Adam Healey on Entrepreneurship

What’s the difference between FB and Twitter?  

This seems to be the question on everyone’s mind of late.  When I say “everyone,” of course, I mean the people in my little corner of the universe.  I imagine there are still folks out there (although the number is dwindling rapidly) that have never even heard of these services.  Good for them.  They say ignorance is bliss.

Twitter makes you keep things short and sweet by limiting to 140 the number of characters in each of your messages.  This is because one of the channels that tweets (as these messages have come to be known) travel over is sms, the short messaging service that utilizes telecommunications networks.  SMSs have a character limit of 160, so Twitter saves 20 characters for the user name and assigns the remaining 140 for the message.  

In responding to this question over Twitter, I have been forced to encapsulate my thoughts into 140 characters or less.  I think I have been able to get it down to 40 characters:

Facebook is a circle; Twitter is a stage.

On Facebook, you create a circle of friends.  Much like real-life friendships, both sides of the relationship “opt-in.”  On Facebook, you ask to be someone’s friend, and they can choose to accept your friendship or deny it.  Once you have accepted a friend request, your new friend joins your circle.  They have access to a wealth of information about you; your bio, your thoughts, your pictures, your links to stories, your other friends.  You can create different privacy groupings and put your friends into separate groups, thereby limiting how much access they have to you, but generally speaking, your friends are in your circle.  A circle of trust.  

Twitter is completely different.

On Twitter you’re either on stage or watching someone else on stage.  You follow people and people follow you.  

Have you ever been to Jazzfest? What a great event.  You can wander around the fairgrounds, deciding which stage to visit, each featuring a different musical genre, and a different kind of crowd.  Some stages are big, others are tiny.  You can easily take in 20 or 30 acts in one day.  

Now, imagine you yourself are a musical performer.  You can get on your own stage as well, and have people listen to you.  Some enjoy what you perform, while others might drift off to visit another stage.  

That’s Twitter.  You decide who you want to follow (or which stages to visit) and their tweets go into your main stream.  Because Twitter was clever enough to launch an API for their service early on, today there are hundreds of third-party applications that help you to extract value from the twitterverse (a few of my favorites include TweetDeck and Tweetie).  An interesting tweet might come from a friend telling you what they are doing, or an industry luminary linking you to their latest blog entry about twitter+physics.  You can let the stream flow by, and when you see something interesting, you might reply to the person, repost their tweet to your followers (known as a “retweet”), or follow a link they have embedded in their message.  

On the flip side, when people decide to follow you they start to see your “lifecast” in their tweetfeed.  You probably won’t know who most of these people are, much like performers don’t personally know many of the members of their audience – but that’s ok.  You’re a bit flattered that the person has decided to follow you, and you may resolve to make your tweets more interesting / relevant / funny / whatever.

I know I’ve just scratched the surface here.  As with most things, the best way to learn is simply to dive in and try if for yourself.  Please share any thoughts, comments, or additions to this post in the comments section, and I would love to have you as a follower – you can find me on Twitter here – see you in the twitterverse!

As we’ve just announced the close of our $3 million Series A Financing Round at VibeAgent, I am remembering back to when my first startup, Samba Digital Media, raised its first (and last) institutional round of $2.4 million in June of 2000, over 8 years ago.

What a difference 8 years makes.  I can’t even begin to tell you how very different these two events have been, both for me personally and for their respective companies.  I think reading the always thought-provoking Paul Graham’s latest essay on the (d)evolution of the VC industry prompted this flashback.

Here are 3 of the major differences:

1.  Samba’s Series A was funded by institutions, while VibeAgent’s was funded by high-net worth individuals.

At Samba, we were raising money in Prague, where access to angel investors was little to none.  Thus, we turned to institutional investors, namely Baring Communications Equity (now defunct), Red-stars.com (also defunct), and Siemens (now out of the investment business).  This time around, we raised our Series A from high-net worth individuals, all of them hailing from Charlottesville or Richmond, and all with a personal connection to one of our board members.

While there are a number of reasons VibeAgent is a fundamentally more attractive investment today than Samba was in 2000, the truth is there simply wasn’t and still isn’t the access in Europe to angel investment that we have here in the United States.  It’s simply easier to get an early stage investment round done in the US vs. Europe.

The implications of raising early stage money from sophisticated individuals vs. bureaucratic institutions can not be understated.  While we could have gone the institutional route with VibeAgent, we decided that we’d be better off going the HNW route first, based on three assumptions: a) we’d maintain more control over our business, meaning we’d have more of a likelihood of success; b) we’d maintain a greater ownership stake, meaning we’d be more motivated to be successful; and c) we’d get a round done faster.  Well, two out of three ain’t bad.  The first two I believe are playing out, but the third not so much.  We spent a full year closing our investment round, and ended up doing two tranches.

2.  Eight years ago, I thought this was a big deal.

A lot of investors will tell you they’d rather invest in an entrepreneur that’s had a moderate failure than a moderate success.  Or at least, they are the ones I tend to appreciate  Having been through the rise and fall of the dot-com bubble and the emotional highs and lows of raising a venture round, hiring lots of people, and then having to unwind a business with 50 employees, I know this time around that we’re simply at the starting line today.  In fact, if anything, we’ve tried to decrease our burn since we closed our round.  Granted, we’re operating today in an unusual environment, to say the least.  In many ways, our company is well-positioned to take advantage of the economic downturn.  Regardless, raising $3 million isn’t a big deal.  It’s simply a necessary evil to realizing our core vision of becoming the market leader in hotel search.  At Samba, I believed that raising the round was an end in and of itself.  Alright, so maybe it was a pretty impressive accomplishment for a 25 year old living in a foreign country, but the bottom line is that we didn’t make our institutional investors money, and that’s what really matters at the end of the day.

3.  We have a clear strategic vision for how to win in the marketplace.

At Samba, we were pretty much making it up as we went along.  No one on our management team had done what we were attempting to do.  Granted, it’s a little tricky trying to find those people in a country that 10 years earlier was under Communist rule.

Eight years later, I have personally been through the full company life-cycle.  I’ve studied business cases with some of the best professors and classmates on earth.  Oh, and I’m not quite the naive optimist I was.  I’m also privileged to have a business partner at VibeAgent that has an impressive strategic mind and a patient decision-making disposition.  And we’ve gone out and recruited the best possible talent we can find, people that have built successful companies and overcome the challenges we face today.  We understand the market we’re competing in well, so we know what we need to do to execute our vision.

So, yes, experience counts.  Perspective helps.  And building a great team that’s done it before doesn’t hurt, either.