJ gave to AT&T over the T-Mobile merger should pause a moment to consider the politics of spectrum allocation in the US.

Anyone who has an iPhone on AT&T knows they need spectrum. Spectrum is a finite resource of airwaves allocated by the federal government (FCC) to businesses based on a bidding process that necessitates demonstrated consumer benefit.

AT&T has been hungry for such spectrum ever since it won a few years of iPhone exclusivity and saw the usage and capacity lines cross on their forecasts and MG develop finger blisters from typing so many hate posts. We all felt AT&T’s constraints as an infuriating experience of dropped calls and poor app connectivity.

So AT&T has been on a spectrum buying spree to try and, well, improve service. They are trying to buy the failed FloTV spectrum from Qualcomm, but it’s not enough. So AT&T is running out of options to improve their service.

You may already know all of this, but what you might not know is that powerful local television broadcasters are squatting on very valuable spectrum with the mere promise of deploying local television services that, well, no one really wants.

Have you heard of the Open Mobile Video Coalition?  I thought not. How about startups like Tivit and Sungale and iMovee?  I thought not as well.

In looking for someone to blame for your bad cell service have a glance at these guys. The OMVC represents the interests of over 800 local television broadcasters who in the transition from analog to digital terrestrial television in 2009 ended up with rights to big chunks of unused, extra spectrum.

The whole reason Congress and the FCC mandated the switch to digital was that digital is far more efficient and thus frees up spectrum for new services. Local broadcasters fought hard against this of course because it meant buying new equipment and potentially losing customers. A product of the haggling was that the local TV companies got to retain access to the spectrum they freed up as long as they use it for “consumer benefit.”

What are the local television broadcasters doing with that extra spectrum? Nothing. Well, nothing that anyone wants. What they are doing is issuing press releases (PDF) saying that live local television is coming to your mobile phone. Aren’t you excited? I thought not.

What they are not saying is:

  1. Qualcomm already tried this, investing several billion dollars in FloTV which was an abject failure.
  2. No one wants local television live on their mobile phones. Have you watched daytime local TV lately?
  3. No cellphone manufactures are ever going to pay the extra money for another radio receiver in their phones for a service no one wants. Yes, it requires specialized battery-depleting hardware.
  4. Broadcasters are in private negotiations with the FCC to share in the profits of selling that spectrum.

Let’s set aside the fact that the sharing of profits with private companies for the sale of a public asset is unprecedented, and just recognize the cynicism of local television owners for a second. They have temporary rights to a public asset. The asset does not enhance their existing business and they have no ideas for using that asset on a service consumers want. So they are blackmailing the public (federal government) for release of that asset, and issuing press releases pretending they are creating the next great consumer service. This stifles innovation that could happen if that asset was used to just give consumers what they want: more, faster, mobile connectivity. It’s like a crazy hermit holed up in a national park with a shotgun demanding the Department of the Interior gives him $100 to leave.

Of course the FCC could just take that spectrum away. There is ample evidence that they are just squatting, and their live television idea is completely bankrupt. But these are broadcasters, with nightly news programs. Eight hundred of them. Starting to follow the path of politics? The FCC doesn’t really want eight hundred local anchors on the nightly news harping about how unjust the FCC is.

So the next time you drop a call on your AT&T iPhone, or can’t load Google Maps when you’re late for a meeting, flip the bird at a local news van if you see one. It will not change the gridlock on spectrum, but it is at least directing your rage at the right target.

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Content Snackers Become Cord Cutters

<This post first appeared in Techcrunch.>

Every five or so years for the past two decades the introduction of an Internet connection to a new device type has created a boom in disruptive businesses. Most of these booms—computers, followed by mobile phones, gaming consoles and now tablets—have been clearly successful. Others (remember the Network Computer?) have been ill-timed.

Now manufacturers, and a growing ecosystem of partners to support them, are betting big that consumers are finally poised to accept an Internet connection in their most cherished living room technology mainstay, the television. Players from Samsung to Sony are bringing the so-called Connected TV (CTV) to market in mass, and you’ll see a big push this holiday season. There are already upwards of fourteen million CTVs in North America and an estimated 65 percent of TVs sold in 2012 will be CTVs.

With every platform change, both new and established companies have lined up to try and capture a share of the redistribution of rewards that inevitably comes when consumers change their habits. North American television advertising is certainly no exception as a host of companies, old and new line up to try and capture their share of that $62 billion annual advertising feast.

While there has been some preparation to date, incumbents have an incredibly hard time cannibalizing existing revenue streams for growing, but yet to mature, new revenue streams. We’ve seen this with everything from books to brokerages. And in the TV world, we are seeing it on display with the recent stutter of Hulu, the pioneering archetype, catching arrows in their back from erstwhile incumbent partners as they bravely forge ahead.

Such is the nature of distribution when the business advantage is built primarily on pricing and bundling, and carefully restricted access, not on real consumer demonstrated desires and behaviors.

Technology has always been on the side of the consumer, especially in the realm of television viewing. You may not remember now, but broadcasters bitterly fought the arrival of cable in the 70s. And while it seems absurd now, given it has created hundreds of billions of revenue, studios fought against the arrival of DVDs in the late 90s. The early titles were a handful of B movies released by Warner Brothers in conjunctions with Toshiba. It was all Toshiba could get at the time.

We may be seeing another disruption today. With a new wave of CTV content applications, the pricing and access advantage of cable television may dissipate. Imagine downloading a TNT program application directly from Turner rather than paying a cable company for access to Turner content. Content providers themselves already, or will soon, have the tools to reach their audience directly on the big screen. Turner could pocket 100% of any subscription fee and advertising revenue rather than having to share with a distribution partner.

The traditional distribution players are betting, but not banking, on the fact that new television distribution will look substantially similar to old television distribution. They are expanding their services to include on-demand viewing and hoping much will continue as before with consumers paying a fee for content bundles.

But what if that’s not the way it goes down? What if like mobile phones and the PC before them consumers choose to snack on content delivered directly to them by the content providers themselves, effectively removing the pricing, bundling and access advantage of traditional cable and satellite television distribution. In that world the power of delivery, and advertising insertion, shifts directly to content providers, device manufactures and the ecosystem of direct Internet-connected business partners they surround themselves with. In that scenario, online advertising businesses have a distinct advantage over traditional distribution businesses as they are already in the market pumping billions of video ads through existing devices like PCs, mobile phones and tablets.

Sure distribution incumbents like Comcast could make IP connected set-top boxes that consumers use to access content directly, unbundled or a la carte, but that erodes their existing revenue model around cable pricing. The industry calls folks who end run cable to get their content directly from content companies, “cord cutters.” A recent Morgan Stanley report concluded that cable companies would have to double the internet access fees of so called “cord cutters” to make up for the lost revenue on cable TV packages.

There is change brewing. Years in this business and witness to booms and busts have taught all of us to be cautious of absolutist rhetoric opining the end of any particular distribution channel. Consumers have shown a remarkable ability to expand their entertainment appetites, and new consumption habits largely prove additive, not cannibalistic (except for my poor print friends of course). So be suspect of anyone who claims that all programming or advertising is going to be wholly delivered in a particular way. But the numbers themselves are so enormous, and the opportunity so large that even a ten percent swing in consumer viewing habits from cable and satelite to Connected TV applications and cord-cutters will represent a shift in $6.2B of advertising spending. That, to me, is a scenario worth preparing for.

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The Funnel Grows; the Funnel Shrinks, Mobile Ads Get a Lot More Interesting

As we prepare for AdWeek next week, I’m looking forward to long conversations about the future of mobile marketing and advertising. (Be sure to catch the Mobile Ad Summit on Tuesday where you’ll hear a lot on the subject: ) The context has me thinking just how much mobile advertising has changed in the past year. In particular I think we have seen a radical expansion in the way our old friend the Marketing Funnel is treated in Mobile. So here are some things to think about leading up to next week.

Marketing FunnelThe Marketing Funnel

The marketing funnel is easy shorthand for matching one’s marketing objectives with one’s marketing strategy. A web search will reveal a wealth of different version of the famous funnel, so I’ve mashed up the one below from some of the best sources. It used to be if you wanted awareness you bought television; if you wanted conversion you bought coupons. Loyalty? Remember Green Stamps?

Good marketers (well to be fair… even bad marketers) are always looking for effective and efficient ways to drive every point of the marketing funnel. While mobile marketing should be no exception it is only recently that we’ve seen the funnel both expand and simultaneously contract. Lemme ‘splain.

In the first phase of mobile marketing much of the marketing focus had been on driving mobile intent and conversion, through search and performance txt and banner campaigns for the likes of big spenders in the ringtone and games business. Let’s call that Mobile Marketing 1.0. Admob and Quattro cleaned up on this wave especially as apps hit the market and people would, and still do, pay for app downloads. AdMob and Millennial Media have a firm grip on this part of the funnel today.

What’s happening now is high-capability devices are driving interesting effects on the funnel, simultaneously expanding and collapsing it for different programs and objectives.

The expansion of the funnel is coming from a clear increase in the amount of dollars being spent on the top of the funnel from “awareness” on down. Awareness budgets are television sized budgets designed to drive brand, well, awareness, as well as positive perception of a brand that will eventually drive purchases. The introduction of iAd and what we’ve seen at Transpera, with the branding power of video to elicit emotional responses on products, are a new opportunities for marketers to use mobile as a super efficient and effective way to address top of the funnel marketing objectives. This is a big expansion in the funnel for mobile, and a big opportunity for mobile marketers, advertisers, vendors and publishers. Not only have rich branding campaigns on mobile blown up this year, the engagement and efficiency of such campaigns on mobile indicate that we’ve barely seen the start of the spending flow.

Ironically at the same time rich media services like ours are expanding the funnel, location based services are collapsing the funnel by more intimately connecting awareness, conversion and loyalty. Think about what foursquare is really doing with its audience. It is providing a physical connection to the world of loyalty. Now people actually compete to be the Mayor of the American Airlines Admiral’s Club. Those are leagues of true believers! What is so powerful about location marketing is that someone can become aware of a brand, there is a Diesel Jeans store near my office, while simultaneously being fed an offer to convert, Diesel is having a sale, and, as is the case with foursquare, check in at that location and start a loyalty relationship. This is the funnel collapsing into a single marketing relationship that can drive multiple objectives.

Both these phenomena will steal dollars away from traditional media. The expansion of the funnel with mobile brand advertising will steal dollars away from television, and the collapse of the funnel with location based services will steal even more money from the Sunday inserts. And all of our combined services are why we haven’t even seen the beginning of what the mobile advertising market is going to be.

– Frank

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