A Different Way — Thoughtful Financing, Or Why We Said “No” to a Lot of Money

Note: This post was authored by Sachin Kamdar, my co-founder at Parse.ly, in 2017. It was written as CEO of the company we started together, but reflects our joint attitude, at least at that moment in time, toward fundraising. It is hosted on my blog as an archival project for the MuckHacker group blog we started a few years back.

I felt pretty good at the start of 2017. My company, Parse.ly, had just executed its best quarter without exploding expenses. We’d built the business to a point where we effectively had unlimited runway to stay the course and still grow. However, coming off of such a successful year made me realize how much more we could do.

2016 gave us a taste of how impactful launching new products and working with differentiated customers could be for our business. We’d only scratched the surface. I knew what we had in the bank wasn’t going to be enough to capture the full opportunity in the market. We needed to fundraise if we wanted to accelerate our momentum.

Sachin Kamdar, CEO at Parse.ly (left); Andrew Montalenti, CTO (right)

I know I’m preaching to the choir when I say fundraising is hard; the numbers are against us. Mattermark found that on average, just 17% of companies that raise a Series A go on to raise a B and that number dwindles to 0.3% for later rounds.

While raising capital is hard, there’s an emerging debate as to whether growing your business organically from customer revenue is even harder. The founder of Basecamp lambasted the VC market for misalignment with entrepreneurs, suggesting the market was architected with few windows for success, instead encouraging growth at all costs.
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Specialists in medicine: not the problem

The NYTimes published a woefully misguided piece on the “specialist stranglehold” on modern US medicine.

So, doctors are to blame for setting the prices for reimbursement by private health insurance companies? And they are also to blame for pursuing extra years of low-pay resident/fellowship training so that they can do advanced procedures and be paid decently for their work? And, they are also to blame for “defending their turf” within a specialty — that is, for specializing at all?

And, this article is even written by a doctor?! Why, yes, of course, it is!

I think medicine may be the world’s most self-hating profession. Trapped inside a system that takes advantage of their altruism, ridiculous work ethic, and decades of training, they can’t help but blame themselves even as the capitalists around them exploit them.

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The Great Reckoning in Digital Attention

Note: At the time of this post’s publication, I was the founder/CTO of Parse.ly, a company that worked closely with major media companies on a real-time analytics platform.

The attention economy is broken.

Brands are spending billions of dollars on a complex digital ad ecosystem to influence consumers, but with often terrible results. Publishers, meanwhile, have never had bigger digital audiences — but they only earn a fraction of the revenue, mainly due to the power of the Google/Facebook adtech dominance.

Spending on Google and Facebook

Spending on Google and Facebook ads exploded between 2010 and 2016, as shown by the orange areas above. Google and Facebook also have about half of all the advertising revenue in the Internet category. It’s very likely that by 2020, that will be closer to 60–70%, with every other Internet publisher on the planet fighting for a shrinking portion of ad dollars.

Consumers — you and me — are the ones footing the bill. We see increasingly slow page load times for publisher pages which are bloated with ad tech vendor code; increasingly invasive ads from brands who are desperate to catch a click; and, a media trend toward outrage, rather than thoughtful debate.

NYC city street

On this last point: it is outrage, not truth, that prevails in an Internet economy built around attention capture and auction, which is how our programmatic digital advertising ecosystem works.

This is because outrage — through a quirk of societal and brain evolution — is more effective at capturing our time. Indeed, as we’ve been learning, outrage decoupled from truth is one of the most engaging forms of content on the web.
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In support of net neutrality

I wrote a letter in support of net neutrality and Title II classification of Internet Service Providers to the FCC. For background on this FCC vote, you can read this Arstechnica explainer.

You can add your own comment in support of net neutrality to the FCC at the URL gofccyourself.org. To clarify some terms:

  • “net neutrality” is a term coined by Tim Wu (author of “The Master Switch” and “The Attention Merchants”) which describes a legal principle that “Internet service providers and governments regulating the Internet should treat all data on the Internet the same, not discriminating or charging differentially by user, content, website, platform, application, type of attached equipment, or mode of communication.”
  • “title II” is a part of the Communications Act of 1934 that establishes that certain forms of communication infrastructure are “common carriers”, which means that in delivering Internet service, the ISPs “cannot discriminate [content/services], that is refuse the service unless there is some compelling reason.”

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Parse.ly Culture: Ethics & Identity

In September 2013, my startup, Parse.ly, had just raised Series A capital, and had just begun growing its team rapidly, from a small group of fewer than 10 to over 40 employees now. In the past several years, I have run Parse.ly’s fully remote engineering, product & design team.

Back in 2013, we had achieved initial product/market fit, initial revenue, and had already established a kernel of a product and engineering culture. I knew the company would change, but I wasn’t sure exactly how. Meanwhile, I had just recently read “Reasons & Persons”, a book on ethics and identity by the philosopher Derek Parfit. Though his ideas focused primarily on individuals, they influenced the way I thought about my business, my team, and its evolution over time.

What follows are my speaker notes from a talk I gave to my team to discuss the issues of Ethics and Identity central to Parse.ly’s culture:

Origin of this talk

  • Parse.ly turned 4 years old in May 2013
  • I reflected after our Series A round
  • I read a book about ethics/identity, Reasons & Persons
  • Realized some interesting concepts apply to firms, too

Parse.ly, different takes

  • “An analytics platform for large media companies?”
  • “A startup founded originally in 2009 at Dreamit Ventures?”
  • “A team of employees?”
  • “A specific configuration of tech and code?”

What is Parse.ly, really?

Are we:

  • our history?
  • our appearance to customers / press?
  • our employees (or founders)?
  • our technology / product?
  • our shareholders? (huh?)

Ship of Theseus

What is the Ship of Theseus?

  • They took away the old planks as they decayed
  • … putting in new and stronger timber in their place
  • One side held that the ship remained the same,
  • … and the other contended that it was not the same.

(Discussion.)

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The Internet is a cult generator

Noam Chomsky once gave a great answer on what he sees as the “purpose of education.” I hand-transcribed this quote because it was so good:

“Technology is basically neutral. It’s kind of like a hammer. The hammer doesn’t care whether you use it to build a house, or a torturer uses it to crush somebody’s skull. The hammer can do either.

The Internet is extremely valuable if you know what you’re looking for. I use it all the time for research, as everyone does.

If you know what you’re looking for — if you have a framework of understanding which directs you to particular things, and sidelines lots of others — then this can be a valuable tool. Of course, you always have to ask yourself, ‘Is my framework the right one?’ Perhaps you need to modify it from time to time.

But you can’t pursue any kind of inquiry without a relatively clear framework that’s directing your search and helping you choose what’s significant and what isn’t; what can be put aside; what is going to be pursued; what ought to be challenged; what should be further developed; and so on.

You can’t expect somebody to become a biologist or a doctor by giving the person access to the Harvard University biology library, and just say, ‘Look through it, you’re on your own.’ The Internet is the same, but just magnified enormously.

If you don’t understand or know what you’re looking for — if you don’t have some conception of what matters — then you’re lost. And you should always be willing to question your framework and make sure you’re not going in the wrong direction.

But if you don’t have that, exploring the Internet is just picking out random factoids that don’t mean anything.

Behind any significant use of contemporary technology is some well-constructed directive apparatus. It is very unlikely to be helpful — it is very likely, in fact, to be harmful.

It turns out, for example, that a random exploration through the Internet turns out to be a cult generator. Pick up a ‘fact’ here, another ‘fact’ there, and someone else reinforces it, and all of a sudden you have some crazed picture that has some ‘factual’ basis, but nothing to do with the world.”

–Noam Chomsky, transcribed from this YouTube video

This is why I am personally so careful about my internet media diet, which has been a topic of reflection on this blog going back to its creation in the 2000s. Stay healthily skeptical!

He Who Controls Traffic Reigns King

Note: This post was authored by Sachin Kamdar, my co-founder at Parse.ly, in 2016. It was written as CEO of the company and when he refers to “we” in the post, he is speaking about Parse.ly’s customers, most of which were independently-run top-ranked websites who were struggling to compete on the open web with the digital advertising and internet traffic duopoly held by Google and Facebook. It is hosted on my blog as an archival project for the MuckHacker group blog we started a few years back.

Last week we saw earnings reports from the two giants of the internet: Google & Facebook. Alphabet (formerly Google) beat expected earnings handily in Q3 2016 and announced a $7B buyback. Facebook did the same showing that a slowdown in user growth doesn’t equal a slowdown in revenue growth.
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The Twitter growth conundrum

Note from the future: this post written in November 2016. A lot has happened to Twitter (or, Twitter/X) since then. But, the fundamental analysis of Twitter’s growth dynamics outlined in this post continues to hold true even 8+ years later.

Twitter is the public Internet company everyone loves to hate these days. It’s not growing. No one wants to buy it. And people are genuinely confused: what, exactly, is Twitter? Is it a social network? A “micro-blogging” platform? A “live events destination”? A social data company?

Twitter 2011–2015 user growth.

I am one of Twitter’s active users, tweeting on topics such as analytics, Python programming, and the media industry, in which I work. In my day-to-day dealings with journalists, editors, social media managers, audience development folks, and others in the media industry, it’s clear Twitter has a special position among the professional class of media raconteurs.
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The value of money in a technology career

Michael O. Church wrote an essay awhile back called “Why programmers can’t make any money.” The post is no longer on his website — for some strange reason — but you can have a look at the archived version here.

If you don’t wish to read his post, this quote will give you the summary.

When the market favors it, junior engineers can be well-paid. But the artificial scarcities of closed allocation and employer hypocrisy force us into unreasonable specialization and division, making it difficult for senior engineers to advance. Engineers who add 10 times as much business value as their juniors are lucky to earn 25 percent more; they, as The Business argues, should consider themselves fortunate…!

I empathize with his thoughts, but I have struggled — for years, now — to understand the author’s conclusion.

If we want to fix this, we need to step up and manage our own affairs. We need to call “bullshit” on the hypocrisy of The Business, which demands specialization in hiring but refuses to respect it internally. We need to inflict […] artificial scarcity.

I decided to (finally) publish this response today because I have seen artificial scarcity play out in another industry; my wife is a medical doctor in the US. Are we to believe that programmers should establish artificial scarcity in the same way that doctors have — with political organizations like the American Medical Association and credentialing via something equivalent to medical school and board certification?

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The 3 best headphone options for programmers

Apple just announced that the headphone jack is going the way of the dodo, but as programmers, we know better. The headphone jack is our reprieve from cantankerous office banter, our salvation from your office mate’s obsession with cat videos, and our gateway to productive coding flow.

For those of us who still believe in the simplicity and beauty of the good old auxilliary audio input, here are three headphone options that I’ve field tested extensively and can vouch for quality and convenience.

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