Day One of Disrupt NYC was packed with all-star speakers and Day Two was just as memorable. All of the photos and videos can be found here and here, but here is a quick breakdown of our favorite moments from Day Two.
The second day kicked off with a bang. With Charlie Rose scheduled to interview Paul Graham and Ashton Kutcher, people from all over were watching in anticipation, quickly waiting for the interviews to start. When Charlie Rose sat down with Paul Graham, the topic of conversation went towards what Graham looks for when picking the people who are most likely to succeed. What is the first thing Graham asks when he is approached by people with a great idea? “Tell me about your co-founders.” To Graham the idea isn’t the most important, the people behind the idea are.
Graham also talked about how you have to be naughty and devious if you want to succeed. “Startups often have to do slightly devious things,” explained Graham. “You can tell if people have a gleam in their eye. You don’t want people who would be obedient employees. We’re not looking for people who did what they were told in life.”
The whole chat between Charlie Rose and Paul Graham can be found below.
Absolutely.
Ah, good morning, we, it’s-it’s-it’s
very good for me to
be back after last
year and, and what we
want to do this morning is
talk to two people who
are both investors and they are both interested in other things.
Paul, as you know, I
am not, we couldn’t really hear
what Mike said so, so I’m just gonna add a couple of things here.
Number one, he was a
guy who went to Cornell and
got interested in programming and then
got a PhD at Harward.
Also had a kind of collateral
interest in Art, took some
courses at The Rhode Island School
of Design while he was there.
He had an interesting idea which
we’ll talk about as to, as
to whether, if you, the
difference between being a hacker
and a painter and how you would become one and not the other.
We’ll talk about that too.
What we want to get
out of this conversation, I think
most of all is to see
the world through his eyes and
what is he looking for and
what is he experiencingof looking at
so many projects, how has
it sharpened his vision and
his experience in terms of
identifying those people most likely to succeed?
You know, and what is the criteria,
and what’s the profile and those kinds of things?
But let me begin with the most
obvious question of all, what is YCombinator?
It ‘s a trick in the lambda calculus.
Just kidding.
It’s a company that
invests in a lot of start ups at once.
Yes.
And then.
What’s a lot?
This summer sixty-two.
so far.
So we fund sixty start ups at
a time, and for three
months they come to Silicon Valley if they don’t live there already.
We work really closely with them
and at the end we have an event called Demo Day.
Demo Day.
They all present your investment.
You have two of those a year?
Yeah.
All right.
But let me back up a little bit.
There’s a famous story about you making a speech at Harvard.
I guess the Harvard Business School.
No, actually it was to undergrads.
It was to undergrads.
Yeah.
Yeah.
And tell us what the results were and what it did – said to you.
Well.
This was ’95 or so.
Yeah, March ’95.
It was We would talk
about how to start a start up to the undergrads at Harvard.
And in the talk
I said if you
are trying to raise money, it is
better to raise money from someone
who made money themselves through a
start up because then they would be able to give you advise.
And I suddenly noticed they
were all looking at me expectantly and I thought oh my god!
I have an idea.
You have money.
I had this terrifying vision
that they would all send me their business plans.
So I said but not
me, right but then afterwards
I felt guilty.
So, I said, “Alright,
alright, I should finally do some angel investing.
So, we setup YCombinator.
Initially, we were just going to do normal angel investing.
Invest asynchronously.
And so why did you call it Y Combinator?
Well the domain name was not taken.
And it is a really
cool mathematical concept actually.
Which is?
Well, you really want me to explain?
Is there not a simplified version.
It’s a way to make a recursive
function even when functions can’t have names.
There you go.
I got it completely.
Yeah.
So when you look at
it when you started it verses today,
how has it changed?
It’s a lot bigger.
It’s a lot bigger.
It’s sort of like the difference between
seeing some like mom and
pop restaurant and seeing like
mom and Pop co, some kind
of gigantic machine or something like that.
It’s got the same
essential structure, but it’s just giant.
Is it easier to do a start-up today than it was when you started?
Yeah I think so.
Much easier?
There’s a lot more knowledge out
there, and it’s a lot easier to raise money.
Why is that?
Partly because more people want
to invest in start-ups, partly because
the procedure for
raising money is better understood,
like the two parties, the
protocol for the founders and
investors to talk to one
another, it’s smoother and more established.
There’s less misconnections.
It’s also cheaper, yeah.
It’s cheaper to do a start-up, yes it’s much cheaper.
It’s essentially-essentially free, right,
because it used to be that
what cost you money were, you
had to pay money for computers,
well everybody’s got a computer now,
for wasting their time now with video games.
A fast computer, now.
Yeah, and like you need
a powerful internet connection, but
everybody’s already got a big internet action for pirating movies.
So where does angel investing end
and venture capital begin?
A million dollars.
About a million dollars.
Yeah.
So now people
now want your, they want
your ou know,
they come to you and they say “I’ve got an idea”.
You seem to say that the
founder is more important than the idea?
When people come to me and
they say, “I’ve got an idea”,
I say, “Tell me about your co-founders.”
Is that right?
Oh yeah, yeah.
I don’t care about the idea!
I mean, I care a little bit.
If it’s-if it’s really great,
I might be excited if it’s
really terrible, that might be
a bad reflection on the guy,
but what I care about is the founders.
And the most important thing you
want to know from founders
is-is how they plan to make money?
No, I want to know what kind of people they are.
Oh.
Right, there are-there are
some people who just get
what they want in the world.
Yeah.
Isaac Stern, a great pianist and great violin player
once said to me
that he could always tell who the
prodigies were gonna to be
because they would walk in front
of him to do, just an exhibition,
and they would basically be
saying to him if they were
ten years old “Sit down
and listen to me, I have something to play”.
Yeah, well, I would not want a bit of that.
I would not want
to encourage that too much
in the people who come to my company here.
I mean were already sitting down and listening.
But-but you did
layout in Fortune magazine, in Forbes magazine, 5 things. Let’s go through those.
you remember what the word because I do not remember.
I do remember all of them determination.
You can spot that, if they
don’t have that.
thing about doing Y combinator
interviews, which are only ten
minutes long, we decided whether or not to fund people.
In ten minutes?
Yes, yes, so it’s
hard to tell if they are determined in ten minutes.
People often fool us.
I mean if they didn’t, every startup we funded would succeed.
Right?
And that’s certainly not the case.
So we can be fooled about determination.
You can usually tell how smart somebody is in ten minutes.
You know, you hit a few balls across and see how hard they come back.
What did they have to explain?
But people can put on
an act, about determination,
for ten minutes a lot of the time.
How about the next one was flexibility.
Yeah.
What does that mean?
Well, that we can test, actually.
Yeah.
Sort of mental flexibility.
So, people come in and they
say, “We want to
do such and such idea” and
then we’ll say, “Oh have you considered
the possibility of like rotating
at ninety degrees and doing that instead”.
And how they respond to that?
Right, some people will take
it up and say, “Yeah,
you know and we could also
do such and such, and such
and such” and other people will just
like, “Oh no, actually we wanted to do the other thing”.
And that shows inflexibility and they’re
lesslike fib, that is not good.
But, people are often nervous in
their interviews, so we have to,
the thing is and this is a lot to put in ten minutes.
The third thing is imagination.
Yeah, very similar kind
of conversation to the one about flexibility.
We try to say, “Have you tried this, have you tried that?”.
“What do you think about
such they are not
only be able to
grasp what we are saying but will take it further.
And, other people just do their best to answer the question.
When you say “we,” what do you mean?
Well, there are six YCombinator partners.
Yeah, so when you come
in to be interviewed a YCombinator,
there is going to be so many of this.
It is just like a court martial.
Rather intimidating.
Yeah, we do not mean it
to be intimidating, but the ten
minute format and the numerical
disparity tend to make it that way.
This is the one I did not really understand, naughtiness.
Naughtiness, well start-ups
often have to do with slightly dubious things.Right
.
So, like you
know, you can kind of tell if people have a gleam in their eye.
Yeah, right.
We don’t want the kind of people who would be obedient employees.
Yeah.
You want people who understand and
are willing to do, that
sort of, that kind of
stuff held together by duct tape.
You have to do to get things done.
That is almost an entrepreneurial quality …by definition.
You can’t, we’re not looking for
people who are sort of,
did what they were told, in life.
But team building is important.
Well …
They don’t, you know, it’s
not team building so much,
I mean, you just want founders
who are already friends, you want founders who have a relationship.
Which is the last one, friendship.
Yeah.
Was is?
There you go.
Yes indeed.
So let me just talk.
One of your big success stories is
Sam Altman, one of them.
Yeah.
Give us… who were
those that… tell us what
you saw, in those that
you have recently invested in, that make a…
difference to you, what was it about them?
Well Sam in particular, when
I met Sam he was 19 going on 40.
Right.
And I remember..
Going on forty.
Right, right.
It’s..
seems like, it’s weird, you
know, you don’t realize this
until you talk to these, You can kind of guess what somebody’s age is based on talking to them right.
Even though you couldn’t see them whether they are young or old.
Old people won’t take as much
shit but maybe they’re not
as mentally flexible either, right?
Sam, when I talked to
him he pushed back like he was forty.
I couldn’t treat him like a nineteen year old.
He was like “Screw you dude, I’m forty inside.
Never mind what I look like”.
He was in Stanford then or not?
Yeah, he was an undergrad.
He was a sophomore.
I tried to reject him actually.
I sent him an email saying look,
you know, what’s the rush stay in college?
You’re only a sophomore.
Just do this later and he
said you know, actually, I insulted him.
I said he was a freshman and
he sent me a reply back
saying I’m a sophomore and I’m
coming, you know, and he was really good.
I’m glad you did!
In all the list of
things you cited, friendship, determination,
flexibility, imagination and naughtiness,
intelligence is not there.
Yeah.
And so your suggesting that, what?
By not putting intelligence as one of the things your trying to look at.
Well, partly that, it ‘s somewhat taken for granted.
If you’re a programer you’re not
probably at least above average intelligence.
But also, it really isn’t as important.
When we first started, we thought that was going to be the key.
Everyone in the startup likes to
believe that’s what makes startup
succeed, But it isn’t.
There are plenty of smart people who get no where.
Each one is not a lot of money.
You mean each start up Angel investing yeah.
Yeah because we, our
goal is only to invest enough
money in them to cover their
expenses until demo day, when they can raise some more.
So they can live until demo day.
It’s just first year.
And What’s the relationship you develop?
Because the promise for
them is that
they get, a, imprimatur because
you’ve invested in them, they
also get a sense of opportunity
to meet people, there is
a connection, to get a part of a community.
It had better not be
just those two things though, because imprimaturs
live and die pretty quickly.
Brands.
Right.
Introducing people, you know.
So, what is it?
You help them understand the Silicon Valley culture.
I would like to believe we actually give them good advice.
About their business.
Yeah.
Yeah.
But tell me about the t-shirts that you have.
We have t-shirts that says
on the front, “Make something people want”.
So, what do you mean by that?
Well, because the the biggest
mistake that start-up founders make
is to be disengaged from their users, right?
Yeah.
The thing I tell people above
all, is go tell your users,
you know, go talk to your users.
Find out what your users want,
because the amount of value
you create is sort of
this rectangle where the number of users on one axis.
Yeah.
And how much you improve their lives on the other axis, right?
So ideally, you want to
be something like Google where it
improves a lot of people’s lives a lot, right?
But the area of
that rectangle is the value
you create and ultimately your
net-worth.
Yeah.
But all of them that
you’ve funded have that the drive
to make something that people wanted.
No, we thought all of
them that we funded, had that
drive after interviewing them for ten minutes.
So, what’s your percentage
of success?
You know, it’s hard to tell ya.
It takes years!
You used to be said like one in
every ten investments of a
venture capitalist will be hugely
successful, a few will
be moderately successful, and the
last five will fail.
You know our definitions of success are lower too.
A venture capitalist: if a
start-up gets acquired for 30
or 50 million dollars, that’s a failure to them.
It’s certainly not to us.
And not the founders either, if
they’re not very diluted, that’s
enough, definitely enough to make them rich.
Take off for us, where the
investments are, and why
you thought these were good
ideas, and what made a difference?
Who is in the portfolio?
Well, there’s are 313 companies.
Well, give me the best ten.
The best ten.
Oh my God.
Oh Drop Box.
Drop Box.
Drop Box is very popular, right.
Airbnb Right, Airbnb.
being Loopt, Heroku which
just got acquired, Scribd, Greplin,
Xobni, Justin.tv,
I don’t know if I can name ten or not.
O.k. but we can find it.
They all share these qualities of
the founder, number one.
The founders of those companies are all driven.
Yeah.
But do they share something else
about where we are
in terms of this
moment in the evolving
history of technology and the web?
A lot of them
were building something that they themselves wanted.
Right.
A product that they wanted or service they wanted.
Right, like Drew made Dropbox
first for himself and even
the founders of Airbnb, they were
their first users too, right.
Sam Altman was, built Loopt
for himself, the original incarnation of Loopt.
It’s so important to understand
your users that, if you
build something for which you
you are yourself the user, then of course you understand them.
You have like, the recipient for
the ideas and the creator of the ideas in one head.
How do you keep up?
Practice and software.
YCombinator includes a lot of software for keeping track of everything.
Yeah And today The
relationship you’ve maintained with
these investments is what?
It depends what they want.
Right?
Like Sam Hoffman I still talk
to regularly and reinvested in them 6 years ago.
And they come back when they
are successful and provide C
capital to be invested through you?
Sometimes, sometimes they come back and do YCombinator again.
Is that right?
Yeah!
For another deal?
Yeah!
This-this summer, we have nine alumni coming back.
Yeah.
When you at
the point I made earlier about.
Tell me this story, when you, somebody
once asked you, I think
it is on your website about questions
I might have asked or something like
that, which was, whether a
hacker could become a painter, or
a painter could become a hacker, remember that?
Yeah, vaguely, yeahBasically,
you said that and I
thought it was fascinating, is that
you have to choose something that’s
mysterious to you and if
you have to do it when you’re
really young, Oh, because you’re
too stupid to realize how hard it is.
Exactly right.
Do most people have that quality
when they come to you;
they are
too stupid to realize how hard
it is and all they want to do who has worked as harder as I can.
It’s not all of them.
Not all of them because they’re not all.
Yeah.
That’s one of the misconceptions about YCombinator,
the founders are all 22.
We funded-
part of the conventional wisdom was anything over 30.
I don’t know yet.
I don’t know.
A lot of our goal,
YCombinator are actually one of
our secrets is that
our goal is not only to
make money, it’s also to
get more data about what works.
Yeah.
Originally that was our entire goal when we first started.
The only reason we started funding
a bunch of start-ups at once
was to teach ourselves how to be angel investors.
It was a complete-
Yeah!
This new business model is like
funding a bunch of startups all
at the same time.
That was a complete accidental discovery.
Let me move to broader thing.
Do you worry about a tech bubble?
I definitely worry prices are high.
Yeah.
I’m always reluctant to use the word bubble.
Because I was there for the last bubble.
And, like, this is, things are
not crazy like they were then.
Yeah.
I warned people, like, prices are high.
Raise money now.
Things might not be so great.
That was a great tip.
Well tell us more about that.
You’re warning people what?
Raise money now.
Get the money now.
Yeah?
Because like, who knows?
Yeah.
Because it may not be there when the bubble bursts.
Tomorrow, the Chinese economy collapses and all the money goes away again.
I mean, things have these ups and down, and it’s an up now, no question.
Any investments you have in Chinese start-ups?
Well, there might be some.
I’m not sure, there might be some Chinese ones this summer.
Yeah.
I’m not sure.
Oh, they’re coming here now?
Yeah.
To Demo Day.
Yeah, I’m not sure.
I’m not absolutely sure.
I mean, we only, some of these
people this summer, I haven’t talked to since we interviewed them.
How many application do come to Demo Day?
Well, they don’t apply to Demo Day, they apply to YCombinator.
Indeed.
A bit over 2,000?
a 2,000?,
yeah The other
question I’m fascinated more, because
of all the things happening in social
media, and we’ll talk later
about that Where do you
see the opportunities in social media now?
Boy.
Where is the.
People always want to know,
what are the good startup idea is?
and what are they about?
You know, I get told
them every six months by the Founders.
So, I’ve learned not to try
and predict, Right?
Because every future sprint me in the face.
But they tell you one by one
based on how successful they are
Rather than having some big
idea about where the future is.
Yeah.
I don’t know, I’m
sorry, I never have good answers
for this, this kind of question.
When you think about
where YCombinator is going, yeah,
is it simply going to get
bigger so rather than investing a billion dollars.
be investing in five more years, five billion or?
But we don’t investing if you like a billion dollars.
But the total investment of the value of the companies you’ve invested in?
well, the bigger the better.
Yeah.
Right?
I mean we get bigger.
We don’t try to get bigger.
It’s just that the number of
good start-ups that apply keeps
going up and we have to grow to accommodate it.
It’s like this plant.
We sort of plant it by
accident really, and it
just like naturally grows, you know?
So, it’s people.
If the number of applications keep
going up, then we have to
keep growing to accommodate them.
You once wrote a piece, maybe,
forgotten where, said Microsoft
is dead, remember that?
Yeah.
I got in a
lot of trouble for that at time,
but boy that was spot on.
That’s exactly the kind of
things people are now saying as
a matter of course in new stories.
And you said this in
what, nineteen, when was it, two thousand or something?
Yeah.
Two thousand something!
Yeah, two thousand something.
Yeah.
So what do you think of the Skype purchase?
I don’t know what, I don’t know.
But what does it say?
It says Marc Andreesen and
Ben Horowitz are pretty smart guys.
I don’t know what they are planning to do with it.
You don’t?
No.
Nothing that’s come out
of Redmond has said anything to
you that made you say ah ha, I get it.
Well to be honest.
It’s not a Hail Mary for them it’s.
I don’t know what their doing.
I don’t know.
There like M;A guys have
a taste for big deals or
something, I mean, it’s
M;A guys have this perverse incentive.
It’s more prestigious as an
M;A guy to buy a
company for a lot than a little, right?
Really, they should be trying to buy things as cheaply as possible.
They’re buyers, right?
The should want the price to be low.
Back to the whole bubble
thing, when do you think Facebook will have an IPO?
I don’t know.
Isn’t it 2012 or omething like that?
I don’t know, you probably know as well as I do.
And what’s going to happen to Twitter?
I don’t know about that either.
Like Jack Dorsey is trying
to be the CEO both
Twitter and Square.
It’s been historically pretty
rare for someone to pull that off.
The only one who did anything like that was Steve Jobs.
Yeah.
But those Pixar and Apple
are much later stage companies.
Yeah.
So, it ‘s sort of an unprecedented situation.
It would be interesting to watch.
And Cisco?
Cisco?
I don’t know!
IBM.
I’m just taking.
Exactly IBM.
Who else is dead or something?
No, no, no.
But these are like these gigantic companies.
Well, yeah.
I know.
And you only think of small ones.
Yeah, I’m like down in the trenches with these little.
Once a company has 30, 40 employees, it seems like.
It’s too big for you.
An international conglomerate to me.
Yeah.
When do you cash out?
When the company, when the founders do.
Is that right?
When the founders.
Yeah!
When they sell you sell?
Yeah.
Well, we couldn’t sell ’til they do.
Right?
Well, of course.
Is angel investing growing faster than venture capital?
I think so, yes.
I think so.
I think venture capital as a business is actually shrinking.
There’s been a big.
Start early on it.
Big garbage collection of funds.
All the bad ones are dying.
Have you done anything about your interest in painting?
Not really, no.
In fact, I haven’t
really thought about it much lately.
It’s kind of a bummer.
It is two different parts of my head.
Does all the attention, the cover
of magazines, Forbes, hings like that.
Does that make it easier or more difficult?
Well, it probably makes
more people apply to YCombinator.
But that might make it more difficult
because it’s more
applications to read, and
if it’s an application we
only got cause we were
in some magazine, then it
is probably disproportionately unlikely to be one we’d accept.
But let’s assume you wanted more applications, you wanted to see more.
would you generate more ideas?
More applicants.
Oh, it’s totally, it would be totally easy.
I would encourage more single founders to apply.
If I started saying “we love single founders!”
instead of saying we discriminate against
and you’ll never get in unless you’re super good.
Yeah.
We’ll get ten thousand applications from single founders.
And it’s, so it’s the
so of all the applicants today, you’ll choose how many?
About three percent.
Three percent.
Yeah, It’s always been between two and a half to three and a half percent.
I think this current summer batch is spot on three percent.
And why do you think you’re good at this?
Well, the companies seem to do well.
Well, yeah.
No, but that test how well the companies do.
No no that’s the measurement, that’s
the measurement of why you do well.
Oh, oh you mean what makes us good
at it Like when
venture capitalists, venture capitalists are
often like MBAs, right?
So when they’re trying to tell
us someone’s a good founder, how do they judge?
But we just judge if they seem like us.
Is that right?
Yeah, we’re all.
It’s like, for us, it’s like
work all the time, meet a
lot of, you know, if they
have the same attitude of those qualities that we talked about.
We’re just trying to recognize our peers.
Yes.Right
?
It is so much easier.
You could probably tell if somebody was going to be a good interviewer.
Well, maybe, yes.
Yeah, so we just tell
if they seem to be good versions of us.
Well, then why aren’t there more people like you then?
You know, I think,
it did not used to be
cool to be an investor, right?
It used to be that investors
were like gallery owners, like in the founders more than artists.
Right?
And investors were just like
these guys who like ran
the infrastructure and were not cool.
But now angel investing is getting a little cooler.
How many, how many guys, men or
women, could come back
to you and say, I told
you I was going to be good, and you turned me down.
See, it does happen,
we keep track of them actually,
in fact when we send out
the emails, you know rejecting
people, we say tell us
if you succeed so we can fix our process.
Oh, then have you learned anything from that?
Oh,yes,yes,yes.
What?
Well, I mean it is always very specific.
But we look it, I
mean one of the advantages of having
so many competitors, is that
if we miss somebody, they will fund them.
so when one of our competitors
has a successful start-up,
we go back and look at
their application to YCombinator and
try to figure out why we didn’t accept them.
Right?
That’s a pretty smart rule, period.
Always be asking yourself, why
are we screwing up, and how am I getting better?
How do I get better?
So, one of the
biggest ones that we missed,
was, well I can’t
mention their name, because then I
would be saying rejected them which
would be sort of insulting to talk about.
I see.
If they were successful I don’t think they would worry.
They probably carry it as
a badge of pride, if in
fact they came to you, you turned them down and they went on to be successful.
Yeah but I feel like
its hole, anyways, we went
back and looked at their application
and we have a bunch of
us reading the applications, one of
our partners is Robert Morris, the
professor at MIT, and he’s
notorious for giving the
worst grades on the applications.
And we went back and looked
like Robert had given them
a C, which completely sunk them
in the ranking so deeply that
no one else has read the application…
giving, so now everyone
he gives a bad grade to, one of us checks as well.
Alright, I’m out of time here, two quick questions .
The total value of Y
Combinator companies is three billions, not one billion.
Oh yeah, yeah.
Definitely more than one.
And the total value of the
investment from you guys is
what, 350 million or so?
What, we’ve invested?
Nothing like it!
More like, five.
Five .
Are you listening?
The value that comes to is 3 billion you invested 5 billion and you generally.
For eighteen thousand times three hundred and thirty.
And you generally take about what
6 to 10 percent.
No, it’s around six or seven years.
Six or seven?
I’m stretching it by going to ten.
This has been great fun.
Thank you.
For me too.
( speaker name) thank you.
Thank you.
Staying?
I ‘m going to sit down with you for a second.
O.k.
Ah, good morning, we, it’s-it’s-it’s
very good for me to
be back after last
year and, and what we
want to do this morning is
talk to two people who
are both investors and they are both interested in other things.
Paul, as you know, I
am not, we couldn’t really hear
what Mike said so, so I’m just gonna add a couple of things here.
Number one, he was a
guy who went to Cornell and
got interested in programming and then
got a PhD at Harward.
Also had a kind of collateral
interest in Art, took some
courses at The Rhode Island School
of Design while he was there.
He had an interesting idea which
we’ll talk about as to, as
to whether, if you, the
difference between being a hacker
and a painter and how you would become one and not the other.
We’ll talk about that too.
What we want to get
out of this conversation, I think
most of all is to see
the world through his eyes and
what is he looking for and
what is he experiencingof looking at
so many projects, how has
it sharpened his vision and
his experience in terms of
identifying those people most likely to succeed?
You know, and what is the criteria,
and what’s the profile and those kinds of things?
But let me begin with the most
obvious question of all, what is YCombinator?
It ‘s a trick in the lambda calculus.
Just kidding.
It’s a company that
invests in a lot of start ups at once.
Yes.
And then.
What’s a lot?
This summer sixty-two.
so far.
So we fund sixty start ups at
a time, and for three
months they come to Silicon Valley if they don’t live there already.
We work really closely with them
and at the end we have an event called Demo Day.
Demo Day.
They all present your investment.
You have two of those a year?
Yeah.
All right.
But let me back up a little bit.
There’s a famous story about you making a speech at Harvard.
I guess the Harvard Business School.
No, actually it was to undergrads.
It was to undergrads.
Yeah.
Yeah.
And tell us what the results were and what it did – said to you.
Well.
This was ’95 or so.
Yeah, March ’95.
It was We would talk
about how to start a start up to the undergrads at Harvard.
And in the talk
I said if you
are trying to raise money, it is
better to raise money from someone
who made money themselves through a
start up because then they would be able to give you advise.
And I suddenly noticed they
were all looking at me expectantly and I thought oh my god!
I have an idea.
You have money.
I had this terrifying vision
that they would all send me their business plans.
So I said but not
me, right but then afterwards
I felt guilty.
So, I said, “Alright,
alright, I should finally do some angel investing.
So, we setup YCombinator.
Initially, we were just going to do normal angel investing.
Invest asynchronously.
And so why did you call it Y Combinator?
Well the domain name was not taken.
And it is a really
cool mathematical concept actually.
Which is?
Well, you really want me to explain?
Is there not a simplified version.
It’s a way to make a recursive
function even when functions can’t have names.
There you go.
I got it completely.
Yeah.
So when you look at
it when you started it verses today,
how has it changed?
It’s a lot bigger.
It’s a lot bigger.
It’s sort of like the difference between
seeing some like mom and
pop restaurant and seeing like
mom and Pop co, some kind
of gigantic machine or something like that.
It’s got the same
essential structure, but it’s just giant.
Is it easier to do a start-up today than it was when you started?
Yeah I think so.
Much easier?
There’s a lot more knowledge out
there, and it’s a lot easier to raise money.
Why is that?
Partly because more people want
to invest in start-ups, partly because
the procedure for
raising money is better understood,
like the two parties, the
protocol for the founders and
investors to talk to one
another, it’s smoother and more established.
There’s less misconnections.
It’s also cheaper, yeah.
It’s cheaper to do a start-up, yes it’s much cheaper.
It’s essentially-essentially free, right,
because it used to be that
what cost you money were, you
had to pay money for computers,
well everybody’s got a computer now,
for wasting their time now with video games.
A fast computer, now.
Yeah, and like you need
a powerful internet connection, but
everybody’s already got a big internet action for pirating movies.
So where does angel investing end
and venture capital begin?
A million dollars.
About a million dollars.
Yeah.
So now people
now want your, they want
your ou know,
they come to you and they say “I’ve got an idea”.
You seem to say that the
founder is more important than the idea?
When people come to me and
they say, “I’ve got an idea”,
I say, “Tell me about your co-founders.”
Is that right?
Oh yeah, yeah.
I don’t care about the idea!
I mean, I care a little bit.
If it’s-if it’s really great,
I might be excited if it’s
really terrible, that might be
a bad reflection on the guy,
but what I care about is the founders.
And the most important thing you
want to know from founders
is-is how they plan to make money?
No, I want to know what kind of people they are.
Oh.
Right, there are-there are
some people who just get
what they want in the world.
Yeah.
Isaac Stern, a great pianist and great violin player
once said to me
that he could always tell who the
prodigies were gonna to be
because they would walk in front
of him to do, just an exhibition,
and they would basically be
saying to him if they were
ten years old “Sit down
and listen to me, I have something to play”.
Yeah, well, I would not want a bit of that.
I would not want
to encourage that too much
in the people who come to my company here.
I mean were already sitting down and listening.
But-but you did
layout in Fortune magazine, in Forbes magazine, 5 things. Let’s go through those.
Well I hope
you remember what the word because I do not remember.
I do remember all of them determination.
You can spot that, if they
don’t have that.
Well I wish I could spot it. Actually the hardest
thing about doing Y combinator
interviews, which are only ten
minutes long, we decided whether or not to fund people.
In ten minutes?
Yes, yes, so it’s
hard to tell if they are determined in ten minutes.
People often fool us.
I mean if they didn’t, every startup we funded would succeed.
Right?
And that’s certainly not the case.
So we can be fooled about determination.
You can usually tell how smart somebody is in ten minutes.
You know, you hit a few balls across and see how hard they come back.
What did they have to explain?
But people can put on
an act, about determination,
for ten minutes a lot of the time.
How about the next one was flexibility.
Yeah.
What does that mean?
Well, that we can test, actually.
Yeah.
Sort of mental flexibility.
So, people come in and they
say, “We want to
do such and such idea” and
then we’ll say, “Oh have you considered
the possibility of like rotating
at ninety degrees and doing that instead”.
And how they respond to that?
Right, some people will take
it up and say, “Yeah,
you know and we could also
do such and such, and such
and such” and other people will just
like, “Oh no, actually we wanted to do the other thing”.
And that shows inflexibility and they’re
lesslike fib, that is not good.
But, people are often nervous in
their interviews, so we have to,
the thing is and this is a lot to put in ten minutes.
The third thing is imagination.
Yeah, very similar kind
of conversation to the one about flexibility.
We try to say, “Have you tried this, have you tried that?”.
“What do you think about
such they are not
only be able to
grasp what we are saying but will take it further.
And, other people just do their best to answer the question.
When you say “we,” what do you mean?
Well, there are six YCombinator partners.
Yeah, so when you come
in to be interviewed a YCombinator,
there is going to be so many of this.
It is just like a court martial.
Rather intimidating.
Yeah, we do not mean it
to be intimidating, but the ten
minute format and the numerical
disparity tend to make it that way.
This is the one I did not really understand, naughtiness.
Naughtiness, well start-ups
often have to do with slightly dubious things.Right
.
So, like you
know, you can kind of tell if people have a gleam in their eye.
Yeah, right.
We don’t want the kind of people who would be obedient employees.
Yeah.
You want people who understand and
are willing to do, that
sort of, that kind of
stuff held together by duct tape.
You have to do to get things done.
That is almost an entrepreneurial quality …by definition.
You can’t, we’re not looking for
people who are sort of,
did what they were told, in life.
But team building is important.
Well …
Or not?
They don’t, you know, it’s
not team building so much,
I mean, you just want founders
who are already friends, you want founders who have a relationship.
Which is the last one, friendship.
Yeah.
Was is?
There you go.
Yes indeed.
So let me just talk.
One of your big success stories is
Sam Altman, one of them.
Yeah.
Give us… who were
those that… tell us what
you saw, in those that
you have recently invested in, that make a…
difference to you, what was it about them?
Well Sam in particular, when
I met Sam he was 19 going on 40.
Right.
And I remember..
Going on forty.
Right, right.
It’s..
seems like, it’s weird, you
know, you don’t realize this
until you talk to these, You can kind of guess what somebody’s age is based on talking to them right.
Even though you couldn’t see them whether they are young or old.
Old people won’t take as much
shit but maybe they’re not
as mentally flexible either, right?
Sam, when I talked to
him he pushed back like he was forty.
I couldn’t treat him like a nineteen year old.
He was like “Screw you dude, I’m forty inside.
Never mind what I look like”.
He was in Stanford then or not?
Yeah, he was an undergrad.
He was a sophomore.
I tried to reject him actually.
I sent him an email saying look,
you know, what’s the rush stay in college?
You’re only a sophomore.
Just do this later and he
said you know, actually, I insulted him.
I said he was a freshman and
he sent me a reply back
saying I’m a sophomore and I’m
coming, you know, and he was really good.
I’m glad you did!
In all the list of
things you cited, friendship, determination,
flexibility, imagination and naughtiness,
intelligence is not there.
Yeah.
And so your suggesting that, what?
By not putting intelligence as one of the things your trying to look at.
Well, partly that, it ‘s somewhat taken for granted.
If you’re a programer you’re not
probably at least above average intelligence.
But also, it really isn’t as important.
When we first started, we thought that was going to be the key.
Everyone in the startup likes to
believe that’s what makes startup
succeed, But it isn’t.
There are plenty of smart people who get no where.
Each one is not a lot of money.
You mean each start up Angel investing yeah.
Yeah because we, our
goal is only to invest enough
money in them to cover their
expenses until demo day, when they can raise some more.
So they can live until demo day.
It’s just first year.
And What’s the relationship you develop?
Because the promise for
them is that
they get, a, imprimatur because
you’ve invested in them, they
also get a sense of opportunity
to meet people, there is
a connection, to get a part of a community.
It had better not be
just those two things though, because imprimaturs
live and die pretty quickly.
Brands.
Right.
Introducing people, you know.
So, what is it?
You help them understand the Silicon Valley culture.
I would like to believe we actually give them good advice.
About their business.
Yeah.
Yeah.
But tell me about the t-shirts that you have.
We have t-shirts that says
on the front, “Make something people want”.
So, what do you mean by that?
Well, because the the biggest
mistake that start-up founders make
is to be disengaged from their users, right?
Yeah.
The thing I tell people above
all, is go tell your users,
you know, go talk to your users.
Find out what your users want,
because the amount of value
you create is sort of
this rectangle where the number of users on one axis.
Yeah.
And how much you improve their lives on the other axis, right?
So ideally, you want to
be something like Google where it
improves a lot of people’s lives a lot, right?
But the area of
that rectangle is the value
you create and ultimately your
net-worth.
Yeah.
But all of them that
you’ve funded have that the drive
to make something that people wanted.
No, we thought all of
them that we funded, had that
drive after interviewing them for ten minutes.
So, what’s your percentage
of success?
You know, it’s hard to tell ya.
It takes years!
You used to be said like one in
every ten investments of a
venture capitalist will be hugely
successful, a few will
be moderately successful, and the
last five will fail.
You know our definitions of success are lower too.
A venture capitalist: if a
start-up gets acquired for 30
or 50 million dollars, that’s a failure to them.
It’s certainly not to us.
And not the founders either, if
they’re not very diluted, that’s
enough, definitely enough to make them rich.
Take off for us, where the
investments are, and why
you thought these were good
ideas, and what made a difference?
Who is in the portfolio?
Well, there’s are 313 companies.
Well, give me the best ten.
The best ten.
Oh my God.
Oh Drop Box.
Drop Box.
Drop Box is very popular, right.
Airbnb Right, Airbnb.
being Loopt, Heroku which
just got acquired, Scribd, Greplin,
Xobni, Justin.tv,
I don’t know if I can name ten or not.
O.k. but we can find it.
They all share these qualities of
the founder, number one.
The founders of those companies are all driven.
Yeah.
But do they share something else
about where we are
in terms of this
moment in the evolving
history of technology and the web?
A lot of them
were building something that they themselves wanted.
Right.
A product that they wanted or service they wanted.
Right, like Drew made Dropbox
first for himself and even
the founders of Airbnb, they were
their first users too, right.
Sam Altman was, built Loopt
for himself, the original incarnation of Loopt.
It’s so important to understand
your users that, if you
build something for which you
you are yourself the user, then of course you understand them.
You have like, the recipient for
the ideas and the creator of the ideas in one head.
How do you keep up?
Practice and software.
YCombinator includes a lot of software for keeping track of everything.
Yeah And today The
relationship you’ve maintained with
these investments is what?
It depends what they want.
Right?
Like Sam Hoffman I still talk
to regularly and reinvested in them 6 years ago.
And they come back when they
are successful and provide C
capital to be invested through you?
Sometimes, sometimes they come back and do YCombinator again.
Is that right?
Yeah!
For another deal?
Yeah!
This-this summer, we have nine alumni coming back.
Yeah.
When you at
the point I made earlier about.
Tell me this story, when you, somebody
once asked you, I think
it is on your website about questions
I might have asked or something like
that, which was, whether a
hacker could become a painter, or
a painter could become a hacker, remember that?
Yeah, vaguely, yeahBasically,
you said that and I
thought it was fascinating, is that
you have to choose something that’s
mysterious to you and if
you have to do it when you’re
really young, Oh, because you’re
too stupid to realize how hard it is.
Exactly right.
Do most people have that quality
when they come to you;
they are
too stupid to realize how hard
it is and all they want to do who has worked as harder as I can.
It’s not all of them.
Not all of them because they’re not all.
Yeah.
That’s one of the misconceptions about YCombinator,
the founders are all 22.
We funded-
Because
part of the conventional wisdom was anything over 30.
I don’t know yet.
I don’t know.
A lot of our goal,
YCombinator are actually one of
our secrets is that
our goal is not only to
make money, it’s also to
get more data about what works.
Yeah.
Originally that was our entire goal when we first started.
The only reason we started funding
a bunch of start-ups at once
was to teach ourselves how to be angel investors.
It was a complete-
So we’ll learn from those you’ve invested in.
Yeah!
This new business model is like
funding a bunch of startups all
at the same time.
That was a complete accidental discovery.
Let me move to broader thing.
Do you worry about a tech bubble?
I definitely worry prices are high.
Yeah.
I’m always reluctant to use the word bubble.
Because I was there for the last bubble.
And, like, this is, things are
not crazy like they were then.
Yeah.
I warned people, like, prices are high.
Raise money now.
Things might not be so great.
That was a great tip.
Well tell us more about that.
You’re warning people what?
Raise money now.
Get the money now.
Yeah?
Because like, who knows?
Yeah.
Because it may not be there when the bubble bursts.
Tomorrow, the Chinese economy collapses and all the money goes away again.
I mean, things have these ups and down, and it’s an up now, no question.
Any investments you have in Chinese start-ups?
Well, there might be some.
I’m not sure, there might be some Chinese ones this summer.
Yeah.
I’m not sure.
Oh, they’re coming here now?
Yeah.
To Demo Day.
Yeah, I’m not sure.
I’m not absolutely sure.
I mean, we only, some of these
people this summer, I haven’t talked to since we interviewed them.
How many application do come to Demo Day?
Well, they don’t apply to Demo Day, they apply to YCombinator.
Indeed.
A bit over 2,000?
a 2,000?,
yeah The other
question I’m fascinated more, because
of all the things happening in social
media, and we’ll talk later
about that Where do you
see the opportunities in social media now?
Boy.
Where is the.
People always want to know,
what are the good startup idea is?
and what are they about?
You know, I get told
them every six months by the Founders.
So, I’ve learned not to try
and predict, Right?
Because every future sprint me in the face.
But they tell you one by one
based on how successful they are
Rather than having some big
idea about where the future is.
Yeah.
I don’t know, I’m
sorry, I never have good answers
for this, this kind of question.
When you think about
where YCombinator is going, yeah,
is it simply going to get
bigger so rather than investing a billion dollars.
be investing in five more years, five billion or?
But we don’t investing if you like a billion dollars.
But the total investment of the value of the companies you’ve invested in?
well, the bigger the better.
Yeah.
Right?
I mean we get bigger.
We don’t try to get bigger.
It’s just that the number of
good start-ups that apply keeps
going up and we have to grow to accommodate it.
It’s like this plant.
We sort of plant it by
accident really, and it
just like naturally grows, you know?
So, it’s people.
If the number of applications keep
going up, then we have to
keep growing to accommodate them.
You once wrote a piece, maybe,
forgotten where, said Microsoft
is dead, remember that?
Yeah.
I got in a
lot of trouble for that at time,
but boy that was spot on.
That’s exactly the kind of
things people are now saying as
a matter of course in new stories.
And you said this in
what, nineteen, when was it, two thousand or something?
Yeah.
Two thousand something!
Yeah, two thousand something.
Yeah.
So what do you think of the Skype purchase?
I don’t know what, I don’t know.
But what does it say?
It says Marc Andreesen and
Ben Horowitz are pretty smart guys.
I don’t know what they are planning to do with it.
You don’t?
No.
Nothing that’s come out
of Redmond has said anything to
you that made you say ah ha, I get it.
Well to be honest.
It’s not a Hail Mary for them it’s.
I don’t know what their doing.
I don’t know.
There like M;A guys have
a taste for big deals or
something, I mean, it’s
M;A guys have this perverse incentive.
It’s more prestigious as an
M;A guy to buy a
company for a lot than a little, right?
Really, they should be trying to buy things as cheaply as possible.
They’re buyers, right?
The should want the price to be low.
Back to the whole bubble
thing, when do you think Facebook will have an IPO?
I don’t know.
Isn’t it 2012 or omething like that?
I don’t know, you probably know as well as I do.
And what’s going to happen to Twitter?
I don’t know about that either.
Like Jack Dorsey is trying
to be the CEO both
Twitter and Square.
It’s been historically pretty
rare for someone to pull that off.
The only one who did anything like that was Steve Jobs.
Yeah.
But those Pixar and Apple
are much later stage companies.
Yeah.
So, it ‘s sort of an unprecedented situation.
It would be interesting to watch.
And Cisco?
Cisco?
I don’t know!
IBM.
I’m just taking.
Exactly IBM.
Who else is dead or something?
No, no, no.
But these are like these gigantic companies.
Well, yeah.
I know.
And you only think of small ones.
Yeah, I’m like down in the trenches with these little.
Once a company has 30, 40 employees, it seems like.
It’s too big for you.
An international conglomerate to me.
Yeah.
When do you cash out?
When the company, when the founders do.
Is that right?
When the founders.
Yeah!
When they sell you sell?
Yeah.
Well, we couldn’t sell ’til they do.
Right?
Well, of course.
Is angel investing growing faster than venture capital?
I think so, yes.
I think so.
I think venture capital as a business is actually shrinking.
There’s been a big.
Start early on it.
Big garbage collection of funds.
All the bad ones are dying.
Have you done anything about your interest in painting?
Not really, no.
In fact, I haven’t
really thought about it much lately.
It’s kind of a bummer.
It is two different parts of my head.
Does all the attention, the cover
of magazines, Forbes, hings like that.
Does that make it easier or more difficult?
Well, it probably makes
more people apply to YCombinator.
But that might make it more difficult
because it’s more
applications to read, and
if it’s an application we
only got cause we were
in some magazine, then it
is probably disproportionately unlikely to be one we’d accept.
But let’s assume you wanted more applications, you wanted to see more.
would you generate more ideas?
More applicants.
Oh, it’s totally, it would be totally easy.
I would encourage more single founders to apply.
If I started saying “we love single founders!”
instead of saying we discriminate against
and you’ll never get in unless you’re super good.
Yeah.
We’ll get ten thousand applications from single founders.
And it’s, so it’s the
so of all the applicants today, you’ll choose how many?
About three percent.
Three percent.
Yeah, It’s always been between two and a half to three and a half percent.
I think this current summer batch is spot on three percent.
And why do you think you’re good at this?
Well, the companies seem to do well.
Well, yeah.
No, but that test how well the companies do.
No no that’s the measurement, that’s
the measurement of why you do well.
Oh, oh you mean what makes us good
at it Like when
venture capitalists, venture capitalists are
often like MBAs, right?
So when they’re trying to tell
us someone’s a good founder, how do they judge?
But we just judge if they seem like us.
Is that right?
Yeah, we’re all.
It’s like, for us, it’s like
work all the time, meet a
lot of, you know, if they
have the same attitude of those qualities that we talked about.
We’re just trying to recognize our peers.
Yes.Right
?
It is so much easier.
You could probably tell if somebody was going to be a good interviewer.
Well, maybe, yes.
Yeah, so we just tell
if they seem to be good versions of us.
Well, then why aren’t there more people like you then?
You know, I think,
it did not used to be
cool to be an investor, right?
It used to be that investors
were like gallery owners, like in the founders more than artists.
Right?
And investors were just like
these guys who like ran
the infrastructure and were not cool.
But now angel investing is getting a little cooler.
How many, how many guys, men or
women, could come back
to you and say, I told
you I was going to be good, and you turned me down.
See, it does happen,
we keep track of them actually,
in fact when we send out
the emails, you know rejecting
people, we say tell us
if you succeed so we can fix our process.
Oh, then have you learned anything from that?
Oh,yes,yes,yes.
What?
Well, I mean it is always very specific.
But we look it, I
mean one of the advantages of having
so many competitors, is that
if we miss somebody, they will fund them.
so when one of our competitors
has a successful start-up,
we go back and look at
their application to YCombinator and
try to figure out why we didn’t accept them.
Right?
That’s a pretty smart rule, period.
Always be asking yourself, why
are we screwing up, and how am I getting better?
How do I get better?
So, one of the
biggest ones that we missed,
was, well I can’t
mention their name, because then I
would be saying rejected them which
would be sort of insulting to talk about.
I see.
If they were successful I don’t think they would worry.
They probably carry it as
a badge of pride, if in
fact they came to you, you turned them down and they went on to be successful.
Yeah but I feel like
its hole, anyways, we went
back and looked at their application
and we have a bunch of
us reading the applications, one of
our partners is Robert Morris, the
professor at MIT, and he’s
notorious for giving the
worst grades on the applications.
And we went back and looked
like Robert had given them
a C, which completely sunk them
in the ranking so deeply that
no one else has read the application…
giving, so now everyone
he gives a bad grade to, one of us checks as well.
Alright, I’m out of time here, two quick questions .
The total value of Y
Combinator companies is three billions, not one billion.
Oh yeah, yeah.
Definitely more than one.
And the total value of the
investment from you guys is
what, 350 million or so?
What, we’ve invested?
Nothing like it!
More like, five.
Five .
Are you listening?
The value that comes to is 3 billion you invested 5 billion and you generally.
For eighteen thousand times three hundred and thirty.
And you generally take about what
6 to 10 percent.
No, it’s around six or seven years.
Six or seven?
I’m stretching it by going to ten.
This has been great fun.
Thank you.
For me too.
( speaker name) thank you.
Thank you.
Staying?
I ‘m going to sit down with you for a second.
O.k.
Another fun part about Rose and Graham’s discussion were Graham’s sandals and socks. We loved them and so did everyone else on Twitter. Check out the picture of them we sneakily captured below.
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Michelle Hopping
@michellehoppingMichelle Hopping
Loving Paul Graham's @paulg socks with sandals #tcdisrupt
When Erick Schonfeld sat down with Moat’s Michael Walrath, Facebook’s Carolyn Everson, Medialets’ Eric Litman and RadiumOne’s Gurbaksh Chahal, Everson took the stage and revealed some keys facts and interesting information about where advertising on Facebook is heading. Everson mentioned there are currently 50 million likes per day for pages, which is out of a billion or more likes per day across the web. She also said Facebook was only one percent done on their ad products, obviously hinting that there are many more big things to come.
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Heather Cooper
@HthrCprHeather Cooper
Make sure to watch the whole interview below.
Okay.
We’re gonna do a little stage resetting
and if you
guys just wait right here they’ve
got to reset the stage and
move the table.
So, this next panel is
gonna be about disrupting advertising,
specifically, online advertising.
And we have a great panel
which I’ll introduce as they’re setting
up the stage here and you
guys can, I guess,
just stay there until the chairs are here.
But Carolyn Everson, who is
the head of, chief
of advertising for Facebook, who
has just been there for 8 weeks right?
New, brand new to the job.
Mike Walrath, who
is the founder of Right
Media, which was sold to
Yahoo and now is
an investor and has
various projects that he will tell us about.
Eric Litman CEO of Medialetswhich
is a leading mobile advertising
company and Gurbaksh Chahal,
the CEO of RadiumOne,
and also former founder
of Blue Lithium, which he
sold to Yahoo as well.
So, thank you very much for being with us.
We have put this panel together because
it seems that other than
search advertising and traditional
display advertising, the sort
of two main modes of
advertising online, and …those
two extremes and not… Sure,
there’s lots of behavioral targeting and
a lot of sort of data driven
stuff on the back end, but from,
you know, a user’s
perspective, it doesn’t seem like a lot has changed in advertising.
Is the online advertising that
we have right now sufficient, or is
there something broken about it?
I’m looking at you Mike.
Yes broken, but it’s
not that the advertising is broken,
it’s the way that we’re dealing with the advertising that’s broken.
So I think we talk
about it in terms of search and
display, but there’s really infinite different
flavors and you start to
think about social and mobile and how we deliver it.
But, and you know that
this is how I feel, the way
that we are delivering results to
marketers is fundamentally broken, and
we’re relying on the usage
of the medium in general
to drive up spending
and that’s not going to happen.
I got death threats for saying
this on other stories, but there are two things we say that are bullshit.
One is that just usage
alone is going to drive brand spending online.
And then when we get
over the fact that that’s not
actually not going to happen, then
we say, well sight, sound and motion; we need sight sound and motion.
Also bullshit.
Users aren’t going to put up
with if Carolyn sticks big
sight, sound and motion in the
middle of their facebook feed,
they’re going to have a freak out.
So, it’s not that the ads
are broken, it’s the way
that we talked about them and the
way that we measure them and the way that we provide value to marketers.
It’s fundamentally broken.
When you talk about usage,
right, that’s the whole argument
that percentage of time
spent is going up, but
percentage of spend isn’t keeping up to that.
But people love that.
You know, Mary Meeker loves that
slide and she is like ‘well,
it is inevitable that one thing is going to follow the other.’
But it’s not necessarily the case.
Not necessarily.
No.
I mean I know I am not supposed to agree.
We are supposed to have a big
debate on the panel
to make it interesting, but I think it is an important point.
You know, Mary Meeker
will always talk about the fifty
billion dollar gap that should
move from TV into digital.
The truth is, for ten years every digital
company has been trying to say
you should move money from TV
to digital because people are spending more time online.
And then they wonder, ‘Well why hasn’t that happened?’
Last week’s Upfront New York
was probably going to be more
successful than the last several years.
So, TV is strong and
everyone in the digital industry
is saying ‘well, how could that possibly be?’
And I think the reason
is a few things: number one,
in order to move money between
any medium, you have to
get the brand managers, the creative
community, really comfortable with
not only next track which,
obviously, was brought up, but also what they can do creatively.
And, you know, for 10 years
we’ve given them boxes, and, you
know, standard IAB display ad
units, and even with play
sound and motion on several
places, they do not feel
comfortable yet, enough with this
medium to fully bring a brand to life.
You know, our point of view
is that you can actually
bring the advertising to life digitally,
but not in the way of
blasting impressions which is happening all over the web.
It is actually around what we
call word of mouth marketing and scale.
We are having friend and friend making a peer to peer recommendation.
We think there is a lot
of power in that, but not
in the current plan which is
an ever endless display
impression tool that advertisers
can get access to.
So is it the case that
in order for online to grow,
TV has to shrink or print has to shrink?
Is it necessarily the case
that you have got
to take from these huge
budgets or could it
be that, you know, everything
can grow because it does seem
imprint that that is
the case. That people take some of the print budgets and moving
it online but I think
in TV, that is a totally different scenario.
I think it ends up being
both and I think, if you
look at, look, we’ve been
doing digital advertising since, what,
1996 was the first of the banner ads?
We started doing television advertising in
the middle of the twentieth century
and over that time span we
got to a multi-billion industry in
just a little bit over 15 years.
Now, we’re at 70 billion dollars
plus in online spend
so to think that dollars are not
flowing in or it is
not a real industry, I think that is an argument from 1998.
I do think that
we are seeing an erosion of spend
in other media, right, particularly in print.
Print has seen the biggest hit
so far, and, and particularly
if you look at some of the
early indicators in new media like
tablets, that are just
eviscerating the print industry right
now, at least in terms
of mind share spent by the buyers.
There is, there are dollars available to come from traditional media.
There are dollars that are
going to be net new in the space.
The pace of dollars
coming from traditional media outpace
the growth of industry that generates net new dollars.
Right so lets talk about two things..I
see, sort of social
and mobile new sort
of, forms of advertising coalescing around those and overlapping.
Let’s talk about social first.
So, there’s a lot
of, you know, social signals out there.
To what extent can advertisers use
those, to target ads
in a, in a ‘non creepy’ way.
I guess to elaborate a
little bit about what we talked about
here before, when I
spoke to Arrington last week, you
know I told them
that the reason I started Radium
One as my third ad
network is when Tulip
was acquired by Yahoo in
2007, there were probably about
three ad networks that did
100 million dollars in revenue per year.
Fast forward four years later there’s 10 or more.
So when you look
at the amount of dollars that
have gone into ad networks and
continues to flow tells you
the money’s there, but fundamentally
the thing that’s changed is nothing’s changed.
Everybody, from a targeting perspective,
is doing the same thing they did before, which is Behavioral Targeting.
If you use art of auto
flash basic forms of retargeting
and the biggest thing
has changed fundementally as an
industry is that we have
all these social activities going on across the internet.
Everything has become social so
if you can actually use social
data and the way
reading one is good as
that; if you share something with
someone across the internet, we
actually create a social graph of
you across the web, and will
start to show other people
the same type of ads that you’ve actually responded
to. So it’s almost an implicit
graph of what you
like and potentially what your friends would like.
Sorry, may cause controversy but this
one’s easy to me because this
idea that everything’s changed, nothing’s changed.
Nothing has changed.
This is incrementalism.
The, you know, in 2005
it was remarketing use through
conversions, and now all
about social, and it doesn’t
mean that these things aren’t valuable, but we’re having the wrong conversation.
We’re talking about the new,
better, whizbang way to
target an ad and that’s fucking great.
We’ve been having that conversation for 15
years and we’ve managed to do
is to back ourselves into a
corner where the only thing we
do when we walk into marketers
is tell them about How we
can make targeting better, we can be incrementally better?
I can give you ten percent lift, twenty percent lift, fifty percent lift.
It’s the wrong conversation, and until
we change the conversation, we are
going to have, we are going to
be basically battling over the
table scraps that fall off
traditional media’s table, which, 70
billion…. you know pick your number.
It’s still tiny compared to
what’s out there, and we need to talk..
What is the right conversation?
The right conversation is talking to
marketers in terms of ways
of measuring media that they actually understand.
So I feel like
I’m channeling Wenda Millard here, who
is probably the biggest champion
in the universe of this conversation and
she’s been trying to have this conversation for fifteen years.
But until we can
talk about things like, so
maybe social targeting is the
next best big thing, until
you can walk into Procter ;
Gamble and show them purchase
intent and brand recall,
and you know, and traditional brand matrix
and how they tie back to
what we are doing with advertising,
then the conversation is pointless.
It’s meaningless.
You’re shifting something from bucket
A to bucket B to bucket
C. And yeah, you can build a hundred million dollar business.
Big fucking deal, like, let’s build
much bigger businesses on
the backs of, much more money
flowing because we’re finally talking
about marketing in ways that
real brand marketers understand.
That’s where the big money
is.
Like, last year was the biggest year for display advertising.
You added more in growth
and searched it for the first time.
And what they shows is
that display advertising works, and
people want to spend more
money And people are spending
double digit percentages in growth in display advertising.
So the conversation can be, you
got a multibillion dollar industry right now.
You could make that better and if
you can make that into a few
100 million dollars and grow
rapidly and create the best
ad network that evolved around, that
is the mission that Google is
doing that’s, at least rumors
of what Facebook is also trying
to do, so I think that’s where the market’s obviously headed.
Do you think that’s what Facebook is trying to
do?
No. I think we’re trying
to work with everything
from the top brands, which absolutely care about a few things.
Number one, they care about the
the insights you gather from the social graphs.
So, when we go
in, it’s not necessarily about a
targeting conversation in the beginning,
It’s really about, what are
moms doing on Facebook, on Friday night.
What are young people doing?
And really get into an understanding
of the audience which the social graph can give you.
Start there.
Then you progressed to a branding
conversation which eventually ties
into how they think about
budgeting, Their media mixed modeling and all those tools.
And then it to brand list
and are products moving off the shelves?
Right, that’s the conversation that we’re trying to
do. And we’re reinventing that conversation
because traditional marketers have used
TV, and print, and other
mediums that they’ve been comfortable
with, for decades, and now
we’re actually saying, all the
things that everybody wanted, I would
argue two million years ago, where it was word-of-mouth.
I would tell somebody in a
village about Something and word
would spread, now we’ve got
something called the internet which
allows us to do that
globally, at scale, real-time
and have friends recommendations and,
that’s the holy grail for branding, we think.
Let’s talk a little bit about
the ad unit on Facebook or ad units.
Because I don’t think everyone is really aware
of maybe what you’re been doing.
And tell me is this an experiment or is this full blown?
What I think is the most
interesting ad unit on Facebook
is somebody decides to like
a brand or, basically
spread the message of a
brand voluntarily, and it appears
in their news feed, and to
all their friends, as just another message, right
? It doesn’t even say “sponsored message” or anything, right?
Well, there’s a couple things.
So, Mark, you know, our
founder, Mark Zuckerberg, he really
sets the bar as high as possible,
and he believes we’re, like, one
percent there of where we need
to be and he thinks advertising
has to be as useful and
as compelling as me
sharing a photo of my
kids or me giving a status update.
And until we get there, he’s not satisfied.
So what your referring to is
our new sort of ad product
which launched a couple of months
ago and it’s called Sponsored Stories,
and the notion there is at
first we wanted to build up the social graph.
Put individuals on, let them
tell you about their family, their
job, their likes, etc., and
we found that fifty
million a day like a brand.
So there are fifty million likes
per day happening on Facebook.
And the truth is, people
identify themselves by the
brand, by the car
you drive, the shoes you
wear, the phone you carry,
and brands are as important
to people than, as some of the other things that we’ve got.
So what we ‘ve done with Sponsored Stories
is tried to say if I
like a brand or I
like something that I’ve read about
Coca-Cola or an offer
that Starbucks has made, and
you are my friend, it can go into your news feed.
And I can supplement that
with a small little display ad that we’re known for on the right.
And that is getting unbelievable traction
. Nielson is showing
that we have a 68
percent recall that people actually
saw the ad because my name
is associated with it as
your friend, you’re twice
as likely to remember the ad
and 4 times as likely to actually do something.
But what percentage of ads on Facebook are the story ads?
Small.
We just launched.
We just launched two months ago
and I would say the most progressive
brands are thinking about that
because sort of what happened
with Facebook evolution of advertising
is, you know, 18 months ago,
the rage was “How many fans can I get?”
And there was a race, and there’s
lots of third party ad
APIs that are helping brands get fans, and that’s great.
but once you have the fans, then what do you do with them?
Right?
You’ve got to engage them, you’ve
gotta give them offers, and compelling
content, so that they actually
comment on it and it gets put into the news feed.
Aren’t you going to get rid of the ads on the side.
The little display adds that nobody looks
at?
more people look at them than
you think, number one, because they are very targeted.
f you go to
my Facebook page they know
exactly the sites I’m shopping on and they’re serving.
They work, I sold a bike through those ads.
You did sell a bike.
Thank you, thank you.
Our end product will continue to evolve.
As I said we’re one percent.
We think were one percent done.
Ok lets talk a little about
mobile right so I
thinkwe starting to
see ads targeted socially, based
on, you know, the pattern
that you share things with, whether
those are ads or stories or whatever, right?
So that’s a different way to spread
it, but with mobile
you have location, right?
And location has always been
a great way to advertise to people.
If you know somebody’s zip code, you
know, like, you know, twenty
percent, or, you know, like,
all the demographics, basically, and
you know what to target to them.
To what extent does it
help you to know exactly where
someone is, you know, at that time?
In what classes of advertising is that good for?
Does that help brands or does that really help more local merchants?
So this cliched argument
about mobile advertising, the story
about walking down the street
and getting hit with an ad there’s a Starbucks nearby.
I don’t know how many people
live here in New York, but
there’s a Starbucks on almost every fucking corner in this city.
I don’t need an ad to
tell me I’m walking in front
of a Starbucks, and I would
probably throw my phone by
the 5th block because I’ve just
been bombarded by the imperfect
location signals in the city
and every single one of those
stores constantly hitting me with data.
That’s not the model for local advertising.
if your AT&T service works.
No comment.
The model for local advertising is
really much more around either
defining where people are
in hyper specific locations so
you are within a store,
and this is actually something that’s being
deployed in nominal trials now,
but you in the store you are
walking down an aisle you want
to understand the difference between
products and you’re using some
sort of tool to compare those products,
you get a message from a
brand marketer who’s paid the equivalent of a slotting fee.
So, I don’t know if anyone,
how many people here know this,
but when you walk into
a Wal-Mart, you see a product
at eye level, the brand has
paid additional dollars for that product to be at eye level.
You’re gonna see the same sort of
thing in product comparison tools, and price matching tools.
That’s one model.
The other is, for advertisers
that want to drive deals, they
want to drive very specific offers
within a broader geographic region,
we are seeing some really interesting things
happen with Groupon, with
Gilt, with Living Social and a whole bunch of folks in that category.
But location is only one of
the interesting things about mobile, the
other is, so this is
my phone, this is actually
a conversation that Eric and I
had last night, and anyone in
here, after I leave
the panel, is more than welcome to borrow this phone and make a phone call.
But if you walk to far outside of my sight.
I’m gonna start to twitch
a little and you are, you
spend too much time away; I’m
probably gonna come looking for you
because this is my device and
there’s no other medium that we
consume that feels that personal to an individual.
So you have from a
marketer’s perspective something where you
know that there’s a one
to one mapping between a consumer and a device.
You have, built into the
platform, the ability to do
commerce, the ability to manage
identity, the ability to
do security in really smart ways.
So when we talk
about leading indicators, so online
we’ve seen a lot of money
pour into search and DR,
that’s a leading indicator for brand.
Where its moving in mobile is
we’ve seen a bunch of the
search dollars come in, relatively speaking.
We’re starting to see leading indicators of brand.
But where it evolves to a
point where we get to
scale is when brand marketers
don’t have to distinguish between the two.
They don’t have to think, you
know what, I want to go
buy this ad on a
cost per click basis because that
feels right to me, or
I want to buy it on a CPM basis because it feels right to
me. They can accomplish equivalent goals.
They can say, “I wanna drive, I wanna drive awareness.
I wanna drive purchase intent.”
For me, for mobile, there’s two
things, one is, on a iPad on a tablet.
I think you can basically recreate
the best print ad experience.
It can be like this lush like
what you do media like The
Daily, are you still doing
The Daily, and other publishing, right?
So, you could basically recreate this great
advertising experience on a
tablet, but then for a
mobile phone it’s all this stuff that you’ve been talking about.
I think those are two different types
of advertising and I
wonder if like, you know, maybe
if some of the other
panels can talk about that
and to what extent, you know,
to what extent can you eject social into mobile?
Does that create a new type
of ad unit, or you
know, there’s also the whole
idea of we are tracking
people online on the web
but then that’s disconnected from what they’re doing on their mobile phones.
How do we connect those two
worlds, you know.
And A do we even want to,
advertising will definately want
to connect with any privacy issue
that always comes up That’s creepy, a
lot of advertising is creepy when
you think about it, at the base,
but then in practice it
doesn’t, it doesn’t line up to feeling that way.
For me, mobile is you know,
my perspective is, most
mobile ads I’ve ever seen are a shitty experience.
You know, I think mobile advertising is
gonna feel more like a really
useful app where a
marketer is paying for some embeddedness in that app.
So it’s not gonna be
sticking an ad in front
of me in any scenario, it’s
gonna be, I’ve told an
app a bunch about myself,
and that app is now feeding
me back, things that are commercial in nature.
So if I tell
Groupon that I live in
this zipcode and I want
deals, then that is a
very generic sense of I’ve giving
a little bit of information that now
feeds me back things that are commercial nature.
I think there will be several new
generations of much, much better advertising.
We’re talking about this proliferation of local recommendation applications.
There are gonna be versions of this
that are basically driven off
your mobile device, your personal mobile
device, and they’re going to
deliver you commercial offers that the
marketer will think of as
marketing and as a consumer I’ll think of it as value.
And if I don’t think
of it as value, then that app’s
gonna be gone from my usage.
I would say mobile’s still pretty,
fairly new in terms of
figuring out its thunder, I mean
it was five hundred and fifty
million dollars as an industry
last year, so obviously we
know on the broader web, there’s
social advertising, there’s display advertising, there’s search.
Mobile, from an experienced
standpoint, still in its
early stage of figuring out
its billion dollar breakthrough as
an industry, and I think that
with new technologies, new targeting,
ways to have the desktop
talk to the mobile web, will
all be ways that, it’ll define it as a billion dollar story.
I would just close
from my perspective, you know,
I’ve said publicly mobile and
social are kind of like
peanut butter and jelly, they just
sort of go together, and we’re
very excited with the engagement
levels we see, actually our
mobile users are two
times more engaged on
Facebook with a mobile device than
they even are with their PC so-
And the ad on mobile is the story?
At this point, we do not have advertising in mobile.
Oh, okay.
Interesting.
Okay, alright please give our our panel a round of applause.
I hope that gave you something to
think about, as you try
to figure out your revenue models.
We’ll file off here.
So, we’re going to have a 15
minute break, and come back here
We’re gonna do a little stage resetting
and if you
guys just wait right here they’ve
got to reset the stage and
move the table.
So, this next panel is
gonna be about disrupting advertising,
specifically, online advertising.
And we have a great panel
which I’ll introduce as they’re setting
up the stage here and you
guys can, I guess,
just stay there until the chairs are here.
But Carolyn Everson, who is
the head of, chief
of advertising for Facebook, who
has just been there for 8 weeks right?
New, brand new to the job.
Mike Walrath, who
is the founder of Right
Media, which was sold to
Yahoo and now is
an investor and has
various projects that he will tell us about.
Eric Litman CEO of Medialetswhich
is a leading mobile advertising
company and Gurbaksh Chahal,
the CEO of RadiumOne,
and also former founder
of Blue Lithium, which he
sold to Yahoo as well.
So, thank you very much for being with us.
We have put this panel together because
it seems that other than
search advertising and traditional
display advertising, the sort
of two main modes of
advertising online, and …those
two extremes and not… Sure,
there’s lots of behavioral targeting and
a lot of sort of data driven
stuff on the back end, but from,
you know, a user’s
perspective, it doesn’t seem like a lot has changed in advertising.
Is the online advertising that
we have right now sufficient, or is
there something broken about it?
I’m looking at you Mike.
Yes broken, but it’s
not that the advertising is broken,
it’s the way that we’re dealing with the advertising that’s broken.
So I think we talk
about it in terms of search and
display, but there’s really infinite different
flavors and you start to
think about social and mobile and how we deliver it.
But, and you know that
this is how I feel, the way
that we are delivering results to
marketers is fundamentally broken, and
we’re relying on the usage
of the medium in general
to drive up spending
and that’s not going to happen.
I got death threats for saying
this on other stories, but there are two things we say that are bullshit.
One is that just usage
alone is going to drive brand spending online.
And then when we get
over the fact that that’s not
actually not going to happen, then
we say, well sight, sound and motion; we need sight sound and motion.
Also bullshit.
Users aren’t going to put up
with if Carolyn sticks big
sight, sound and motion in the
middle of their facebook feed,
they’re going to have a freak out.
So, it’s not that the ads
are broken, it’s the way
that we talked about them and the
way that we measure them and the way that we provide value to marketers.
It’s fundamentally broken.
When you talk about usage,
right, that’s the whole argument
that percentage of time
spent is going up, but
percentage of spend isn’t keeping up to that.
But people love that.
You know, Mary Meeker loves that
slide and she is like ‘well,
it is inevitable that one thing is going to follow the other.’
But it’s not necessarily the case.
Not necessarily.
No.
I mean I know I am not supposed to agree.
We are supposed to have a big
debate on the panel
to make it interesting, but I think it is an important point.
You know, Mary Meeker
will always talk about the fifty
billion dollar gap that should
move from TV into digital.
The truth is, for ten years every digital
company has been trying to say
you should move money from TV
to digital because people are spending more time online.
And then they wonder, ‘Well why hasn’t that happened?’
Last week’s Upfront New York
was probably going to be more
successful than the last several years.
So, TV is strong and
everyone in the digital industry
is saying ‘well, how could that possibly be?’
And I think the reason
is a few things: number one,
in order to move money between
any medium, you have to
get the brand managers, the creative
community, really comfortable with
not only next track which,
obviously, was brought up, but also what they can do creatively.
And, you know, for 10 years
we’ve given them boxes, and, you
know, standard IAB display ad
units, and even with play
sound and motion on several
places, they do not feel
comfortable yet, enough with this
medium to fully bring a brand to life.
You know, our point of view
is that you can actually
bring the advertising to life digitally,
but not in the way of
blasting impressions which is happening all over the web.
It is actually around what we
call word of mouth marketing and scale.
We are having friend and friend making a peer to peer recommendation.
We think there is a lot
of power in that, but not
in the current plan which is
an ever endless display
impression tool that advertisers
can get access to.
So is it the case that
in order for online to grow,
TV has to shrink or print has to shrink?
Is it necessarily the case
that you have got
to take from these huge
budgets or could it
be that, you know, everything
can grow because it does seem
imprint that that is
the case. That people take some of the print budgets and moving
it online but I think
in TV, that is a totally different scenario.
I think it ends up being
both and I think, if you
look at, look, we’ve been
doing digital advertising since, what,
1996 was the first of the banner ads?
We started doing television advertising in
the middle of the twentieth century
and over that time span we
got to a multi-billion industry in
just a little bit over 15 years.
Now, we’re at 70 billion dollars
plus in online spend
so to think that dollars are not
flowing in or it is
not a real industry, I think that is an argument from 1998.
I do think that
we are seeing an erosion of spend
in other media, right, particularly in print.
Print has seen the biggest hit
so far, and, and particularly
if you look at some of the
early indicators in new media like
tablets, that are just
eviscerating the print industry right
now, at least in terms
of mind share spent by the buyers.
There is, there are dollars available to come from traditional media.
There are dollars that are
going to be net new in the space.
The pace of dollars
coming from traditional media outpace
the growth of industry that generates net new dollars.
Right so lets talk about two things..I
see, sort of social
and mobile new sort
of, forms of advertising coalescing around those and overlapping.
Let’s talk about social first.
So, there’s a lot
of, you know, social signals out there.
To what extent can advertisers use
those, to target ads
in a, in a ‘non creepy’ way.
I guess to elaborate a
little bit about what we talked about
here before, when I
spoke to Arrington last week, you
know I told them
that the reason I started Radium
One as my third ad
network is when Tulip
was acquired by Yahoo in
2007, there were probably about
three ad networks that did
100 million dollars in revenue per year.
Fast forward four years later there’s 10 or more.
So when you look
at the amount of dollars that
have gone into ad networks and
continues to flow tells you
the money’s there, but fundamentally
the thing that’s changed is nothing’s changed.
Everybody, from a targeting perspective,
is doing the same thing they did before, which is Behavioral Targeting.
If you use art of auto
flash basic forms of retargeting
and the biggest thing
has changed fundementally as an
industry is that we have
all these social activities going on across the internet.
Everything has become social so
if you can actually use social
data and the way
reading one is good as
that; if you share something with
someone across the internet, we
actually create a social graph of
you across the web, and will
start to show other people
the same type of ads that you’ve actually responded
to. So it’s almost an implicit
graph of what you
like and potentially what your friends would like.
Sorry, may cause controversy but this
one’s easy to me because this
idea that everything’s changed, nothing’s changed.
Nothing has changed.
This is incrementalism.
The, you know, in 2005
it was remarketing use through
conversions, and now all
about social, and it doesn’t
mean that these things aren’t valuable, but we’re having the wrong conversation.
We’re talking about the new,
better, whizbang way to
target an ad and that’s fucking great.
We’ve been having that conversation for 15
years and we’ve managed to do
is to back ourselves into a
corner where the only thing we
do when we walk into marketers
is tell them about How we
can make targeting better, we can be incrementally better?
I can give you ten percent lift, twenty percent lift, fifty percent lift.
It’s the wrong conversation, and until
we change the conversation, we are
going to have, we are going to
be basically battling over the
table scraps that fall off
traditional media’s table, which, 70
billion…. you know pick your number.
It’s still tiny compared to
what’s out there, and we need to talk..
What is the right conversation?
The right conversation is talking to
marketers in terms of ways
of measuring media that they actually understand.
So I feel like
I’m channeling Wenda Millard here, who
is probably the biggest champion
in the universe of this conversation and
she’s been trying to have this conversation for fifteen years.
But until we can
talk about things like, so
maybe social targeting is the
next best big thing, until
you can walk into Procter ;
Gamble and show them purchase
intent and brand recall,
and you know, and traditional brand matrix
and how they tie back to
what we are doing with advertising,
then the conversation is pointless.
It’s meaningless.
You’re shifting something from bucket
A to bucket B to bucket
C. And yeah, you can build a hundred million dollar business.
Big fucking deal, like, let’s build
much bigger businesses on
the backs of, much more money
flowing because we’re finally talking
about marketing in ways that
real brand marketers understand.
That’s where the big money
is.
Well, if you just look at the industry in general, though.
Like, last year was the biggest year for display advertising.
You added more in growth
and searched it for the first time.
And what they shows is
that display advertising works, and
people want to spend more
money And people are spending
double digit percentages in growth in display advertising.
So the conversation can be, you
got a multibillion dollar industry right now.
You could make that better and if
you can make that into a few
100 million dollars and grow
rapidly and create the best
ad network that evolved around, that
is the mission that Google is
doing that’s, at least rumors
of what Facebook is also trying
to do, so I think that’s where the market’s obviously headed.
Do you think that’s what Facebook is trying to
do?
No. I think we’re trying
to work with everything
from the top brands, which absolutely care about a few things.
Number one, they care about the
the insights you gather from the social graphs.
So, when we go
in, it’s not necessarily about a
targeting conversation in the beginning,
It’s really about, what are
moms doing on Facebook, on Friday night.
What are young people doing?
And really get into an understanding
of the audience which the social graph can give you.
Start there.
Then you progressed to a branding
conversation which eventually ties
into how they think about
budgeting, Their media mixed modeling and all those tools.
And then it to brand list
and are products moving off the shelves?
Right, that’s the conversation that we’re trying to
do. And we’re reinventing that conversation
because traditional marketers have used
TV, and print, and other
mediums that they’ve been comfortable
with, for decades, and now
we’re actually saying, all the
things that everybody wanted, I would
argue two million years ago, where it was word-of-mouth.
I would tell somebody in a
village about Something and word
would spread, now we’ve got
something called the internet which
allows us to do that
globally, at scale, real-time
and have friends recommendations and,
that’s the holy grail for branding, we think.
Let’s talk a little bit about
the ad unit on Facebook or ad units.
Because I don’t think everyone is really aware
of maybe what you’re been doing.
And tell me is this an experiment or is this full blown?
What I think is the most
interesting ad unit on Facebook
is somebody decides to like
a brand or, basically
spread the message of a
brand voluntarily, and it appears
in their news feed, and to
all their friends, as just another message, right
? It doesn’t even say “sponsored message” or anything, right?
Well, there’s a couple things.
So, Mark, you know, our
founder, Mark Zuckerberg, he really
sets the bar as high as possible,
and he believes we’re, like, one
percent there of where we need
to be and he thinks advertising
has to be as useful and
as compelling as me
sharing a photo of my
kids or me giving a status update.
And until we get there, he’s not satisfied.
So what your referring to is
our new sort of ad product
which launched a couple of months
ago and it’s called Sponsored Stories,
and the notion there is at
first we wanted to build up the social graph.
Put individuals on, let them
tell you about their family, their
job, their likes, etc., and
we found that fifty
million a day like a brand.
So there are fifty million likes
per day happening on Facebook.
And the truth is, people
identify themselves by the
brand, by the car
you drive, the shoes you
wear, the phone you carry,
and brands are as important
to people than, as some of the other things that we’ve got.
So what we ‘ve done with Sponsored Stories
is tried to say if I
like a brand or I
like something that I’ve read about
Coca-Cola or an offer
that Starbucks has made, and
you are my friend, it can go into your news feed.
And I can supplement that
with a small little display ad that we’re known for on the right.
And that is getting unbelievable traction
. Nielson is showing
that we have a 68
percent recall that people actually
saw the ad because my name
is associated with it as
your friend, you’re twice
as likely to remember the ad
and 4 times as likely to actually do something.
But what percentage of ads on Facebook are the story ads?
Small.
We just launched.
We just launched two months ago
and I would say the most progressive
brands are thinking about that
because sort of what happened
with Facebook evolution of advertising
is, you know, 18 months ago,
the rage was “How many fans can I get?”
And there was a race, and there’s
lots of third party ad
APIs that are helping brands get fans, and that’s great.
but once you have the fans, then what do you do with them?
Right?
You’ve got to engage them, you’ve
gotta give them offers, and compelling
content, so that they actually
comment on it and it gets put into the news feed.
Aren’t you going to get rid of the ads on the side.
The little display adds that nobody looks
at?
Well, a lot
more people look at them than
you think, number one, because they are very targeted.
f you go to
my Facebook page they know
exactly the sites I’m shopping on and they’re serving.
They work, I sold a bike through those ads.
You did sell a bike.
Thank you, thank you.
Our end product will continue to evolve.
As I said we’re one percent.
We think were one percent done.
Ok lets talk a little about
mobile right so I
thinkwe starting to
see ads targeted socially, based
on, you know, the pattern
that you share things with, whether
those are ads or stories or whatever, right?
So that’s a different way to spread
it, but with mobile
you have location, right?
And location has always been
a great way to advertise to people.
If you know somebody’s zip code, you
know, like, you know, twenty
percent, or, you know, like,
all the demographics, basically, and
you know what to target to them.
To what extent does it
help you to know exactly where
someone is, you know, at that time?
In what classes of advertising is that good for?
Does that help brands or does that really help more local merchants?
So this cliched argument
about mobile advertising, the story
about walking down the street
and getting hit with an ad there’s a Starbucks nearby.
I don’t know how many people
live here in New York, but
there’s a Starbucks on almost every fucking corner in this city.
I don’t need an ad to
tell me I’m walking in front
of a Starbucks, and I would
probably throw my phone by
the 5th block because I’ve just
been bombarded by the imperfect
location signals in the city
and every single one of those
stores constantly hitting me with data.
That’s not the model for local advertising.
if your AT&T service works.
No comment.
The model for local advertising is
really much more around either
defining where people are
in hyper specific locations so
you are within a store,
and this is actually something that’s being
deployed in nominal trials now,
but you in the store you are
walking down an aisle you want
to understand the difference between
products and you’re using some
sort of tool to compare those products,
you get a message from a
brand marketer who’s paid the equivalent of a slotting fee.
So, I don’t know if anyone,
how many people here know this,
but when you walk into
a Wal-Mart, you see a product
at eye level, the brand has
paid additional dollars for that product to be at eye level.
You’re gonna see the same sort of
thing in product comparison tools, and price matching tools.
That’s one model.
The other is, for advertisers
that want to drive deals, they
want to drive very specific offers
within a broader geographic region,
we are seeing some really interesting things
happen with Groupon, with
Gilt, with Living Social and a whole bunch of folks in that category.
But location is only one of
the interesting things about mobile, the
other is, so this is
my phone, this is actually
a conversation that Eric and I
had last night, and anyone in
here, after I leave
the panel, is more than welcome to borrow this phone and make a phone call.
But if you walk to far outside of my sight.
I’m gonna start to twitch
a little and you are, you
spend too much time away; I’m
probably gonna come looking for you
because this is my device and
there’s no other medium that we
consume that feels that personal to an individual.
So you have from a
marketer’s perspective something where you
know that there’s a one
to one mapping between a consumer and a device.
You have, built into the
platform, the ability to do
commerce, the ability to manage
identity, the ability to
do security in really smart ways.
So when we talk
about leading indicators, so online
we’ve seen a lot of money
pour into search and DR,
that’s a leading indicator for brand.
Where its moving in mobile is
we’ve seen a bunch of the
search dollars come in, relatively speaking.
We’re starting to see leading indicators of brand.
But where it evolves to a
point where we get to
scale is when brand marketers
don’t have to distinguish between the two.
They don’t have to think, you
know what, I want to go
buy this ad on a
cost per click basis because that
feels right to me, or
I want to buy it on a CPM basis because it feels right to
me. They can accomplish equivalent goals.
They can say, “I wanna drive, I wanna drive awareness.
I wanna drive purchase intent.”
For me, for mobile, there’s two
things, one is, on a iPad on a tablet.
I think you can basically recreate
the best print ad experience.
It can be like this lush like
what you do media like The
Daily, are you still doing
The Daily, and other publishing, right?
So, you could basically recreate this great
advertising experience on a
tablet, but then for a
mobile phone it’s all this stuff that you’ve been talking about.
I think those are two different types
of advertising and I
wonder if like, you know, maybe
if some of the other
panels can talk about that
and to what extent, you know,
to what extent can you eject social into mobile?
Does that create a new type
of ad unit, or you
know, there’s also the whole
idea of we are tracking
people online on the web
but then that’s disconnected from what they’re doing on their mobile phones.
How do we connect those two
worlds, you know.
And A do we even want to,
advertising will definately want
to connect with any privacy issue
that always comes up That’s creepy, a
lot of advertising is creepy when
you think about it, at the base,
but then in practice it
doesn’t, it doesn’t line up to feeling that way.
For me, mobile is you know,
my perspective is, most
mobile ads I’ve ever seen are a shitty experience.
You know, I think mobile advertising is
gonna feel more like a really
useful app where a
marketer is paying for some embeddedness in that app.
So it’s not gonna be
sticking an ad in front
of me in any scenario, it’s
gonna be, I’ve told an
app a bunch about myself,
and that app is now feeding
me back, things that are commercial in nature.
So if I tell
Groupon that I live in
this zipcode and I want
deals, then that is a
very generic sense of I’ve giving
a little bit of information that now
feeds me back things that are commercial nature.
I think there will be several new
generations of much, much better advertising.
We’re talking about this proliferation of local recommendation applications.
There are gonna be versions of this
that are basically driven off
your mobile device, your personal mobile
device, and they’re going to
deliver you commercial offers that the
marketer will think of as
marketing and as a consumer I’ll think of it as value.
And if I don’t think
of it as value, then that app’s
gonna be gone from my usage.
I would say mobile’s still pretty,
fairly new in terms of
figuring out its thunder, I mean
it was five hundred and fifty
million dollars as an industry
last year, so obviously we
know on the broader web, there’s
social advertising, there’s display advertising, there’s search.
Mobile, from an experienced
standpoint, still in its
early stage of figuring out
its billion dollar breakthrough as
an industry, and I think that
with new technologies, new targeting,
ways to have the desktop
talk to the mobile web, will
all be ways that, it’ll define it as a billion dollar story.
I would just close
from my perspective, you know,
I’ve said publicly mobile and
social are kind of like
peanut butter and jelly, they just
sort of go together, and we’re
very excited with the engagement
levels we see, actually our
mobile users are two
times more engaged on
Facebook with a mobile device than
they even are with their PC so-
And the ad on mobile is the story?
At this point, we do not have advertising in mobile.
Oh, okay.
Interesting.
Okay, alright please give our our panel a round of applause.
I hope that gave you something to
think about, as you try
to figure out your revenue models.
We’ll file off here.
So, we’re going to have a 15
minute break, and come back here
Bing Gordon surprised us all when he took the stage. Not only is he a partner at Kleiner Perkins Caulfield & Byers, he is also a talented poet. Michael Arrington, knowing Gordon wrote poetry, asked him to write something quickly before going onstage. As Gordon read the poem out-loud to the thousands of guests, there wasn’t one person in the audience who was not smiling or laughing. The poem was pretty hilarious and really catchy.
Follow @bingfish
@bingfish
bing gordon
@bingfishbing gordon
RT for joe! @JoeFernandez: love that this poem by @bingfish includes @klout http://t.co/5VfSe5Z via @techcrunch http://myloc.me/kh0qp
Be sure to read Gordon’s full poem below.
Chris Dixon apparently has a hunch
That it’s only Internet news if it’s in TechCrunch –
And you can verify this on Wikipedia:
Ashton Kutcher is the Charlie Rose of social media.The meat-packing district is the new South of Market
So VCs are bringing cash there to park it.
If you make a name for yourself, you’ll get Klout perks
And John Borthwick has proven that Beta actually works.Rent the Runway, Gilt and Etsy have the New York smarts
To redefine the way we all fill up our shopping carts –
And now even Stanford will put up with Silicon Valley censure
And open a campus to provide entrepreneurs for Union Square Ventures.You can prove you’re hip enough, and that you’re there
Because Disrupt has a custom check-in on 4 Square
Even Michael Bloomberg has gotten into the act
To support Kristina Salen’s Quest to Learn so education can be hacked.The Big Apple was overwhelming in 1973
When I arrived from Michigan, it was like OZ to me.
This is a paean to Manhattan, on an Arrington dare –
Because, if you can make it here, you can make it anywhere!
When Julia Hu took the stage for her presentation, nobody expected what was to come. Hu made it through her presentation on LARK before Michael Arrington came onstage to chat with her. When she sat down, someone called out that she had forgotten to go over one last slide. She looked at the slide, screamed, and to our delight and surprise became happily engaged.
Follow @parneetg
@parneetg
Parneet Gosal
@parneetgParneet Gosal
#tcdisrupt's very first engagement/wedding proposal on stage:) congrats! @ourLARK
Be sure to watch the entire proposal below.
You going to have a seat?
Yes.
So, you have been
working with a company
in China called PCH.
Oh, oh my god.
We’re going to be OK.
Someone put the slide back up.
Oh my god.
ou .
Sorry.
What ‘s happening right now, just so the audience knows.
Did you just get engaged to be married?
Yes Yeah.
You didn’t actually ask her, you just put-
Do you guys
want to reverse that and redo it?
Let’s try that again.
All right.
Okay.
So.
Julia, will you marry me?
Oh my God, yes.
I’ve only been waiting for it.
I didn’t know that was going to happen.
Me neither.
Now we get back to business.
How did we, how did that get screwed up.
Is the slide, you guys all saw the slide.
I was like forget that, let’s move
on, we got stuff to do
in the middle of your, so That was 11 years, thank you.
Alright.
I’m ready again.
You had no idea that was going to happen?
No, Did you see me?
Yeah, it took me
a little while to figure out what
was going on but Oh my God.
Did you know that was going to happen?
Or you saw the slide.
Alright.
He it just stole my thunder, didn’t he?
You said yes, because you wanted
to get married, right, it was just
in front of everyone, I
mean, that’s a good thing, and everything?
Oh, yeah, yeah.
My PR firm told me to do
that, no, I was just kidding
Did your P.R. firm actually set this up.
Congratulations.
Jeff congratulations.
Thank you.
Hi, it’s Matt Burns with Crunch
Gear, I’m here with Julia Hu
of Lark this fantastic little
sleep aid but first before
we get to this something fantastic happened on our stage.
Oh my god it was so shocking.
you broke an alarm clock but more than that right?
that’s right.
you got engaged?
yeah.
that’s fantastic.
he totally sprung it on .
And everybody, nobody.
Not even Mike?
Not even Mike, and he loves surprises.
So that’s fantastic, well congratulations.
Thanks
Yes.
So, you have been
working with a company
in China called PCH.
Oh, oh my god.
We’re going to be OK.
Someone put the slide back up.
Oh my god.
ou .
Sorry.
What ‘s happening right now, just so the audience knows.
Did you just get engaged to be married?
Yes Yeah.
You didn’t actually ask her, you just put-
I asked her on the flight Yes .
Do you guys
want to reverse that and redo it?
Let’s try that again.
All right.
Okay.
So.
Julia, will you marry me?
Oh my God, yes.
I’ve only been waiting for it.
I didn’t know that was going to happen.
Me neither.
Now we get back to business.
How did we, how did that get screwed up.
Is the slide, you guys all saw the slide.
I was like forget that, let’s move
on, we got stuff to do
in the middle of your, so That was 11 years, thank you.
Alright.
I’m ready again.
You had no idea that was going to happen?
No, Did you see me?
Yeah, it took me
a little while to figure out what
was going on but Oh my God.
Did you know that was going to happen?
Or you saw the slide.
Alright.
He it just stole my thunder, didn’t he?
You said yes, because you wanted
to get married, right, it was just
in front of everyone, I
mean, that’s a good thing, and everything?
Oh, yeah, yeah.
My PR firm told me to do
that, no, I was just kidding
Did your P.R. firm actually set this up.
Congratulations.
Jeff congratulations.
Thank you.
Hi, it’s Matt Burns with Crunch
Gear, I’m here with Julia Hu
of Lark this fantastic little
sleep aid but first before
we get to this something fantastic happened on our stage.
Oh my god it was so shocking.
you broke an alarm clock but more than that right?
that’s right.
you got engaged?
yeah.
that’s fantastic.
he totally sprung it on .
And everybody, nobody.
Not even Mike?
Not even Mike, and he loves surprises.
So that’s fantastic, well congratulations.
Thanks
There were many other conversations and interviews that took place, all of which can be found here under the Day Two section.
As for the Startup Battlefield presentations, there was one small moment that stuck out in our minds. To our surprise, when Getaround was done with their presentation all of the judges went silent. No one really knew what to say or where to start with their evaluation. That is, until Chris Sacca blurted out, “That was a holy shit moment.”
The rest is history. For Getaround’s first Startup Battlefield presentation, be sure to watch the video below and then scroll down to check out some of our favorite pictures from Day Two.
fuck you.
Anyway, anyone who’s playing the
drinking game also note there
we’re trying to change the world and we’re trying make the world a better place.
No, no, Sarah wants to say something.
Do you wanna just to me?
These people shouldn’t hear?
Sarah ‘s note is that
she wants to see more Tony
Conrad so the entrepreneurs can just stay off the stage.
Maybe the entrepreneurs can stay backstage we can just both stare at Tony for any hour?
No, you’re right that’s my bad management.
I will, I will make sure they.
No, I appreciate it.
I’m sorry.
Good note Sarah.
about pregnancy?
The pregnant lady comes up with a note about stage craft.
I thought that was your big moment?
We have one more start up, I almost said one more act.
What I’m hosting now.
We have one more start up
to come on, I’d just
like to remind you guys please face
away from Tony Conrad just stay as far away from him as possible.
Don’t block any of Sarah’s lines of sight.
OK?
We good?
Or you might just pitch from there if you want.
All right, our last I’ve lost a session piece.
Give a huge round of applause to Sam Slade [sp?]
and Elliot Crew from Get Around.
And someone else’s name isn’t on my list.
I’m sorry.
Good afternoon Tech Crunch.
My name is Sam Slade [sp?].
I am the CEO of Get Around.
With me on stage are my co-founders
Jessica Scorpio and Elliot Crow.
We are here to share our
vision for solving a problem
we call “car overpopulation.”
We have over 250 million
cars in America that sit
parked 22 hours each day.
Our solution to this problem is Get Around.
A new way for people to share cars.
Instead of buying a car, you
can rent one instantly from someone near by.
And as a car owner, you can
earn thousands of dollars a year sharing your car.
Today, we redefine car ownership with three amazing announcements.
The first, a powerful new iPhone app.
Jessica, please take it away.
Thanks Sam.
Get Around is a
marketplace for peer to peer car sharing.
The Airbnb for cars.
Owners set pricing and availability.
Get Around, provides insurance
and takes a forty percent commission.
Just a few months ago
we launched an exclusive trial in
San Fransisco and now its expanded all over the Bay area.
This is why Get Around is so disruptive.
The peer to peer
model is not limited to
dense urban areas like Zipcar.
Here in Nob Hill,
Sally shares her
2006 VW beattle for $5.60/hr and 33.50 a day.
In Soma, Trung shares
his 2010 3 series BMW
for $15 an hour and $60 a day.
Let’s check out this BMW.
As a renter I can
see who owns it,
where the car is located when
it is available, car features,
and beautiful photos uploaded by the owner.
Ratings and reviews help me
filter for beautiful cars and great people.
If this car looks good, hit request.
Select the start time and
end time, and confirm the rental.
Once the owner
confirms the request, you get a key on your iPhone app.
With it you can unlock the
car and locate
the car, all from your iPhone.
The Getaround iPhone, available for free, on the app store today.
So we are not done, OK.
There is more.
OK, so how can
iPhone app unlocked your car.
The answer is our second announcement of the day.
A breakthrough device that makes
peer to peer car sharing hassle free.
Now, this is not your run
of the mill fleet management
spaghetti, like you’re seeing here.
This is a beautiful low
cost and easy to
install device that combines a
keyless remote with WiFi and GPS.
We call it the Getaround Carkit.
The first ever device
designed to share access
to your car using only a smart phone.
you can even install it yourself.
It takes less than 5 minutes.
So we are going
to be giving away the first five hundred of
these for free, so if you
would like one, then sign up at Getaround.com.
Our third and final
announcement answers the question
that everybody asks, how does insurance work?
Getaround provides insurance as part of each rental.
Today we’re excited to announce
that we’ve secured a unique deal
with an amazing insurance carrier
that would help us expand our
coverage across the entire country.
hat carrier is Berkshire Hathaway,
one of the most trusted names in insurance.
Let’s review.
The Getaround iPhone app, the Getaround car kit.
Super safe insurance, provided by Berkshire.
Three amazing announcements that redefine car ownership.
But, can we actually
solve car overpopulation?
For a moment, imagine one million shared Getaround cars.
We’d have taken ten million cars off the road.
C02 emissions would drop.
by a whopping 43 billion pounds
per year, which is like planting a billion trees.
Zip car with 8500
cars is a billion dollar company.
We’d be a hundred times bigger.
This may sound like a pipe
dream but remember, there are
over 250 million cars in America.
Sharing one million cars means
sharing less than half of
one percent of all the cars we already own.
If you like what you hear, sign up at Getaround.com.
Sign up is free, and there are no membership fees.
On behalf of the whole
Getaround team myself, Elliot, and Jessica.
Where’s Jessica?
Jessica?
Oh Jess, what are you doing over there?
Sam.
Hello.
I am not sure Elliot tested the
iPhone app before pushing it
to the app store, so I
am going to test it here and now.
OK here we go.
Lock.
Unlock.
Looks like you can pay Elliot this week, Sam.
The Getaround iPhone app.
Download it.
We can help you get Getaround.
Thank you.
Alright, that was, that was Getaround.
I love it when the judges whisper, “Holy shit!”
at someone’s pitching.
I suspect that’s a good thing, Chris Zucker?
Yeah, that was a holy shit moment.
I think the biggest mistake of
my career was passing on Air
B;B and be like, who would
ever sleep on someone else’s couch?
And as a VC I’m wrong 80 percent of the time, that’s something you need to know .
But, this blew my
mind and I think it objection
handled all of the things I would have said.
Which is, you know, Air
B;B still has the key problem
and they’ve solved that in innovative ways but this blows that away.
And the insurance thing, I
mean it’s just the number one objection
I think I instinctively get is, how am I going to do this.
I’d love to know a
little bit more about reputation management on
there, so, who am I,
you know, who am I actually renting to?
I think Uber is addressing this
with drivers and users actually having reputation there.
You said you’re a community
of trusted drivers so maybe you
can respond to that.
Reputation is obviously, and
trust, are critical to
Getaand so we
really just want to make
sure, like you said,
that trust and reputation are
totally respected and protected.
I think we talk about bubbles and not bubbles.
This is why we are not in a bubble.
This is a very, great job
on the presentation, even if
the product didn’t work, but I
think we are in the smile,
we want to smile when we see these things, right?
That’s why we’re not in a bubble.
This product makes you smile, there’s
hundreds more like it coming
on the iPhone, so good job.
Don’t you get a little anxious?
I would not let this guy drive my car.
So I don’t know, there is a model flaw in there a little bit.
Why don’t you just block person by person.
Anyone in America apart from Chris Zucker.
I wouldn’t want Jason or
Have saka driving my car.
No Jason no saka.
I don’t smile as much.
I bet they can probably hard
encode that in that no one can rent that one.
That would be cool.
That’s a feature request.
I get a little anxious I’m not
an investor yet.
That’s a good sign as well.
I loved everything about it.
I hope I get to invest in this company one day.
wow they are lining up.
Yeah chris and bijan aren’t good investors.
They aren’t or are?
They are not.
think as youth would say that’s baller, congrats.
That’s great.
Well done.
Does anyone have a bad word to say about this company?
No.
I would not have partnered
with, I think Warren
Buffet cannot be trusted, I would have gone somewhere else.
You know what, I suggest you don’t rent your car to him.
I would block him as well.
What does he know about the Internets?
Why let him into our world.
He’s partnered with a
company that you guys wished you invested.
Which one?
This one.
He has no idea.
that I’ll guarantee.
So but let’s clarify on the insurance.
Yes, so if I have my car I put in the system.
So let’s walk through the flow.
I have my car what do
I do, I reach out to you
guys and you send me that little kit thing?
You sign up the site.
You put up a photo and description
of your car and all that stuff,
so probably similar to put
listing on your
B;B. We send you two things.
So you can either sign up and
opt to do a manual key swap or to do the car kit.
We’ll ship you the car kit and
we also send you auto
So I can install that
automatic key thing myself?
Yes.
In many cases you can install it yourself.
It is actually just like a keyless
remote so imagine you lost
all your keyless remotes to your
car and you had to register
new ones and you had to
pair them back you’d follow the same
sequence to pair this.
But does that thing just get
me in the car and there is a
manual key in the car somewhere, or is that thing start my engine?
No, it does not start
the engine it just get you in the car.
OK.
So it just gets you in the car and the key is somewhere in the car.
I have insurance covering my car.
I put my car out in the driveway for somebody to come pick up.
What happens when?
So they come, they unlock it,
and then what is the insurance part?
I can speak for that.
The insurance is one
of the hardest pieces to get around.
We structured everything so there’s no risk to the owner.
So, essentially when you’re sharing your
car, your insurance is not in play.
Our insurance kicks in and
if anything were to happen
the renter would show our insurance card.
In terms of the rental transaction
you would have gotten a request or
you could have set your card to auto approve.
So the person would just
pick it up, unlock it with their
iPhone, get in, drive away, bring it back.
You’d rate that person so
they have the kind
of motivation to be a
good renter, to keep the car
clean and bring it back in good condition.
Speaking of insurance, from the start of
the rental to the end,
we provide collision, comprehensive and liability
coverage.
How good have car owners
been about updating that calendar?
That seems like a friction
point Oh shit, I’m using my car.
Is there a way to automate that, by the device or something?
So you don’t have to actually update your calendar.
What happens is if I
want to rent your car
and your calender is not up
to date, it will send you a
ping saying, Sam wants to rent
your car and you just
hit approve and the rental is done.
If I am out using my car, what do I do?
I say no?
You say no.
But does that hurt me on the system later?
No, it doesn’t.
But it should though, right?
Actually, we have a patented process
where you can actually multicast and
hit, as a renter you can request multiple cars.
ven if you said no,
and someone else said yes,
then they would actually win the business.
So Tony any final words, twenty seconds?
Nope.
In that case that’s Getaround everyone.
That was pretty amazing.
And they should I was
going to say, they should have
got points for being exactly
on time, but then they did
the car thing, so 5 seconds over, but I think they’re okay.
Alright, that was the
first section, so that was the first frame.
You probably all know your favorite thing.
I think it is some sort of audience voting thing.
Anyway, anyone who’s playing the
drinking game also note there
we’re trying to change the world and we’re trying make the world a better place.
No, no, Sarah wants to say something.
Do you wanna just to me?
These people shouldn’t hear?
Sarah ‘s note is that
she wants to see more Tony
Conrad so the entrepreneurs can just stay off the stage.
Maybe the entrepreneurs can stay backstage we can just both stare at Tony for any hour?
No, you’re right that’s my bad management.
I will, I will make sure they.
No, I appreciate it.
I’m sorry.
Good note Sarah.
about pregnancy?
The pregnant lady comes up with a note about stage craft.
I thought that was your big moment?
We have one more start up, I almost said one more act.
What I’m hosting now.
We have one more start up
to come on, I’d just
like to remind you guys please face
away from Tony Conrad just stay as far away from him as possible.
Don’t block any of Sarah’s lines of sight.
OK?
We good?
Or you might just pitch from there if you want.
All right, our last I’ve lost a session piece.
Give a huge round of applause to Sam Slade [sp?]
and Elliot Crew from Get Around.
And someone else’s name isn’t on my list.
I’m sorry.
Good afternoon Tech Crunch.
My name is Sam Slade [sp?].
I am the CEO of Get Around.
With me on stage are my co-founders
Jessica Scorpio and Elliot Crow.
We are here to share our
vision for solving a problem
we call “car overpopulation.”
We have over 250 million
cars in America that sit
parked 22 hours each day.
Our solution to this problem is Get Around.
A new way for people to share cars.
Instead of buying a car, you
can rent one instantly from someone near by.
And as a car owner, you can
earn thousands of dollars a year sharing your car.
Today, we redefine car ownership with three amazing announcements.
The first, a powerful new iPhone app.
Jessica, please take it away.
Thanks Sam.
Get Around is a
marketplace for peer to peer car sharing.
The Airbnb for cars.
Owners set pricing and availability.
Get Around, provides insurance
and takes a forty percent commission.
Just a few months ago
we launched an exclusive trial in
San Fransisco and now its expanded all over the Bay area.
This is why Get Around is so disruptive.
The peer to peer
model is not limited to
dense urban areas like Zipcar.
Here in Nob Hill,
Sally shares her
2006 VW beattle for $5.60/hr and 33.50 a day.
In Soma, Trung shares
his 2010 3 series BMW
for $15 an hour and $60 a day.
Let’s check out this BMW.
As a renter I can
see who owns it,
where the car is located when
it is available, car features,
and beautiful photos uploaded by the owner.
Ratings and reviews help me
filter for beautiful cars and great people.
If this car looks good, hit request.
Select the start time and
end time, and confirm the rental.
Once the owner
confirms the request, you get a key on your iPhone app.
With it you can unlock the
car and locate
the car, all from your iPhone.
The Getaround iPhone, available for free, on the app store today.
So we are not done, OK.
There is more.
OK, so how can
iPhone app unlocked your car.
The answer is our second announcement of the day.
A breakthrough device that makes
peer to peer car sharing hassle free.
Now, this is not your run
of the mill fleet management
spaghetti, like you’re seeing here.
This is a beautiful low
cost and easy to
install device that combines a
keyless remote with WiFi and GPS.
We call it the Getaround Carkit.
The first ever device
designed to share access
to your car using only a smart phone.
you can even install it yourself.
It takes less than 5 minutes.
So we are going
to be giving away the first five hundred of
these for free, so if you
would like one, then sign up at Getaround.com.
Our third and final
announcement answers the question
that everybody asks, how does insurance work?
Getaround provides insurance as part of each rental.
Today we’re excited to announce
that we’ve secured a unique deal
with an amazing insurance carrier
that would help us expand our
coverage across the entire country.
hat carrier is Berkshire Hathaway,
one of the most trusted names in insurance.
Let’s review.
The Getaround iPhone app, the Getaround car kit.
Super safe insurance, provided by Berkshire.
Three amazing announcements that redefine car ownership.
But, can we actually
solve car overpopulation?
For a moment, imagine one million shared Getaround cars.
We’d have taken ten million cars off the road.
C02 emissions would drop.
by a whopping 43 billion pounds
per year, which is like planting a billion trees.
Zip car with 8500
cars is a billion dollar company.
We’d be a hundred times bigger.
This may sound like a pipe
dream but remember, there are
over 250 million cars in America.
Sharing one million cars means
sharing less than half of
one percent of all the cars we already own.
If you like what you hear, sign up at Getaround.com.
Sign up is free, and there are no membership fees.
On behalf of the whole
Getaround team myself, Elliot, and Jessica.
Where’s Jessica?
Jessica?
Oh Jess, what are you doing over there?
Sam.
Hello.
I am not sure Elliot tested the
iPhone app before pushing it
to the app store, so I
am going to test it here and now.
OK here we go.
Lock.
Unlock.
Looks like you can pay Elliot this week, Sam.
The Getaround iPhone app.
Download it.
We can help you get Getaround.
Thank you.
Alright, that was, that was Getaround.
I love it when the judges whisper, “Holy shit!”
at someone’s pitching.
I suspect that’s a good thing, Chris Zucker?
Yeah, that was a holy shit moment.
I think the biggest mistake of
my career was passing on Air
B;B and be like, who would
ever sleep on someone else’s couch?
And as a VC I’m wrong 80 percent of the time, that’s something you need to know .
But, this blew my
mind and I think it objection
handled all of the things I would have said.
Which is, you know, Air
B;B still has the key problem
and they’ve solved that in innovative ways but this blows that away.
And the insurance thing, I
mean it’s just the number one objection
I think I instinctively get is, how am I going to do this.
I’d love to know a
little bit more about reputation management on
there, so, who am I,
you know, who am I actually renting to?
I think Uber is addressing this
with drivers and users actually having reputation there.
You said you’re a community
of trusted drivers so maybe you
can respond to that.
Reputation is obviously, and
trust, are critical to
Getaand so we
really just want to make
sure, like you said,
that trust and reputation are
totally respected and protected.
I think we talk about bubbles and not bubbles.
This is why we are not in a bubble.
This is a very, great job
on the presentation, even if
the product didn’t work, but I
think we are in the smile,
we want to smile when we see these things, right?
That’s why we’re not in a bubble.
This product makes you smile, there’s
hundreds more like it coming
on the iPhone, so good job.
Don’t you get a little anxious?
I would not let this guy drive my car.
So I don’t know, there is a model flaw in there a little bit.
Why don’t you just block person by person.
Anyone in America apart from Chris Zucker.
I wouldn’t want Jason or
Have saka driving my car.
No Jason no saka.
I don’t smile as much.
I bet they can probably hard
encode that in that no one can rent that one.
That would be cool.
That’s a feature request.
I get a little anxious I’m not
an investor yet.
That’s a good sign as well.
I loved everything about it.
I hope I get to invest in this company one day.
wow they are lining up.
Yeah chris and bijan aren’t good investors.
They aren’t or are?
They are not.
think as youth would say that’s baller, congrats.
That’s great.
Well done.
Does anyone have a bad word to say about this company?
No.
I would not have partnered
with, I think Warren
Buffet cannot be trusted, I would have gone somewhere else.
You know what, I suggest you don’t rent your car to him.
I would block him as well.
What does he know about the Internets?
Why let him into our world.
He’s partnered with a
company that you guys wished you invested.
Which one?
This one.
He has no idea.
that I’ll guarantee.
So but let’s clarify on the insurance.
Yes, so if I have my car I put in the system.
So let’s walk through the flow.
I have my car what do
I do, I reach out to you
guys and you send me that little kit thing?
You sign up the site.
You put up a photo and description
of your car and all that stuff,
so probably similar to put
listing on your
B;B. We send you two things.
So you can either sign up and
opt to do a manual key swap or to do the car kit.
We’ll ship you the car kit and
we also send you auto
So I can install that
automatic key thing myself?
Yes.
In many cases you can install it yourself.
It is actually just like a keyless
remote so imagine you lost
all your keyless remotes to your
car and you had to register
new ones and you had to
pair them back you’d follow the same
sequence to pair this.
But does that thing just get
me in the car and there is a
manual key in the car somewhere, or is that thing start my engine?
No, it does not start
the engine it just get you in the car.
OK.
So it just gets you in the car and the key is somewhere in the car.
I have insurance covering my car.
I put my car out in the driveway for somebody to come pick up.
What happens when?
So they come, they unlock it,
and then what is the insurance part?
I can speak for that.
The insurance is one
of the hardest pieces to get around.
We structured everything so there’s no risk to the owner.
So, essentially when you’re sharing your
car, your insurance is not in play.
Our insurance kicks in and
if anything were to happen
the renter would show our insurance card.
In terms of the rental transaction
you would have gotten a request or
you could have set your card to auto approve.
So the person would just
pick it up, unlock it with their
iPhone, get in, drive away, bring it back.
You’d rate that person so
they have the kind
of motivation to be a
good renter, to keep the car
clean and bring it back in good condition.
Speaking of insurance, from the start of
the rental to the end,
we provide collision, comprehensive and liability
coverage.
How good have car owners
been about updating that calendar?
That seems like a friction
point Oh shit, I’m using my car.
Is there a way to automate that, by the device or something?
So you don’t have to actually update your calendar.
What happens is if I
want to rent your car
and your calender is not up
to date, it will send you a
ping saying, Sam wants to rent
your car and you just
hit approve and the rental is done.
If I am out using my car, what do I do?
I say no?
You say no.
But does that hurt me on the system later?
No, it doesn’t.
But it should though, right?
Actually, we have a patented process
where you can actually multicast and
hit, as a renter you can request multiple cars.
ven if you said no,
and someone else said yes,
then they would actually win the business.
So Tony any final words, twenty seconds?
Nope.
In that case that’s Getaround everyone.
That was pretty amazing.
And they should I was
going to say, they should have
got points for being exactly
on time, but then they did
the car thing, so 5 seconds over, but I think they’re okay.
Alright, that was the
first section, so that was the first frame.
You probably all know your favorite thing.
I think it is some sort of audience voting thing.
Another huge thank you to all of our sponsors, partners, and volunteers who helped us make all of this possible. Thank you to GE, Media Temple, and MailChimp for hosting our fun after parties. Thanks to Tagged for powering our charging lounge, and to Zecco and SecondMarket for providing the networking and cocktails for our receptions.
Also, thank you to Bing for supporting the ‘decision-makers’ in Startup Battlefield.
If you would like to attend Disrupt SF, September 12th – 14th, extra early bird tickets are on sale now.
If you’d like to become a foundational part of the Disrupt experience and learn about sponsorship opportunities, please contact Jeanne Logozzo.
