Reddit’s IAMA Sub-Reddit

One of the greatest things about Reddit is the IAMA sub-reddit. The idea is that people post things like:

I Am A (Cardiologist|Photographer|Fisherman) Ask Me Anything!

And people pose questions to them. It’s usually anonymous (except when the point is that they’re famous) so you tend to get an amazingly unvarnished look through their eyes.

For example, maybe someone works at a Chili’s or an Outback Steakhouse as a server, you can ask them whether the burgers are fresh or frozen, the best dishes, how things are made, and even what to avoid. These are the kinds of questions you could ask in the restaurant and the positive things they might even tell you (Our burgers are fresh!) but the atmosphere is very different.

For one thing it’s less likely that they’ll lie in a public forum and even less likely that someone won’t point it out if they do. You’ll often see two or more current/former employees comparing notes. The biggest advantage is that there’s no manager watching over them, no chance they’ll get caught for telling a customer the truth instead of the marketing spiel.

You’re getting the kind of behind-the-scenes look at a business that is usually reserved only for friends.

Tonight I saw on Twitter that @pud (Philip Kaplan) asked whether he should eat at Outback Steakhouse or Chili’s and I semi-jokingly suggested he read the relevant Reddit IAMA threads to make his decision.

The truth is that it’s not a very practical use-case. He’s probably driving around with his wife trying to make a decision. He can’t spend 20 minutes poring over Reddit comments. Those are not the best threads either, just the two I could find quickly.

Other times Reddit is more than good enough as-is. For example medical patients will often post talking about their illnesses. Doctors post as well. If you have the time go digging there’s a wealth of knowledge available.

Someone I know was recently interested in the idea of becoming a pharmacy technician. My first thought? Check Reddit. The results?

1. http://www.reddit.com/r/IAmA/comments/i0j4u/iama_pharmacist_bored_at_work_who_will_actually/
2. http://www.reddit.com/r/IAmA/comments/fzenl/iama_pharmacy_technician_ama/
3. http://www.reddit.com/r/IAmA/comments/dozsm/iama_pharmacy_tech_with_over_10_years_experience/
4. http://www.reddit.com/r/IAmA/comments/hzzhm/iama_pharmacy_student_with_one_more_year_to_go/
5. http://www.reddit.com/r/IAmA/comments/hckaw/iama_recent_graduate_who_just_received_a_doctor/
6. http://www.reddit.com/r/IAmA/comments/h6bv2/iama_pharmacy_tech/
7. http://www.reddit.com/r/IAmA/comments/fwome/iama_20yo_fibromyalgia_patient_and_have_been/
8. http://www.reddit.com/r/IAmA/comments/f2wu0/iama_doctor_of_pharmacy_and_neuropharmacology_ama/

After reading those you’ll feel like you know what the job is really like. Compare that to Googling and reading a bunch of SEO’d pages.

The Startup Idea

Imagine a site that collected/organized/filtered/structured/verified/summarized and did all the other muck-work necessary to make this kind of data instantly searchable and quickly readable to anyone who wanted it?

The the next time you needed a locksmith you could search under “locksmith” to find all the do’s-and-dont’s when dealing with them. Or moving companies, doctors, restaurants, dentists, clothing shops, electronics shops, etc, etc.

It would be like having “a friend that works” there for every business that you ever deal with. If the service became large enough it would become immensely powerful. Companies would have to get better because they wouldn’t be able to get away with doing anything bad that employees knew about.

Name/branding ideas I like are based around getting “the inside scoop” or having “a friend that works there.”

Scoop.com — Your friend on the inside.

That kind of thing. I haven’t given it a ton of thought, but that’s the general idea. It could also be a single vertical. Maybe just restaurants or professional services. It could also be completely open-ended. Probably would be wise to start with The Bowling Pin Strategy regardless of your eventual ambitions.

Now. It’s got problems. How do you collect all that data? Do you pay people for it? Do you make it an altruistic thing? Do you verify the data? How do you handle disputes? And more…

There are a lot of challenges to overcome. I think Reddit IAMA proves that it’s possible to create an amazingly valuable resource, that people are willing to contribute this kind of information, and that people are hungry for it. It shows “proxy for demand”.

The only hard part is in the execution. Heh.

This article: Steve Jobs was right: Dropbox is a feature, not a product (pandodaily.com) argues that Dropbox’s functionality will be replicated by the major companies.

I’ve been a fan of Dropbox since the day Drew Houston posted a demo link on Hacker News. I think it solves an important problem in a really great way. It’s a great business too. Charging for storage works quite well.

I have to agree with the article’s title at least. I don’t really see how Dropbox has a great shot at surviving in the post-file world that is rapidly approaching.

The truth is that all I really use Dropbox for is as a redundant backup solution and a way to easily transfer files.

I find myself actually using it actively less than once or twice a month. When I do use it I appreciate it greatly — I would certainly miss it if it was gone ,but I really don’t need it that badly or that frequently.

The real issue is mobile devices. How are tablets and smart phones going to store your data and sync it to the cloud so it’s instantly available on any of your other devices?

Dropbox is certainly the right kind of technology, but what we really need is an open platform.

The same way you plug in your email account to an iPhone you could just as easily plug in your cloud storage provider. An open protocol is all that’s required and it could be defined really quite simply. Dropbox could probably write up an RFC in a month.

The alternative (and perhaps more likely) outcome is that Google will create a service and everyone on Android will use that, everyone on iOS will use iCloud, and both of the people using Windows phones will use Microsoft’s solution.

I remember reading that the reason Google gave up on creating something like Dropbox (dubbed GDrive) was that they didn’t want to continue to support the file as a thing. They wanted to incentivize and support users who moved their “files” into the cloud as Documents in Google Docs and the like.

I think Google made the right bet. They probably should have created GDrive anyway, just to get their grubby little hands in the cloud storage pot earlier, to learn more about how users still rely on files, and even to help users move their stuff into the cloud. How easy would it be for Dropbox to sync all of your MS Office files to Google Docs if they really wanted to? That could have been Google’s option.

Dropbox is an awesome company but there’s no reason to suspect that they’ll be the #1 cloud storage company going forward. I’ll probably end up using Google’s storage service just because I trust their technical expertise more Dropbox (who have made some dumb mistakes like any new company is bound to). The biggest reason though is just that I already have all my eggs in Google’s basket. All my stuff is there and they’re likely to integrate everything together in ways Dropbox won’t have the ability to.

At best Dropbox will become the biggest third-party cloud storage service and Google/Apple will split the majority of the market.

The Hubris of traditional Silicon Valley investors

The primary job of an investor is to find the best possible companies to invest in. Yet nearly all of them proudly ignore any company that hasn’t been referred by someone they know. You’ve heard it a million times:

“I get sooo many deals. I can only talk to the ones who are referred by someone I know.”

It’s completely illogical. It doesn’t follow that because you have one good source for companies that you wouldn’t want more good sources.

Their reply would be:

“I already have enough deals to look at.”

But do they have enough good deals to look at? If they’re ignoring a huge portion of potential deal flow how could they possibly?

The other common retort is:

“Anyone worth their salt will find a way to get a referral to me.”

Really? How would you know what you’re missing out on? Maybe they’ll just talk to more accessible people. Maybe they can’t find someone you know, but they can find someone another investor knows? Or maybe they’ll just get into Y Combinator and then you’ll pay a big premium to invest in them.

Y Combinator’s Secret Weapon

Y Combinator is by far the most successful and prominent investor in Silicon Valley now. Quite a few things make them different from traditional investors, but the one thing that makes them different from virtually every single investor, including many “accelerators”, is that they take applications for funding over the transom.

It’s not easy for them. They spend weeks and weeks sifting through thousands of applications to find the 5% that are worth talking to in person. Then they pay tens of thousands to fly those people out just to talk to them. They don’t really really care where they’re from, what schools they went to, or particularly: who they know.

Some of the very biggest YC successes have come in like this. Probably the majority of their best companies have. Even in cases where they had a referral it probably helped a lot to have a formalized application process. It forces companies to properly and fully pitch their idea.

Y Combinator’s formalized and meritocratic application process means the best companies rise to the top — not just the ones with the best referral, resume, or slickest elevator pitch.

Is it any wonder that Silicon Valley was so easily disrupted? A few good hackers took a close look at the problem and decided rightly to re-define it.

Opportunity for a new wave of Silicon Valley investors

Some smart VC is going to realize that one of the most important parts of YC is quite easily replicated and they’re going to make a killing doing it.

They’re going to put up a thorough application on the web like YC does, institute a rigorous process for evaluating them, and start treating that source of deals as their primary and best source of deal flow. They’ll start telling their referrals to “submit an application”.

And founders will hear about it. They’ll hear that there’s a VC who you can pitch without knowing his cousin’s friend who founded a company that failed 3 years ago. One who evaluates companies based on the fundamentals of the company and not whether other VCs are interested or not, or how slick you are.

It won’t be magic of course. The VC will still have to be smart enough to pick good companies and good at supporting them. They’ll have to offer competitive deal terms and have a great reputation.

Probably it will be some VC that’s new to the game. Someone with nothing to lose. Someone like what YC was like when they first started.

It’s the future

I think it’s inevitable that this will happen for all VCs. The world of handshakes and connections is great, but it creates an inefficient market. The ability to network and schmooze is not a requisite skill to building a great company. Certainly not in the early stages where it’s purely a game of finding product/market fit. Users don’t care who you know, where you went to school, or that you have Ron Conway on speed dial.

A lot of VCs are trying to use YC like a filter. The problem is that a lot of VCs are using YC as a filter. That means the top deals in every YC class are highly competitive. That’s why you’re hearing about inflated YC valuations.

There’s nothing inherently wrong with using YC like that, but if everyone is doing it you’re not going to have much of an advantage unless you’re offering overly-generous deal terms or one of a very few top firms.

Just like no technology company should outsource their technology no VC should be outsource their deal flow. Finding the best deals is the core of their entire business.

I predict that either all VCs will learn to accept and evaluate applications for funding over the transom or a select few will and they’ll outperform all but the very best schmooze-only VCs.

AngelList is already forcing their hand, and that levels the playing field even more for the best companies, but it’s more of a formalization of the “social proof”-based investing that VCs are currently relying on.

Have feedback? Comment on Hacker News >

People sometimes refer to startups as “lotteries”, as if everyone who participates in the game has roughly the same odds of winning.

The Misconception

There are two primary causes for this misconception:

Luck does play a huge role in every company’s outcome.

It’s true. Not a single founder that’s succeeded couldn’t have also lost miserably. If one was all-knowing, and had the power to travel in time, it would not be difficult to completely throw off a company’s trajectory with one tiny change to the timeline. A missed phone call. A little extra traffic on the way to an important meeting. That’s all it would take to have prevented Microsoft or Intel from becoming the behemoths they are.

Sometimes it really is almost purely luck.

It’s not nice to point it out, but some founders really did just stumble blindly into a lucky situation. Even in those cases it’s not as if they don’t deserve their success. After all, they had to overcome fear enough to start the company and they had to actually try (which is far more than most people do). But there really are some people who just got unbelievably lucky. It happens.

Game of Skill

Startups are far more like poker than roulette. Sometimes luck dominates temporarily, but in the long term the game is won mostly based on the skill, intelligence, and determination of the player. Luck can make or break you, but it rarely does. At the end of the day you’re far more likely to be the cause of your own success or failure.

Look at the players

Most people would have no chance at playing poker professionally. They lack the determination, intelligence, drive, and whatever else it is that separates those guys from the rest of the world. Anyone can learn how to play poker in 20 minutes. Very few people could ever play professionally.

It’s easy to start a hand of poker. It’s easy to know your goal is (“get all the chips!”). The hard part is knowing how to play every new hand as it’s dealt and keeping that up until you’ve won.

It’s the same with startups. Anyone can throw up a RoR CRUD app for their new real-time-mobile-social-marketplace-for-college-student-dating. How many can actually figure out how to make it work? How many of those can actually put in the necessary work to see it through?

Seems like a pretty nice new version of Twitter is being rolled out or tested right now.

They’ve done away with the right side panel entirely and moved your info to the top left:

Your Home

Your Feed

When you click a Tweet, instead of opening in a right side panel, it opens replies below.

Other person’s Profile

Pretty exciting I think. I’ve always wished for more interesting and sustained conversations on Twitter, though that might be too much to hope for.  Even with this update Twitter still doesn’t have a good way of doing threading or keeping older conversations from falling down the feed.

There was an article today in FastCompany about a cool company called Stripe. They’re a dead simple credit card processing gateway. In just a few minutes any web developer could sign up and add credit card processing to their site for a flat rate of 2.9% + $0.30 fee.

The thing is: you could already do that. PayPal already has this product. It’s called Web Site Payments Pro and the sign up process is easy. No merchant account required. It does cost $30/mo, but the rate is the same (or cheaper with volume) and their Name-Value Pair API is just about as simple.

Almost every popular language has a client library already, which means it’s really just as simple to get started.

Here’s some official clients on their site: https://cms.paypal.com/us/cgi-bin/?cmd=_render-content&content_ID=developer/library_download_sdks

PayPal

curl https://api-3t.sandbox.paypal.com/nvp -d
METHOD=DoDirectPayment
&VERSION=XX.0
&USER=API_username
&PWD=API_password
&SIGNATURE=API_signature
&AMT=400
&CREDITCARDTYPE=Visa
&EXPDATE=022018
&...

Stripe:

curl https://api.stripe.com/v1/charges -u vtUQeOtUnYr7PGCLQ96Ul4zqpDUO4sOE: 
-d amount=400
-d currency=usd
-d card=tok_x9vhXvDM3LuscU
-d "description=Charge for site@stripe.com"

So what is Stripe doing that’s better?

1. They’re not PayPal.

2. Their product is focused and looks simpler. Stripe sounds better than Website Payments Pro.

3. Much better reporting.

4. Much better documentation.

5. Faster account activation. PayPal does let you get started with very minimal info, but they have bugged me one time for more as an anti-fraud measure. I predict Stripe will do that as well eventually.

At the end of the day though, what they created already existed and not in some complicated form. It was just a little obscured and required a little knowledge to find/use.

I thought PayPal sucked as a credit card gateway until I discovered the Website Payments Pro service and NVP API for it. Turns out it works quite well.

Which brings me back to the title of this post. This reminds me a lot of what Hipmunk did. They took an idea that was buried in the back of ITA and focused all of their effort on improving it and marketing it better than ITA ever did (which had its own reasons for not doing that).

Stripe is doing the same thing to PayPal and I don’t for one second want to claim that it’s a bad thing. I think it’s one of the best possible recipes for startup success: find some high quality, but under-polished/under-promoted, product that a big company is offering and polish, improve, and promote it.

I know I’ll be using Stripe the next time I need credit card processing. It’s definitely nicer than PayPal’s solution. It’s not so much better though that I’d be willing to pay significantly more to use it, so if PayPal saved me a lot more money at volume I’d certainly switch to them.