This past Wednesday, VentureFizz hosted an event about scaling to 1million users. It was moderated by Antonio Rodriguez of Matrix Partners, the shop that backed TalkTo. The panelists were Brian Carr from Springpad, Sarah Welch from Gazelle, Scott Healy of Care.com, and Ed Marci of Wayfair.

A ton of knowledge was dropped. Here are the 7 major takeaways.

1. App Store - Don't just use screen shots of your app. Brian Carr from Springpad suggested using the first 1 - if not 2 - screens to tell your story through pictures. This alone gave Springpad a meaningful bump in downloads.

Takeaway: Use the first screen as more of an advertisement than a tour/tutorial of the app. Here is a good example from Sesame by Sincerely:

2. Google Play - You won't get any love in Google Play if your marketing materials have Apple/iPhone. So if you're serious about marketing in the Android market, create Android centric images and video.
3. App Store v. Google Play: - Apple rank is a function of # of downloads and frequency of downloads. Google Play, on the other hand, is a function of Reviews and Uninstalls. Counting uninstalls is brilliant; it's the true sign of a useless app.
4. Facebook wins! - Antonio asked: "If you had one marketing platform to invest all of your kids' college fund into, which one would it be?" Facebook got 3/4 votes. There was a lone vote for content marketing.
5. Fun Fact 1 - Average person has 43 apps on their phone and use just 8 per day.
6. Fun Fact 2 -  7 pm is the heaviest hour for mobile traffic. 50+ million American launch their phone during this hour every day.
7. Localize - Even if your app doesn't work outside of the United States, you should still localize it. I didn't get the exact reason but I believe it is because Apple looks more favorably at localized apps. Can anyone shed some more light on this?

For the last five or so years, everyone has been asking: "What will web 3.0 be"? No one saw this coming but it's here. Web 3.0 is the "Ephemeral Era" and the leading player is Snapchat. Yes, that dumb app that enabled sexting marks a monumental change in the way we interact on the web.

In all previous eras, the internet was your permanent record. So people did one of two things. They either ignored the permanency and posted incriminating content that alienated friends and sent employers and insurers running for the hills. This week's poster child is Sorority Psycho Rebecca Martinson. Or, people understood the permanent nature of the web and therefore created a white-washed version of their digital life. I mena, is your Facebook page a true representation of your life? Mine sure isn't; notice there are no photos of my bald spot.

Snapchat changed this. Snapchat is a perfect mechanism for ephemeral and real expressions of oneself. Take a silly photo, write a stupid caption and don't worry because it will be erased in seconds. People now have a safe space to express themselves freely over the web without harming their permanent record.

I'm convinced we are at the dawn of the Ephemeral Era because the scion of a previous era is in denial. On The Colbert Report, Eric Schmidt of Google concluded his interview with this phrase: "There is no delete button." Eric hopes not because his company's bread and butter is indexing all of the worlds content. But people want a delete button and Snapchat has given them that.

It was the final class of “Mobile and Web Development.” Twelve teams were presenting their final projects. We were one of them. I was ready to BS my way through a presentation of crudely crafted wireframes, collect my B for the semester, and inch 3 credits closer to graduation.

When I got to class, it all changed. Zak, my partner, took my iPhone 3G, plugged it into his Mac and handed it back to me. “Create an account,” he said. “What?” I said dumbfounded. “Open the app and create an account.”

I clicked on a blank icon, entered my email address and was brought to a white screen. In the top right corner of the app, was a “+”. I hit it, which brought me to a new screen asking me to create an album. With my heart beating steadily faster, I typed in “test” and hit “Done.” I was brought to another screen with a camera icon. I took a photo. It uploaded. I then noticed an “invite” button. I hit it and entered Zak’s email into the pop-up box. One minute later a new photo, not taken by me, appeared next to the first photo I took.

Viola! A collaborative album.

Ditching the PowerPoint deck, we did a live demo for the class. When we were through, I asked: “How many of you would use this app?” About 42 out of 45 raised their hands. We were onto something.

At that moment, we had an MVP: a barebones product built quickly that is used to test consumer reaction. Given the positive feedback, the next step was to build an initial product for the market – you know, something thoughtfully designed and rigorously tested.

But did we do that? Nope.

I was so hopped-up on the lean start-up buzz, that I spent the next six weeks saying “we need to build a Minimal Viable Product.” So we took the barebones design and added to it.  Some of the features were sensible; for example, attaching the name of the photo-taker to the photo. Others were unnecessary; posting a photo to Twitter, for example, could wait.

In the end, we spent 6 weeks adding features to a “minimal” product that had already tested positively with consumers. That time should have been spent enhancing our design, nailing the user experience, formulating the out-of-the-box experience and testing.

Repeat after me: I will stop building an MVP after validating my product with real users and move quickly to building a market-ready product.

Last week, Spottah 2.0 was released. The redesign was made possible by the talented Chris Allen. He discovered Spottah at a bachelor party, loved it, and pitched us on a redesign. Two days later, he shipped a reimagined home page. It was stunning.

Chris crafted crisp designs and Yin brought them to life. And for the next few months, I had the honor of watching the Lennon/McCartney of app builders compose their masterpiece.

I love business history. And I love music. So this is just about my favorite song. It's by Mark Knopfler, and it's the history of Ray Kroc and the founding of McDonalds. I've pasted the lyrics below. Enjoy!

i’m going to san bernardino 
ring-a-ding-ding
milkshake mixers
that’s my thing, now
these guys bought
a heap of my stuff
and i gotta see a good thing
sure enough, now
or my name’s not kroc
that’s kroc with a ‘k’

Being in the early-stage space means that you’re constantly talking about ideas. The idea might be a new feature for an existing product. Or, it could be a pie-in-the-sky idea for a yet-to-be-formed company.

Talking ideas is fun. But sometimes you run into an “Idea Hater.” You know, the person that says one (or all) of following things, repeatedly:

• “someone is already doing that”;
• “it cannot be done”;
• “what’s gonna stop {insert big company name} from doing what you’re talking about?”

Are these folks wrong to ask such questions? Hell no! It is vital to understanding the competitive landscape, technical feasibility and strategy for establishing a moat. But what defines an Idea Hater is someone that regardless of the answers still believes the product or company cannot be created, let alone successful. Idea Haters do not believe another great company can be built.

But all around us, crazy ideas are being turned into great companies. Here are two of my favorites. So the next time you run into a Hater, share these ideas as a reminder that innovation is alive and well.

Airbags for bicyclists
The pitch: “What about using airbag-like technology to create a more comfortable bike helmet. Think about it. It is inflatable airbag that cyclists wear around their necks, like a scarf. It’s light, stylish and unencumbering. In the event of an accident the airbag inflates and protects the rider's head.”

This crazy idea is brought you by Hovding.

A Smart Saw
The pitch: “You know how the iPhone doesn’t work if the person is wearing gloves. It’s like the iPhone knows the difference between flesh and other materials. Well, what about a saw that detects the difference between wood and flesh. And if it detects flesh, it immediately stops the saw and saves the craftsman finger, hand or arm.”

This idea by SawStop actually works. It's the reason my father-in-law still has all ten of his fingers.

America celebrates its innovators. When Steve Jobs passed away, millions held vigil and thousands wept. Jack Dorsey and Drew Houston sell out MIT.  A picture of President Obama chatting with Mark Zuckerberg goes viral. In short, Americans love people that make things that change the way we live our everyday lives.

Financial innovators, on the other hand, do not enjoy the same love and respect. At best, innovators in finance make a lot of money and have tons of fun but don’t become household names.  Arthur Rock, for example, should be as well known as Gates, Jobs and Zuckerberg. After all, he created venture capital – the tool that enabled Microsoft, Apple and Facebook.

At worst, financial innovators are reviled as fat-cat villains. Look no further than the topic du jour: Mitt Romney and his private equity background.

It’s easy to demonise people that “don’t build anything” and “make money on the transaction.” But the bad rap on private equity is misguided. Private equity was an important financial innovation and a key factor in the productivity gains and technology boom that began in the 1990s.

Before going any further, this blog is NOT an endorsement for Mitt Romney. It’s simply a look at the overall private equity market, and not a judgment of any specific deals done by Bain or any other firm.

This Machine Kills Conglomerates
Following World War II, American companies enjoyed nearly three decades of growth. At home, Americans consumed American-made goods. There were no German or Japanese or Chinese imports. These nations were decimated during the war and were rebuilding. And guess which economy provided the equipment, materials and services for the rebuilding? America. In short, America was #winning.

This period saw the rise of the conglomerate. According to The New Financial Capitalists by George Baker and George David Smith, three factors led to conglomerations. First, companies became bloated and staid in light of no competition. Second, ERISA (passed in 1974) limited the amount of money pension fund managers could invest into a single company. As a result, pension funds held a small number of shares in a large number of companies.  Such a structure fosters passive – not active – shareholders. Lastly, antitrust rules made it difficult for two companies operating in the same industry to merge.

To put it all together, managers who face no threats from the outside (competitors) or the inside (shareholders), and who do not want to ruffle the feathers of anti-trust authorities, have only one option with excess cash: buy businesses in completely unrelated industries. It was this formula that led oil industry giant Mobil to acquire Montgomery Ward, a retail chain.

Private equity and the leveraged buyout were the change agents that dismantled conglomerates and realigned management with ownership. In its simplest form, a buyout works like this. An acquirer like Bain buys a target company using cash from its fund and debt from either a bank loan or a bond issuance. The target company’s assets serve as collateral for the debt. So a company worth $10 would be purchased using $1 of cash and $9 of debt.

Debt is the secret sauce. When a company has an obligation to meet, it must trim the fat and only make sound investments. That means no more corporate jets, lavish headquarters or underperforming divisions bought for the purpose of Empire Building. It means investing in projects with expected rates of return above the companies cost of capital. I equate LBOs to a mortgage. A person who takes on a mortgage will watch his or her money more closely and make financially sound investments -- one hopes, at least.

Private equity affected all enterprises in the economy. In order to avoid a takeover, management proactively levered up. (A company that already has debt cannot take on more debt to do a leveraged buyout.) In the end, American companies got leaner and more focused. By the 1990s, the LBO dividend began to pay-off. Companies invested soundly into R&D and process improvements, which in turn improved productivity and helped fuel the information technology revolution.

In conclusion, private equity isn’t perfect and it isn’t always pretty. The anger over compensation and taxes is understandable; private equity managers charge a 20% fee on profits earned, which is taxed as long-term capital gains (15%) as opposed to income or a bonus (35%). Partners in private equity firms also use debt to extract dividend payments for themselves; in some cases, these payments are too burdensome and good companies are forced into bankruptcy. Overall, however, private equity is a tool - though sometimes blunt - that moves the economy forward.

In 2006, I started a biodiesel operation for The Doe Fund, a non-profit organization in NYC that creates businesses to employ formerly homeless or incarcerated men. There I was: a college-educated Jewish kid from the Boston exurbs leading 10 African American and Latino men from the toughest neighborhoods in New York. One of my employees, who was about my age, hailed from the South Bronx but had spent the last 10 years in Federal Prison for shooting a rival dealer. Another had started using heroin when he was nine years old. 

Today, my team at Spottah is the exact opposite: highly skilled knowledge workers. The degree-to-employee ratio is 1.7. Technology recruiters, not DEA agents, are breaking down our doors. Email is our addiction.

These distinct experiences defined my management philosophy. The manager’s job is to understand the goals of his team members, and align those goals with the organization’s goals.

The fact that this philosophy works with people three sigmas right or left is testament to its strength. Take Lester from The Doe Fund, for example. Lester’s goal was to land a job with New York City Sanitation. Some of you may be thinking, “‘garbage man’ doesn’t sound like a great goal.” But it is. It’s high-paying, secure, and provides benefits. Once I knew Lester’s goal, I was able to align his goal with the goal of my biodiesel unit. We focused on establishing a safe driving record, following safety protocols, truck maintenance and crew management.

Fast forward to Spottah. A few months back, we brought on a new graphic designer named Chris. Chris came to us as a product manager at a major web property. The extent of his design experience were a few side projects and a ton of photography. He knew photoshop and had an eye for design.

Being a product manager, Chris had two personal goals. First, improve as a designer, specifically by focusing on logos & icons, textures, fonts and the balance of the screen. Second, he wanted to push the boundaries of the mobile user experience.

Initially, I favored an incremental redesign -- you know, change an image size here and a font there and eventually achieve a new look. Incremental change, however, did not align with Chris’s goals. Furthermore, incremental change was not best for Spottah; our success rests on an amazing user experience. So we tasked Chris with razing the old design and completely reimagining our product. Thanks to Chris’s designs and Yin’s ability to implement anything, the new version of Spottah looks and feels amazing. Here is a taste, but you’ll have to wait a bit longer for the full meal. Sorry.

Gaining an honest understanding of your team members’ goals is not easy. A person’s goals may not include the current company; Lester, for example, had a goal of working for DSNY, not The Doe Fund. Also, a person may fear that their goal counters the goal of their manager or another team member; Chris wanted a complete redesign while I initially wanted to move in increments. It is essential to create an environment where people can honestly share their goals. If a company fails to achieve this, than people will project false goals and the manager will not be able to develop a meaningful plan for achieving individual and company goals.

Apple TV is an aberration from every other Apple product. Rather than being an all-in-one device, Apple TV is a component that plugs into televisions manufactured by others. Apple, therefore, cannot control the entire experience and thus the overall experience isn’t that good. This is why you don’t see people camped outside for days waiting for the newest Apple TV.

The next and most obvious frontier for Apple is building an actual TV. This is definitely on the company’s mind; CEO Tim Cook was quite cagey when asked about his company’s plans at D10. An Apple TV set is technically feasible. Apple knows how to make beautiful large screens; the 27-inch iMac is a great example. And Apple knows how to take an existing product and totally reinvent it.

So if it isn’t technology, creativity or desire, what is holding Apple back from bringing a TV to market? My guess: Retail square footage. By most measures, Apple’s move into retail was brilliant. Retail enabled Apple to control the customer experience, and thus its brand. This is difficult to achieve when selling through independent channels like Best Buy or Staples. But the drawback is limited space for additional - and significantly larger - products like a line of TV sets.

According to RetailSails.com, the average Apple store is 7,886 sq ft. While I don’t have the exact figures, my guess is that the median is much smaller because there are handful of flagship stores at 20,000+ square feet and then hundreds of smaller footprints in regional malls. Either way, one thing is certain: the stores are cramped. Finding floor space to display 15 TVs ranging from 27 to 60-inches, plus hundreds of units of inventory, is no easy feat.

Big Box retailers will be better equipped to distribute an Apple TV. Since they already have space for TVs, it is simply a matter of taking space from a poor selling brand. Apple doesn’t have this luxury. Sure, Apple will no longer be selling the Apple TV “puck” but that will hardly make a dent in the space required.

Retail square footage will continue to be a hurdle. Apple, I predict, will enter the 3D printing market. Currently, there is a huge valley between hobbyist and enterprises. Thirty-six years ago, Apple was founded to fill a similar valley in computing. Today, Apple is the best equipped company to deliver to the masses a beautiful 3D printer and a “Blueprint Store.” To do this, though, Apple Stores will require significantly more square footage.

In summary, Apple’s move into retail was a branding homerun. But on the downside, the company now has less flexibility to bring new, physical products to market without simultaneously investing in retail expansion.

The best part about being in the start-up community is watching other start-ups. Almost every week, I learn about a new company that stops me in my tracks and makes me say, “Damn, that is so obvious. ABC company is going to forever change the way we do XYZ.” Here are three companies that have given me this reaction.

Kickstarter
Venture capital was created 56 years ago. Before Eugene Kleiner’s shot-in-the-dark letter that landed on Arthur Rock’s desk, there was no institution for funding smart people with new ideas. That changed when Rock connected Kleiner and 7 other colleagues with Sherman Fairchild. Fairchild invested $1.5 million into the 8 transistor scientists to create Fairchild Semiconductor. Fairchild Semi was a success, at first, but soon the founders left because they did have enough equity. Two Fairchild employees - Robert Noyce and Gordon Moore - went on to found Intel. (To learn more about the fascinating history of VC and The Valley, check out this interview and the movie Something Ventured.)

Venture capital was a tectonic innovation in finance. But in the last half century, not much has change: VCs raise money from Limited Partners and invest in young, un-established companies with mountains of potential. In fact, the major innovation has been the rise of secondary markets like SharesPost and SecondMarket. These exchanges give shareholders of private companies liquidity, which is great. But these markets have not changed the fundamental way in which early stage ideas get funded.

The way that VC offered equity financing for early stage companies, Kickstarter offers working capital finance. This is huge. Before Kickstarter, working capital finance was restricted to established companies that had good relationships with banks. Now, a company with a novel product idea can create a Kickstarter campaign and pre-sell units. Since the company receives the money before shipping the product, they have capital on hand to deliver the promised product.

In short, Kickstarter gives early stage entities a form of finance that did not previously exist for them. The key question is will Kickstarter launch a billion dollar business? Naysayers say no way; Kickstarter is for crafts and movies. I say, if Kickstarter was around in 1976, Jobs and Wozniak would have created the “Apple 1” campaign.

TalkTo
Look at the data. Texting is on the rise; voice calling is on the decline. Recognizing this, TalkTo created an app that allows anyone to text any question to any business. Want to know if Whole Foods has your favorite microbrew? Launch TalkTo, select Whole Foods, and shoot off a text. Running late for a dinner reservation? No worries; TalkTo has your back.

I was in New York City this weekend and used TalkTo half a dozen times. It worked flawlessly. I was able to get a restaurant reservation, change said reservation, and double check that we would be seated outside.

Within one day, TalkTo inserted itself between me and every business that I interact with. In other words, TalkTo -- not the restaurant, bank or hotel -- owns the relationship. This is incredibly powerful: owning the customer relationship is the holy grail in business. In the insurance industry, for example, brokers and underwriters constantly struggle to own the policyholder relationship. Owning the relationship enables companies to better understand customer needs and ensure quality interactions, leading to customers that stay longer and buy more.

By building a simple app that delivers as promised, TalkTo is poised to change the way that people find information about and interact with companies. What company recently did that? I’ll give you a hint. It starts with a “G” and ends with an “oogle.”

GigWalk
I love services that create marketplaces. The two most recent examples are Airbnb and Uber. Airbnb looked at the world and said how can we connect supply (people with spare beds) with demand (people looking for an inexpensive place to stay). Uber did the same thing, connecting underutilized Town Cars with people seeking reliable and convenient car services.

GigWalk is connecting businesses that need market research with people looking to make a few dollars. A brand - think Colgate, P&G, etc - needs to understand (or audit) how its products are being placed on the shelf at retailers. The brand could send in a dedicated “secret shopper,” which is costly and logistically challenging. Or, the brand could use GigWalk to push an alert to anyone in the area and ask them to simply take a photo of the Dental Section.

I particularly like GigWalk because it is an everyday product. A simple trip the grocery store or Starbucks or a restaurant could net a GigWalker a few dollars. In short, GigWalk looked at the world and said how can we use existing tools to mobilize people to solve a business challenge.