Uncrunched

In the first six months of 2011 Facebook had $1.6 billion in revenue and about $800 million in operating income, says a source I trust a lot. That revenue number has been reported before. And the 50% profit margin is in line with last year’s $2 billion in revenue and $1 billion in operating income.

With Facebook growing revenue and profit by more than 50% every six months, it won’t be surprising if they hit something close to $2 billion in operating income for the year.

To put that in perspective, realize this – Facebook will likely be more profitable than Amazon this year. On a quarterly basis they’re already there. Amazon had $191 million operating income in Q2 and $322 million in Q1 (financials here). That’s $513 million v. Facebook’s $800 million for the first half of the year.

Amazon’s Q3 financials are coming out this week, and Citi analyst Mark Mahaney says to look for around $298 million in operating income from Amazon for the quarter. Q4 is obviously Amazon’s big sales period – operating income for Q4 is usually almost double what Q3 is.

Mahaney also notes that Amazon’s Q4 may not look as rosy as usual due to the launch of the Kindle Fire. Says Mahaney, “There is the distinct possibility that an aggressive/successful Fire launch could materially negatively impact AMZN’s margins and EPS near-term.”

The Kindle Fire is irrelevant though – Facebook will likely be more profitable than Amazon for the year even if the Kindle Fire doesn’t negatively impact Amazon’s Q4.

Does that mean Facebook is still undervalued at $70ish billion, despite the fact that recent secondary market sales are stalling? Amazon’s market cap is currently around $107 billion.

Of course Amazon has far more revenue than Facebook, nearly $10 billion per quarter, and Q4 will be much higher than $10 billion. Last year they had $34 billion in revenue.

They just have terrible margins compared to Facebook because they sell (and deliver) actual stuff. Facebook delivers ad impressions and Facebook credits to buy stuff on Zynga.

And about Zynga. The company is still completely dependent on Facebook – “We generate substantially all of our revenue and players through the Facebook platform and expect to continue to do so for the foreseeable future,” says the Zynga S-1 For the first six month of this year Zynga reports $522 million in revenue.

That doesn’t include Facebook’s cut, which is taken before Zynga recognizes the revenue – “Facebook remits to us an amount equal to 70% of the face value of Facebook Credits purchased by our players for use in our games. We record bookings and recognize revenue net of amounts retained by Facebook.”

That means Zynga sent Facebook some $250 million in the first half of the year, or about 16% of the total Facebook revenue for that period. So Zynga is a very important source of revenue for Facebook, and probably will be for quite some time.

So is Facebook undervalued? Based on a comparison to Amazon today, and taking into account that the big growth years for Facebook are just getting started, that answer is yes.

Sounds like we should be buying Facebook stock and adding it to our list of portfolio companies, stat.

A week ago SecondMarket failed to clear any shares in its 43rd weekly Facebook secondary market auction. It was the first time that no shares at all were bought or sold.

This week, same thing. The weighted average offer and bid prices converged somewhat, but not nearly enough. Last week the weighted average offer price was $33.91 – this week it was $32.42. Last week’s weighted average bid price was $28.15 – this week it drifted up to $28.47. At $30, Facebook would be roughly valued at $75 billion. Trades were happening in that range back in January of this year.

Buyers clearly want a lower price. And sellers for now aren’t willing to give it.

As a point of reference, about 130,000 shares (about $3.9 million) cleared in the auction two weeks ago on October 7, 2011, and 50,000 shares clear the week before that.

It took me until today to realize, and then confirm, that I can finally have an iPhone and still use Google Voice natively. Via Sprint.

Background – in 2009 I bailed on the iPhone. Too many AT&T issues. And more importantly, I ported my mobile number to Google Voice. If I wanted to use that phone number with a mobile phone (and I did), I needed a phone that integrated with Google Voice natively. Apple didn’t allow that.

Google Voice is an awesome service because it allows me to set which phones ring whenever someone calls that number. If you call me on my mobile number it might ring one of many cell phones that I have, or Skype (via SkypeIn), or my home phone, or on Gmail. I can send and receive text messages via my browser, and voicemails are auto-transcribed (which can be hilarious).

I could still use Google Voice with an iPhone. Calls can easily be forwarded to any phone, including an iPhone, and the Google Voice iPhone app lets you place calls as well. But without native integration into the address book and, crucially, the call log, you always have to open the Google Voice app to make any calls. You can’t simply call someone back from your call log, which is a good percentage of my outgoing calls.

So I went all Android in 2009 and have been there ever since. My current phone is the original Nexus. I still think that’s the best Android phone on the market today, and it’s nearly two years old.

Anyhow, earlier this year Google announced deal with Sprint that allows any Sprint customer to make their phone number also a Google Voice number. Or, if you already use Google Voice, you can make the phone number associated with the phone the same number.

Bingo. No app needed. And it works with the new iPhone 4S, too, I’m told from someone at Google (I’ll check it myself tomorrow). Google doesn’t need Apple’s permission to take over the address book and call log. They’ve moved down the stack to control the device’s actual phone number.

What an amazing world we live in. Next week, fingers crossed, I’ll be using an iPhone with Google Voice natively. The cherry on top is that AT&T will be nowhere in sight. Sure, in a few months I’ll be ranting (again) about how awful Sprint is in general. But first, the honeymoon.

Best of all, the iPhone v. Google Voice religious war MG Siegler and I have been engaged in for years is over. Instead, the churches just merged. What a perfect video to capture the moment.

Venture firms have been buying stock on secondary markets in quasi-public companies for some time. This means they’re buying stock from other stockholders, not investing money into the company. They’re doing it because they think the stock is cheap and there are still venture level returns to be made. And they’re also doing it for marketing purposes, to put the cherished company logo up on their website as a portfolio investment.

Elevation Partners bet the house on a massive Facebook secondary market transaction in 2010, for example (it was a good bet). Facebook is listed as a portfolio investment on the Elevation site.

Andreessen Horowitz also does this – their investments in both Facebook and Twitter were both secondary market transactions. Both companies are listed prominently on their portfolio page.

Kleiner Perkins also lists Facebook as an investment on it’s Digital Growth Fund page, although it takes a bunch of clicks to get there. Their main portfolio page does not list Facebook. The firm bought shares in the secondary market.

Competitor venture capitalists hate this – a portfolio page listing a Facebook investment could mean a late stage secondary deal made without the knowledge of Facebook, or it could mean a very early investment at a $100 million valuation (Accel, in that case) when everyone thought you were crazy for putting money behind a Harvard dropout.

Sarah Lacy wrote a post on TechCrunch earlier this year (with a really handy chart) showing which firms invested in which companies when and at what valuations. It really shows how much of a difference there is.

This is inside baseball, but most of the really interesting stuff is inside baseball, in my opinion. So when you see Roelof Botha at Sequoia Capital talking about the issue publicly on Twitter (see image above), that’s what’s really going on. Marketing, positioning, and future deal flow. As well as genuine frustration about what the ground rules are for VCs.

Disclosure – every venture firm mentioned in this post (or their individual partners), except Elevation Partners, is an investor in CrunchFund. I keep meaning to put up a website showing all of their logos.

Getaround couldn’t have timed their debut at TechCrunch Disrupt New York in May any better. Rumors around Airbnb’s huge growth and new funding round were already swirling. And whether Getaround liked it or not, they were being dubbed the “Airbnb of car rentals.”

Like hotels, the car rental market is huge. And ripe for P2P disruption. Some people, like me at first, thought no one would hand their car over to strangers. But just like Airbnb, that’s wrong. Lots of people want to rent their car out. On average car owners get $325 per month renting the car out (and gas is paid by renters). The top 25% of owners get $910/month on average.

Many owners who don’t use their cars that often rent it through Getaround to make their monthly payments.

The average rental cost is $9/hour. There are higher end cars, too, like this Audi A4 for $11/hour, and this 2010 BMW 328i fro $15/hour or $60/day. The picture above is the owner of that BMW holding up his monthly check from Getaround.

Getaround is now handling over 15,000 hours of rentals per month, and they’re only available in San Francisco (more cities next year). Soon they’ll end field testing of the keyless carkit that will greatly ease the renting process, and it will become available on lots more cars.

And the growth. It’s still relatively small, but the company is growing by up to 50% per month right now. The model is proving out, and they’re preparing to raise a much larger round of financing to fuel growth (look for news on that soon).

I invested in Getaround shortly after they won TechCrunch Disrupt, and it’s looking to be one of the stars of the portfolio. More like this one, please.

I first wrote about Inspirato (affiliate link, see below) earlier this year – it’s a way for people to rent high end vacation homes at extremely reasonable prices. Instead of paying $4,000 a night for a four bedroom penthouse condo on the beach in Puerto Vallarta (with a private pool, no less), for example, you can pay just $400/night with Inspirato.

The picture above is a 2 bedroom, 3,200 square foot home in Tuscany that rents for $450/night in the summer, and as low as $320 per night in the off season.

For families, or a bunch of friends, it’s an extremely inexpensive way to feel like you are a super high roller while you’re on vacation.

The company operates on a “Costco” model. They have long term leases on the properties and let members get them for a price that just covers the cost of those leases (and the cost of a concierge, housekeeping, etc.). The profits all come from a one time initiation fee of $15,000, and a $2,500 maintenance cost.

It’s not for everyone, but there are a lot of people out there that see this as an almost magical deal. In just the few months since launching they have 900 members, and are adding about 100 per month.

I’ve been thinking about joining since I first wrote about them. Now, I’m not only joining but I’m investing, too. CrunchFund is joining the $17.5 million venture round being led by Kleiner Perkins.

If you’d like to join, use this affiliate link – http://www.inspirato.com/Invite/marrington. I get a $1,000 credit for each signup, and I’ll assign that to you for you to use for your first trip.

Kleiner Perkins Caufield & Byers Leads $17.5M Financing for Inspirato

Investment to fuel property expansion for world’s fastest growing destination club

DENVER, October 18, 2011 – Today, Inspirato announced $17.5 million in equity funding
led by Kleiner Perkins Caufield & Byers (KPCB), the preeminent venture capital firm for
category building consumer companies. Founded by Brent and Brad Handler, the co-
founders of Exclusive Resorts, Inspirato eliminates what is wrong with luxury vacation
rentals, adds what is right about destination clubs, and creates the perfect solution for
families wanting to vacation better. Other investors in the round include Access Venture
Partners and New York Yankees All-Star First Baseman Mark Teixeira.

Launched in January of 2011, Inspirato’s quickly expanding property portfolio has over
85 residences in 25 destinations. With more than 900 memberships sold to date, Inspirato
is already cash flow positive and plans to use the new capital to add even more vacation
choices for its members.

“KPCB’s investment in Inspirato offers further proof that ‘smart luxury’ is alive and well,
and that savvy consumers are looking for a better way to vacation with family and friends,”
said Inspirato founder and CEO Brent Handler. “Our members recognize that overpaying
for a luxury vacation is no longer a status symbol. They have been burned too many times
playing vacation roulette with online rental sites and have no interest in first-generation
destination clubs whose initiation fees are typically hundreds of thousands of dollars.”

The Inspirato membership is simple and affordable. Members pay a one-time Initiation
Fee of only $15,000 and an Annual Membership Renewal fee of $2,500. Unlike other
luxury vacation clubs and fractional ownership options, Inspirato has no complex or
confusing reservation rules. Members travel as often or as little as they like, and have no
restrictions on usage, even during peak travel periods such as school holidays. So far this
year, members have traveled thousands of days to club-managed properties and reported
satisfaction of 9.4 out of a possible ten point scale.

At the center of the company’s success is a unique business model whereby the club enters
into long-term leases on properties directly with owners. This structure eliminates
brokers’ fees and enables the club to control the end-to-end vacation experience for
members. Inspirato’s model allows for deeply discounted nightly rates, personalized
service, and maximum availability, even during peak travel seasons.

Ted Schlein, partner at KPCB who will join Inspirato’s board of directors, said, “We believe
that Inspirato is rapidly becoming the standard for luxury vacations in homes. Offering an

affordable, fully curated member experience from one vacation to the next distinguishes
Inspirato from other luxury vacation rental options. I am excited to work with the Handlers
who co-founded Exclusive Resorts and have deep expertise in this business.”
Schlein added, “In the luxury market, even affluent consumers are prioritizing value and
exercising discretion when making purchase decisions. We believe there is a significant
advantage for businesses that not only offer quality, but also value to the affluent
consumer.”

New York Yankees All-Star First Baseman Mark Teixeira, who along with several high-
profile CEOs and athletes joined Inspirato earlier this year, recently became an investor
in the company as well. “After taking my family on an Inspirato vacation, I knew this was
a concept that would appeal to so many other families, especially ones with children like
mine,” Mark said. “The properties are spacious and in the ideal location, the service is
proactive, and everything we need to make the trip perfect is at our fingertips. I am thrilled
to be a part of it.”

About Inspirato
Inspirato is the luxury vacation solution ideal for travel with family and friends that
combines the best of destination clubs’ consistency and service with the value and
flexibility of villa rentals. Inspirato founder/CEO Brent Handler is the co-founder and
former president of Exclusive Resorts. By leasing its vacation properties (rather than
owning,) Inspirato is able to keep membership fees low, offer up to 80 percent off market
rates, and easily add homes and destinations as demand increases. The company’s
innovative business model has led to rapid growth since its January 2011 launch, placing
Inspirato at the forefront of the “luxury for less” movement.

Access to Inspirato’s personalized travel services and advisors, club-managed portfolio
of more than $150 million in vacation homes, and exclusive discounted everyday rates,
is available for an Initiation Fee of only $15,000 and a small Annual Membership Fee of
$2,500. There are no complicated restrictions; members travel as much or as little as they
like. Inspirato residences are outfitted with the highest quality amenities and located
in popular destinations including Italy, Mexico, Hawaii, California, South Carolina, the
Caribbean and Colorado. Beyond luxury residences there is Inspirato Metropolitan, a
collection of select fine hotel and resorts in the hottest destinations around the globe, and
Inspirato Experiences, offering expertly curated vacation adventures.

For more information about Inspirato, visit http://www.inspirato.com.

About Kleiner Perkins Caufield & Byers
Since its founding in 1972, Kleiner Perkins Caufield & Byers has backed entrepreneurs in
over 500 ventures, including AOL, Google, Amazon, Compaq, Electronic Arts, Genentech,
Intuit, Juniper Networks, Netscape, Sun, Symantec, Twitter, and Zynga. KPCB portfolio
companies employ more than 250,000 people. More than 150 of the firm’s portfolio

companies have gone public. Many other ventures have achieved success through mergers
and acquisitions.

All this year TechCrunch and others were covering the weekly SecondMarket auctions for Facebook stock. 2.7 million shares, for example, cleared in aggregate the first five auction at prices ranging from $21.01 to $28.26 per share.

The auctions have continued, but there haven’t been the dramatic price increases or decreases needed to trigger the rabid coverage. But today, for the first time I believe, SecondMarket was unable to clear any shares at all in the auction.

The weighted average offer price for this week’s auction was $33.91, roughly in line with the clearing price for last week’s auction. But the weighted average bid price was just $28.15. Zero shares cleared the market, meaning no shares changed hands.

Why? The WSJ article this week pouring cold water on rising startup valuations, and suggesting that venture cash was drying up, was almost certainly the cause. Whether or not there was much truth to the article, things like that can and do freak buyers out and cause them to step back. No one wants to buy at the top of the market.

What really matters is whether or not things pick back up next week or the week after. And whether or not sellers will take lower prices in the $20s to cash out of Facebook.

Gary Flake, a long time Technical Fellow at Microsoft, sent me an invite to his new Clipboard service today. The company has been on my radar for a while now, but they’ve kept things pretty quiet. Today was the first time I was able to see what they’ve been working on.

It’s an internet clipping and bookmarking service, sort of Delicious meets Pinterest. There have been scores of these types of startups before, but none of them were quite efficient or beautiful enough. At first and second glance, Clipboard looks like a winner.

With a click of your mouse you can highlight any part of a web page (it helps you by grabbing obvious content areas, and save it to your clipboard. The usual stuff, tagging and annotation, is available if you want. You can then make the clips private or public, share them, etc. And you can view them in a variety of ways, including a boring list or a Pinterest-style layout.

It has some real bugs still – it doesn’t grab posts from TechCrunch well, for example. And when I grabbed a screen from the MoMa website it showed a 404 error on Clipboard (meaning it’s pulling it real time from the original source, I guess, not taking a static picture of what you saw at a certain time).

But…It’s GOOD. Really good. A definite keeper. I’ve already used up most of my invites, but if you can find someone who’s using the service already, hit them up for one.

See GeekWire for their take.

Update: From comments:

Clipboard engineer here.

Clips are not just screenshots – they preserve the original markup and style. In real time, we translate the selected portion of the HTML and CSS of the source page into a self-contained unit that is both compressed and can safely coexist with other clips. For example, notice that all the links are preserved in this clip:
http://www.clipboard.com/clip/LR-B8x4FlQsi9NHM0YYHNxQZ806b3pRw61He

We even preserve embed and objects.
Youtube video: http://www.clipboard.com/clip/LR-Ipfjh4bp-vpwg2XZSaQssLBqu2A8tKdDe
Live map: http://www.clipboard.com/clip/LR-KylLO_bqPkN0m5S3BjhOSpVleZmN-925e
Stock chart: http://www.clipboard.com/clip/LR4afhOoCYqJ-LDy

Because we capture all the relevant markup and styles, a clip will persist even if the original page goes away.

The Wall Street Journal quietly enabled a personalization feature today (or at least this is the first time I’ve noticed it). Articles are now automatically sorted based on what they think you’ll like to read. It’s powered by Los Angeles based startup Gravity.

If you’re not familiar with Gravity – it was founded in 2008 by three former MySpace executives and has gone through many iterations. Originally the company was a site where people could chat with others about topics of interest. Then they turned the engine they created to determine people’s interest graph and planned on helping other sites personalize content.

CEO Amit Kapur, formerly the COO of MySpace, wrote a guest blog post on TechCrunch last year talking about his vision around the future of personalization.

It turns out that sites want this feature. Earlier this year they began talks with the WSJ and others, and they contacted me about adding the feature to TechCrunch. We were aggressively pursuing a deal as of the day I was terminated, and I had hoped that we’d be the first to launch.

That didn’t happen apparently (and I have no idea where things stand with TechCrunch and Gravity). But I’ve been checking the WSJ site to see when it would launch there.

To see it in action go the the WSJ and scroll down to the part of the site where there’s a grid of topics with stories underneath (or just search for “personalized” and you’ll see it right away – “The sections below are personalized for you. Learn more >.”

WSJ News Personalized for You
The articles and sections in this area of WSJ.com have been selected based partly on the stories you have previously read on the site. We take your privacy seriously and while this personalization feature uses cookies, it does not connect your WSJ.com reading history to your name or other personally identifiable information.

If you prefer not to see personalized content on WSJ.com, please click here to opt out. To learn more about our privacy policy, click here. This personalization service is powered by Gravity, a WSJ.com partner. Please click here to see Gravity’s privacy policy.

There’s more here on the Gravity site about the partnership. That’s also the place where you can opt out of the service if you want to.

As you read stories on the WSJ site, and then share those stories or “like” them, Gravity is watching. Try clicking on a bunch of sports stories, for example, and you’ll see the sports section move up to the top and the top stories will be related to the things you’ve clicked on (I clicked on a bunch of NBA stories, for example).

For now it looks like the WSJ is just using Gravity in that one area of the home page. At TechCrunch we were planning on rolling it out on the site as a whole. Important stories (determined by us) would still be positioned on top. But if you only seem to read stories about Apple, there’d be a concentration of those stories, too.

Gravity is charging a fee to publishers to use the service – a quite steep fee. But the data that you get back on what individuals like is a potential gold mine. You can then use that data to hyper target ads to those people. The person who only reads Apple stories, for example, would get a lot of iPad and iPhone 4GS ads.

That combination of features – providing users with a more interesting website, and getting back a ton of interesting data about those users, made it a no brainer from my perspective.

One of the things the press is fascinated with – and have asked me repeatedly since the CrunchFund was announced – is exactly how venture capitalists differentiate themselves to provide a competitive edge.

The question sounds smart. But for anyone who’s been an entrepreneur it makes about as much sense as asking a baseball team how the colors of their uniforms will help them win the world series.

Entrepreneurs really just want a couple of things from investors. Money, obviously. The brand/marketing benefits of associating their brand to yours. And directed, specific help exactly when they need it.

The worst kind of investor is the one that’s in your business all the time. These are generally the freshly minted MBAs who joined a big venture firm and are trying to impress everyone at board meetings. They like to do things like fire CEOs and bring in “seasoned managers.” Or “lay off half your staff and sell this loser to whoever will pay at least enough that we get our money back.” Mostly they’re just insecure, have no idea what they’re doing, and want to try to hide that by talking a lot.

Far better than that is an investor who does absolutely nothing beyond giving you money. The “first, do no harm” principle should apply to venture capitalists just as much as it applies to doctors.

The perfect investor, though, knows when to leave you alone but also knows when to help in a directed, high value-add way. Most of the time they only help when you’ve specifically asked them. Occasionally if things are going really sideways they’ll step in with advice, too.

In an interview a couple of weeks ago Vinod Khosla spoke with me about how he helps companies. The first way is to be “brutally honest” with them – see my post here.

The second way, he said, is through targeted help that adds incredible value. He was currently spending a lot of time trying to recruit a single person for a startup he’d invested in. This person was being recruited by another big venture firm to start a new company. But Khosla’s company wanted him too. And so Vinod spent time meeting with this person directly to try to convince him.

When he spends time directly recruiting like this, he said, he has a very good success rate. He thought it was likely he’d convince this guy to join his company. “Sometimes the right person can make a young startup 2-3x more valuable than it would be without him or her,” he said, “recruiting these people is a great use of my time.”

If Vinod invests in your company, don’t expect to spend hours on the phone with him every day becoming bestest friends. But when you need a big gun, you’ll have one.

Ron Conway has the same philosophy. He spends almost all of his time helping startups raise money, recuite people and eventually sell. I’ve probably heard at least two dozen stories about how he helped a company pull a victory from the jaws of defeat. Unfortunately almost all of these stories involve him leaning on some CEO or board member of a big public company and will never be told publicly. The most amazing thing is how often he’ll do big favors for startups he hasn’t even invested in.

In fact, he may be doing too many favors. Here’s an email that David Lee (he runs SV Angel, the fund Ron founded) sent out recently about Ron:

From: David Lee
Sent: Monday, October 10, 2011 9:10 PM
Cc: SVA Partners
Subject: Understanding Ron’s Role at SV Angel

CONFIDENTIAL – DO NOT FORWARD

Friends and Colleagues,

I want to clarify Ron’s role at SV Angel and how he works with us. This is very important because many of you still email Ron on most business matters, which is causing unnecessary bottlenecks.

Ron is not involved with day-to-day operations of SV Angel. He is not a General Partner in SV Angel. He is the (largest) limited partner in the fund. He directs all of his deal flow to us and we have access to him and his resources. The team and I are responsible for all day-to-day activities such as evaluating deal flow, making investment decisions, meeting business partners and helping portfolio companies at inflection points such as financings and M&A.

Ron focuses on highly-sensitive inflection points – special projects for portfolio companies that have unusually high impact. The SV Angel team and I focus on all other inflection points. We use the following analogy: Ron is the “brain surgeon” and we are the “primary care physicians.” The physician is the point person for all matters and can handle 95% of them. The brain surgeon handles the ‘delicate’ stuff.

We have been using this approach for the last few years and it’s been successful in leveraging Ron’s strengths. I am writing this email because many don’t understand our system and still email Ron only.

Please understand that Ron forwards EVERY SINGLE EMAIL HE RECEIVES to me and the SV Angel team. The only exceptions are those that are highly confidential or sensitive.

If you think it’s urgent, please feel free to cc Ron but keep in mind that we will bring it up to him anyway so ccing him won’t necessarily expedite things.

Also, please keep in mind that he is also very active in philanthropy so he is at full capacity all the time.

To be clear, this email doesn’t mean we are changing a thing. Ron is still as active as ever – as the brain surgeon. But I want to clarify our approach to you so we can continue to provide responsive follow-up and service, which has been Ron’s trademark over his 15 year career as an angel investor.

CONFIDENTIAL – DO NOT FORWARD

-David

The difference between Ron and Vinod is just one of scale. Khosla Ventures invests in far fewer companies than SV Angel, and so Vinod doesn’t have as many people asking him for help. SV Angel invests in 4-5 companies a month. They have a lot of active portfolio companies, a lot of them are really young, and all of them have pressing needs.

This is exactly how we operate at CrunchFund (and to be clear, all the best angels and venture capitalists do, too). We don’t meddle, but we’re there for entrepreneurs when they need us.

So back to that first question in the first paragraph above that the press loves to ask. How are we different? Well, we focus on having a very, very deep network that we can call on when we need to help our startups get something they need. Putting together a round of financing with like-minded investors. Hiring a team, particularly talented product, design and engineering people. And, eventually, helping them with liquidity events.

There’s one last thing that entrepreneurs need, too. Your support. Starting a company is a lonely thing, and there are usually people in your life who think you’re crazy for doing it. Sometimes an entrepreneur just needs to know you actually believe in them to keep their morale up during the tough times. I talk a lot about this in my “Are You A Pirate” post on TechCrunch