February 10, 2016

Tech Caucus 2/10: The Best President for Tech, The Top Startup of 2015, and Book Recommendations for Anyone in Tech


Ever since I saw the Puppy Monkey Baby commercial during the Super Bowl, that bastardization of a creature has haunted my dreams. I haven't been able to sleep. I haven't been able to eat. I've only been able to drink Jameson out of the bottle, praying that it'll be enough to forget about what is clearly a genetically-engineered-Ewok-gone-wrong.

It hasn't worked. I must find a place to hide from the puppy monkey baby. Help me.

While I go looking for an underground bunker to wait out the inevitable Puppy Monkey Baby apocalypse, here are this week's Tech Caucus topics:

  • The Fall of Parker Conrad And What We Can Learn from Zenefits
  • Which Presidential Candidate Would Be the Best for Tech?
  • The Winner of the #TechCaucus Startup of The Year Is...
  • Must-read Books for Anyone in the Tech Industry
  • Interesting Links of the Week
  • Commentary from the Peanut Gallery
  • #PuppyMonkeyBaby (sponsor)
Have questions you want me to ask the Caucus? Email me. Want to chat about this week's newsletter? Reply to this newsletter.


1) What Can We Learn from Zenefits?

Another Unicorn stumbles. Or, in the case of Zenefits, the unicorn ran into the brick wall that is the law. Zenefits, a $4.5 billion Silicon Valley payroll and insurance giant, unceremoniously fired Co-founder and CEO Parker Conrad, whose "ready, fire, aim" approach to business worked great when Zenefits was a lowly startup trying to disrupt benefits, but put him and his entire company into legal trouble as it was supposed to mature. Buzzfeed's report that many Zenefits salespeople weren't licensed to sell insurance likely triggered regulatory inquiries that were leading to legal repercussions.

David Sacks, the legendary PayPal COO, Yammer founder and Zenefits COO, will take over the reigns as CEO. Conrad, for all his work, will no longer have any role at the company. He's even been kicked off the board. That's extremely rare for a founder-CEO transition and speaks to the volumes of trouble Zenefits actually faces for flipping the middle finger to the law.

Conrad's fall is stunning. I asked the Tech Caucus what they thought the #1 lesson startups and the tech industry can learn from Conrad Zenefits' failures. The wisdom fell into three categories.

1) Culture Matters.

From a caucus member: "When I sit down with entrepreneurs, one of my favorite questions to ask is, "Tell me about the biggest mistake you made." Almost always that mistake was not paying attention to culture sooner. It sounds like that certainly is the case here."

2) Details Matters.

"Details and integrity always matter," one member cautions. "Slow down to go faster."

"Don't cut corners. The details matter. Transparency matters. Honesty matters," echoes another.
"We should always be pushing the limits of what's possible, and what's 'regulated', says one Caucus member. "But there are still lines you can cross. Founder/CEO doesn't mean you are un-fireable."

"Compliance should always be #1. Period."

3) Hubris Will Be Used Against You.

Parker Conrad was known for his unbridled confidence and his brash, outspoken personality. This ethos trickled down into the rest of the company. (Company culture always comes from the founder CEO.) Unfortunately, that ego and personality was part of his fall, according to the Caucus:
"It's a very similar lesson to that of Elizabeth Holmes and Theranos: Silicon Valley hubris gets burned when it refuses to work with existing legacy industries and infrastructure," states one member of the Caucus.

"In highly regulated markets, you can't afford to break all the rules (i.e. Airbnb, Uber)," says another. "In any company, too much hubris will kill you. Confidence is awesome and an essential source of power for startups, but great founders put hubris aside and do what's right for their community and team. I don't know Parker personally, but he seems to have put ego too much in the drivers seat at Zenefits."
"Your outlandish comments on the way up will be used against you on the way down," one member puts succinctly.
Finally, some Caucus members translated what happened into an overall theme for the industry: "The era of the all-powerful, infallible founder is ending, and investors are not afraid to roll up their sleeves and take action with companies that are struggling."

For better or worse, Parker Conrad will be added to the case of cautionary tales of what happens when you let disruption go out of control. The question now is whether David Sacks can right the ship.


2) Who Would Be the Best President for Tech?

Unless you've been hiding in a bomb shelter for the inevitable #Trumpocalypse, you know that Donald Trump and Bernie Sanders destroyed their opponents in the New Hampshire primary. With Clinton, Rubio, and most of the other candidates wounded, the action moves to Nevada and South Carolina. If voting happened today, Trump and Clinton would handily win both states. 

Oh, and let's not forget about Mike Bloomberg, possibly the most serious Independent challenger in decades.

We'll eventually get to who the Tech Caucus supports for the presidency of the United States. This week, though, I asked them a slightly different question: "Which Presidential Candidate do you think would be best for the tech industry?" I asked the members to objectively look at who they thought would be best for tech, startups, and the ecosystem in general.

And the winner, by a 15% margin of victory, is...

Yes, former NYC Mayor Mike Bloomberg won the Tech Caucus straw poll with 45% of the vote. Hillary Clinton wasn't terribly far behind though with 30% of the vote, though. (I bet Hillary wishes she got this margin in New Hampshire.)

Most of the Caucus members cited Bloomberg's experience building a tech company as hugely beneficial to the tech industry. "He understands tech in a way that the others can't," says one member. "And no, he is not the same as the person I support for President."

"Look at what Bloomberg did for NYC Tech, enough said," declares another member. NYC Tech grew by leaps and bounds under Bloomberg's administration. He was the first mayor to name and empower a Chief Digital Officer, the incredibly talented Rachel Sterne Haot.

One member went a step farther, directly attributing his/her career to Bloomberg:

"I'm a direct beneficiary of Michael Bloomberg's New York, and my career would not be anywhere near where it is if he had not done such a phenomenal job at diversifying New York City's economy for the 21st century in the wake of the financial crisis. He courted and exalted start-ups in a very startup-averse city. I can't stress enough how unfriendly New York was to these kinds of companies before he took the reins. If he runs, he has my vote, and my money (though I doubt he needs it)."

That is one hell of an endorsement.  

Former Secretary of State Hillary Clinton took second place in our poll. "Hillary is a change maker," one member simply states. "Because she knows how to manage an email server, independent of the government!" jokes another member of the Caucus. "Seriously though, she's tech-savvy and the Obama administration was successful in tech. She likely gleaned a lot from that."

And finally, one thoughtful member of the Caucus doesn't think there are any better choices:

"Most of why I am supporting Hillary is because I am voting against everyone else. I saw Hillary speak when I worked at ********, and she's smart and knowledgeable on the issues. Out of everyone on the playing field, I think she'll do the least damage. That said, income inequality will increasingly become an issue and I don't know if she has any real answers there."

Sorry, I had to censor the company -- gotta keep things anonymous here. :-)

Support for the other candidates as the one who'd be best for the tech industry:

Bernie Sanders: 

"Anything that's good for the country is good for the tech industry long term. Creating a basic social safety net and chipping away at corruption in politics is essential before the erosion and corrosion of U.S. institutions causes a catastrophic collapse."
Carly Fiorina:

"Carly Fiorina came from the tech industry and understands it better than any other candidate. However, she is at best a long shot VP candidate. Same for Mike Bloomberg. None of the others know anything about tech, and are more likely to view us as robber capitalists."

(For the record, I personally think Fiorina did a terrible job at HP and is clearly unqualified for the Presidency. If you're going to pick someone from tech, pick Bloomberg.)

Even Rand Paul made an appearance:
"Honestly I don't think anyone is [best for tech]. I'd say Rand, but he is out."
It seems like the tech industry doesn't believe Washington D.C. understands it. This has been a common theme for years, even as companies like Google, SpaceX and Facebook have invested far more money into lobbying and courting political leaders. They are two different worlds.


3) The #TechCaucus Startup of the Year Is...

The TechCrunch Crunchies put on its latest awards show on Monday. I was there, doing the green carpet thing. It still doesn't have the production quality an awards show needs to avoid mockery, but it was a vast improvement over last year's T.J. Miller debacle. Host Chelsea Peretti was likable, affable, and occasionally dropped a gangbang joke.

(A big suggestion for TechCrunch: you MUST have alcohol before the show! Not should, MUST. People enjoy these shows a lot more drunk, period. The reviews will go through the roof if you can find a way to let everyone drink beforehand.)

But I digress. The winner of "Startup of the Year" at the Crunchies was Uber, which makes no sense to me, because Uber's a $60+ billion company with thousands of employees. But we use the term "startup" loosely here in Silicon Valley, so I'll let it slide.

Since I have my own voting committee, I thought I'd ask them the same question -- who was their startup of 2015? I kept this ballot open-ended to get the full spectrum.

By a single vote, the winner of #TechCaucus Startup of the Year was... Slack! The enterprise chat and team management software has endeared itself to the tech industry. (Seriously, if you're not using it... why?!)

"I think these folks are the next communication and distribution channel for enterprise," one member reasons." 

"2015 is when [Slack] grew from being a 'startup' to a real company. That transition should always win startup of the year," says another.

"Slack, for building a fast-growing company while being conscientious and moral," states one member in a clear dig to Zenefits, Theranos and other morally ambiguous players.

The Crunchies winner, Uber, polled second in our #TechCaucus poll. "The Crunchies got it right," declares one member. "It should be Uber. Uber really isn't a startup, but still an amazing company."

"Uber, because it's clearly the most disruptive, fast growing startup the world has ever seen. And it has a business model - bonus!"

Other companies that received votes:
  • WeWork
  • ​Slash: "The message wars will be won by the best keyboard."
  • Snapchat: "Judging by all the snaps I get of my friends' kids, it's finally hitting the adult mainstream."
  • WeChat
Some of the more critical members of the Caucus don't like the idea of a "Startup of the Year" at all.  "Oh good grief, why?" exclaims one member. "It is all pomp and circumstance. And as we learned from Zenefits what looks amazing in one light is shit in another."

Good point. The sentiment was shared by another member:

"This isn't Miss America. You should try to make amazing product, have happy customers and go after your target market. Every startup is unique and while there are certainly ones who excel in each industry and niche, I don't think it's particularly helpful to try to chose one 'winner' overall. It leads to us choosing the one who's gotten the most press or who we personally are more familiar with instead of anything more meaningful."

This member stresses s/he doesn't have any issue with the Crunchies (they're "silly and fun"). Then again, this member also wouldn't be opposed to being named "Person of the Year." I think the point is that we all like getting awards and recognition, no matter where it comes from.

(Disclosures: One Caucus member works for WeWork. One works for Uber. And plenty of people here are investors in plenty of these companies.)

4) Recommended Reading for Anyone In Tech:

I always try to ask a question that'll help the entrepreneurs that read this. This week, I asked the Caucus for a book they recommend everyone in the tech industry should read. Here is their recommended reading list:
  • The Innovator's Dilemma by Clayton Christensen. This was the most-recommended book by the Caucus (and is a stable of tech reading.) "It describes why big companies fail to make the transition for new technology platform shifts and how startups can exploit this weakness."
  • Hackers & Painters by Paul Graham
  • Built to Last by Jim Collins and Jerry Porras
  • Give and Take by Adam Grant. (I personally love this book.)
  • The Four Agreements by Don Miguel Ruiz.
  • Lean In by Sheryl Sandberg.
  • Recommendations by one member:  "Bold by Peter Diamandis; From Zero to One by Peter Thiel; Elon Musk by Ashlee Vance; and of course, Captivology by Ben Parr. ;)"  (Thanks for the Captivology plug, anonymous Caucus member!)
  • Five Dysfunctions of a Team by Patrick Lencioni. "That will teach you how to build a strong trusting stable team from the start."
  • Delivering Happiness by Tony Hseih.
  • The Industries of the Future by Alec Ross.
  • The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger by Marc Levinson.
  • The Gilded Age by Mark Twain. "It reads like a satire of Silicon Valley that just happens to take place during the railroad speculation boom of the late 19th century."

Interesting Links of the Week:


Commentary from the Peanut Gallery

In last week's Tech Caucus newsletter, I asked the Caucus to name a startup to watch from outside of the U.S. While we got many great suggestions from the members, none of the companies were from Africa. One reader, Simon Griffiths, pointed this out:

Hey, Simon's right -- we in the Silicon Valley / LA / NYC bubble have no clue what's happening in Africa. I'd love to hear what companies are growing over in Africa. The Quartz article on the subject is worth a read.

(Did you know I post all the Tech Caucus newsletters on Medium as well?)

This week's Tech Caucus is sponsored by Puppy Monkey Baby. Because if I say the Puppy Monkey Baby is the sponsor, maybe the nightmares will stop.

(If you want to sponsor the Tech Caucus and get in front of hundreds of CEOs... you know who to email. First real sponsons start soon!)

Have a question you want me to ask the Tech Caucus? Have a suggestion for a new member of the Tech Caucus or an Interesting Link of the Week? Reply to this email or email me directly.

The Tech Caucus: Mark Achler, Jason L. Baptiste, Megan Berry, Niko Bonatsos, Sarah Buhr, Jason Calacanis, Vanessa Camones, Tracy Chou, Julie Crabill, Paige Craig, Don Dodge, Adam Draper, Josh Elman, Julie Fredrickson, Erin Griffith, Troy Henikoff, Daire Hickey, Ryan Hoover, David Hornik, Charles Hudson, Leila Janah, Olivia June, Richard Kerby, Aileen Lee, Loic Le Meur, Doug MacMillian, Jessica Mah, Jesse Middleton, Miyuki Matsumoto, Danielle Morrill, Nathaniel McNamara, Nathalie Nuta, Jeremiah Owyang, Chris Saad, Raju Sagiraju, Juan Scarlett, Matt Schlicht, Robert Scoble, Marcy Simon, Jon Swartz, Jana Trantow, Jennifer Van Grove, Kurt Wagner, Robin Wauters, Mike Weiksner, Brian Wong, Michelle Zatlyn.