Five lessons after five years of Punchbowl

Five years ago this week, I was part of a small team (me, Sean, Devin and Gerard) that launched MyPunchbowl.com (now Punchbowl.com). The site officially "launched" with a press article that was published on the tech blogger site TechCrunch.com. Five years. Wow.

I've been thinking a lot about what this anniversary means for me professionally and personally, and some of the most important lessons I've learned after these five years. So here are five big lessons, in no particular order:

1) It's going to take much longer than you think
When I started Punchbowl, I had no idea how long it would take to build the company. In fact, I didn't even know if it would become a real company. Now five years later, I realize just how long it takes to build lasting value. It takes longer than you think to build a great team, to evolve the product, to build revenue streams, and to delight your customers. You hear about a lot of companies that are overnight successes, but that's rarely actually the case. Most start-ups slog away year after year, and then the media glorifies their rise to the top. It take most companies 5-10 years to become a financial success (e.g. Constant Contact took 11 years before it went public, hardly an overnight success). So here's the real question: will I be running Punchbowl five years from now? I have no idea. But I'll tell you this: if I am, we'll have experienced more success than I could have ever predicted.

2) No one will believe in you more than yourself

For anyone reading this post and contemplating starting a company -- let me give you a piece of advice. Stop seeking outside validation for your ideas and beliefs. Will you find some people to agree with you? Absolutely. And you'll also find some people that tell you that you're full of shit and you don't know what you're talking about. The reality is that the only person that needs to believe in you for the entire journey is yourself. Yes, I've had lots of days that I wanted to throw in the towel and get a simpler job. But deep within my soul has always been a belief in myself and a belief that the world needs the products we're creating. And that's critically important if you're going to succeed as an entrepreneur.

3) Don't beat yourself up too much when things are going badly

I don't remember where I heard it, but I love the saying "Don't beat yourself up too much when things are going badly, and don't congratulate yourself too much when things are going great." If there is one start-up maxim that I try to live by, it's this one. I'm lucky to be surrounded by a few people in my life that are more "even-keeled" than I am (hi Sean and Jess). As a passionate startup entrepreneur, I find it hard to keep my emotions in check when things are going badly. Somedays it feels like it's all going to come crashing down on me. And other days are filled with great success. On those days, it's hard not to be on top of the world with excitement about the possibilites. From my experience, the key to success as an entrepreneur is to remain as balanced as possible through the ups and downs. Ask anyone who works with me: this is much easier said than done.

4) Great people are the lifeblood of your success

It's taken five years to build, but we now have a *great* team at Punchbowl. I can't emphasize enough how important it is to find people that are "A" players that fit well with your style. When you find them, do what it takes to keep them. I believe that one of my strengths is my ability to spot talented people and form lasting relationships. A good example of this is the friendship I formed with a guy named Eric during business school. When I met him, I knew he was very smart. Years later (wow, 10 years!) Eric is a key member of the Punchbowl team and a big part of the reason that we've been successful these past few years. If you want to be a successful entrepreneur, seek out the smartest people you know, form lasting relationships, and convince them to join your team. And if you make some mistakes along the way, it's also important to quickly remove people who aren't working out. In every single case where I laid off an employee or contractor, I wish I had done it sooner. Final thought: regardless of how much talent you possess, it's very unlikely that you'll build a successful startup alone. Go find great people that want to work with you and who respect you. After all, there's no greater success than the admiration and respect from your peers.

5) The journey is the reward 

Yes, I know it's a trite saying, but the more this journey continues, the more I realize it's true. I started Punchbowl with the desire to have freedom in my career and in the hopes of making significant money someday. While it's true that I still want both of those things, more and more I find myself relishing the journey. I take great pleasure in customer stories, and how we've made their lives better. And these days I spend more time focusing on strategy and product direction. These are the things I really enjoy and I'm pretty good at them too. I like my co-workers, and I generally like what I do (ok, minus the legal stuff). Now that the company has grown bigger I have more resources -- and that makes daily challenges that much easier. I'm acutely aware that someday I will look back on these years as the glory days of my first start-up. It's been challenging and fun, and I wouldn't trade it for any other job in the world.

SWAMI SAYS: Happy 5th Birthday Punchbowl. Thank you for everything you have given me over these last five years. Thank you to the people who helped create Punchbowl, and the customers that pushed us to make the site better everyday. What an amazing ride it's been.

Rocks, Pebbles, Sand

There is an old story about a teacher who shows his class a glass jar. The teacher asks the class: "If I fill this jar with 3 large rocks, will it be full?" The class looks at the large rocks and comes to the conclusion that the rocks will indeed fill the jar.

So the teacher takes the three large rocks and places them in the jar. Then he takes out a large box full of pebbles. Once again, he asks the class: "If I add all of the pebbles to the jar, will it be full?" The class looks at the pebbles and concludes that the jar will be indeed be full once the pebbles are added. "You can't fool us again," they all say.

Image from CouchsurfingCEO

So the teachers takes the pebbles and dumps them into the glass jar. They slide easily around the three large rocks. Then he takes out a a bag of sand. Once again, he asks the class: "If I add this sand to the jar, will it be full?" Chagrined, the class laments. Now they can see the teacher still has room for the sand.

Satisfied, the teacher once again asks the class: "Now that I've added the three rocks, the pebbles, and the sand, is the jar full?" Looking at the jar filled to the brim, the class agrees that the jar is now full. "There's no room for anything else in the jar," says the class.

So the teacher takes out a cup of water, and pours it right into the glass jar. The water easily falls into the jar down between the rocks, pebbles, and sand. "Now it's full," says the teacher.

I think about this story often as I figure out my own capacity for handling tasks:

• Rocks: At any one time, I can only handle three major tasks at once. I try to structure my day so that I make progress on these three major tasks. I would argue that for most people, three is the right number of major tasks they can handle at any one time. 
• Pebbles: As I look at my inbox, there are many other items that need my attention. I try to get to these as I have time, but the rocks always take precedence.
• Sand: These are the more organic things I handle everyday, in the process of doing something else. For me, this is the equivalent of reading an email while I'm talking on the phone. 

And just when I think that I can't possibly handle anything else, I find a way. That's the water. As my 2 year old daughter says, "Water, water, everywhere."

SWAMI SAYS: This story of rocks, pebbles, and sand is a great framework for prioritizing your tasks. As a start-up, time is your most precious asset. What are the three rocks that you're working on now? What else do you still have time to do today?

Comments at Punchbowl Mixer

Here are the comments I delivered tonight at the 2nd Annual Punchbowl Mixer:

Thank you very much for being here tonight. Tonight is a celebration of consumer-internet companies in Boston -- and it's about what it takes to start a company in this area.

You've already heard from our MC Ben Saren and our guest speaker Scott Kirsner that this area is a great place to start a company -- but what distinguishes it from other places in this country or around the world? How can we make it clear to the world that this area is unique?

I'm from New York, I've lived in Silicon Valley, and I've lived in North Carolina. And now I live in Boston. I'm the CEO of a growing consumer-internet company in Boston. So I know a little about what makes Boston different.

A quick story about the early days of Punchbowl will illustrate a point about this area. What most of you don't know is that back in 2005 and 2006, I was too embarrassed to talk to anyone about my idea. Why? Because there was so much I didn't know and I knew that I wasn't prepared to answer basic questions. At the time, I didn't know where to turn to find supportive people who had been through it themselves.

Now, six years later I have a deep network of people who help me build Punchbowl. Every week I meet with innovators who are not only helpful, but passionate about Boston.

Many say that Boston is searching for an identity. Well here's an idea: what if -- what if Boston became known as the most supportive place to start a new company? What if we were known as the place to go when you're idea isn't fully formed, when you have more questions than answers, and when you need help and guidance to take the next step? What if we were known for the best mentors, the best angels, and the best people who were supportive of half-baked, half-understood ideas?

I'm lucky enough to be a mentor to some great new companies in the Boston area. But I'm just as guilty as anyone to jump to criticism. So I call on all of us -- all of you -- to embrace Boston as the most supportive place to start a company.

---

And now -- as you may have heard, I have an special announcement to make.  Tomorrow morning, in conjunction with Time Inc., we'll be making a press announcement. Punchbowl has signed a technology-licensing agreement with Real Simple.com. This is a substantial deal for both companies, and enables RealSimple.com to send and receive Digital Cards.  We've built a new platform for digital cards. This robust new platform will enable any media company or retailer to easily add digital cards to their site.

---

Before I wrap up, I'd like to thank a few people.
1) Our MC, Ben Saren and our guest speaker Scott Kirsner
2) The Punchbowl team. We have one of the best teams in the Boston area, and I'm glad to call you my co-workers
3) In particular: Sean Conta, Blake Carlson, Eric Peden -- a great executive team
4) The Punchbowl Board of Directors and investors, for their continued support of our company
5) Stephanie Fader and Jess Noble: they worked hard to put on this event for you tonight
6) The significant others, families, and children of our employees and contractors
7) My wife Jessica for all of the sacrifices she's made to help support me and this company

That's all from me. Let's all celebrate consumer-internet in Boston. Have a great time tonight!

Don't judge a bartender by his cover

I spent last week on the road in Los Angeles. The first part of the week I spent in Huntington Beach (south of LA) at the Intel Capital Global Summit. The last part of the week, I used Priceline to find a hotel somewhere closer to the city. I ended up in Hollywood, right down the street from Hollywood Boulevard. Naturally, I wanted to walk the strip and look at the stars that adorn the sidewalk.

As I checked into the hotel earlier that evening, I had heard some other people talking about local sushi restaurants and it got me in the mood. So when I left the hotel later on, I asked the valet where I could find some good sushi on Hollywood Boulevard. He directed me down the street to a place called Katsuya.

About 10 minutes later, I walked into Katsuya, and the hostess offered me a seat at the bar or the sushi bar. I typically enjoy sitting at a bar and people-watching, so I said I would sit at the bar. As I made myself comfortable, I was greeted by the bartender -- a warm hello even as he moved quickly between patrons.

I remember wondering about his story as I watched the bartender and waited for him to take my drink order. At first glance, he looked like the "typical" struggling actor. You know, the story of an aspiring actor who comes to Hollywood in search of fame and fortune only to find himself tending bar just to pay the rent. There's nothing wrong with that story per se -- and he seemed to fit the mold. He looked happy and comfortable in his environment. And by his interactions with the patrons and other bartender, he seemed to be well-liked.

The bartender's hello turned more conversational when he took my sushi order. He quickly learned that I was traveling for business, and he asked where I lived. Within a few minutes, we learned that we had a lot in common: we're both from Long Island, both Jewish, both lived in Waltham, MA at one time, and we're both Jets fans. He told me that he went to law school at GW (same as my brother) and that he left the East Coast to pursue his dream of making it in the television business (see, I wasn't that far off). However, even in our short interaction, I could see that this was no ordinary bartender. He was very smart and had an aire of quiet confidence about him.

So I probed a little to find out more about him. How long has he been in Hollywood? Was he an actor? Why did he decide to move west?

And that's when he dropped the bomb on me. He said "I'm the EP of a show called Mobbed." I did a double-take. "EP?" I asked. "Yes, I'm the creator and Executive Producer of a new show on Fox." I couldn't believe it. I still can't believe it. Allow me to tell you why.

These days, between running a company, having a toddler, and trying to be a good husband, I don't have much time for watching television. I pretty much only watch one show (American Idol) and I almost never watch new shows. But this past Spring, I was intrigued by the promos for a new show called "Mobbed." When it debuted, I watched the entire show. I was BLOWN AWAY. I loved the concept, and the show was so well done. The night I debuted, I sat on my couch transfixed by the show. Not only did it have a great story-line, but I loved the staging and cut choices (worth noting: I'm a bit of a video editing geek after 5 years of managing Adobe Premiere). As soon as I was finished watching the show, I called to my wife upstairs and told her that she had to come downstairs and see it. So we sat down and I watched the show again with her. And then I called Sean (co-founder of Punchbowl) and told him he HAD to see this show. Keep in mind that this is atypical behavior for me as it relates to television. I can't remember the last time that I've watched a show more than once, let alone told others they should watch it. But this was no ordinary show: Mobbed is an television spectacle, and I felt so fortunate that I got to come along for the ride. Days after the show aired, I told my friends, colleagues, and anyone else who would listen about the show.

Back in Hollywood, I feebly attempt to tell my new friend Howie about how much I love his new show (note to avoid confusion: my new friend is named Howie K., and the show is hosted by Howie Mandel). I try explaining to him how unusual it is for me to rave about a T.V. show, and just how brilliant I thought it was executed. Howie is very gracious, and he and I spend the next hour bantering back and forth about future episodes (note to self: don't forget to send Howie your latest ideas). He tells me what it's like to work with Howie Mandel, and tells me about his favorite episodes in the upcoming season (don't miss the first show in January!). He introduces me to his other friends at the bar, and I end up having a fantastic night out with some really nice people. As they say, strangers are just people you haven't met yet.

On the plane ride home, I get an email from Howie -- and later a Facebook friend request. It's nice to hear from him so soon after we met. And there's something about our budding friendship that moves me. Perhaps it's my awe at how he picked up his life and chased his dream in Hollywood, or perhaps it's his unassuming demeanor even though he's the Executive Producer of a show that's about to be a huge hit. Howie probably doesn't need to work at the sushi bar (or soon he won't), but he chooses to be part of a community of people that provides him stability and comfort in a world of craziness and glamour. To me, Howie represents the proper intersection of life and work: boldly pursuing your dreams, demanding creative excellence, making practical decisions, and building a community around you along the way.

Upon reflection, there are a few things that my meeting Howie and this experience left me with:

1. When you travel for business, don't hide in the hotel room. Get out, see the world. You never know who you might meet.
2. Stay humble, even if you have a hit show on TV (or a successful internet company)
3. Don't judge a book by its cover: not all bartenders are just bartenders (especially in Hollywood)
4. In Los Angeles, the sushi bar at Katsuya is a great choice

Howie: it was a pleasure to meet you, and I hope we can share a few drinks next time I'm in L.A. And next time you're in Boston, I'd love to buy you dinner.

SWAMI SAYS: An ordinary evening can turn extraordinary, depending on the company you keep. And one more thing: do you want to watch an amazing television show? Tune into Mobbed this Wednesday 9/8c on Fox. If the first episode was any indication, you won't be disappointed.

Wisdom to know the difference

I hope I land safely in Los Angeles. I’m sitting here stuck in the middle seat of row 14 on JetBlue flight 481, 35,707 feet over Colorado. We’re hurtling through the air in a metal tube at 470 miles per hour. And I have no control over when or if we get there.

Last week, I spent a good deal of my time trying to convince a big customer to extend their deal with us. I sent them a revised proposal, made myself available for a late night phone call, and carefully crafted a compelling argument of why they should renew. At this point, I’m still waiting to hear from them to see if the deal will be extended.

As an entrepreneur, I know that I can’t impact whether we get to L.A. safely, but want to believe that I can impact the decision of this big customer. I’ll sit quietly staring out the window of this plane through turbulence, while I stew about what else I can do to land this extended deal.

And yet, so many of the decisions that impact my company are out of my control. Despite what I want to believe, there is someone else piloting the deal, many external factors that I don’t even know about. There is only so much I can do to impact the situation. In the case of this deal, there are many factors that will determine whether or not we get the deal extension. As I reflect, it’s easier to see that the final decision is largely out of my hands. I’ve done all that I can do.

Just like in life, wisdom is recognizing the difference between things you can control and external things that are completely out of your control. I was reminded of this last night as I watched my football team lose a critical game of the season. Despite wearing my lucky sweatshirt and drinking out of my team mug, I watched helplessly as they committed mistake after mistake. I had no impact on their preparation, concentration or lack of execution. Yes, it hurt to watch, but I had nothing to do with it.

A few years ago, I had a conversation with a colleague about the economy. He insisted that the economy would impact our business in a significant way in the coming months. I remember my response was to tell him that there was nothing I could do about it. We would weather the storm if the storm hit – like a pilot, I would do my best to circumvent the bad weather. There is only so much I can do if the economy lags, and I don’t spend too much mental energy thinking about the impact of the stock market on our business.

Part of maturing as an entrepreneur is to recognize which things you are working on that are out of your control. As a start-up, you have plenty of things to worry about. Why fret about things that are out of your control? Why not focus on areas of the business that you can make a direct impact? Here’s a quick list of things you can impact as the pilot of your start-up:

• Are you employees happy? Have you checked in with individuals to see how they are doing? 
• Do you actively work on company culture to make it a great place to work? 
• Are you spending time setting the priorities so that everyone knows what is most important? 
• When is the last time you looked closely at the competitive landscape? Are you pro-actively trying to out-maneuver the other players in the market? 
 • Does your development team have a product roadmap? 
• Have you set a strategic direction for the next fiscal year? When is the last time you brought the key team members together to think about where you are headed as a company? 

We’re 36,326 feet somewhere over southern Utah. The ride is smooth now, and I’m hopeful for a nice landing into LAX. But I know there’s nothing I can do to change the outcome of this flight.

SWAMI SAYS: In a start-up, time is your most precious commodity. Use your time and mental energy to impact the things that you control. Recognize when you’re the pilot, and recognize when you’re just a passenger.

Future Forward 2011

This week, I'm moderating a panel at Future Forward 2011. If you live or work near the Boston area, I'd highly encourage you to attend. I've attended in the past, and the attendee list is top-notch. If you want to meet some of the best VCs and entrepreneurs in the area, it's worth your time.

The panel I'm moderating is called "A, B, C, D, E, F, Uh-Oh: Investors Talk About the Challenges of Funding at Various Stages" and includes well-known local investors: Jonathan Seelig, Joe Caruso, David Beisel, and Eric Hjerpe (disclosure: Joe Caruso is an investor in Punchbowl).

It will be interesting to moderate this panel for a couple of reasons. First, more than one of these investors passed on investing in Punchbowl. Keep in mind that these investors are local Boston investors, so it's not surprising that I spoke with them at one point or another. But it will be interesting to be on the other side of the table from them. I'm also curious to hear what they have to say about later stage investing -- again, keeping in mind that one or more of these investors could invest in Punchbowl sometime in the future.

I sent the panelists an email to prepare them for our session, and I thought I would share the list. I plan to take the audience through the stages of investing from an entrepreneurs perspective. I'll be very interested to hear about some of the objections that each investor has between each stage. After all, Punchbowl has raised a Series Seed, a Series A, and a Series B -- and I might be the one needing to convince investors to put their money into a Series C.

Here's the list I sent the panelists:

Seed stage investing:
- What are some of the structural things an entrepreneur can do prior
to raising seed funding that are deal killers for you? (think corp
structure, taking money from Uncle Joe with strange provisions -- what
else?).
- What key proof points do you want to see prior to your investment decision?
- Is user feedback/engagement a requirement for seed investing or will
you invest on the promise?

Series A:
- What key metrics are most important to you to follow-on from Seed to A?
- What signals do you look for that might scare you off?
- Let's talk about strategic investors: a good idea or stay away?

Series B:
- Financials: Does profitability matter when a company is raising a B?
Why or why not?
- Valuation: Revenue multiple or EBITDA multiple?
- How much due diligence do you require at the B? Do you just trust
the previous round investors?

Series C and beyond:
- Do you expect entrepreneurs to take money off the table at a later
stage rounds?
- How do you get new, outside investors to the table at these later stages?
- What can go wrong in later stage investing?

SWAMI SAYS: Raising one round of capital is really, really hard. Getting investors to step up to follow-on rounds requires knowing what motivates an investor to re-up. Come to Future Forward 2011 to learn more from investors who know.

Build culture with team offsites

From the early days of Punchbowl, we've had outings as a team. We didn't have an office, so once a month we would get together at my house to discuss the product and brainstorm about the future. After we spent the morning together, we would head out to have lunch. Once in a while, we would go out and do something after lunch. We called these days "Punchbowl Pow-wows" and they were an important part of establishing the culture at the company.

Even as the team has grown (and after we opened an office), we've maintained this culture. A few years ago, I walked into the office on a random day in June, and declared it to be "Summer Day." (hat tip to Mountain Day at Mount Holyoke College for the inspiration). We shut down the office in the afternoon and had lunch as a team. Afterwards, I took everyone to the local brew-your-own beer place, and we brewed many gallons of beer. In other years, we've played mini-golf. This most recent year, I took the entire Punchbowl team to Fenway Park for a special on-the-field day (more on that below).

These office outings play an important role in establishing the culture of the company. It's not just about doing something fun, it's about creating shared memories together. Like most start-ups, the people at Punchbowl work exceptionally hard, and they are asked to work long hours at certain times of year. Team outings, lunches, and "Summer Days" all play an important role in helping bond the team together and reminding our employees that rewards come with hard work.

Are you looking for inspiration of outings you can do with your start-up team? Here is a sampling of some of the Punchbowl Pow-wows, random outings, and Summer Days that we've had over the years:

• IMAX movie day: I took the team to have lunch, and afterwards we saw an IMAX movie about Dinosaurs (if memory serves me, I believe the movie was in 3D!)
• Beer brewing: We went to lunch, and then brewed our own beer together at Barleycorns in Natick. I split the group into 3 teams and we created a competition for best beer. The Punchbowl Board of Directors were our judges (at our next Board meeting) and teams were judged on taste, pitch, and brand image.
• Pumpkin Carving: I brought the team back to my house where we enjoyed take-out food and then carved pumpkins together. We handed out a prize for the best pumpkin carving.
• Miniature Golf: One of the key members of our team (Devin) was celebrating his 30th birthday, so I took everyone out to play miniature golf. Afterwards, we went to Dairy Queen for ice cream.
• Fenway Day: We participated in a special charity day with the Genesis Fund. The entire team was able to go on the field at Fenway, take batting practice, and field balls in the outfield. Punchbowl was listed as one of the sponsors on the big screen at the park (see image above). We also met a handful of Red Sox legends. Here's a link to pictures from that day. 

SWAMI SAYS: Do you want to build culture and team camaraderie at your start-up? Set aside a few times a year where you take your team out of the office to do something fun. To keep it fresh, don't announce the day ahead of time -- just surprise everyone. It will make the day more memorable and build that close team dynamic that is worth so much to your business.