Dan Rose Profile picture
chairman coatue ventures / 20 years at facebook and amazon
Michael Hood Profile picture sourcex Profile picture Cameron Priest Profile picture Su An Profile picture महेश सावंत Profile picture 22 added to My Authors
17 Oct
In 2004 I had an offer to join the new Kindle team at Amzn and I jumped at the oppty. I was on our retail team at the time -> Kindle was new/sexy. But a week before I was scheduled to start my new job, I was told to stay put and I learned an important lesson. Here’s the story:
2 years earlier I had been given P&L responsibility for Amzn’s cell phone store. We sold phones + plans (like Car Warehouse and Best Buy). This was Amzn’s highest margin biz, but it was tiny and not growing and I was told it could get shut down. I had 6 mos to turn it around.
The industry model at that time was give phones for free w/ service plan attach. I reinvested the service plan margin to make phones less than free, and rev growth exploded. GM % plummeted, but profit $ went way up. My little biz was our fastest growing segment at Amzn!
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3 Oct
In 2008 Facebook’s user growth hit a wall at 80M and we were having serious debates about whether any social network could ever reach 100M users. 2 years later we had doubled our user base and not long after that we reached 1B users. Here’s how we did it:
I joined FB in summer ‘06 when we had 7M users and were adding 5k/day. Over the next 18 months, Zuck shipped News Feed, Open Registration, Platform and community-led translation. By end of ‘07 we had 70M users and it seemed like we couldn’t be stopped.
Towards end of ‘07 I helped raise our Series C at $15B valuation. We had <400 employees and only $250M revenue, but we had explosive user growth and powerful network effects. Our entire valuation was based on how fast people were signing up for FB all over the world.
Read 13 tweets
19 Sep
May 18, 2012 - there was a crisp blue sky at FB’s campus as we rang the opening bell. Emotions ran high as we took a brief moment to celebrate our hard work. The stock traded up for the first few hours. Then it traded down for the next 12 months...
Facebook’s IPO coincided with a paradigm shift in technology. The majority of our usage and revenue transitioned from desktop to mobile practically overnight. Facebook’s journey to a mobile-first company started with a strategic error and ended with a pivot. Here’s the story:
Mobile initially presented us with a number of challenges, and our instinct was to innovate our way around them. The heart of our strategy was HTML5, which turned out to be a flawed approach. We spent 2 years sprinting down the wrong path before reversing course. Why?
Read 16 tweets
12 Sep
Amazon launched in July 1995, and every Xmas was a near death experience for the first 7 years. I joined in ‘99 and got to experience this first hand. Starting in late Nov, all corporate employees were shipped to fulfillment centers to pack boxes for 6 weeks. Here’s what I saw:
Despite efforts to plan ahead, the company literally couldn’t keep up with holiday demand. 40% of all annual orders would come through in 6 weeks from Thxgiving through New Years. Ops teams would start planning in Jan, but by Sept they were always massively behind.
As “earth’s most customer centric company,” failing to deliver presents for Xmas would have been like Santa missing his deadline. But when demand exceeds even your most aggressive forecasts, it’s a physical world problem that requires physical world solutions - ie human bodies.
Read 11 tweets
4 Sep
I dropped out of b-school to join Amazon July ‘99. By Dec Amzn’s stock had doubled, Jeff was Time Man of the Year. Then March ‘00 internet bubble popped -> my stock options were underwater and Amzn faced bankruptcy. Yet dropping out was the best decision I ever made. Here’s why:
I needed a pattern interrupt. My life had been conformist up to that point - straight A’s, awards, Harvard, b-school. But business is messy, life is messy. I knew deep down I needed to mess stuff up, get outside the box. I’ve tried to maintain that mentality ever since then.
Shortly after I started my internship at Amzn, I asked CFO Joy Covey if she thought I should drop out of b-school to stay on full time. She said I would learn more on the job than in school (she had dropped out of high school). She was right, you can’t learn biz in a classroom.
Read 8 tweets
21 Aug
In 2002 I was working in Amazon’s retail division. We were organized by department - books, CDs, electronics, etc - and a separate dept for products sold by 3rd parties. Then Bezos decided 3rd party should appear next to 1st party on the same product page. Here’s what happened:
Amzn launched 3rd party biz right after I joined summer 1999. Started w auctions, competing directly w eBay. Added fixed price when eBay acquired Half. Despite a ton of cross-promo, nobody visited the 3rd party store. eBay had buyer/seller network effects. Amzn couldn’t compete.
By 2002 most people thought we should shut down 3rd party biz. It wasn’t working, consumed a lot of resources, good people were on it, big distraction. At the same time, core retail biz had decelerated to single digit growth after we raised prices to stop bleeding cash.
Read 12 tweets
8 Aug
A few months after I joined Facebook in 2006, we shipped the 2 most important products in FB’s history: News Feed + Open Registration. A lot of smart people thought these moves would destroy FB. Instead, they transformed the company and cemented Zuck’s leadership. The backstory:
News Feed shipped first. In 2006 there were no feeds (other than RSS), NF was a novel product idea. Websites were measured on page views back then, and NF was designed to reduce PVs by eliminating the need to click around profiles. Less PVs = less ad impressions, seemed crazy.
Mark described FB as a utility, and NF was central to his vision. It showed info you could already see on people’s profiles, but organized efficiently on the home page. And stories would be ranked based on what people found most interesting. This was a massive change.
Read 10 tweets
28 Jul
In 2004 I got the opportunity to work with Jeff Bezos to develop the original Kindle. It was Amazon’s first foray into hardware and I learned a ton from my interactions with Jeff. Here’s some of the stories and lessons that I took away from that experience:
1/ Learn and adapt. Amazon’s second largest business was decimated when Apple digitized the music industry. CD sales had been important to Amazon, but they were dwarfed by book sales. Jeff took the lessons from iPod/iTunes and applied them to Kindle.
2/ Ignore the “institutional no”. Amazon’s core retail business was pummeled after dot-com crash, and we were still pulling out of the tail spin in 2004 when Jeff started the Kindle team (same year he started AWS team). Everyone told him it was a distraction, he ignored them.
Read 12 tweets
14 Jul
The most difficult / pivotal moment in my career occured shortly after Sheryl joined FB in 2008. She saw my potential and wanted to give me more responsibility for the business, but decided first to do a 360 performance review. The feedback from my team and peers was devastating.
While everyone acknowledged my high level of competence in partnerships and business strategy (this is also what Sheryl saw in me), they universally criticized me for being political and untrustworthy. Sheryl told me I couldn’t stay at FB if I didn’t address this.
This was obviously extremely difficult to hear. I was completely unaware that people viewed me this way, and it wasn’t consistent with my values. But the feedback was clear - it wasn’t isolated - and I realized I had a huge blind spot.
Read 12 tweets
22 Jun
I’ve sat on both sides of the platform / developer dynamic: managed FB’s developer ecosystem including Zynga during our web platform days, and managed FB’s relationship with Apple/Google as the largest app developer on iOS/Android. Here’s a few things I learned:
1/ Platform management is a fascinating case study in value creation and power dynamics. Value creation: durable platforms strike a “balance of value” between platform owners, developers and end-users.
2/ Power dynamics: there’s natural tension between platform owners and developers. They share the same end-users: who owns the customer? They make each other’s products more useful: which direction does value flow? They have overlapping features: where is “the line”?
Read 9 tweets
26 May
In 2009, an unknown investor from Russia came out of nowhere to make one of the greatest late stage venture bets in the history of Silicon Valley. Why did FB choose an outsider to lead our Series D round? Here’s the inside story:
2 years earlier we famously raised from Microsoft at $15B valuation. That turned out to be a mistake because it set us up for a painful down round. By 2009 growth had slowed and the financial crisis crushed advertising. “Smart money” bids for our Series D were coming in at $3-6B.
We had a high bid at $8B from a respected valley firm, and we had a wildcard bid from Yuri Milner/DST who offered to top any other bid by 20%. We initially chose the reputable firm at a lower price, but they refused to drop a ratchet provision so we decided to give DST a chance.
Read 9 tweets
15 May
In 2006 I almost made one of the most expensive mistakes in history of business. FB was growing in English-speaking countries but there was a clone (red instead of blue) in Germany that most college students were using. Based on my experience at Amzn, I thought we should acquire
The clone had sold to a German newspaper company, and we offered the owner 5% of FB to acquire it. Zuck and I wanted to do it, others didn’t (they were right). We thought they had locked-up Germany, and we couldn’t imagine a world where FB wasn’t in Germany
I had fully negotiated the deal, but on the 1 yard line the German newspaper owner pulled out because he was worried they would no longer be able to use the social network to drive traffic to their newspaper websites (classic innovators dilemma, can’t fault him for this concern)
Read 5 tweets
16 Apr
Adversity can present great opportunities for growth. One of the pivotal leadership moments in my career happened in the middle of Facebook’s post-IPO meltdown. Captured in Stephen Levy’s new book Facebook: The Inside Story amazon.com/dp/0735213151/…
The dive in the stock price was affecting morale. Dan Rose decided to give a pep talk at an all-hands. He recounted his experience at Amazon in the dot-com bust. The stock had crashed from $120 a share to something like $6.
Rose’s personal plans to buy a house for his family had been shelved. Some people were leaving the company. But Amazon and its leader, Jeff Bezos, hung in there and now ruled the commerce world. Same deal with Facebook.
Read 5 tweets
29 Feb
When I worked at Amazon 1999-2006, Jeff Bezos’ favorite interview question was “are you a lucky person?” What a great way to filter for optimists and people who manifest success.
If you’re a successful, optimistic, humble leader the right answer starts this way: “Yes, I’m the luckiest person on earth. I’ve worked hard to get to this point in my career, but a lot of things also had to go right and I’ve taken full advantage of my luck.”
Sorting for optimistic people is a good proxy for leadership potential and likelihood of success. Perceiving yourself as lucky is a good proxy for optimism.
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16 Dec 19
Difference between partnerships and ecosystems:
Partnerships - 2 parties enter into a relationship that benefits both sides
Ecosystem - 1 party (aka platform or aggregator) enters into a relationship with many parties (aka developers or partners) that benefits 3 parties: platform owner, developer and end users (aka shared customers).
Read 8 tweets