An Important Reminder… from Our Sponsor

Not too long ago one of the investors in my company reminded me that a startup’s value, especially one at our stage, doesn’t move incrementally. Value for us is a discrete step function based on our ability to meet a certain milestone, and the challenge for us is to increase the value substantially before the funding runs out.

This was the single most valuable piece of advice we’ve had in the last six months. Since then, we’ve focused on the core in order for us to get to our next milestone as soon as possible. This has also meant saying “No” to tempting opportunities (for their mid to longer term gains), but opportunities that would have ultimately caused us to move resources away from our core business.

Thankfully, the advice came before we opened up our Singapore office, for it helped us set the right framework for building the development center there, especially in terms of the type of people that we wanted to recruit.

What timezone am I in?

I must be getting old.

It used to be that when I had to cross multiple time zones, I’m able to adjust pretty quickly to the new time. But not this time. Since coming back from Asia I’ve had the most irregular sleep pattern I can recall. I fall asleep for about 2-4 hours at a time, about 4 times a day. Add in the hay fever, and welcome to the misery that I’m in right now.

I really shouldn’t complain. According to Kevin, there are 90M Americans who have sleep disorder. At least this is the only time I recall in recent years where my sleep clock is really screwed up, I can’t imagine what it’s like when this happens to you on a regular basis.

Of course, being up and alone at 4 in the morning, you look for things to do. So, I’ve talked to my girlfriend in Singapore whose on her way to dinner 8000 miles away, I’ve read 5 articles on Sanjaya’s staying power, seen a few crazy infomercials, and raided the refrigerator. And I’m wide awake and bored. I’m probably going to really pay for this tomorrow during the day.

However, I must admit this bout of insomnia have made me appreciate technology advances more. For example, rather than talking to my girlfriend with a conventional telephone line, I was able to use Skype, which costs a fraction of what the telephone call would be with nearly the same amount of clarity. In fact, I use Skype so often as a form of communication I don’t think I could have done the startup without it. (Now if someone could invent something similar for lawyers we’d be all set!)

And the Sanjaya thing. I was out to dinner tonight, so I Tivo’d the results show, but the truth of the matter is that I knew who got eliminated tonight before I even watched the Tivo’d show because I had already found out on MSNBC, and I’m sure there are other sources that reported the blow-by-blow even faster than MSNBC (who generally don’t report until the end of the West Coast airing). In any case, the speed at which information travels and is accessible certainly beats the early Internet days, and for a startup like ours it keeps us informed of the dynamics of the market as it happens. Sometimes this can be overwhelming, but I always prefer to have more data than less so I can be as informed as possible when making decisions.

The infomercials are interesting to me as a transformation of the broadcast world. There are more channels today, more slots for programming, and when you throw the Web in, infinite distribution channels for broadcast. So I supposed I should never be bored as there are lots of people filling up the collective airwave with content. But that’s precisely the problem. There’s a lot of long tail content that I’m not interested in, and they’re in broadcast as much as as on the Web. However, filtering on TV (i.e. channel surfing) isn’t as elegant as on the web (i.e. search), and even with nearly 100 channels on TV I find more interesting content (or more long tail content that fit my mood) on YouTube. Choice and control, if made simple, can disrupt status quo, a key insight for me as we focus on the user experience of our next rev.

Well, the good news is that my refrigerator hasn’t changed that much. The other good news is that when I read my writing, I get sleepy. I think I just found a cure for my insomnia.

Terms

We’re in the midst of documentation right now, or as my CEO, Kevin, calls “corporate cleanup.” While we don’t have all the terms of our business documented and signed, we do have a product. But nonetheless as we go through our current round of financing, potential investors want to get everything that we’ve done and have agreed to on paper and signed. Hence we began the process of having lawyers (we’re represented by Cooley) giving everyone a ton of papers to review and sign. Not exactly green but necessary. Hopefully, this painstaking process will come to an end in the next few days and we can be on our way towards collecting checks and beginning official payroll.

In stark contrast, we’ve been in discussion with our Chinese partner for nearly 5 months and other than a few pieces of emails confirming that we were proceeding with a partnership, no agreements have been signed. Yet they’ve dedicated resources towards the partnership, as have we. It’s like doing business the old way, with a handshake. Scary, I know. Some people might think that I’m being naive and that we’re going to be taken to the cleaners. I certainly hope that doesn’t happen. While I would have liked to have documented everything, I do wonder how enforceable they’d be, in what jurisdiction they’d agreed to, and whether a Chinese competitor would have come on really strong and caused us to lose the opportunity to get into China. Most importantly, I worried that it’d cost us more to have the terms negotiated, documented, and reviewed, jacking up the cost of the deal to a point where we’d be in the red for months to come. At our stage (which is very early, by the way), cash flow is king. So we took a deep breath and decided to go forward with the deal based on establishing trust and value in a long term relationship.

There may just be a fundamental difference in the way Asians look at contracts versus Americans. I was taught this by our Singaporean partner, earth9, and more recently by my friend who runs a consulting agency in Taiwan. Namely, Americans seem to treat it as a definition or blueprint of the business relationship, while Asians think of it as an agreement to work together. We tend to have the approach that what’s in the contract is what needs to be followed; if either party don’t, they are liable to be penalized (often spelled out explicitly in contracts), or worse, be sued. On the other hand, Asians tend to approach a contract like a marriage certificate — they know there are going to be problems and they’re committed to solving the problems with their business partner(s).

Which is better? I don’t know. I think it depends on the level of protection you’re comfortable with. The important insight for me is that we adapt to the cultural norm of the country in which we’re doing business. This adds a layer of complexity, but in the end, I believe it will yield better results, perhaps help us close deals that we wouldn’t have otherwise closed.

I’ll keep you posted on our progress in China. In the meantime, it’s time for me to chase the rest of my partners to sign their corporate documents.