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Posts Tagged ‘women’

Silicon Valley investors often have a picture in their heads of the type of person who is worthy of funding: young, brash, stubborn, and arrogant. They believe that successful entrepreneurs come from entrepreneurial families and that they start their entrepreneurial journey by selling lemonade while in grade school. Angel investor and entrepreneur, Jason Calacanis said as much in his recent talk to Penn State students. And after meeting Wharton students, VC Fred Wilson expressed shock when a professor told him that you could teach people to be entrepreneurs. Wilson wrote, “I’ve been working with entrepreneurs for almost 25 years now and it is ingrained in my mind that someone is either born an entrepreneur or is not.”

Jason, Fred, and Silicon Valley VCs, I’ve got news for you: you’ve got it all wrong. Entrepreneurs aren’t born, they’re made. And they aren’t anything like you think they are. My team surveyed 549 successful entrepreneurs. We found that the majority didn’t have entrepreneurial parents. They didn’t even have entrepreneurial aspirations while going to school. They simply got tired of working for others, had a great idea they wanted to commercialize, or woke up one day with an urgent desire to build wealth before they retired. So they took the big leap.

We found that 52% of the successful entrepreneurs were the first in their immediate families to start a business — just like Bill Gates, Jeff Bezos, Larry Page, Sergei Brin, and Russell Simons (Def Jam founder). Their parents were academics, lawyers, factory workers, priests, bureaucrats, etc. About 39% had an entrepreneurial father, and 7% had an entrepreneurial mother. (Some had both.)

Only a quarter caught the entrepreneurial bug when in college. Half didn’t even think about entrepreneurship, and they had little interest in it when in school.

There was no significant difference between the success factors or hurdles faced by entrepreneurs who were extremely interested in entrepreneurship in school (and who likely set up the lemonade stands) and the ones who lacked interest. But entrepreneurs with extreme interest started more companies and did it sooner. Of the 24.5% who indicated that they were “extremely interested” in becoming entrepreneurs during college, 47.1% went on to start more than two companies (as compared with 32.9% of the overall sample). Sixty-nine percent started their companies within 10 years of working for someone else (as compared to 46.8% of the rest of the sample population).

What did affect their successes?  Education — but not the college they graduate from. In a different study of the 652 CEOs and CTOs of 502 tech companies, we researched the correlation between education and the sales and headcount of companies founded. We learned that the there was a significant difference between companies started by founders with just high-school diplomas and the rest. Education provided a huge advantage. But there wasn’t a big difference between firms founded by Ivy-league graduates and the graduates of other universities.

The education and training of entrepreneurs is something that the Kauffman Foundation has been researching extensively. Over the last six years, it has invested around $50 million on academic research to understand what makes entrepreneurs tick and what policies are most conducive to entrepreneurship and to construct data bases to permit analyses of these subjects. (Kauffman has also funded some of my research at Duke, UC-Berkeley, and Harvard.) Its VP of Research, Bob Litan, says that Kauffman has learnt conclusively that entrepreneurship can be taught. The key is to provide education at “teachable moments” — when the entrepreneur is thinking about starting a venture or ready to scale it. What entrepreneurs need isn’t the type of abstract course they teach in business schools, but practical, relevant knowledge.  That’s why Kauffman created a program called Fast Trac, which has trained 300,000 entrepreneurs so far.

One of the findings of Kauffman research is that of the appx. 600,000 businesses that are started every year, less than a fraction of 1% become high-growth “scale” businesses. These new firms, especially the “scale” firms, have added all of the net incremental jobs to U.S. economy since 1980 (about 40 million), and probably account for about 1/3 of GDP growth since then. So the key to boosting economic growth is to increase the number of successful high-growth startups.  After all, the growth rate of our economy is nothing more than the aggregation of the growth of our firms.

That is why Kauffman (which has a $2 billion endowment) is investing heavily in an ambitious new program called Kauffman Labs.  This aims to dramatically increase the ability of small businesses to become big businesses. The Labs program is built around a novel idea: that highly motivated individuals with “scalable ideas” can be recruited to be entrepreneurs and to be made successful, by surrounding them with a network of other experienced entrepreneurs; sources of money; and mentors. The goal is to educate entrepreneurs and surround them with a powerful network. This is like a Y Combinator on steroids.

Anecdotal evidence also shows that there are many more factors at play than that of genes. Note this BusinessWeek article about waves of spinoffs from Google. I doubt that all of these Google employees who are starting successful businesses were born with entrepreneurial genes. VC and former entrepreneur Brad Feld also blogged about how many of his frat buddies at MIT had become successful entrepreneurs. Were all of these people born to be entrepreneurs as well? I don’t think so. It is probably education, exposure to entrepreneurship, and networks that led these people to pursue the entrepreneurial path — which means that Kauffman Foundation may have hit on the right idea with Kauffman Labs.

The reason this topic is really important is that, as Wilson writes, “Venture Capital is a lot about pattern recognition”. The reality is that VCs like him make quick judgments about people based on the stereotypes in their minds. So, like the women that I wrote about in my previous posts, we may be disadvantaging another important segment of our population – a segment that is older, more humble, more sensible, and more realistic than the population that is getting all the attention (and the money).

Editor’s note: Guest writer Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. Follow him on Twitter at @vwadhwa.

Women, Hispanics and blacks have always been underrepresented in the ranks of the Valley’s tech companies.  A new analysis by the Mercury News shows that from 2000 to 2008, the proportion of women tech workers in Silicon Valley dropped from 25.3% to 23.8%, and that the national numbers dropped from 30% to 27.4%.  In 2008, blacks and Hispanics constituted only 1.5% and 4.7% respectively of the Valley’s tech population — well below national tech-population averages of 7.1% and 5.3%. It seems that the problem I highlighted in my last post on the dearth of tech women is actually getting worse, particularly in Silicon Valley.  And it’s not just the women who are being left out, but also important minority groups.

Is the Valley deliberately keeping these groups out?  I don’t think so.  Silicon Valley is, without doubt, a meritocracy.  In this land, only the fittest survive.  That is exactly the way it should be.  For the Valley’s innovation system to achieve peak performance, new technologies need to constantly obsolete the old, and the world’s best techies need to keep making the Valley’s top guns compete for their jobs.  There is no room for government mandated affirmative action, and our tech companies shouldn’t have to apologize for hiring the people they need.  But at the same time, without realizing it, the Valley may be excluding a significant part of the American population that could be making it even more competitive.  False stereotypes may be getting in the way of greater innovation and prosperity.

Consider the data that I highlighted in my earlier post.  It wasn’t always like this, but girls are now matching boys in mathematical achievement.  In the U.S., 140 women enroll in higher education for every 100 men.  Women earn more than 50% of all bachelor’s and master’s degrees, and nearly 50% of all doctorates.  The companies they start are more capital-efficient, produce higher revenue, and have lower failure rates than those led by men.  Yet women are still a rare commodity in the ranks of tech CEOs and CTOs.

How do we fix the “hidden biases” and discrimination?  The experts I’ve spoken to have many great ideas.  They suggest we create role models, provide mentorship and financing, and teach entrepreneurship. Foundry group’s Brad Feld says that simple acts of encouragement from parents, teachers, and peers would make a big difference.  Cindy Padnos, of Illuminate Ventures suggested a solution that particularly resonated with me.  She says that women should follow the trail mapped by Indian entrepreneurs (no, not the American natives, but my kind: the immigrants).

Thirty years ago, there were hardly any Silicon Valley firms with Indian-born founders.  UC-Berkeley’s AnnaLee Saxenian documented that 7% of tech companies started in 1980–1998 had an Indian founder.  A survey conducted by my research team at Duke University found that this proportion had increased to 15.5% from 1995 to 2005. My team also determined that in this period, Indians started 6.7% of the nation’s tech and engineering firms.  These are pretty astonishing numbers considering that according to the U.S. census, in 2000 less than 0.7% of the U.S. population and only 6% of the Silicon Valley high-tech workforce was born in India.

I know from personal experience that Indian immigrants didn’t have it easy.  They suffered from the same types of stereotypes as women, blacks, and Hispanics.  Despite having co-founded a software company that we took from startup to $120m in revenue; profitability; and IPO in a record five years, I couldn’t get Research Triangle Park (RTP) VCs to even return my phone calls when I was ready to start my second venture.  I later found out why: “my people” were great at mathematics and made great engineers, but didn’t make great CEOs — “we” didn’t have the necessary management skills, didn’t like diluting our equity ownership by raising venture capital, and couldn’t “fit” into the rough-and-tough American business-management culture.  That’s what one RTP VC told me over lunch, to explain why his firm wasn’t inviting me to pitch my business plan.  They were very busy and had to be selective in who they met.

So how did “my people” rise above ignorance and bigotry?  When the first generation of Indians in Silicon Valley succeeded in shattering the glass ceiling, they decided to help others follow their path.  They realized that they had all surmounted the same obstacles.  And they could reduce the barriers to entry for others behind them by sharing their experiences and opening some doors.

In 1992, a number of highly successful Indian business executives formed a group called The Indus Entrepreneurs (which is now called TiE). Their mission was to give back to the community by fostering entrepreneurship.  They would hold monthly events, teach entrepreneurship, and provide mentoring and support.  And they would facilitate Indian-style matchmaking between entrepreneurs themselves and with investors and corporate partners.  They created two categories of members: a charter member, who took the role of guru, and a regular member, who would be a disciple.  The Guru had to donate time and money (minimum $1500/year) and was not allowed to gain any personal financial benefit.  When disciples achieved success, they would be expected to pass it forward by becoming charter members and helping others behind them.

One of my current research projects is to document and quantify the accomplishments of TiE. But I already know the impact TiE has made. After my lunch with the RTP VC, I cold-called TiE co-founder, Kanwal Rekhi. He told me that my experience was no different from what he and others in Silicon Valley had endured.  Rekhi advised me to look outside the region and to recruit a white male as president of my company.  TiE Charter Member Vinod Khosla advised me to contact VCs in Boston and gave me several introductions. After I followed Rehki’s and Khosla’s advice, it didn’t take long for me to get a term sheet from Greylock Partners (of Boston).  When the word of this got out, the RTP VCs came begging that I take their money.  (I didn’t take their money and after I achieved success, I became founding President of TiE-Carolinas and would usually spend five to seven hours weekly — even when I was really busy — mentoring fledgling entrepreneurs.)

Telle Whitney, President of the Anita Borg Institute for Women and Technology, says that TiE has done an amazing job and that its work is a great example of a mobilizing, formidable force in making change through networks.  But all networks are not created equal.  To achieve systemic change and have more women and minority-group members as entrepreneurs, we need to involve corporate leaders.  They need to personally be mentoring, proselytizing, and demonstrating by example a different model of investing in women and minority-group entrepreneurs.  There is nothing more powerful within an organization than having its own CTO talk about the importance of, for example, promoting women.

I agree with Telle. Neither Rekhi nor Khosla knew me from Adam, but both readily gave me invaluable advice.  That is the type of mentoring that women, blacks and Hispanics need. In addition to establishing stronger networks for these groups, we need to have the CEOs and CTOs of all of our top companies volunteer their own time to help others follow in their footsteps. They need to do this because this is the best path to diversity and this diversity will enrich their organizations. And we need to have VCs mentor the women and minorities they typically ignore. They need to do this not only for social good, but also for their own survival.

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Here are some links to women and minority networking groups which readers may find useful (If you know of others, please detail these in your comments).

Anita Borg Institute for Women and Technology

Astia

Forum for Women Entrepreneurs and Executives

National Center for Women & Information Technology

Silicon Valley Black Professionals

Silicon Valley Hispanic Professionals

Society of Hispanic Professional Engineers

Springboard Enterprises

The African Network

Women 2.0

Young Women Social Entrepreneurs

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Editor’s note: Guest writer Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. Follow him on Twitter at @vwadhwa.

For men looking to have some sort of forewarning of their girlfriend or partner’s “time of the month,” PMSBuddy has got you covered. PMSbuddy’s iPhone app allows users to track the menstrual cycles of the women in their lives in the hope of notifying men and helping them cope with the dreaded PMS (premenstrual syndrome) and its effects.

As ridiculous as it sounds to a woman, the service is currently being used by over 100,000 people worldwide, via an iPhone app, a website and Facebook widget. PMSBuddy is launching a new version of its iPhone app that will offer push notifications of upcoming PMS and the the ability to locate flower shops near you (via GPS). PMSBuddy will also be rolling out similar applications for Android and Blackberry phones.

And PMSBuddy is expanding to other verticals. The startup will soon be launching Fertility Buddy, which allows women to track when they are ovulating to increase (or decrease) the likelihood of conception. Similar apps to PMSBuddy include MyMate and iAmAMan.

Motorola this morning announced that it has completed the previously announced acquisition of BitBand, an Israel-based provider of content management and delivery systems, specializing in video on-demand for IPTV.

Terms of the transaction were not disclosed.

Motorola says the purchase of BitBand will complement its existing on-demand product line, which includes a framework for content management and high-performance streaming servers for centralized on-demand networks. It’s also worth noting that Motorola late last year also completed the acquisition of SecureMedia, a company that specializes in digital rights management for IP video networks.

Motorola recently said that it is moving forward with plans to reorganize into two independent companies by the first quarter of next year, with its mobile handset unit and its television set-top box division being combined and spun off as a separate publicly traded company.

Rumor has it that Motorola has been seeking a buyer for its set-top box and wireless networking units for quite some time, hoping to fetch between $1 billion and $5 billion depending on which media report you choose to believe.

“People in technology businesses are drawn to places known for diversity of thought and open-mindedness”, is what Professor Richard Florida concluded after studying the growth and success of 50 metropolitan areas in the U.S. The most successful regions were those with the most gays, bohemians, and immigrants. These groups flourish in Silicon Valley, and its diversity has undoubtedly provided it with great advantage. But after attending the recent Crunchies Awards, I realized that something important is still missing — women entrepreneurs.  I was shocked that the only woman CEO on stage during the entire event was TechCrunch’s own Heather Harde. Nearly all the companies that competed in the event (other than the PR firms) had males at the helm. This dearth may be one of the reasons for which the Venture Capital community is in such sharp decline, and why the Valley isn’t achieving even more success.

An analysis of Dunn and Bradstreet data shows that of the 237,843 firms founded in 2004, only 19% had women as primary owners. And only 3% of tech firms and 1% of high-tech firms (as in Silicon Valley) were founded by women. Look at the executive teams of any of the Valley’s tech firms – minus a couple of exceptions like Padmasree Warrior of Cisco, you won’t find any women CTOs. Look at the management teams of companies like Apple – not even one woman. It’s the same with the VC firms – male dominated. You’ll find some CFOs and HR heads, but women VCs are a rare commodity in venture capital. And with the recent venture bloodbath, the proportion of women in the VC numbers is declining further. It’s no coincidence that only one of the 84 VCs on the 2009 TheFunded list of top VCs was a woman.

Is the background or motivation of women that prevents them from becoming entrepreneurs? I just completed a project with National Center for Women & Information Technology (NCWIT) to find out (Kauffman Foundation will be releasing our research paper this spring). Our analysis of 549 successful startups showed there was virtually no difference in motivation between men and women entrepreneurs.  Just like men, women started companies because they wanted to build wealth, capitalize on business ideas they had, liked the startup company culture, and were tired of working for others and wanted to be their own boss.

Women entrepreneurs were as highly educated as their male counterparts, had the same early interest in starting their own business, and learned the same valuable lessons from their work experience and from prior successes and failures. The only real difference was that women put a higher value on their business partners and on their personal and professional networks.

Is it that women are less competent than men? Quite to the contrary. An analysis performed by Cindy Padnos, managing director of Illuminate Ventures, showed that women are more capital-efficient than the norm and that venture-backed companies run by a woman had annual revenues that were 12 percent higher and used an average of one-third less committed capital. Women-led high-tech startups have lower failure rates than those led by men. And organizations that are the most inclusive of women in top management achieve 35% higher return on equity and 34% better total return to shareholders than do their peers.

Padnos points out that the tide is turning in favor of women in education. Girls are now matching boys in mathematical achievement.  In the U.S., 140 women enroll in higher education for every 100 men.  Women earn more than 50 percent of all bachelor’s and master’s degrees, and nearly 50 percent of all doctorates. Women’s participation in business and MBA programs has grown more than five-fold since the 1970s, and the increase in the number of engineering degrees granted to women grew almost 10-fold.

So what holds women back from starting companies? Shaherose Charania, of Women 2.0, thinks it is because women have had few role models and mentors. Additionally, it is harder for women to obtain funding than for men. She notes that historically, women-led companies have received less than 9% of venture capital investments; in 2007, the proportion of funded female CEOs dropped to 3%. And there is another problem which her group works hard to overcome: some old-time VCs won’t give women the time of day. Her group members recount examples of VCs and angel investors interrupting pitches to ask questions and make comments like:

• When are you planning to have kids?
• Why isn’t “he” the CEO?
• So you moved here because your husband lives here? What if he has to move for work one day? Will you go with him?
• You should cut your hair, dress a bit more manly if you want to be CEO.

Sharon Vosmek, CEO of venture accelerator Astia doesn’t think that VCs have an overt bias against women. Instead, it’s the way the venture-capital industry operates.  Vosmek says that these “systematic or hidden biases” include:

1. that VCs hold clear stereotypes of successful CEOs (they call it pattern recognition, but in other industries they call it profiling or stereotyping.)  John Doerr publicly stated that his most successful investments – and the no-brainer pattern for future investments – were in founders who were white, male, under 30, nerds, with no social life who dropped out of Harvard or Stanford (2009 NVCA conference).
2. VCs invest in people they know. If women aren’t in their natural networks, they won’t get through the door.  We know that still today, men and women network in separate business networks.
3. VCs want to invest in serial entrepreneurs. (This further reduces the chance for woman entrepreneurs.)
4. The VC community is obviously male dominated, and it just got worse…after the cold freeze VCs experienced over the past 24 months, many women partners exited the industry. As the Diana Project research shows, a firm with women General Partners is more likely to invest in women entrepreneurs.

So, it is clear we have a problem here: we’re holding back the most productive half of our population. What can we do to fix this problem? NCWIT’s CEO, Lucinda Sanders, Shaherose Charania, Cindy Padnos, and Sharon Vosmek have all given me their suggestions. I also have some ideas of my own. I plan to write a follow-up post that details some of these, but I’d like to get your input first. After my recent BusinessWeek column on the dearth of women entrepreneurs, I was deluged with angry emails from men who disagreed with my conclusion that the problem isn’t a failure on the part of women but rather a societal failure. Some were really angry about my comparison of Wall Street firms to their counterparts in India. I’ve heard from the angry men, now I’d like to hear from the women. Please post your comments below.

Editor’s note: Guest writer Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. Follow him on Twitter at @vwadhwa.

Every few weeks Internet dating site OkCupid uses the power of anonymized data to share a few truths about the online dating scene and human nature in general. To be sure, these reports are often highly controversial and aren’t going to be showing up in scientific literature any time soon, but they’re generally interesting (and often amusing) reads. The latest report to come out addresses ‘Your Looks And Your Inbox’, charting the number of messages users receive in relation to how attractive other members rate them.

Some of the conclusions aren’t surprising. The “most attractive” women receive five times as many messages as the average female does, with 2/3 of all male messages going to the top 1/3 of women. And women tend to favor the most attractive men, though the ratio is less extreme.

But there are a few interesting phenomena. For one, men on the site tend to be more generous than women when it comes to rating attractiveness, leading to a nice bell curve with the bulk of ratings falling around ‘average’. But despite their fair ratings, they tend to ignore many of the women they find reasonably attractive and primarily target the most attractive females.

Women, on the other hand, are harsh with their ratings. According to the study, they rate a whopping 80% of men on the site as ‘below average’. My first guess was that there was an issue with self-selection here (i.e. unattractive men congregate on the site for whatever reason). But the study includes photos of four pretty normal looking guys who were all rated to be unattractive. And perhaps more telling: women don’t seem to be opposed to actually contacting these men that they’ve just deemed unattractive.

From the post:

“As you can see from the gray line, women rate an incredible 80% of guys as worse-looking than medium. Very harsh. On the other hand, when it comes to actual messaging, women shift their expectations only just slightly ahead of the curve, which is a healthier pattern than guys’ pursuing the all-but-unattainable. But with the basic ratings so out-of-whack, the two curves together suggest some strange possibilities for the female thought process, the most salient of which is that the average-looking woman has convinced herself that the vast majority of males aren’t good enough for her, but she then goes right out and messages them anyway.”

That last bit seems like a stretch (women could just as well have more interest in a man’s personality/profile than his photo). But an interesting trend nonetheless.

For more, including the message open rates as they vary by attractiveness, check out the OkCupid post here.

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This story just screams amateur hour, although I can’t figure out exactly who’s the amateur. Maybe everyone. A CEO says too much in an interview and gets fired. Lawyers go after the blogger to get content removed. And a partner is pissed off. Not bad for a day’s work.

It involves TweetPhoto, a service we’ve been writing about since last April. The company has had their rite-of-passage fight with Apple over an iPhone app, and they’ve done a deal with Kodak that got them some additional press. But until now, no serious drama.

TweetPhoto (now former) CEO Dan Caufield did a 23 minute podcast interview with Frank Peters earlier this month. He apparently said too much in the interview, disclosing confidential information about partnerships. He was fired by the company for the transgression.

That’s enough drama to make me want to listen to the podcast. But it gets better. The company also had its lawyers fire off a letter from its law firm to Frank Peters, demanding that he remove the podcast.

Just to be clear, a company is threatening legal action against a blogger for posting an on the record sound recording of the company’s CEO.

“The interview posted on your website contains numerous factual inaccuracies and disparaging statements from Mr. Caufield that TweetPhoto is concerned were made in an effort to harm the economic prospects of TweetPhoto and may constitute a violation of the laws prohibiting unfair competition, defamation, as well as tortious interference with contractual relations and prospective economic advantage,” the letter says.

Peters posted the letter and took the link to the podcast down. But it’s still up on iTunes here. And if it gets removed, I’ll upload it to our servers.

I’ve listened to the entire podcast, and there’s not much said that I’d call interesting. A couple of comments about their monetization strategy. And a few sentences on their deal with Kodak. But overall, snoozy stuff. Of course, now that the lawyers are making threats, everyone will listen to it.

And of course it goes without saying that its absolutely absurd that the company is threatening Peters. As I said before, this was an on the record conversation with the CEO of the company. It’s an audio file, so they can’t claim a misquote or any other nonsense.

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The Audit Bureau of Circulations has released the numbers for the top 25 daily newspapers in the U.S. based on their weekday circulation numbers. Not surprisingly, the numbers are bad — okay, awful. Exactly one of the top newspapers has shown growth when compared to where they were 6 months ago. That paper is The Wall Street Journal, which is now the number one paper in the country thanks to USA Today’s staggering loss of nearly 20% of its readership the past 6 months.

And it’s not like WSJ is growing like gangbusters, it grew 0.61% in the last six months.

Also a good list is the top 10 gainers in circulation, only because it looks like they could barely find 10 papers in the entire country with positive gains. Almost all of the ones on this list are smaller papers, with Women’s Wear Daily coming in as the number two gainer over the timeframe.

Below, find a chart of top 10 circulated paper’s “growth” over the past 6 months. Below that find the raw data for the Top 25 papers.

THE WALL STREET JOURNAL — 2,024,269 — 0.61%
USA TODAY — 1,900,116 — (-17.15%)
THE NEW YORK TIMES — 927,851 — (-7.28%)
LOS ANGELES TIMES — 657,467 — (-11.05%)
THE WASHINGTON POST — 582,844 — (-6.40%)

DAILY NEWS (NEW YORK) — 544,167 — (-13.98%)
NEW YORK POST — 508,042 — (-18.77%)
CHICAGO TRIBUNE — 465,892 — (-9.72%)
HOUSTON CHRONICLE — 384,419 — (-14.24%)
THE PHILADELPHIA INQUIRER — 361,480 — N/A

NEWSDAY — 357,124 — (-5.40%)
THE DENVER POST — 340,949 — N/A
THE ARIZONA REPUBLIC — 316,874 — (-12.30%)
STAR TRIBUNE, MINNEAPOLIS — 304,543 — (-5.53%)
CHICAGO SUN-TIMES — 275,641 — (-11.98%)

The PLAIN DEALER, CLEVELAND — 271,180 — (-11.24%)
DETROIT FREE PRESS (e) — 269,729 — (-9.56%)
THE BOSTON GLOBE — 264,105 — (-18.48%)
THE DALLAS MORNING NEWS — 263,810 — (-22.16%)
THE SEATTLE TIMES — 263,588 — N/A

SAN FRANCISCO CHRONICLE — 251,782 — (-25.82%)
THE OREGONIAN — 249,163 — (-12.06%)
THE STAR-LEDGER, NEWARK — 246,006 — (-22.22%)
SAN DIEGO UNION-TRIBUNE — 242,705 — (-10.05%)
ST. PETERSBURG (FLA.) TIMES — 240,147 — (-10.70%)

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I’m here at the Palo Alto Research Center, where the Churchill Club is hosting an interview with Sheryl Sandberg, Facebook’s Chief Operating Officer. Altimeter Group Founder Charlene Li is moderating the discussion. Below, I’ll be taking liveblogging my notes throughout the interview.

Q: What does Facebook mean to you personally? What are your favorite things to do? How much do you use it?
A: I use it a lot. Have used it since before I joined Facebook. Back in college I had a ‘little sis’ though a mentorship program (she was in elementary school). I couldn’t find her later on when I tried to find her. But earlier this year I got a message from a girl asking “Are you the Sheryl Sandberg”. And it was her. I’m on Facebook several times a day. It’s open all day. I stay in touch with the girls I grew up with, and the people I know now, through work and outside of work.

Q: Any favorite apps?
A: I’ve tried sowing a farm. It didn’t work for me… I got lazy and bought the stuff for $5. But there’s a lot of things that I’ve used. I’m pretty active on causes.

Q: Any feature you’ve really liked?
A: One of the things that’s helped me the most is the friend list, being able to segment your friends into lists is very helpful.

Q: What would you like to see personally that would make your experience better?
A: More applications that would integrate the things that I do every day.

Q: What do you see as new ways that people use Facebook?
A: There were two girls in Australia who got caught in a storm drain. They updated their Facebook status, and they got rescued. We are not emergency services.. I suggest you call 911. We see lots of use cases. People have found bone marrow transplants for their children. People have found long lost relatives. There’s lots of recruiting. We are trying to be a platform. We don’t pretend we should prescribe what people should share. We want to help people connect with who they want to connect with, and share with whomever they want to share.

Q: I’m getting so many invitations. What about Facebook burnout
A: it can get overwhelming. We offer lots of tools. I think people are uncomfortable with hitting ‘ignore’. I think it’s ok to hit Yes/No for things, to tell an application to stop sending you messages. My homepage on Facebook is now a very small group of my friends (segmented using friends lists).

Q: How do you see businesses using things like Facebook Pages?
A: Pages are for businesses the same way Profiles are for people. They are exploding. 10 million people fan pages every day. Starbucks has the number one fan page. 4.5 million today. Sprinkles, the cupcake store does a word of the day (get a free cupcake if you know it). People use pages to update, do special permissions. More of what you see is authentic communication. Papa John’s pizza — Papa John himself posts. He came to Facebook, took a picture with Mark. We’re seeing increasingly authentic engagement from people who run businesses.

Q: Lets talk about engagement in posting vs. dialog. Seems like companies just push, don’t talk back.
A: It’s a tool. Some people use better than others. The best use cases are companies that post frequently enough that there’s new info on the page, but not so that it’s too much. And they watch their page to see what people say. Virgin America asking people what their route should be.

Q: Do you think most of the advertisers get this.
A: I think some do. Some are coming along. They get it more than they used to. We were meeting with a CMO of a very important company that does lots of advertising. They asked about best practices. We said you should post frequently — you don’t just spend lots of time upfront. With us, spend half an hour a day, and do it frequently. He said, if we have a 12 day approval process to get something up online, is that a problem. We said it was. When I first took the job I was meting with a head of a movie studio. He said that it used to be, if you have a bad movie, you had that weekend with people seeing it — it wasn’t til the second weekend that they stopped. Now they find out it’s bad the same day, they don’t go to the second showing. I think their processes are changing. We’re working with almost all the top 100 advertisers in the country, and increasingly in the world.

Q: How on Earth do you measure this, to help them figure out what they’re getting?
A: We just announced a partnership with Nielsen — Polls. One example with Sony,a movie they were releasing.. We did studies of people who had seen the ad. If they had seen the ad they were 87% more likely to see the movie. It’s important that Nielsen is well respected and a third party.

Q: Are there some basic mistakes you see?
A: Businesses sometimes try too much. This is about very authentic communication. More and more, people are saying they want comments, so they we know about them and can address them. On the Internet, brands can’t perfetly control themselves, they have to work to create an authentic community.

Q: Is the real value the broad reach or the engagement?
A: I think it’s both. I think it’s unusual in the second category. There are other places you can get reach (Yahoo). We have engagement. We are by far the top place people spend the most amount of time on the web. The engagement is two way. When you buy ads on most parts of the web, it’s the same old communication style. Our ads are entirely different. You can engage with our ads. When the Internet came out, everyone thought it was going to change marketing. What happened is that people kept the one way communication (tv ad-> banner). Now you can do interactive ads.

Q: Give me an example? Lots of them operatite just like banner ads.
A: If you look at our homepage ads, you can leave comment, fan a page. When you take any of those actions, a lot of other ads are taking on those properties.

Q: Let’s talk about targeting. There’s so much data on Facebook. In terms of privacy how do you balance, avoid big brother feeling.
A: Privacy is never about balance. It’s an absolute. If you ask why is our usage exploding compared to everything else. We think it’s because we made it really safe. One of the things Mark said when I first met him. He told me how many people put their cell phone numbers on Facebook. Facebook is that safe. We take user privacy as the most important thing we do. We let advertisers target in a non-personally identifiable way.

Q: implications of revenue coming in. You just announced you’re cash-flow positive. You really sped things up. What happened?
A: We’re growing our users, and our ad products have improved tremendously. Our homepage ads with those engagement features are new and really working. Our adspace ads, the targeting is getting better, and people are using them more as they learn how to use them. We are trying to offer new kind of advertising in this market. And in this economy advertisers are looking for the most value.

Q: Social networks in general have reputation of ads not being that good. What was it about your ads that are so effective?
A: We think it’s interactivity and the ability to target. I don’t think people dislike ads, I think they dislike untargeted irrelevant ads.

Q:Want to talk about a new product Facebook Lite.
A: The Lite site is something I think says a lot about our approach to building products. Facebook is feature heavy. Can take a while to load we want to make it faster. If you are in a country with slow bandwidth, it is tough to use. We said we see ourselves as hacker culture — took a small team 4-5 people. Rather than take features out, we’ll rebuild it and only put features in. We made a whole new site. It’s not broadly used in the US. We’re seeing how this works. Adding features in as they get fast enough. Gives all of us a bar for how quickly things should load.

Q: Let’s talk about the culture. Describe the culture. How did you find yourself coming into this?
A: I think that’s Facebook’s strength. We’re a product driven company driven by extraordinary tech visionary. Mark has a very clear vision of what connectivity is, what a platform means, how a product should evolve to enable people to share. We say we want to be a great place for engineers to work, and sales, and biz dev. But we think that starts with being great place for engineers to work. We start from the product.

Q: What’s it like running a company full of engineers?
A: I sit in the middle of the engineering pit, with Mark. I think the fundamental thing you understand is that you don’t manage these people. Mark and I don’t run Facebook. We lead. But it’s run by the people who work there. We’re all aligned the culture of shipping products, getting them into the ecosystem.

Q: You talk a little bit about shocking people. You do things (news feed, other big new things) and get away with it. How do you check yourself if you’ve gone to far.
A: Mark would say the risk is we don’t do enough. The risk is that you have one big innovation, become risk averse and stop evolving. Our product looks very different than what it used to look like. With each opening up, because that’s what you see (college, open to the world, news feed, open to platform, opening to websites w/ Connect) all of these make it more open, all of these come with difficulties. What we’re trying to avoid getting scared and stopping putting out a better product. We know we watch usage. People protested news feed, but they used it more. We know we’re not doing the right thing when users/engagement stop growing.

Q: Talk about you say Facebook is trying to be as open as possible. Some criticisms are that it is a closed platform. Doesn’t have open standards, pretty locked down.
A: We want to make it open for everyone to share their information with who they want to share it with. We believe people own their data. We are a closed ecosystem — we don’t let people export their data, or let third parties do it. We do let users spread their data. You can share data with external app. We have to be tight in how we control the system to protect the privacy of our users.

Q: You say it’s for the users. People outside, everyone else. Says we’re all working together on open standards. And there’s Facebook over there. You say it’s privacy, but still, do you see these coming togehter.
A: We are making it more and more open. Facebook Connect lets you use your friends on other sites, it’s more open. Can go to ABC and take your Facebook identity with you. We have 15k Connect partners. When you talk about that competitve landscape, we are the only company among (Twitter, Microsoft google) that has privacy info to protect (my note: huh?).

Q: Talk about Google’s stealth social network. They have OpenID. define relationships through contact list, Google Talk list. Google calendar. I use Google Voice. They have sidewiki, that extends those features to any page. Different connect in that you have to get publisher to do it with that. Google can’t do a frontal assault on you, but they can come from the side.
A: Our fundamental view of the world is that the web is evolving. Goes from an anonymous identity on the web to your real identity. We think we’ve led that, but no surprise that other people are doing it, imitation highest form of flattery. We think it’s good taht there are other people evolving the social web. We believe that if we continue to iterate on the products, and stay ahead technologically, we can provide most value to users. Google has lots of different products you use that are only teid together through your Google login. We have a unified product and we’re spreading. In terms of what is the social web, we think we have the deepest understanding of it, and our product evolution shows that.

Q: Let’s talk about the future of the social web. In the future everything is much more social. We’re going to look back 5-10 years ago, and think remember when we had to go to Facebook to be social. What does it look like in the future.
A: I agree. We think people will increasingly be comfortable using their real identify. Experiences will be more personal and much faster. Think you’ll interact with Facebook rom a kiosk in the store, share it on Facebook from there. Can share from wherever you are.

Q: Twitter. Constant comparision. Do you use twitter?
A: I’ve tried it. I don’t use it very frequently. 2-3 tweets up ever. For me, I use it because I’m not trying to broadcast to the world. We think Twitter is important, a great product. We think world is moving towards realtime. Long time ago when we launched status updates people wondered why you would tell what you were doing. Now obvious. We think there will be many more products like this out there. We watch engagement. 40 million status updates a day on Facebook. We want that to continue to grow.

Q: Is twitter complimentary or competitive?
A: There are products out there by both companies that integrate. What I believe is that Twitter is part of the same movement we are part of. They have a different approach. Fundamentally based on anonymity and broadcasting. Ours is identity and sharing.

Q: Some people would say Facebook is chasing Twitter. (Public –> Private)
A: We watch how people use products on the web. Twitter did show there are people who want more open privacy settings. Was something we were working on, they showed people used it. Fundamentally we think there are going to be 3 other things like it. Like us, like it. Letting people share more information with each other.

Q: People haven’t been able to log in for a week and a half. Saying Facebook’s communication has been inadequate.
A: 150k accounts had an issue. Resolved in a week and a half> I think it was too slow. We’d like to do beter. The data was fully recovered, got them back up and running.

A: What google ads are. they’re direct response marketing. ou take people from awareness of your product down through purchase. What google does very well is the bottom part of the funnel where you know what you want, help you find it. It’s not demand generation, it’s demand fulfillment. Everyone needs to get customers. that’s why 90% of marketing is demand generation. We’re playing in that demand generation area. Top 90% of the funnel.

Q:Any secrets for helping expose brand to users on fb? I’m finding myself suggesting an ad buy to get people.
A: I think most people do start with something to push the product make people aware you’re there. You either have to get individuals to push to friends. Or do an ad buy. We see both work.

Q:I’m amazing by FB’s use in international world. There’s talk about next billion users being cell phones, bandwidth. Lots of people with only voice calls and SMS. Are these things you are looking at? What you have is not just a website, it’s social media. There’s other ways to express that.
A: We want everyone to use Facebook. We’re well aware there are ~1billion people without access to websites. We have increasing number of users who have only accessed fb from mobile phone.

Q: We’ve seen lots of people try to convert customers through wallets. Can you talk about FB wallet?
A: We believe in the platform we have. We don’t start with making money on the platform, we wanted power of having world develop for us. 250 apps with > 1 million users. Common question is how do you make money from this. People develop into our pages, we put ads on those pages. We aren’t in the wallet businesses.

Q: You have no future plans for payments?
A: We do have a credit system where you can use Facebook credits. we’re testing that with some devs. Something we’re interested in exploring, but it’s not why we did Platform.

Q: Seems like enterprise is a big market. Where are you in thinking about all these bad IT apps. FB would be a much better central piece.
A: Great question. Companies are doing this now that aren’t failing.

Q: Question about communication, skype.
A: We launched chat. Haven’t done calling or video. How we’ll prioritize is something we’ll do looking forward, no plan right now. We’re interested in communication that is many to many. When I publish something into the stream, the wall, sharing with many so less social. We could make more social by including more people. Not high on priority list, but we’d love to do it.

Q: What are challenges as COO with product so iterative?
A: One of challenges we face is that we’re moving fast. Was meeting with company we were thinking about deal with. Finally CEO of that company and I realized their team has 12 month roadmap/product cycle, we can’t tell you what our product will look like in six months.

Q: You want us to spend more time, but we really have finite amount of tiem to spend.
A: Time spent isn’t a core metric we’re focused on. We’re focused number of users, and engagement — how many people back once a day. We’re at 300 million users, 50% come back every day. Usually it’s early adopters who are most active. Now our newcomers are too. Also important metric is number of shares. We’re at 2 billion things shared per week.

Q: We’re FB devs. My question is authentic identity.. what do you do to authenticate not only identity but intent?
A: We authenticate you based on usage with your friends. We don’t look at what you post. If someone complains we do. Facebook only works if you are yourself. People ask how doy ou prevent against people who are fake on Facebook. I can go on. But then what, who am I going to connect with? Who is not going to hit ignore. Site is not useful if you’re not yourself.

Q: How does acquisition of FriendFeed factored in? Any future plans of acquisitions? How is founded team of FF integrated?
A: We’ve done two integration. Blake Ross’s company and FriendFeed. They’re small, they’re incredibly talented group of engineers. We are a culture of builders. This was a company in our ecosystem iterating the fastest. They were attracted for the same reason. They want to impact hundreds of millions people. People stood up and applauded as they walked around.

Q: I want to talk a little bit about leadership. What has been secret to your success of being a leader?
A: I think I’m lucky. I’ve been lucky to have these opportunities. Fundamentally people who can be great leaders have some qualities: one is a real sense of humility, you don’t lead people by thinking you’re better than them. That sincerity can’t be faked. Mark has that. He has a deep sense of where he thinks the world is going, what he thinks we can add. The other thing that really matters is ability and willingness to communicate authentically. Kids say it like it is. They will learn not to do that, but there’s something endearing about it. I don’t subscribe to honesty for honesty’s sake. Find a way to communicate authentically. Be ok with saying I dont have the answer…

Q: Talk about Mark. What’s it like working with him?
A: You go work for someone who is quite young. Need a close partnership. We were explicit about how to do that, we spent a lot of time together before I joined. We agreed we were going to sit together. We do first meeting monday morning, and a meeting friday. Give feedback every week. More and more we can finish each other’s sentences. He’s someone I really learn from. He is good at asking, “why not?” Worst thing about working with him is he accidentally reminds me how old I am. I was saying I am going to my business school reunion, I was asking when his reunion would be.. He asked me when mid-life crises happen?

Q: How do you balance having two young kids, work/life challenge?
A: You’re very active too, you’re posting a lot and have kids. I think this is hugely important, I think we need to keep more people in the workforce. Most of the women from our class aren’t working. 15% of C level execs in the country are women. 10 years ago it was 7%. It’s not fast enough. I think not enough women are staying in the workforce. I’m passionate about telling women you can do both. I don’t say you can have it all. But I’m glad I get to work, and I’m glad I’m raising kids. I think we’ve made more progress in workplace than in the home. Women still working a lot in the home when husband/wife are both working. So it’s like they have two jobs.I think most important thing we can do is change the home, and that is really hard. We need to applaud men for taking care of kids and we don’t do that. We need to make it more part of women’s identity to work, and less for men.

Q: You used to have a big focus on apps. Now more on FB connect, FB Fund/FB Rev. Coming year how you will deal with third parties.
A: We’re very focused on everyone. We have platform where you can build, put apps on Facebook.com, or you can have your own website. We recognize there are people building for Facebook who don’t have website.

Q: You talk about the evolution of Twitter/Facebook. What is your view on traditional media in the next five years?
A: They provide editorially verified news. My fear about local news going out of business. Who is going to cover the school board? I’m a big believer in this. We have challenge of getting quality of information out of WSJ and provide to citizens. The ways in which it is monetized and written is going to be different.

Q: What kind of impact, 10-20 years, Facebook and all the people in this room will have. How will it be better? What do need to do?
A: I have a sense of gratitude that I get to work in Tech. I can write like 3 lines of code. I feel lucky to be sitting in this room, where there is so much history. My son thinks the world has Tivo, that it’s on demand everywhere. We’ve made his world that much more driven by him. The things we haven’t invented today, my kids aren’t going to understand the world without. They’re going to make it harder for the moral atrocities that go on today to continue.

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Geek Weekend: Columbus, Ohio