Uncrunched

There are a lot of different kinds of people in this world. I’ve found that I get along best with the ones that are brutally honest.

Earlier this evening I interviewed Vinod Khosla at the jam-packed Startup Weekend Seattle event. We had a long talk – nearly an hour in total, which is a lot longer than most interviews I do and allowed us to take a deep dive on a number of issues important to Vinod. There’s good coverage of the event at Xconomy, GeekWire (again) and AndrewDumont.me.

What strikes me most about the man aren’t his views on technology or venture capital, but his communication style.

During the pre-interview prep I carefully brought up an issue that I’ve heard from a number of people – that Vinod is somewhat “difficult.” “I hear he can be a massive pain in the ass,” someone told me last week while asking if he’d be a good potential investor for their startup.

So I asked Vinod about it, and carefully watched his reaction. I did not want to ask him this on stage if it was going to make everything go sideways. He chuckled, said this was a fine topic to discuss on stage, and asked me if I’d read the quote on the Khosla Ventures site about brutal honesty. I hadn’t, but here’s what it says: “We prefer brutal honesty to hypocritical politeness.”

He told me stories, and then repeated them on stage, about a variety of entrepreneurs he’s been “brutally honest” with. A startup that still had $50 million in the bank when he realized with certainty that they’d fail and suggested they shut down and liquidate. Two years later, he says, they had $3 million left in the bank and sold for $2 million. Yes, I double checked those numbers with him – the company sold for less than the cash they had in the bank (there are a variety of reasons why this can make sense for the sellers).

He talked about passing on investing in Joe Krause’ Jot because it wasn’t, in his opinion, a big enough idea. And he talked about how he gives his brutal, unvarnished opinion to entrepreneurs who seek his attention and money.

VC’s give lots of reasons for turning down a startup, he told me. Things like “it’s too early,” or “it’s too late,” or “I couldn’t get my partners comfortable with it.” Those are the easy ways out, he says. He prefers to give the exact reason. The one he seems to give most often is that the idea simply isn’t big enough to matter.

It’s tough to hear those kinds of things as an entrepreneur, and it’s no wonder some of them pass along their opinion that he’s a “pain in the ass.”

In my world I’ve had to learn about brutal honesty in a couple of different ways. The first is when you first hear a startup pitch and you know it’s not going to make it. I’ve tried the brutal honesty approach in the past, and some percentage of those entrepreneurs become enemies, sometimes lifelong enemies. I’ve tried a softer, more polite approach. In those cases the entrepreneur remains eagerly on the hook. If you don’t respond later, though, you get the same result.

After years of tinkering I’ve found two excellent ways of minimizing the damage from these people. If I’m at a tech event in public I put on my full (invisible) body armor. Smile, shake hands if I must and perform the right type of theatrical engagement. “Amazing. Love to hear more. Do you have a card? I’ll contact you.”

That contact never comes. And for some reason far fewer people ever become upset v. the other ways of handling things.

I really don’t like doing this, but it’s the one thing that keeps me sane and allows me to continue to engage with the community. And every once in a blue moon someone does manage to sneak in past the armor and make a lasting impression on me. Still, I’d rather be more like Vinod in this way, and I’m going to experiment to see if I can make it work.

Here’s the other way brutal honesty works for me – in chasing down a story or interviewing someone. I just ran across this story on VentureBeat this evening from September 16. I believe it gives a good overview of how I conduct myself in interviews. I ask a hard question. I get “bullshit, bullshit, polite nonsense bullshit” in response. I respond that my question wasn’t answered, and ask again. and again. and again. And then, finally, for example, Kevin Rose admits he sold much of his Twitter stock over the summer. Or Matt Cohler, after three tries, simply gives me that look that suggests I stop asking him if he’d invested in Dropbox. Or Carol Bartz gets so frustrated with my attempts to penetrate through the haze of bullshit that she yells “so fuck off!”

I’m not trying to make people uncomfortable on stage. I respect (eventually) their refusal to answer and simply move on. But what drives me crazy are the people who are so politicized and media trained that they can speak for hours about everything in particular but never answer the question I’m putting to them. I appreciate their art, but I don’t respect their unwillingness to engage in the truth.

Bad news, good news, no news, it should all be spread truthfully and succinctly. There are exceptions, but they can usually be dealt with by saying “I’m not going to answer that question,” and we can move on. That’s why I enjoy interviewing certain people more than others.

Doug Leone plays it straight and fears no question. Marissa Mayer is excellent at going deep on issues she likes, and skirting those that she doesn’t. But she doesn’t engage in idle bullshit. Roelof Botha, Ron Conway, Josh Felser, Jeff Clavier, Dave McClure are all straight shooters. Reid Hoffman will talk about anything at all with the innocence of a newborn (he sleeps well at night, I think). Matt Cohler, who was whelped by Hoffman in a previous life at LinkedIn, is much the same way. His trademark move, though, is to simply stare you down silently when you ask something he doesn’t like. It’s direct, communicative and it works. I often simply move on. When I talk to John Doerr, on stage or off, I get the distinct feeling that the man can create matter from the swirls of his words. I don’t know if that’s bullshit or honesty, but it keeps me interested and, I admit, willing to imagine a better world is actually possible.

Sometimes people call me a jerk for the way I interview these people. I get why they think that. But I think I do a good job of showing off the shiny parts of a person’s achievements, and letting them get their words out to the world. When I cut them off, it’s only because I expect more from them. Better. These people keep coming back for interviews year after year, so I know they’re not entirely unpleased with the experience.

Back to Vinod…All this brutal honesty seems to be working out nicely for him. Entrepreneurs come back to him time and time again as they move from one startup to the next. They often take significantly lower valuations to be part of his family. Just this week, in fact, a startup I’ve invested in took a term sheet from Vinod valuing the company at $6 million. Another very good firm was offering $10 million. I asked him why he did that. “Because a startup with Vinod is a lot better than a startup without Vinod,” he said.

Which says it all. Direct, brutal, no frills, awesome, wonderful, honesty. Versus being smile fucked by someone who’s hypocritically polite. I’ll take the honesty any day for the win.

Disclosure: Khosla Ventures is an investor in CrunchFund. I think this is kinda rad.

Not sure how the tech press managed to miss this. Some 450 people who work on Google Plus are currently in Hawaii for an offsite. For tax purposes, we understand, the event involves work. But in reality it’s a reward for all the hard work the team has accomplished in launching and growing Google+.

Google has confirmed the trip but won’t provide any further details.

The “no good deed goes unpunished” rule applies here too, though. There are lots of people working on Google+ who weren’t invited to the offsite, a source tells me, and obviously wish they were. The issues brought up around that may have tanked the entire trip, apparently.

If there’s any actual work going on in Hawaii, it’s likely trying to understand the recent product changes at Facebook and how to address them.

Have more details? Send them my way.

Update: Liz Gannes has pictures

“So we begin another journey. I fully intend to stay with AOL for a very, very long time.” – Me, one year ago.

A year ago yesterday we announced the acquisition of TechCrunch by Aol. But it wasn’t until September 29 that the deal officially closed. Today marks the one year anniversary of that acquisition, an important milestone both psychologically and contractually.

Congratulations to everyone at TechCrunch who made it to the one year mark. As I said on stage at Disrupt a couple of weeks ago, the thing I’m most proud of is the team we built at TechCrunch, and the fact that we managed to keep that team together post-acquisition. It is the most talented writing team I have ever seen, led by the most talented CEO I’ve ever met.

Unfortunately I’m no longer there. Neither is Paul Carr. And over time more people will leave. TechCrunch will evolve into whatever it’s supposed to be when it grows up, and I hope that it continues to be something I’m proud of.

One thing is certain, though. It has been a very, very good year for TechCrunch. As of the day I left the company revenues were up 50% year over year from 2010. Profits had more than tripled. Unique visitors are up 25% (12.2 million) and page views are up 30% to over 42 million.

Congrats to the TechCrunch team and also to Aol on what is most certainly a successful business acquisition.

With the exception of a very large faceplant over the last several weeks Aol kept their initial promise not to interfere with TechCrunch’s editorial process. The problem is that I don’t think that was just a one time hiccup. From what I can tell right now (as an outsider), Huffington Post is actually becoming more involved, not less, in TechCrunch’s day to day editorial decisions. Public executions of leaders tend to have a severe chilling effect on whoever takes over, and Arianna Huffington is, without a doubt, the current editor in chief of TechCrunch.

It is my sincere hope that over time TechCrunch is able to carve out some level of independence for itself. Because, as a reader, I want TechCrunch to live on. And stay the voice, however controversial, of Silicon Valley. Tranparency, Truth and Bias. The TechCrunch way.

ps – The logo above is the very first TechCrunch logo from 2005. It didn’t last long. Fred Oliveira redesigned the site and the logo and by 2006 the site looked like this:

Patrick Gallagher, my partner at CrunchFund, sat down with the folks at Bloomberg today to talk about the fund. You can also watch it on YouTube.

VentureBeat leveled quite an accusation at TechCrunch this evening, claiming that they had evidence that suggested TechCrunch was trading stories for ad buys. The evidence? An email sent by a startup CEO to VentureBeat that was meant for TechCrunch.

“AOL-owned tech blog TechCrunch is often accused of trading favors for exclusives,” says VentureBeat, adding “Now we have proof.”

Err, ok.

The company supposedly offering the payment apparently has an advisor that’s married to a VentureBeat reporter, which may explain how the mixup happened (or not, it’s a very confusing post). But the gist of the accusation is that the company spoke to a TechCrunch salesperson about an ad, and then emailed the TechCrunch editorial team with an expectation of a post. There’s now an update to the post with the company CEO trying to explain that the email was taken out of context and was really meant for VentureBeat anyway. In short, it’s a mess.

Despite the extremely hazy background facts, the accusations are clear. TechCrunch posts stories in exchange for advertising.

That’s absurd.

In a comment to the post I pointed out that if that email had been received by the TechCrunch team someone would almost certainly have posted it immediately and mocked it. Here’s a post I wrote last year when an ad agency threatened to pull business based on a post I wrote about American Express.

Here’s another interesting factoid. Valleywag tried for years (and years) to nail TechCrunch on some sort of ethics charge. They never succeeded because that stuff never happens at TechCrunch. The original post is gone but I quoted it here:

Arrington, for a reason no one has ever pinpointed, attracts haters at a level far beyond what you’d expect for what is basically an online trade magazine. I learned this firsthand when I wrote for gossip site Valleywag from 2006 to 2008. Despite Valleywag’s cruel, personal posts, we received almost no hate mail and were never accosted in public. Instead, we got mail, phone calls and in-person pleas from people who begged us to take down Mike Arrington. The most common accusation was that TechCrunch sold endorsements of startups, either in exchange for advertising buys on the site, or for outright cash payments.

This is important: None of these claims ever checked out. Sources would claim to know someone who knew something, but these mystery witnesses never showed up to tell their stories to a reporter. Arrington’s success, both as a blog-era publisher/writer and a startup businessman, inflames less successful entrepreneurs and journalists with off-the-scale envy. How does he do that?

In the one case where a TechCrunch writer had acted inappropriately by requesting compensation for a blog post he was terminated immediately and everything he’d ever written was deleted from the site. And I broke the news about that, we did not wait in the hope that it would never get out.

TechCrunch has been controversial because it has never played by the rules (see my post here about how I ran the joint). But they’ve never (NEVER) done the kind of shady shit that VentureBeat is accusing them of today, despite a ridiculous effort by competitors to show otherwise. Like I said in that post, “One thing I knew for sure was that I’d never trick readers, or lie to them, or otherwise be shady. It’s not me. And even if it was me, it’s too easy to get caught.” It’s just not the TechCrunch way, and if it was, they’d have been nailed for it by now.

If VentureBeat wants to fight it out with TechCrunch, I’ll be glad to watch. But they need to put on their big boy pants, or bow out gracefully with an apology.

Look for that apology shortly.

Update: The original title, “How TechCrunch’s back-room deals destroy its credibility” has now been considerably softened to “Start-up’s gaffe raises questions about blogs in Silicon Valley.”

Update 2: A representative from the company in question left this comment on the VentureBeat post: “Hi my name is Bill Briggs. I am part of the founding team of Own Point of Sale, board member, and VP of Business Development. I wanted to state that this article was taken very far out of context. A simple conversation was cut, pasted and filled to make it look like a direct blow to TechCrunch. This is not the case we like Tech Crunch very much. I spoke with the editor, Mike, and explained to him that he is pulling us into a battle which we want to no part in. This is directly hurting our reputation, especially with those we like (TechCrunch). I asked them to please take it down. He refused saying, “we don’t have to,” which might be and probably is true. However, know this, Venture Beat has falsely composed an article about our company and it is not true. The very fact that they chose not to take this down shows the caliber of this organization.”

Update 3: Apology issued:

Update 4: Here’s a copy of the original post.

I ran into Zappos CEO Tony Hsieh yesterday at the Google Zeitgest conference in Arizona. We caught up briefly over ex-TechCruncher Paul Carr – Tony and I are both backing his new startup. Then he told me about another of his new projects – the launch of a private jet service under the Delivering Happiness brand.

A few weeks ago Hsieh led a $7 million investment round in a small private jet service called JetSuite.

It wasn’t clear what, if anything, that investment had to do with Hsieh’s larger plan: restoring and transforming part of downtown Las Vegas into a live/work/play paradise (Downtown Project) and turning happiness into a business model (and a way of life) (Delivering Happiness).

It turns out the investment is an important part of Delivering Happiness and Downtown Project. Hsieh, and Delivering Happiness CEO Jenn Lim (both pictured above), are launching the new Delivering Happiness travel experience service as part of the overall mission to create experiences, memories and stories. The jets will be branded Delivering Happiness (see picture), and they’ll be operated by JetSuite (Hsieh is also a board member of JetSuite, as is David Neeleman, the founder of JetBlue).

The new service is actually part of a much bigger story that involves multiple entities – Zappos, Downtown Project (a company owned by Hsieh), Delivering Happiness (owned by Hsieh and Lim) and JetSuite (Hsieh is one of a few investors).

Downtown Project aims to reinvigorate downtown Las Vegas and make it into the most community focused large city in the world, where residents can live, work and play and everything is within walking distance. This is a grand vision, and involves dozens of small investments by Hsieh in micro entrepreneurs who want to start businesses in the area around Zappos’ new headquarters in downtown Las Vegas. He’s looking at 70 startups right now, many of them to be founded by current Zappos employees who can keep their day jobs while forming these new Downtown Project companies.

Delivering Happiness is starting multiple businesses around the science of happiness. “Not the kumbaya let’s all get along type of happiness,” Lim tells me, but the actual science of building sustained happiness for people that Hsieh outlined in his book of the same name.

One of the ways they plan to spread happiness in the world is through Delivering Happiness Experiences. That’s where the jet experience comes in.

The Delivering Happiness jet will initially be part of an experience that takes people back and forth from San Francisco to Las Vegas. These experiences may also include door to door pickup in a restored classic Airstream RV (pictured below, pre-restoration) or a Delivering Happiness bus. And when you’re in Las Vegas, you will have the option of staying at one of the condos leased by Hsieh at The Ogden.

If this all sounds confusing, it’s because it’s still a work in progress. But it’s all definitely coming. People will be able to book flights on the jet and have an amazing experience in Las Vegas at prices more suited to the Southwest Airlines crowd – every day, Jetsuite offers special deals that can be booked for as little as $499 each way (for all four seats on the plane). In what might be the perk of the century, Zappos employees already get to fly free.

In fact, Hsieh and Lim repeatedly referred to the service as “the Southwest Airlines of private jets.”

This is a much bigger story than a simple private jet service. There’s a massive vision of rebuilding a big chunk of Las Vegas and turning it into the most fulfilling place to live and work in the world. And a separate but related vision of turning happiness in general into a real business and, as Lim believes, a movement. Hsieh and Lim haven’t given many specific details to the world about these visions yet, but that’s all changing soon.

Stay tuned. But at least one outsider, Paul Carr, has bought in to the vision. He’s going to base his new startup in Las Vegas and immerse himself in the Downtown Project world.

William Shatner once asked me what exactly I was doing at TechCrunch, the blog I started in June 2005. Let’s put aside the fact that I was testing out a new service that got celebrity autographs and a video in exchange for cash. I actually never answered his question.

I never really did know what I was doing at TechCrunch. I was writing about startups while building a startup and investing in others. It never occurred to me that as the site became, almost immediately, an important part of the tech news scene, to figure out exactly what my plans were.

One thing I knew for sure was that I’d never trick readers, or lie to them, or otherwise be shady. It’s not me. And even if it was me, it’s too easy to get caught. The easy path was the one where transparency was shining brightly.

That was never enough to stop the journalism community’s antibodies from hitting TechCrunch hard over all the conflicts of interest that were inherently part of who I am. We fought through all that for years, and I kept fighting until my pen was removed from my hand, so to speak, by Aol a couple of weeks ago.

Now I’ve got a new pen, though. And a blank slate. Infinite choices, I get to choose my own path. All that jazz.

So as William Shatner would undoubtedly ask if I gave him another $149, what exactly am I going to do here at Uncrunched?

I’m going to do the same thing I’ve been doing since 2005. I’m going to write about startups, and the people who build them, and the people who fund them, and the people who use them. I’m going to break stories and I’m going to write my opinion, and I’m going to write whatever the hell else I feel like in between. If people want to read what I write, yay. If they don’t, I can live with that too.

This time, though, my eyes are open. I know exactly what I’m walking into, and I know how to play this game.

Here are the things you can expect from me:

– TRANSPARENCY: I will disclose, as I’ve always done, all financial conflicts of interest (I have lots and lots of those). I’ll also disclose other conflicts of interest, like friendships, when I can. I know a lot of you don’t understand why I can’t disclose all conflicts of interest. The answer is that if I did, not that many people would want to talk to me in the direct, honest way that I prefer. As a reader you must remain aware of the inherent bias in everything you read, and form your own opinions accordingly. Read this post on TechCrunch and the links for more about how I see the world.

– TRUTH: I always try to find the truth in a situation. That unvarnished, pure nugget of truth at the core of every issue that I write about. Sometimes this takes more than one post, and sometimes I have to go back and correct things I’ve gotten wrong. I’ll continue to do that. For more on this, read my post about process journalism.

– BIAS: I have lots of it, and I never try to ignore it or hide from it. The main thing to know about me is that I’m a champion of entrepreneurs and the startups they build. They are my rock stars. If in doubt I side with them, and that’s clear from my writing. For more on this, read my pirate post and my thoughts on how government can best help Silicon Valley.

Ok, now that we’ve got that stuff behind us, let’s do some blogging!