Nate is a Co-founder of Anyclip.com, organizer of New York Tech Meetup and Advisor to Flybridge Venture Partners.

In Part 3 of 3 Nate talks about:

• what he’s doing for Flybridge Captial in his role as their New York advisor
• how to get involved in the New York tech community that helped him go from a mostly unknown to one of the more recognized people in the community
• the goal and future of the New York  Tech Meetup, that now stands at 12,677 members and over 800 attendees per month and growing.

Sean: There seems to be a lot more activity in New York from venture capitalists. There’s a first round coming from Philadelphia opening offices…

Nate: Flybridge…

Sean: …Flybridge hired you

Nate: Polaris….

Sean: …. So talk about what you are doing for Flybridge.

Nate: … for Flybridge? Well, I’m technically an advisor to Flybridge, and what that means is, for the most part is, when it comes to New York investments, I’m both helping them source deals as well as due diligence o n deals and then on their investments, help make connections. You know I think that it’s really something that, you know… I put, at the last New York Tech MeetUp, I put DreamIt Ventures up on stage to announce their new fund. I don’t think we should be, you know… I’ve been accused before of being a bit “chest-pounding” about the New York tech scene…

Sean: mmm-hmm

Nate: But at the same time, I don’t think it’s bad to have competition or more investors in New York looking at New York companies and focusing here. In fact, I think it’s a really good thing for the ecosystem, with the full disclaimer that I’m being paid to say that. Right? (chuckle) We’re not paid, but obviously I have skin in the game here.  But…

Sean: But at the same time, the reason the [Silicon] Valley is so successful is because there’s, you know, an ecosystem, and the idea behind a community here is get, build the same kind of ecosystem and you’ve got to support it…

Nate: Here’s the thing… part of the ecosystem is diversity. And the thing that really excited me at first, besides once I met with the Flybridge guys, they’re all just top-tier guys. They are just great, great people. Everybody involved in the firm. And I vetted them with Tengen. I made sure to talk to, you know, Union Square Ventures to talk to them about their co-investment with them and I made sure to talk to Dwight Merriman and a number of the Flybridge guys were at Greylock, which backed DoubleClick, so I vetted them. Something that excited me, beside the fact of who they were as people was the fact that they were doing investments outside of New York that don’t look like New York investments, in that they… As a Boston VC firm, versus a New York VC firm their investing in medical devices, they are still doing semiconductors – there’s still innovation in semiconductors – there’s all these technologies that New York isn’t necessarily strong in, and therefore New York-centric VC’s aren’t focused in. Where if you … When you plug in a VC from outside of the area, you’re getting all sorts of, intellectual capital that you wouldn’t have in this ecosystem anyway. So, you know, First Round Capital goes the same for them. They are more plugged into what’s happening in the [Silicon] Valley than any other, I think, VC firm that’s operating in New York City.  And so they are they’re bringing in all sorts of intellectual capital from Josh [Kopelman] and Chris’s [Fralic] and Howard’s [Morgan] experiences outside of New York and we’re better off for it. So that diversity, those outside agents, these agents that operate primarily in other ecosystems with different components in them are hugely, I think, adding to what we do. Having them here is really good.

Sean: So the whole Idea here is to promote the ecosystem.

Nate: mmm-hmm

Sean:  So for those who are outside of the community who are wanting to break in and get involved, what would your advice be?

Nate: Of course, I tell people to come to the New York Tech MeetUp every month, but I actually tell them that that should be… that’s sort of your staple. That’s your daily vitamin, I guess, but you’ve got to do more than that. … There was a time, not too long ago, that I knew nobody in this industry, and where I found the most amount of value were all of the niche, smaller events that are going on. The smaller groups; the more focused ones. Those were the places where I would go and I’d meet one or two people in these smaller setting where it was easier to do so. So that when I did show up at the New York Tech MeetUp, I could leverage those connections. That was the best way to leverage a crowd of (at the time) 400, 200 to 300. Right? Walking into a room that size is pretty intimidating, even for some outgoing people like most entrepreneurs. I suggest people go to Garysguide.org, subscribe to Startup Digest or Charlie O’Donell’s weekly email blast. You know, pick out some of the smaller MeetUps, whether it’s the Video 2.0  MeetUp, if you’re into video,  or the Fashion 2.0, or the Gaming 2.0 MeetUp, or TechAviv if you are into Israeli startups. Just like there is a Boston…  a different profile for Boston MeetUps, there’s a different profile for Israeli companies that operate in NewYork City. Right? Where we are more interested in, sort of, computer vision and advanced algorithms than amazing interfaces.  So I would just think about the different niches that you’re most interested in. Or you might find that it’s sort of like dating, right? You want to hang out at the bars and the cafes where you think you’re going to meet the most compatible person. And then come to the New York Tech MeetUp and you’ll feel like you’re more at home and you can better enjoy the, sort of, grand scale of the New York Tech Meet Up.

Sean: Last question, what’s the goal for the MeetUp? Do you want to grow it?…

Nate: Yeah.

Sean: …Is it getting bigger? Is there anybody that can house it? (chuckle)

Nate: Yeah. Certainly we’re grow[ing]. It’s a hard thing to balance. Strike a balance, right? I think that the goal of the New York Tech MeetUp is to advance the New York technology industry for its people and the world. The goal of the New York Tech MeetUp is not to have more members or explicitly to provide more programs. One of the beauties of the organization, I think, is that everybody involved is doing it on an entirely pro bono basis. And I think everybody involved is doing it from a pretty legitimately good spot in their heart where they really care about this industry and they find that this is a good way to put that into action. So, how do we advance the New York technology industry?   Well I think that one ways is to play, sort of, partner to all the other people who do have ongoing initiatives. Outside of the monthly event, which we’ll continue to do, and we’re actually going to move to, this summer we’re going to move to the Skirball Theater at NYU, because they are right down the street from here, which will now host over 850 people (chuckle), and after that, I think it’s Madison Square Garden.  Right?

Sean: Nice!

Nate: No, no… I think we’ll be fine at Skirball. It’s a beautiful theater.  So, I don’t even know if you want to even have… you want to always accommodate everybody. You hate to turn people away, but at the same time it gets very big. So, what we are going to do in the background is we are going to leverage the community to fulfill, to support niche communities. So, for instance, the education space is really important to me right now and other members of the organization. We feel like there is something that we can do to help be, sort of, the connective tissue among all of the people in the university system as well as the startup ecosystem. Columbia and NYU already have an amazing infrastructure for doing that, whether it’s the Columbia Venture Network or… they sort of compliment that at NYU. But, there’s still a lot of things going on at Pace, and stuff that was going on at Apollo which is now slowly getting wrapped into NYU. Stuff at Fordham, you know, Stevens even. Even Yale – I ran into a student from Yale that was just at the Tech MeetUp because it’s just close enough.  And so I think that we can provide… we can, sort of, fill in gaps where other people aren’t providing services or aren’t actively getting startups into research labs or students internships into startups. One thing I’d really like to explore is providing a scholarship to come and study at universities in New York City and be a part of this community while they are in school. That’s sort of a long-term dream. I think that New York Tech MeetUp, because of its scale and because of the passion in its community, is better suited…and again, nobody… everyone involved, their only platform is to advance the community. It doesn’t write checks for anybody, and so that means that we can really play this sort of dispassionate middle for all of the different people involved in the community. So that’s really the goal is to leverage this to move the needle in the areas like education research that New York could use.

Sean: That’s great. Man, we could go on forever…

Nate: Yeah.

Sean: … I’ll have to bring you back some other time. Thanks for coming. I appreciate it.

Nate: Thank You.

[END]

Nate is a Co-founder of Anyclip.com, organizer of New York Tech Meetup and Advisor to Flybridge Venture Partners.

In Part 2 of 3 Nate talks about what we all learned from the bursting of the bubble in early 2000’s, the infamous “RIP Good Times” meeting that Sequoia Capital organized for its portfolio companies back in 2008  and why the come back of Internet startups is sustainable this time around.

Sean: There was a famous, board meeting that Sequoia organized for all its…

Nate: Yeah.

Sean:  …for all its portfolio companies, of which we are one, that got quote/unquote “leaked.” It said “R.I.P. Good Times.”  This was October…

Nate: Yeah.

Sean: …November of 2008

Nate: Yep, yep. It was immediately after.

Sean: Basically saying that everybody needs to cut the fat, this looks a lot like 1999, however, what’s different is there’s a lot of companies creating a lot of value.  Buckle down.

Nate: That’s exactly… and I think that people paid attention along the entire chain. I think start-ups paid attention. I think that VC’s got more disciplined with their investments.  For instance, during that period of time, I was at Rose Tech Ventures, and we basically decided to only invest in companies which could be cash-flow positive with a million dollars or less. Which is a, filter that not many people were thinking about putting on their investments, because a part of the… This industry is attractive for many reasons, one of which is the, you know, the speculation that’s involved and the idea that you might need to take the ten million dollars of investments, or more, the fifty million dollar investment before you’re producing  a lot of cash. And so to think about this industry and the lens of getting cash-flow positive with a million bucks,  is just a type of discipline and a type of thinking that that scenario forced people into; both entrepreneurs and investors, whether it was that specific role or not.  And I think that produced just smarter companies and I think we’re better off for it.

Sean: I agree, but what do you think about the ‘Twitters’ and the ‘Facebooks’ who…

Nate: Well listen…

Sean: …probably want to miss those, right?

Nate: But, of course, Twitter didn’t take investment until it had… outside of the founders… I mean, it’s up to the founder’s prerogative. I think that if you’re sort of Evan Williams, you’ve made your money, and you can afford to buy back oddeo or Odeo, and reinvest in this concept that you really believe in, that’s sort of an entrepreneur’s prerogative.  It would have been, you know… could I speak for Chris Sacca for putting in the angel money at what point, you know, I’m not sure. But they had a prototype out there; they had some sort of adoption indication that this was interesting. I don’t necessarily think that… And then by the time they took serious venture capital money the growth curve was, was predicting this sort of, or you could at least imagine, this sort of scale. So, and again like Foursquare is a great example of that, too, where they, you know, Dennis [Crowley] had a success and he and Nuveen [Investments] were able to be very responsible, almost too cau[tious ]…  I mean, they could have raised money much before. So I think the investment community was almost, was… they probably would have passed their sniff-test too early, if they have even pushed it. I think, they were very smart to get it out there, see it ramp. And, sure, those two companies are examples of companies that aren’t looking, or aren’t monetizing, heavily monetizing right now. They likely won’t be cash-flow positive, or… Twitter certainly wasn’t on its first VC investment, Foursquare might not either. But these are like, again, these companies have growth curves that, I think, allow you to justify, sort of, other types of investments.  The rule that I like to remind people of is that we’re not all Foursquare and we’re not all Twitter, and that’s not the only way that value is created on the internet.  And people, I think, sort of forget that.

Sean: Yeah. What I think is unfortunate is that those are the ones that people…  Those are the exceptions and people hold on to those, because that’s the ones they find out about…

Nate: Well that’s a part of “the Dream,” you know. It’s like, when you go into this world you sign up for “the Dream,” and, you know, it just so happens that “the Dream” comes in all sorts of sizes, but like the default, sort of,” the Dream,”  the one that you read  most about is, again, that one model.  So you never read about, or you rarely read about “the Dream” which is the AnyClip model. And If we are successful we’re going to be, sort of, much more like, let’s say,  Zappos. Right? Zappos is a great example, where here is an existing sort of struggling company and, you know, which was then taken over by really smart, innovative entrepreneurs.  They didn’t hang out in any garage to sort of get Zappos up and running, but they are the fou[nders]…they would be considered founders and certainly any catalyst for its success. So I think that the more you become, I think, a dispassionate observer, of the industry, you sort of see that there’s lots of stories, there’s lots of ways. There’s people who work on an idea but don’t quit their job for two years, then all of a sudden it’s the right time. I think Yipit is a great sort of example of something that where you know, Jim [Moran] and Vinny [Vacanti] have been like super-patient with it. And I really think that it’s going to come into its own.  It’s a great… I think their building … I don’t know much about their traffic, but it seems to me, I just feel like that they must be doing well right now. And it took them some time to figure out exactly what that meant and I don’t think they over-invested in the company before that happened, which makes them smart and makes this industry, you know, all the better for it.

A month ago we found out that my nephew Bryan, who was born a week before my 16 month old son Christian, has a brain tumor.

Nothing in this world can give you perspective like staring death straight in the eye.  It makes you see the big picture really quickly and realize that you can be “here one day and gone the next.”  My perfectly healthy cousin Michael literally got run over by a bus in Philadelphia not even a year ago and was announced dead on arrival.

I share these incredibly personal and tragic stories because I hope that some good can come from them. Yes, I hope you appreciate life more. Yes, I hope you live today as if it were your last. But I also hope you are inspired to take a chance on yourself. I can’t help but think how many dreams and good ideas never get realized and how many would be entrepreneurs never made because they lacked the courage to take the plunge.  If that describes you then I  hope these stories help give you the courage to make a run for your dreams.  It doesn’t matter how old you are or how many bills you have there is never a better time to go for it than right now.   I am living proof of that!

A few weeks ago I announced here on this blog that I am leaving the company I helped build from 5 to 110 people and 0 to 7M monthly users for the past five years, at the end of March to start another Internet software company.  A lot of people think I am nuts to leave such an amazing team just as all our hard work was starting to pay off, right as the company is poised to make a run for the #1 spot in its category.  Add to that a rather hefty mortgage on an apartment in Manhattan, a 16 month old baby with plans for another and the fact that my wife left her VP job 17 months ago to be a full time mom.  In most people’s opinion this is the exact wrong time for me to be taking a risk and starting another company.  But this is all I have ever dreaming about doing for as long as I can remember. I started my first business when I was 16 and had three people over the age of 30 working for me. Ok, for like a minute I majored in finance in college because I thought I wanted to be Gordon Gekko after seeing Wall Street, but I got over that really quickly and have started a few other businesses since then.  A month ago “they” started making me question if I was indeed nuts. But then I was coming out of my health club while an older gentleman in his 70’s was coming in and I thought to myself, when I am his age I want to look back and say I went for it. I don’t want to be spending my golden years wondering “what if.”  No matter what the outcome, I want my kids and grand kids to know I had the balls to try and they should too.

Ben Franklin said “if you have your health you have everything”.  When Beatles drummer George Harrison died of Cancer in 2001 I remember thinking even a billionaire can’t pay his way out of death and no amount of money can save your when your number is up.   So for all you would be entrepreneurs out there, what are you waiting for? The longer you wait the harder it will be, so there is never going to be a better time than right now. Tomorrow might be too late.

If anyone else has a story about what made them take the leap and start a company that you think would inspire others please share in the comments.

Unfortunately, I am easily distracted by nature. I have worked really hard over the years to find sustainable work habits that keep me focused and increasingly more productive.  I have tried many productivity systems (time management is an oxymoron) and finally found one that works at few years ago in Getting Things Done (GTD) by David Allen.  But what I have found is that it doesn’t matter how good your system if you can’t manage the inevitably distracting work environment you are in.

I was reminded of this reading the new book “Rework” last night. They have a chapter on productivity and a section called “Interruption is the enemy of productivity” with which I couldn’t agree more.  They stress that interruptions break your day into a series of moments. You work for half an hour and then someone taps you on the shoulder to ask a question. Twenty more minutes and the phone rings. Forty more minutes and a meeting starts, etc. You can’t get into a zone if you are constantly being interrupted.

As recently as four or five years ago, I remember aspiring to be a crack multitasker. If I could only do five things at once like some of these people I read about I could get so much done. In the midst of it all I remember desperately wondering why I was getting lots of things started and nothing accomplished.  Then I read a study about how, unless your a computer, multitasking is a complete crock of shit.  The study found that it takes someone at least 10 minutes to get fully immersed in the task at hand. So if you are constantly switching from one thing to another you are never really in the zone. Well the same goes for getting constantly interrupted.

When I started our New York office for Trulia in 2005 we only had three people in it. I quickly saw the tendency for us to turn to each other constantly asking questions, thinking out loud, blurting out ideas, etc.  At first I wanted to encourage a collaborate  environment and I thought letting that happen was a way to get it.  I quickly learned that I couldn’t get anything done being constantly interrupted.  Alot of times people were asking each other for things that they could easily find by Googling it. I started parroting my mom saying “look with your eyes, not with your mouth.”   That worked a little, but I had to stop the madness so I create a rule called “Top-of-the-Hour” or “Open Mic”.

I talked about this previously in my post about open work spaces, but here’s how it works:

Top-of-the-Hour Explained:

Only at the top of every hour are people free to take the floor to ask questions, make requests, tell jokes, talk about their weekend plans, and otherwise distract their co-workers.  This simple rule increased productivity in three major ways:

• Enables people to work uninterrupted for large chunks of time.
• Gives peeps a nice way to blow people off who interrupted them by simply saying “can this wait till top of the hour?” It also gave everyone permission to interrupt others once an hour.
• Forces peeps to batch all their questions, problems, issues etc to be discussed at the top of every hour instead of interrupting people multiple times per hour. In many cases, people answer their own questions within the hour.

There was some resistance to open mic  at first.  It was even the butt of a few jokes in our West Coast office, but it became popular pretty quickly as everyone’s workload and stress level increased and they too found the environment around them pretty unproductive.  Now it’s the cardinal rule.

There are two other things that we as a company have done that has been very effective as getting large blocks of uninterrupted time:

1. We put headphones on.  There is an unspoken privacy bubble when someone has headphones on that, at the very least, makes people think before interrupting.
2. We hide in a conference room or cafe and shut off all communication devices for a few hours.

If you have found better ways to work uninterrupted for hours or have tried some of the above let us know in the comments section.

I was at an event last week where a panel of professional angel investors talked about what they look for in investments.  By professional I mean this is what these people spend the vast majority of their time doing to make money.  I am not talking about a successful entrepreneur who sold his/her company and is investing in other startups on the side while they spend most of their time starting another company or even sailing around the world.  I would define these types of angels as private investors. Dharmesh Shar from OnStartups puts these into folks into the “fools” category in his post on the subject. There is a very big distinction between the later, very typical kind of angel, and the former one I am writing about today. Ok, now that I have cleared that up, let’s get back to my night out that prompted this post.

At end end of introducing themselves to the audience, a local startup came up and gave their pitch, at which point the angels did their usual Q & A.  It was fairly representative of the alien-like anal probe an entrepreneur can expect when pitching  a group of professional angels, albeit a little more dramatized for the audience’s benefit.  One of the panelists was from a reputable early stage firm. Another was from a reputable angel group. I had never heard of the other four, but most had done well as entrepreneurs, even if 20+ years ago. I don’t have enough data points from a two hour session to say if they were good or bad people.  All I do know is I walked out of that event feeling like I wanted nothing to do with raising money from professional angel investors.

Below is a list of what I started to define as the most important pros and cons of raising money from friends, family and fools (don’t look at me, I didn’t make this term up), which include wealthy people you know, vs. professional angels. These lists are by no means exhaustive, but are the ones I have found to matter most:

Professional Angels:

Pros

• They actually have money and are in the market to invest.  In theory, they need less education and time to make a decision.
• If successful themselves, they may also be looking to give back and are committed to spending time as well as money.
• If active, they have friends that can invest and/or a network that can open lots of doors for you.
• If they are high-profile or “celebrity” (in the TechCrunch sense of the word, not the tabloid sense) they can add a little credibility to your startup.

Cons

• They are probably overwhelmed with opportunities, so getting in touch and/or getting mind share is far more difficult. They might also have an air of superiority about them or just be down right arrogant.
• Because they hear so many ideas and pitches they start to become jaded and even immune to good ideas, enthusiasm, passion, talent, etc.
• They think they know how to value an early stage company, so they are likely to force you to put a valuation on the seed round. This will likely cost the founders a bigger stake in the company.  Depending on the terms, it could also negatively impact or even derail future rounds.
• They are invested in multiple companies, and so might not have very much time for you.

Friends, Family & Fools

Pros

• Easy access.
• You know and trust each other and/or can easily get references.
• They are more likely to write you a check on the spot without lots of formalities.
• They have alot less opportunity to invest in new companies, so you may be doing them as much of a favor as they are doing for you.
• If they have relevant experience they likely have a lot more time to spend with you if they are not invested in multiple companies like professional angels.
• They are more likely to take convertible debt, or debt that is convertible to stock at a discount to the first VC round. This is great because they get a discount for the extra risk and everyone avoids a bunch of inexperienced people putting a valuation on a company too early. It also gives you an opportunity to create more value and increase the first valuation.

Cons

• You have to live with these people for the rest of your life. Worse, you may lose some of them along the way. Startups are risky roller coaster rides. Are you prepared to bring them along for the ride and/or lose their savings?
• There is more up front and ongoing education and hand-holding since they are not professional investors, might not have the stomach for it, don’t know what questions to ask and/or how to measure success.
• Depending on how wealthy your friends and family are, you may need alot more of them to fill out your seed round, which consumes valuable time and energy.
• They may or may not be as connected or plugged in as a professional angel and therefore able to open as many doors for you.

It is very important to note that these two groups are not mutually exclusive.  For example, “smart-money” can just as easily come from your friends and family as from professional angels depending on how good a job you did building out your network.  I always abide by the saying “when you need a friend, it’s already too late to make one.”

The happy medium I came to was to  raise money from a blend of experienced entrepreneurs that aren’t professional angels for “smart-money” as well as wealthy individuals regardless of background to fill out the round.

Regardless of what kinds of angels you get, here are a few basic requirements I live by that will help keep you guilt and pain free:

• Don’t let anyone invest money that would change their lifestyle. If they will miss it, you don’t want it.
• Don’t ever, ever assume personal liability for paying it back if the company doesn’t succeed. This is an investment, not a loan. Failing is hard enough without owing people money for the next 30 years.
• If they are high maintenance and/or you don’t like them as people, don’t let them invest no matter how much you need the money. They will make you miserable and its just not worth it.
• Assign a minimum investment amount that will keep you under 10-15 investors and stick to it. The more investors you have the more of your valuable time you will spend up front and over the course of growing the company.

[update] Final thought, you don’t need to use your angel round to get good people that can give you good advice. You can always take a bunch of money from rich people and get your advice by surrounding yourself with lots of other smart people. For example, you can and should build an advisory board of the people that can ask the questions you don’t know to ask and answer the questions you can’t answer. Give them a little stock and the privilege of being on your select advisory board and voila, you have your circle of trust (panel of experts).

Break-a-leg!

Nate is a Co-founder of Anyclip.com, organizer of New York Tech Meetup and Advisor to Flybridge Venture Partners. In Part 1, he talks about AnyClip, why New York is a great place to be an entrepreneur and the reality vs hype of what is going on in Silicon Alley.

Update – A transcript can now be found directly below the video. Thanks for your patience.

Sean: So we’re here with Nate Westheimer.  The… a lot of titles:  co-founder of AnyClip[.com], organizer of  the New York Tech MeetUps, and the newly appointed advisor to Flybridge Capital.

Nate: Yep.

Sean: You’re a busy guy so thanks for stopping by.

Nate: My pleasure, yeah.

Sean: (Laughter) So, let’s talk about the New York Tech community, in general, but as probably a good specific example maybe you could tell us a little bit about “AnyClip.” Maybe just like the elevator pitch…

Nate: Yeah, that elevator pitch that I give for “AnyClip” is  the only one I’ve ever given that gets a round of applause…But, it’s the index of the world’s films so people can search for and find any moment from any film ever made, instantly.

Sean: Oh, so that favorite food fight from Animal House?

Nate: Food fight, Animal House,”BAM! Gas station scene, Zoolander, “Roll on Shabbos,” “Make him an offer he can’t refuse.”

Sean: That’s awesome.

Nate: Yeah, it’s… the movies as a medium are just an, incredible force. I mean it’s almost the most democratic form of culture and of art. And so working with films is just a delight.

Sean: So you have an office in New York?

Nate: Yep.

Sean: And Jerusalem?

Nate: Yep.

Sean: Uh, And we were talking a little bit about the story behind how that came to be and I think it is a really good and interesting story that entrepreneurs would enjoy.  So maybe you can tell us a little bit about your background.

Nate: Yeah. I think, you know, what entrepreneurs can take away from the “AnyClip” story is that it’s not the traditional “two guys and a bowl of Ramen, in a garage” story that I think has been, sort of, canonized. You know, it is the “Google” story, and it is down to the “Foursquare” story, and it’s the “Tumblr” story. And that’s amazing for a number of reasons – those types of stories that’s;  capital efficiency, sort of being or having all of the skills in-house,  all of those things that help small ideas, or big ideas start small and then grow to be big. But “AnyClip” is a different story that people say an existing company that had tried something in the movie space, and knew wasn’t working with their current idea, with their current management, but, they had assembled a great team and the investors wanted to keep going. The investors, themselves, were quite passionate about the space for a number of reasons.  And so they were actively recruiting new management and they got around to my friend and co-founder, Aaron Cohen, who… he and I sort of talked about that opportunity.  We were sharing different opportunities. I was on my way out of Rose Tech Ventures. My term as EIR was coming to a close. He had been out of Menu Pages, he was the CEO of Menu Pages [inaudible] with New York Magazine. He had been out of that for about six months, sort of thinking about his next thing. We started talking about ideas. We took a look at this company together and decided that, you know, we had an Idea – the idea of “AnyClip” – that would be really, really compelling and that we would enjoy working on. So we took that back to the investors and they decided to hire Aaron and including myself to come in and, turn it around and, that was almost a year ago in a couple of weeks.

Sean: And, what happens in New York and what happens in Jerusalem?

Nate: In Jerusalem, the two main functions of everybody in Jerusalem is engineering and data engineering: so software engineering and data engineering.  When we say indexing the films, there are some things that we do logarithmically, but there is actually a huge manual component to that.  And then from an engineering perspective, we have sort of three teams, people on the core data, API and search teams, and then people on the web and product teams, and some on the Flash and development, which happens in both camps. In the [United] States, it’s more on the product side. So, I run product and technology for the company as a whole and Gabby Moore, our lead designer, sits next to me in New York.  So she is the main interface between, sort of, product and code because she is a developer, a former developer. Then in terms of business functions:  Aaron, our CEO, our head of licensing is in New York. And actually our head of business development is in L.A., so we kind of have an office in L.A.  And then we have a number of support staff here in New York as well. So we’re about 20 people – about half New York and Jerusalem.

Sean: Yeah. What do you think about building an engineering team here in New York?  What’s kind of the pros and cons?

Nate: Well the pros are… I adore my team in Israel and I couldn’t see doing this project without them. Of course it has its difficulties – to be so far away – and so I think that most people should and would be wise to look for building their team locally. And I think that in terms of – and not always, but in a lot of cases – start lean. Lean start-ups  can really… it might be cheaper in other places. Certainly that’s not a reason to be in Israel , but in other places in the world– it’s cheaper than New York. But you lose a lot in just that, sort of, having zero-latency in getting feedback, and brainstorming, and all that. So New York is the place where I think you’d want to be building your engineering team. And the question is, “Can you?” and I think, “Absolutely!”  It’s not that… There is no reservoir of engineers, nor should there be. Right? Engineers are highly skilled individuals and so it’s going to be tough, no matter where you are to find the right set of skills for your start-up.  I don’t think anywhere else in the world there is this reservoir that you can just dip into.  And so what you have to do is, just like any other place, you have to convince people to work for your company where you are. Well I can’t speak for your company, you know, but in terms of New York, it’s been increasingly easy to convince people that New York is a pretty awesome place to do work. And the quality of life here – what I put in a recent blog post and sort of made myself chuckle was– “where else can you live a life of such luxury and have a smaller carbon-footprint  than anyone else in the country?”

[laughter]

Sean: Yeah. You can live in box and have the best life ever.

Nate: Yeah, it’s true. That’s one of the appeals of living in New York. You, both, can take public transportation everywhere and you‘re actually living well and doing good at the same time. The lifestyle is just hard to beat. Outside of just business, right,… the MoMa, the entire city. So it’s easy to recruit people to come here and then a lot of those people are here anyway. I don’t think you generally have to hire somebody, convince somebody to come in from Chicago or Atlanta or San Francisco to move here. A lot of those people have decided that New York is going to be their home anyway. And so New York is a great, you know, a great feeder itself for talent.

Sean: So what do you think, about what’s happening with the New York, sort of, tech scene in general? We were just talking about how in 2006 we would go to these MeetUps,  New York Tech MeetUps, with about 100 people give or take.  Now there’re 800 people – you’re organizing them.

Nate: Yeah.

Sean: What do you think is going on?

Nate: I think a number of factors.  I think even in that 3-year period of time, or 3 ½ -year period of time that I’ve been involved, just the things that I’ve seen happen are… we had a sort of a bubble, we had a fever-pitch, I think, of you know like a year ago where… I’m always sensitive to the amount of publicity or attention given versus how much is deserved.  And I think it’s ok to have, sort of, one the formerly the later. Right? It’s ok a little bit more attention but not too much.  And I feel like we were, maybe 2007, things were getting a little out of control because of Tumblr and Digipop and started… I think they were the main two; the main brands that people were recognizing that were coming up in consumer internet. And consumer internet drives a lot of the perceived hype and awareness of the industry.  I think what’s changed between you know’06 and then ‘07 and sort of now is that everyone sort of is doubled, sort of reinvested the attention that they got, reinvested in really creating value.  People, I think, go to less parties because they are working harder, and that’s really healthy.

Our VP, Engineering sent the below New York Times post around internally yesterday (thanks Daniele) and I thought it was spot-on, especially since it was directly from the mouth of someone in the trenches.

Bottom line, don’t underestimate the power of happy employees to drive productivity and/or unhappy employees to derail the entire company! That’s why you hear the term “happy, productive employees” and almost never hear “unhappy, productive employees”.  The former go together like peanut butter and jelly and the later are as about as compatible as Jerry Seinfeld and Bill Gates.

We have had a “hire slow, fire fast” policy for years, but it is a lot easier said than done. We do a pretty good job on the hire slow side, with every candidate interviewing with several people including most of senior management and the direct team with which they will be working.  When it comes to firing fast, however, there are so many things that make the policy very hard to live by, from the emotional drama involved to the time and resources invested in that person (sunk costs) and what you will have to pour into finding and training the next one. But you are not doing anyone any favors keeping an unhappy employee or waiting for them to quit.  We have lived to regret it every single time and can tell you that one bad apple does indeed spoil the whole bunch!  You can offset the emotional issue a little if you give them a healthy severance, but you are never going to make it emotional free for either party. Deal with it and deal with it quickly and decisively. Think of it like a band-aid – you have to pull it off fast so you can get the initial sting over with and everyone can start to heal.

The Secret to Having Happy Employees

About 10 years ago I was having my annual holiday party, and my niece had come with her newly minted M.B.A. boyfriend. As he looked around the room, he noted that my employees seemed happy. I told him that I thought they were.

Then, figuring I would take his new degree for a test drive, I asked him how he thought I did that. “I’m sure you treat them well,” he replied.

“That’s half of it,” I said. “Do you know what the other half is?”

He didn’t have the answer, and neither have the many other people that I have told this story. So what is the answer? I fired the unhappy people. People usually laugh at this point. I wish I were kidding.

I’m not. I have learned the long, hard and frustrating way that as a manager you cannot make everyone happy. You can try, you can listen, you can solve some problems, you can try some more. Good management requires training, counseling and patience, but there comes a point when you are robbing the business of precious time and energy.

Don’t get me wrong. This doesn’t happen a lot. There’s no joy in the act of firing someone. And it’s not always the employee’s fault — there are many bad bosses out there. Bad management can make a good employee dysfunctional. On the other hand, good management will not always make a dysfunctional employee good. And sometimes people who would be great employees somewhere else just don’t fit your company, whether it is the type of business or the company culture.

In the worst cases, the problem of a bad fit can have a bigger impact than just one employee’s performance. Being in charge does not necessarily mean you are in control, and being in control does not necessarily mean being in charge. Have you ever seen a company or department paralyzed by someone who is unhappy and wants to take hostages? It is remarkable how much damage one person can do. If you haven’t seen it, I suggest you watch “The Caine Mutiny.” Basically, one guy takes apart the ship. He was unhappy. It only takes one.

This is only my opinion. I don’t have a Ph.D., an M.B.A., or even an economics degree. What I do have is a happy company. And that makes me happy. Now I know some people argue that business is about making money, and not everyone has to be happy. That is also an opinion. Everyone has a right to his or her opinion. When you own a company, you also have the right to surround yourself with the people you choose.

Read the full post on the New York Times here

Part 3 in this series focuses on Charlie’s upcoming launch of the New York chapter of The Open Angel Forum and gives a key piece of advice to anyone thinking about starting a company.

Sean: Tell me a little bit about the [Open] Angle Forum I know you’re bringing it to New York soon so interesting to hear about it.

Charlie: So the Open Angel Forum that started a few months ago. I actually posted something a little before Jason [Calacanis], but Jason kind of has this much bigger megaphone than I do. So I think there are a lot of folks that basically make money-brokering introductions between startups and angel investors, which isn’t necessarily a bad thing I just don’t think it needs to exist. I think this is something that the community should be able to get together and do, you know, on its own without necessarily charging the entrepreneur, who by the way has the shallowest pocket out of the whole bunch. And so I think we realized that…and at the same time these weren’t necessarily the folks who had the best connections to angels and sort of financing too, you know. I don’t necessarily get my best deals by going to a conference where somebody paid a thousand dollars to go. In fact, I don’t necessarily want to find an entrepreneur who decided it was a good use of their own personal capital to spend a thousand dollars to get to me. I’m pretty accessible, and I think most investors generally are. We may have overstuffed inboxes that may take a couple times to get through, but we’re paid to find good deals and we have to look at a lot of deals. So, you know, the open angel forum basically, you know, it’s set up a as a dinner, you know really sort of relaxed, sort of intimate setting, smaller. We’ll take six or seven companies and, you know, introduce them to about a dozen angels. We’ll have some sponsors there, you know, who basically, you know, pay for the whole thing. But a much better way, I think, to interact in a small setting basis, and this is something we hope to do, you know, a couple times a year. I think the day is April 8^th. I should know that off the top of my head we just moved it. But we’ll take applications up until about, I think a week or two beforehand. So I think it’s definitely worth applying if you’re going through angel financing, and so far it’s been a success. They’ve done it in L.A. and Boulder, and companies definitely have gotten financing from it.

Sean: The model is, so you have sponsors to help pay for the event but also the angel investors pay [to attend] as well?

Charlie: No

Sean: It’s the sponsors?

Charlie: Yea…so there’s you know whether it’s a lawyer or a recruiter or somebody, you know, along those lines, but no the angel investors don’t get charged either. So both sides that need and want to connect  [are] as seamlessly as possible, there’s no barriers to them necessarily participating.

Sean: So you posted a week ago in your blog, any takers yet?

Charlie: A bunch. Yea. No I very quickly looked at the spreadsheet and it was like very overwhelming. So, I know I don’t have to think about it, you know, until we sort of make the decisions later on. But there’s a lot of interested folks.

Sean: How do you pick?

Charlie: It’s tough, you know. I think one thing we definitely are counting on is a little bit of diversity. So there’s a couple folks that I talked to that I thought had interesting models that would make for a nice mix. You know we didn’t want necessarily six or ten people doing the same type of thing. I think, you know, different judges may have their criteria, but I would love to see somebody who had a really great idea, might not otherwise be as tapped in as some other folks to this community. You know, probably, maybe less likely to pick somebody who would have gotten to these people otherwise.

Sean: And can you say who the angels are?

Charlie: We’re still trying to figure that out actually. There’s a whole bunch of people, and in fact, I think one of the big questions is who’s an angel? Right? You know look at somebody like Rodger Aaronberg who [has starting his own fund], and will still make angel size investments. There’s a number of VCs who want to come who want to make angel size investments. And that’s, it’s kind of a tough call. I think, you know, a piece of feedback, and I’ve had a debate with a lot of folks about this, is you should try and get people whose main job and main routine it is to make these kinds of investments. Where you’re finding somebody who does this by exception, I think it’s tougher for you to get that kind of time. They’re not as used to dealing with companies at this sort of stage. So, you know, were looking for people who are active, can write checks. And that’s the worst part about some of these forums where you pay money. Half the people I know haven’t written a check in two years and the entrepreneur sort of feels like it’s a waste. So there are a bunch of active people in New York that will get invites, and will all be a matter of sort of scheduling.

Sean:  If you were to give some advice…so it sounds like we both agree New York’s a great place to start a company, plenty of money, plenty of customers here. You don’t need to be on the left coast. You don’t need to have a Stanford MBA or degree. Anything else you would suggest to someone thinking about starting a company?

Charlie: I think, really, one important thing to keep in mind is…I think VCs and angels are seen as people who take risk, and actually I think if you really want to get an investment taking as much risk off the table to think about…There’s a couple of things. I think you know we look at team, we look at product, and you know, you look at market. And product…you’re never gonna have all three of those things.  But, you know, if you have the most experienced team ever, a product that’s already in the market and getting traction, and a huge market, well that’s a real and concern, that’s a late stage investment. On an early stage for a seed you might have an unproved team, with an interesting product, and a big market.  And you sort of have to pick and choose, you know which, which missing piece you’re basically gonna have your bet on. The more of those pieces that are question marks the tougher it is to kind of get there. So if you know you’re missing key motors of your team and you don’t have the right product, but it’s a big market, you know, what can you do to take some of those pieces of risk off the table? Can you bootstrap your way to an interesting product? Can you validate the market with a customer, you know, a couple of customers who are willing to buy it or even invest in the product? You know, try to take as much risk off the table as possible, you know, I think is a key piece of advice.

Part 2 of my interview with Charlie focuses on why New York is a great place to start a company and talks about why the early stage funding gap in New York has largely been closed.

Sean: So change of focus a little bit, what do you think about, sort of, what I’m calling the reemergence of the internet startup scene in New York?

Charlie: Well I think it’s been reemerging for quite a while. I joined the scene, you know, back in sort of late 04’ early 05’ when I started working for Union Square ventures. And I was certainly guilty of growing up here in New York, being distracted by the sort of Wall Street world. I worked in an institutional finance, and didn’t really know there was a technology scene. And, you know, when I started working in venture the New York tech meet-up was thirty people in the back of Scott [Heiferman’s] offices. And now they can barely contain the 750 people that show up at FIT, you know, once a month. I think it’s phenomenal. I think it’s fantastic, because I think what’s nice is…I think a lot of the pieces have always been in place. You know access to customers, critical mass of technologists, and look they may not have all been working for startups but there was never any shortage of engineering or programming talent in New York. They were just working on real time trading applications at Goldman Sachs, which by the way is an interesting technical challenge. A lot of people I think knock the financial scene as something that is, you know, not as worthwhile. But if I’m a programmer, and I know that whatever I build is gonna be used by hundreds of thousands of traders a day that’s pretty cool actually. And I think startups need to realize that because technical people look for great challenges there’s never been a shortage of money in New York. It’s New York, you know. I think there is a reemergence of dedicated, early stage, knowledgeable money. Entrepreneurs who have done this before are coming back to make angel investments who can really add a lot of value. I think there’s certainly a bit of reemergence in the community. That you can be someone who doesn’t know a lot of startups, doesn’t have a lot of startup experience, and very quickly get ramped up in terms of who are the people to connect to, where to get your information from, you know where to do hiring. That sort of thing.

Sean: You wrote in your blog a year ago, and actually a couple days ago, that there was a huge gap in early stage financing. And you wrote a couple days ago about [The Open] Angel Forum, and how that gap is closed or solid. Do you really think it’s closed?

Charlie: I think so. I mean, I think in New York there’s a number of very smart sources to get early stage or angel money. And the interesting thing is if you polled the whole entrepreneurship scene, most people would probably disagree. But that’s because less than ten or five percent of all entrepreneurs pitching ever get financed at all right. So I think it’s very fascinating that, you know, poll a hundred entrepreneurs, people who say they have an entrepreneurial idea did you get money? If the systems works well the answer should be no, because frankly most ideas shouldn’t get financed. Or whether or not they are good or bad ideas may not be appropriate for third party financing. I think those people that have good ideas, have good experience, and have the means to execute on a business, don’t find it particularly difficult to raise financing here in New York. I think there are a lot more people, a lot more smart places to get money, a lot more places to go, and for the most part do a pretty good job of financing most of the good stuff here.

Sean: What do you think the best thing is about starting a company in New York?

Charlie: The best thing about starting a company in New York, I think, is living in New York. I mean this is a phenomenal place to live more than anything else. And I think, you know, your access to a really diverse set of people and diverse set of networks…I mean the power of your network I think increases with the diversity. If the only people that you know are other startup people the likelihood that your network , its sort of the power of lose connections, the likelihood that your network is really gonna help you out that much both from a feedback perspective and from an introduction perspective is probably pretty low. In New York, you know I just think of myself as having grown up here. I mean, I know folks that are in the finance industry from when I worked in, and the technology industry. I teach up at Fordham so I know a bunch of educational folks. I kayak, and so you know the potential useful connections that come to me, particularly from the feedback perspective. If you’re gonna be a direct to consumer play, you’re gonna struggle if the only feedback you’re getting is from your other tech friends who are all on twitter, and all blog, and you’re only sort of thinking one way about things. Secondarily, I love the community here. I think the community here is very open. I don’t… I think sometimes in other areas you might feel like if you didn’t work for certain companies or you don’t have a certain pedigree you’re sort of not on their radar. And I think New York has a very kind of blue-collar approach to, you know, building companies. I think as long as you work hard, and pay your dues, and show you’re [very] passionate about something people are very accepting of it. Were all kind of in this together, sort of help each other out.

Sean: You don’t need a Stanford degree?

Charlie: No definitely not. Definitely not. A Fordham degree, but no [not a Standford Degree].

Last week I officially announced that I am leaving Trulia at the end of March after 4-1/2 incredible years to start another internet company.

I am incredibly proud of all that we accomplished during my tenure at Trulia.  Most notably, we grew the team from five to over 100 ridiculously smart and talented people, raised over $33M from prominent Valley angels like Ron Conway and leading venture capital firms like Sequioa Capital and Accel Partners.  We grew our audience from virtually zero to almost seven million unique monthly users becoming one of the top three real estate sites on Comscore in the process. Most importantly (to the shareholders) we acquired hundreds of paying enterprise clients from Bank of America to Home Depot along with thousands of paying real estate broker and agent customers.  The current team has both the ambition and the wherewithal to become #1 in its space and build a billion dollar brand in the process.

Being at a fast growing internet startup with so many incredibly smart, driven people for 4-1/2 years is like spending decades at a large company in terms of what you learn.  One of the reasons I started StarupAlley was to start sharing all that knowledge with the community and any entrepreneur who wanted to learn from my experiences.  But as hard as it is, I wanted to leave my fellow Trulians with just one important lesson I learned during my time at Trulia that would last them a lifetime. That lesson is applicable to anyone that has lofty ambitions and wants to change the world, so I included my email to my fellow Trulians below:

I will be leaving Trulia at the end of March after 4-1/2 incredible years. When thinking what I wanted to leave you with there is just so much to chose from, so many great memories, so many stories and so much video footage I will never be able to show you thanks to the cease-and-desist letter Daniel and Rebecca sent me on Saturday.

But seriously, I wanted to leave you all with some profound wisdom or at least a golden nugget. In thinking about what that would be I couldn’t help but think about the last time I had a chance to work so intensely with an amazing group of smart, diverse people for such a long period of time, which for me was business school. The more I thought about it the more I thought it was the perfect analogy because I absolutely went to school on Trulia every day I was here.

Anybody that has gone to business school, or has thought about it, knows that half the reason you pay $50k per year is what you learn and the other half is the people you meet.  Like a startup you spend countless hours, many all-nighters and even more weekends in close quarters with your classmates and you all (ok, many) become very close friends. Thanks to my business school experience I have 35+ of my closest friends and a place to stay pretty much anywhere in the world I go, as 50% of my class was international.

Well, at Trulia I felt like I got MBA every single year I was here.  Not only did we cram just as much learning into every year, but also we added 35+ new incredibly smart, passionate people each year that spent countless, days, nights and weekends together tirelessly building this company.  I look around at Trulia and I see 100 really good friends from all over the world. When I think about what I take away from my time here its something like 25% what I did, 25% the friends I made, 25% what I learned and the memories I made with those friends and 25% monetary. I say that to make that point that only a small fraction of the time I spent here was about a paycheck.

I am so excited for all of you that I leave behind.  As Trulia goes from 100 to 300 people in the next few years you too will learn and grow 10 times over!

So if there is a golden nugget I can leave you with it’s to take advantage of the opportunities you have here to get your MBA every year for the next 5++ years at Trulia.  Take a look around you everyday, because you have the privilege of working with an incredible assemble of smart, ambitious people that are going to change the world. We are a relatively young company in terms of average age, so for most of you the people you work with over the next few years at Trulia are going to shape the way you think and determine a lot of your future opportunities.  So spend as much time as you can getting to know as many of your fellow Trulians as possible.  And I don’t mean just the people you already work with everyday, but all those other people you don’t. Come in a little early in the morning and have coffee with them, go to lunch with them, have a beer in the kitchen at the end of the day with whomever is standing around.  You are a much larger part of each other’s future than you can possible imagine right now.

Finally, I hope you will always consider me a friend and resource and never hesitate to reach out to me for anything.   My business card might change, but I leave a big piece of my heart and soul at Trulia and will always bleed green.  Thank you all for 4-1/2 incredible years.

Your friend and biggest fan,

Sean