Investors tend to value growth over everything else because a business can’t get big enough to break out if it isn’t growing. Of course, there are a number of key performance indicators for managing a business well and toward profitability — which we’ve written about here — but there are still stomach-churning moments where growth trajectory was interrupted.

Sometimes it happens gradually, but in a surprising number of cases it happens suddenly: The business is growing one day, then it’s not growing the next. I’ve taken to calling these growth hiccups “Oh, shit!” moments for CEOs. So what do you do when the growth rocket judders? MORE


A few weeks ago, we shared some key startup metrics (16 of them, to be exact) that help investors gauge the health of a business when investing in it. As one reader shared: “Drive with them, don’t just ‘report’ them”. So here are 16 more metrics — from TAM, ARPU, and sell-through rates to network effects, scale, NPS, cohort analysis, and more — that we think are important to add to the list. MORE


We have the privilege of meeting with thousands of entrepreneurs every year, and in the course of those discussions are presented with all kinds of numbers, measures, and metrics that illustrate the promise and health of a particular company. Sometimes, however, the metrics may not be the best gauge of what’s actually happening in the business, or people may use different definitions of the same metric in a way that makes it hard to understand the health of the business.

So, while some of this may be obvious to many of you who live and breathe these metrics all day long, we compiled a list of the most common or confusing metrics. Where appropriate, we tried to add some notes on why investors focus on those metrics. Ultimately, though, good metrics aren’t about raising money from VCs — they’re about running the business in a way where you know how and why certain things are working (or not), and can address or adjust accordingly. MORE

A big part of managing two-sided marketplaces involves managing tensions between the two, often opposing “sides”. Typically these are consumers on one side and micro-entrepreneurs or small businesses on the other. Depending on the type of marketplace it is, this tension could be between buyers and sellers (Amazon, eBay, etc.); diners and reviewers and restaurants and establishments (OpenTable, Yelp); guests and hosts (Airbnb); riders & drivers (Lyft, Uber); and so on.

So what should you do when you believe introducing a new product or feature will benefit the marketplace as a whole — but one or both of the sides have trouble seeing that big picture? Here are some tactics that I have deployed while managing different marketplaces… MORE

YouTube does a fantastic job of generating zillions of video views for its community. Yet it does a relatively poor job of helping their users earn money. There hasn’t been any serious competition that can deliver viewers at such scale… Until now. MORE

Until now, crowdfunding has mostly been an occasional, desktop sort of experience. We might back a new gadget launch or a charity a few times a year, but it’s not an everyday thing. With a smartphone in our pocket, however, we not only have access to crowdfunding platforms whenever we want, but to the crowd that comprises the various social circles of our lives. MORE

When new media technologies start out, their programming tends to be aimed at the mass market. It’s only when these technologies mature and their audiences grow that it becomes feasible to go beyond general interests and target segments of the audience with specialized content or commerce.

This evolution happened in the magazine industry, which exploded in the 1920s with new general-interest magazines like Reader’s Digest and Time but later targeted more specific interests with magazines like Jet, Sports Illustrated, and WIRED. This evolution also happened in television: As new technologies like UHF, cable, and then satellite emerged, programmers responded by developing channels like BET, Nickelodeon, and Zee TV targeted at specific segments of the population. Similarly, on the Internet, the early winners were “portals” that carried a broad range of programming. Next came e-commerce companies like Amazon and eBay that could address a long tail of interests—and now we’re seeing ever-more-targeted e-commerce companies such as Zulily, Warby Parker, and Julep.

What’s happening throughout all of these examples is a shift from broadcasting to “narrowcasting”, a term first coined by computing pioneer J.C.R. Licklider in 1967 about the “multiplicity of television networks aimed at serving the needs of smaller, specialized audiences”. Today, the Internet (and social media) enables us to target these segments more precisely. There’s an important nuance here, however: This targeting is not about narrowing per se, but about reaching and including segments that weren’t addressed before.

That’s why our newest investment is e-commerce company Walker & Company, which was founded by Tristan Walker to build a modern personal care brand for people of color. Globally, this is not a narrow audience given that a giant percentage of the world’s populations are people of color. But we believe Tristan is on to a big idea, because in the U.S., this segment appears woefully underserved—even though it is growing.

Brands catering to this segment are badly dated, and customer needs aren’t being met

I’m a huge basketball fan, and one of my favorite players when I was a kid was Walter “Clyde” Frazier in spite of the fact that he played for the hated Knicks (I grew up in Philadelphia and Washington, D.C.). Clyde epitomized cool, and he helped lead the Knicks to NBA championships in 1970 and 1973.

No offense to Clyde, but I think it’s a symbol of how neglected these markets are that one of the leading selling brands in the category hasn’t updated its spokesperson or its packaging in multiple decades…

People of color also have specialized personal care needs that are often not served by the global CPG (consumer packaged goods) brands.

For example, 80% of black and Afro-Latino men—and 30% of other races—suffer from Pseudofolliculitis Barbae (PFB) or “barber’s itch” due to curly hair follicles. The resulting razor bumps are not only annoying, but also can be unsightly and painful. Current leading selling shaving products tend to exacerbate this condition.

The market is large and growing

The population of people of color is growing in the U.S. and “over-indexes” significantly on beauty and personal care CPG products. For example, black consumers spend 2x the general population on cosmetics and 1.8x on skincare (Essence Communications, Inc.). And black women represent approximately 7% of the population but 30% of hair care spend.

We believe Walker & Company is extremely well positioned to build a big business catering to this market:

• Their first product, the Bevel shaving system for men (which they designed and manufactured), is impressively designed and executed — but more importantly it works. Clinical tests show that shaving with Bevel reduces razor bumps among men of color. More importantly, customers perceive that difference too: “Last razor I used had my face looking like nestle crunch. Been using @Bevel for some days now and my face still feels like a baby’s bottom”. “You guys did it! The first shaving system I’ve used that actually works as advertised. I will be a life long customer… Thank you…”

• The Internet enables efficient marketing to previously difficult-to-reach segments, and Tristan is quite adept at social marketing. He was the first business development person at Foursquare, and personally has 280,000 Twitter followers. Walker & Company takes customer satisfaction and feedback so seriously that he and his employees personally reply to and engage with every customer on Twitter.

• Results are early, but Bevel is off to a great start. They have gone to market with a five-part shaving system sold through a subscription format—and sales as well as customer retention have been strong out of the gate.

• There are numerous other huge segments in this market with under-served needs, and Tristan already has an extensive product roadmap for adjacent markets.

Yet it’s important to note that Tristan’s mission goes beyond profits. For the consumer, it’s hard to feel like a first-class citizen when you’re only able to buy second-class products. That’s why Walker & Company focuses on developing brands that solve acute physical problems (beginning with PFB) in the community—they won’t be making shampoo just to make shampoo.

Tristan feels he has found his life’s work at Walker & Company, and he is hell-bent on building the modern health and beauty brand for people of color. We’ve known Tristan for years, and consider him to be a charismatic, talented, and passionate leader. We look forward to joining him on this journey.

Photo: Getjustin


E-commerce has disrupted a number of large categories, including media, electronics, apparel, and home furnishings. If you’re shopping in these categories, there’s a strong and rapidly growing chance that you’re going to buy them online. But that’s not the case for the largest retail category: grocery. For the vast majority of people, filling the fridge still means rolling a cart down the aisles at the local grocery store.

As I outlined in a previous post, groceries are among the last huge e-commerce opportunities. Online penetration of groceries is extremely low. It’s not that innovators haven’t tried—it’s that they haven’t enjoyed significant success. To date, virtually all of the digital efforts to attack the grocery vertical—i.e., the brick and mortar franchises—have followed a very similar model: by building out e-commerce grocery businesses end-to-end, including warehouses, inventory, and trucks. They’ve essentially replicated the grocery store supply chain at great cost and complexity. During the first wave of Internet startups, we saw this centralized approach most famously with Webvan, but also at Peapod, FreshDirect, and more recently Amazon Fresh.

But now a new wave of digital companies is going after the grocery business with a very different approach. That’s why we’re thrilled to announce we’re backing Instacart.

The proliferation of mobile devices is enabling what I call “People Marketplaces”: two-sided marketplaces that connect consumers with people providing specific services.From finding a ride with Lyft, to getting your house cleaned with HomeJoy, home-delivered restaurant meals from DoorDash and Caviar, and instant pet-sitting from DogVacay, the variety and usage of People Marketplaces are exploding. It’s really becoming a thing!

People Marketplaces couldn’t really exist before the smartphone; the efforts of all these people couldn’t be efficiently managed or optimized without that supercomputer-with-GPS that’s now in everyone’s pocket. Today these devices can run sophisticated software that orchestrates tasks like order placement, driver location and logistics, delivery timing, and payment.

Instacart offers same-day delivery from your favorite grocery store via an army of local contractors, often within the hour. The service is expanding rapidly and is already available in the San Francisco Bay Area, New York City, Chicago, Boston, Washington D.C., Philadelphia, Los Angeles, Seattle, and Austin. Instacart is doing this by taking what I’d term a “virtual” approach that requires negligible infrastructure investment relative to other more centralized models; they leverage the existing grocery store infrastructure with a workforce enabled by digital tools.

I know what you’re thinking; I’ve written extensively on how brick-and-mortar retailers will be disrupted by e-commerce companies, and how they’re at risk of becoming dinosaurs in many retail categories. Yet Instacart is partnering with these same brick-and-mortar grocery stores in the delivery of their service. Have we cast our lot with the dinosaurs?

Not. Traditional brick-and-mortar retailers have a large advantage relative to e-commerce companies (if they can figure out how to harness it): Each of their stores is essentially a mini-warehouse with inventory widely distributed throughout the country. So we’re making a bet that Instacart’s partnerships with brick-and-mortar grocery stores will be the winning play in grocery delivery to the home, with the ability to fend off competition from e-commerce companies that build out their own infrastructure.

Here’s why we think the virtual model wins in this case:

  • It’s capital efficient – Instacart’s virtual approach to delivering groceries is extremely capital efficient relative to the approach of e-commerce grocery players like Amazon Fresh, Fresh Direct, and Pea Pod. Instacart’s leveraging of existing infrastructure obviates the need for physical capital investment. To put a point on it, Webvan raised $1.2 BILLION  largely for cap ex in their unsuccessful attempt to build a centralized grocery e-commerce business back in the day.
  • Faster to market – Instacart’s virtual model lets them expand to new cities quickly; their market entry strategy requires them to digitize local grocers’ inventory, hire drivers, and acquire consumers. Contrast this with the centralized e-commerce players and their need to build warehouses, buy trucks, buy and receive inventory, hire both warehouse workers and drivers… For these same reasons, Instacart should also be able to service smaller cities more efficiently.
  • Offers potentially superior operations – Instacart’s model is much more simple operationally; an order on Instacart results in a shopper going to the grocery store you selected, picking the items on your list, and delivering them immediately to your door. This should enable them to provide service that’s both high quality and FAST (remember that Instacart is often able to deliver groceries within an hour). By contrast, centralized e-commerce approaches have significant operational complexity. They need to buy, store, and pick inventory that’s often fragile and/or perishable (e.g., fruits, vegetables, meat, dairy) and keep it fresh and undamaged inside their trucks that run around the city all day making multiple deliveries.
  • Capitalizes on well-known brands – Instacart leverages the brands of the physical grocery chains, which typically are well known to the neighborhoods they serve. These chains know and carry the SKUs that people in their community want to buy. In the Bay Area, this already includes national chains like Whole Foods and Safeway as well as iconic local brands like Rainbow Foods and Berkeley Bowl. Centralized e-commerce businesses, on the other hand, need to build a brand from scratch and optimize for the tastes of an entire city.

We’re not alone in thinking that grocery will develop differently than other e-commerce verticals.  Fred Smith ,the founder of FedEx — which re-invented the delivery business — had this to say about the delivery of groceries (as part of a 1999 InternetWeek interview):

 “A lot of retailers are coming to the conclusion that well, maybe the best thing is not a total inventory-less environment but maybe what we do is use the Internet in concert with our bricks and mortars. And that’s what I think will happen, because you have a lot of things that have very low value, and they don’t lend themselves to e-commerce and fast-cycle distribution.

Groceries are the best example of that. Now, maybe there’s an example where you have an e-commerce interface and home delivery of groceries, but those groceries are not going to be delivered from across the country, and they’re not going to be built on demand for your order.”

FedEx was the pioneer of the centralized approach to delivery,jet planes and all. And even back in 1999, he thought the virtual approach in partnership with brick-and-mortar grocery stores was the future of online grocery distribution. Fast-forward 15 years and throw in the smartphone — and we think he just might be right.

I see lots of analogies between Instacart and OpenTable, the business I ran for four years before joining a16z. They are both local, requiring city-by-city rollouts. They both provide convenience to consumers. They both drive incremental business for their retail partners, providing those retail partners with an incentive to promote the service. They both have the potential for network effects. And FWIW, they both involve food!

In addition to these strategic advantages, we as always are making a bet on the founder. In this case, it’s Apoorva Mehta, a former Amazon programmer who is the founder and CEO of Instacart. Apoorva and the team have made extremely impressive progress, leading Instacart to strong early results on very modest resources. This round will give them a deeper war chest to rapidly bring the convenience of Instacart to cities across the country. We look forward to supporting their efforts to revolutionize grocery shopping. Your fridge awaits!

Many folks make the observation that it’s challenging to run a fast-growing technology start-up.  I personally think that’s a dramatic understatement.  It’s the hardest thing I’ve ever done…as well as the most rewarding.

I’d had very modest experience actually running a business when I got to eBay in 1999.  Most of my management experience had been in running functional groups within organizations, such as being the CFO of The Disney Stores.  I had a very brief stint running a business as CEO of, the now defunct movie superstore that Amazon steamrolled once it expanded beyond books.  But that doesn’t really count as it wasn’t really a business—for example, no viable business spends something like $40 million in marketing to sell something like $40 million in DVDs at a gross margin loss. went from filing to go public in December 1999 to being closed down in June 2000, ostensibly a casualty of the end of the “Bubble”.  I saw the writing on the wall and left as they were preparing to file.

But Meg Whitman was willing to take a chance on me in spite of this lack of operating experience.  Meg had been my hiring manager at The Walt Disney Company in 1990 when I joined their Strategic Planning unit.  Nine years later, after we both had departed Disney, she reached out about my joining eBay.  Frankly, my impressions of eBay going into those conversations was that it was a quaint website that sold lots of collectibles like Beanie Babies, and it was already public so that most of the potential upside had already been realized.  But Meg is quite compelling, and she successfully disabused me of those notions and convinced me to join—no small feat given the Bubble was still alive and well at that point and I had lots of other offers (companies in the Valley in the late ‘90’s were hiring anyone with a pulse!).

My first role at eBay was managing a fledging “Services” unit whose charter was to develop partnerships with companies to facilitate trade on eBay, such as bulk auction management tools or electronic postage.  And she gave me a whopping two employees to manage, one of whom it turns out was plotting to start a Baja Fresh franchise and soon left.

But I had joined eBay as part of a management “bench”, in the hope that a bigger job would materialize down the road.  And one quickly did when Meg decided to split eBay into two divisions with the launch of the International unit, and in early 2000 she appointed me as head of the legacy eBay North America business.  Fast forward, I ended up running that unit for about five years during its period of hyper-growth.  During that time I championed eBay’s acquisition of PayPal, and in 2005 I moved over to head PayPal during its hyper-growth period.  Having started my eBay career managing effectively one person when I joined, seven years later I was managing something like 5,000 people.  What a ride!

Over the course of my seven years at eBay, I discovered the experience and requirements of successfully running a hyper-growth business changes dramatically over time.  The best analogy I have for it is a sports analogy:

Employees = 1-10.  Player:

When I first started managing eBay North America, I recall I was managing about a half dozen people.  At this scale, I found myself involved in pretty much every decision.  Heck, I found myself making pretty much every decision.  It felt like I was on the field of play during a high stakes game, my adrenaline pumping as the action crashed all around me.  It was unbelievably exhilarating, and it seemed to be working—the business was growing like crazy!

Employees = 10-100.  Coach:

…Until it wasn’t working any more.  It turns out the number of decisions to be made scaled tremendously, seemingly even faster than the business.  The line of people outside my cube waiting for decisions kept growing longer, and it quickly became obvious that the old M.O. wasn’t going to scale.  I found I needed to hire talented people to supplement my efforts and delegate more and more decisions to them.  And I needed to manage these daily decision makers as a team, giving them high-level direction and coordination but watching from the sidelines as they executed the plays.  I had to become a coach.  I found it a bit less exhilarating, but it scaled a whole lot better and at least I was able to make it home at night.

Employees = 100-1,000.  General Manager:

And then almost just as quickly coaching wasn’t working any more.  The business continued to explode, and the folks I was delegating the daily decisions to soon found out they couldn’t make all of the decisions themselves either.  They now also needed to become coaches, building out their teams and delegating their decisions to their players.  And I found I now needed to coach these new coaches differently.  I still needed to give high-level direction, but other tasks soon became required such as setting high-level organizational goals, coordinating their efforts, and tuning the organizational relationships of these rapidly growing groups.  I had to become the general manager of this rapidly growing team.

Employees 1,000-10,000.  Commissioner:

By the time I moved over to manage PayPal, the size of the team had grown into the thousands.  And I quickly discovered that I needed to supplement my just discovered and nascent general manager skills substantially.  The organization was so big that the players on the field were now two or three levels below my direct reports.  I continued to set high-level direction, but I quickly found that the organization performed best when I executed a set of administrative tasks that I came to refer to as the “-tions” (pronounced “shuns”) such as vision, motivation, communication, organization, simplification, and coordination.  If I performed these “shuns” well, then the team was freed to devote most of their energies to the game.  With my sports analogy, I’m not sure now whether I was the team owner or the commissioner of the league, but I do know that I felt like I was in a Sky Box near the top of the stadium, squinting down trying to see what was happening on that distant field of play.

The most important discovery I made in this process was the recognition that I needed to quickly and continually develop entirely new sets of skills to manage the business effectively as it very rapidly scaled.  And given the rate of scaling, that required massive learning and adaptation at a ridiculously fast pace.  And given eBay/PayPal was a high profile business and I had a high profile role, any failures on my part to deliver would be widely known.  This was really, really hard work that needed to be done at a break-neck pace amidst very high levels of stress, much of it self-imposed.

I heard G.E. chief Jeff Immelt speak to a small group of executives during this time.  He said something that stuck with me, that leadership requires high levels of self-awareness and requires an intensive journey into knowing oneself.  Becoming a great leader requires you to know yourself, your strengths, weaknesses, and idiosyncrasies.  And it requires you to understand how others experience you, perceive you, and respond to you.

In looking back, I think he was precisely right.  Here are some of the tools I used on that journey to self-awareness that enabled me to scale from managing one to thousands of employees:

– Periodic 360 feedback from the organization.  It’s really quite straight forward: If you ask people for feedback and typically respond to it in a constructive way, then they will typically give it to you.  I usually awaited this periodic feedback with a sensation somewhere between dread and abject terror each time it was coming.  But done right this feedback was almost always constructive, and it invariably gave me a roadmap for what was working as well as what wasn’t, which led directly to the new skills I needed to develop.

– Working with a talented coach that I trusted.  My buddy John Donahoe, the current CEO of eBay, turned me on to the concept of using a coach in a session during my eBay tenure when I was pulling my hair out in frustration.  He observed that if world-class athletes like Tiger Woods (recall this happened last decade) utilized swing and strength coaches, why shouldn’t executives who aspired to improve use a management and leadership coach?  I ended up using a number of coaches over the years and one that helped me tremendously was a wonderful woman named Jane Creech.  Jane’s efforts in helping me develop my management and leadership skills made me better…and probably had an indirect impact on improving the lives of thousands of people at eBay and PayPal!

– Find a mentor or mentor(s).  I eventually made the realization that I wasn’t the first person who had gone through this situation.  One of the things that makes Silicon Valley unique is that it’s one of the few places in the world where hyper-growth companies are spawned with fairly high regularity.  So over time I developed a few close relationships with people who had “been there, done that” that proved very helpful to me.  John Donahoe was one of these people, as were a few members of my Young Presidents’ Organization who were in my forum.

The keys to success to using these methods are a hunger to learn and improve, a willingness to be vulnerable and share weaknesses as well as strengths, and often owning up with your organization to shortcomings that you’re working hard on improving.  And for me, these were the heavy-lifting parts of the process.

That said, it was an incredibly gratifying journey to be able to scale effectively from running a small start-up to leading a huge organization.  Personally, I found the early days to be a whole lot more fun.  I recall a conversation late in my eBay tenure with Scott McNealy about how I was becoming more effective but having less fun over the years as the business scaled.  He said something to me along the lines of “You idiot, don’t you realize that your job is to do the shit stuff so that everyone else in the company can be productive and happy?”  I didn’t then, but I do now.