Thor Muller

Several weeks ago I had the chance to do my third Ignite talk, this one for Ignite SF. Five minutes, twenty slides on auto-advance, fifteen seconds per slide. This time I did things a bit differently. I had a theme in mind, a set of loosely connected ideas, but I didn’t have the meat of the overall narrative I wanted to tell. I put together my slides and submitted them to the organizers a few days before the talk. Then I went to work filling in the story around my slides. It was, if nothing else, a fun game, culminating in an on-stage rush.

My talk ended up being denser and more poetic, certainly less linear than previous presentations. It is collage of answers framed by a question that’s on my mind a lot these days: how do we change our own minds?

For our South by Southwest Interactive session on cooperative games, Health Month’s Buster Benson and I decided to try something different. We turned the talk into a game.

We named it Heat, a Cooperative Game in Three Parts. The scenario was inspired by a Twilight Zone episode called The Midnight Sun that haunted me as a kid. Our story starts like this:

The earth has begun to move closer and closer to the sun, leading to blistering temperatures and causing all kinds of mayhem. The polar icecaps are melting at an alarming rate, flooding continents and sending the world’s populations into panic as their homelands are submerged underwater.

The first stage of the game is The Lifeboat.

To survive the rising waters, each person in the session must find a spot on one of twelve lifeboats before they depart. There are only two rules: find a seat next to someone born in the same month, and the person to their left must be born on the same day or earlier in the month. Other than that, it is every person for themselves.

Oh, and one more thing. The attendees have exactly five minutes to find their spots.

I admit I was a bit worried when we walked into the conference room and saw that it wasn’t 75-150 people as we expected, but closer to 500. It was always a bit ambitious to expect that many people to get up and re-organize their seating arrangement in a cramped room in such a short period. Doing so in a standing room only situation was risky at best.

I pushed play on Iggy Pop’s Lust for Life and the 5 minute race was on. It was instant pandemonium. People started shouting for their month (“April, April over here!”). Some people began to write their month’s name on paper with markers. Others created ad hoc signs using their iPads. Quickly, people began to converge into groups, and the the sorting by date began. By the time the five minutes were up the room was about 98% sequenced by birthdate. Those who didn’t quite find their spot? The became zombies, of course.

The Lifeboat demonstrated that individual self-interest, combined with a few simple rules, would lead to wide-scale emergent cooperation. It’s perhaps the simplest form of cooperation–that which requires little forethought, where wriggling towards the light is enough to form co-adaptive behavior. This simplicity is its power, however. We see similar ordering patterns all through nature, from the formation of crystals and nucleotides, to the sociobiology of ants, to the computational models known as cellular automata. It only takes a few well balanced rules to conjure a remarkable system.

The second stage of the game is called The Island.

The twelve lifeboats have reached separate islands, each containing its own supply storehouse. All the food and water needed for survival are in the storehouse which is protected by a security system. To unlock the supplies, each group needs to crack the code before time runs out. The code is a multiple of the number twenty-one made up of as many of the birthdates in each group as possible.

To make this game even more interesting, we brought out a bottle of Bulleit Bourbon as a prize for the group that produced a key that included the largest proportion of its’ members birth dates. We were surprised when all twelve groups (each with dozens of members) formed keys that included 100% of its members. The game was easier than we’d expected so we adapted our winning conditions on-the-fly. The bourbon was awarded to the group with the largest number.

It was again amazing how quickly the attendees self-organized, this time with a strong team dynamic. We’d engineered the game to show how small group goals can be engineered to supersede individual interests. Yes, we’d added a competitive element with the bourbon, but what stood out was how a shared victory condition and a stretch goal turned a group of people into a single directed unit. Critical to this was that the fact that any solution required every member’s contribution.

The Island stage didn’t scale as well as the Lifeboat in one regard. While every member of the group shared their information, the solution itself was often calculated by a few leaders, leaving the rest of the group to stand by. It was only a few minutes long, but if I was to try this again I would tweak this part of the game to maintain the involvement of all members through to the solution.

The third stage of the game is The Final Countdown.

The earth is now so close to the sun that it’s clear that the end is near. There is only one hope–to escape earth before all life perishes. This means building a ship big enough to transport all the remaining survivors. To do so, each island must produce a part to be used to construct the whole by collecting a full set of resources.

Each island begins with twelve of one kind of resource, recovered from the supply storehouse in The Island phase. Each Island may trade one resource for another with an adjacent neighboring island (e.g. January can trade with February and December). The goal is for each island to end up with one of each of the resources through a series of trades within the allotted time.

Unfortunately, we didn’t actually get to this last phase of the game–ironically, the session ran out of time. I’m dying to know how it would have turned out. Would each group have organized themselves into hyper-efficient trading units with a trader for each neighbor, a treasurer to tabulate resources as they came in, one or more de facto economists watching the flow of resources as they percolated across the island chain, a communications specialist who coordinated plans with island neighbors? Or would the whole thing have collapsed on itself, desperation and chaos defeating any semblance of coherence?

These questions will have to wait until the next time I get my hands on five hundred willing subjects, er, players.

Read Buster Benson’s account of the panel for a great summary of many of the topics we covered.”

I’m more of a Bowie guy, but I sing what they put in front of me. Props to my homeboy Keith Messick (@keithmessick) who penned those rhymes for me (with apologies to Dylan)

In case it’s not obvious, this video is an homage to Dylan’s song Subterranean Homesick Blues which was featured in his iconic film Don’t Look Back.

The Austin Chronicle is running features on some of the upcoming sessions at SXSW.  James Renovitch was kind enough to feature my session in his well-written article, ”Gaming the System“, previewing gamification themes at this year’s conference . I am in great company in this article with Brynn Evans, Dave Gray and a nice description of Buster Benson‘s web app, Health Month. Here are a few choice (and quite possibly self-serving) quotes:

Enter panelist and Get Satisfaction Inc. Chief Technology Officer Thor Muller, who tweaks the parameters of gamification to move from a competitive mode to something cooperative. Muller’s company specializes in adding social elements to websites that maximize users’ combined talents. He contrasts his approach with Yahoo Answers’ competitive approach, which involves voting for the most helpful answer to a question until one answer sits atop the heap as the “most helpful.” Muller prefers a system that recognizes each user’s strengths, saying: “You have experts who have knowledge, and you have connectors who may not have all the answers but … they’re really good at connecting a question to an answer. And you might have a copy editor who can improve the title of a question so that other people can discover it.” Throw in programming that identifies participants’ strengths and weaknesses and crunches the numbers, and the unwitting team’s best answer comes out the other side. Putting it in gamification parlance, Muller adds, “That’s the victory condition for everybody.”

Muller sees game mechanics advancing so far as to create new economic models. At first click, Kickstarter, the Internet’s hotspot for grassroots project funding, doesn’t play like a game, but closer inspection reveals the underlying impetus for the site’s success. “It has all the aspects of a game in that for each project there is a victory condition which is raising the minimum amount of money,” says Muller. “You can also level up to different rewards.” In this way gamification can be the extrinsic amplifier for people’s intrinsic desire to support friends and good causes. “We’ll see more things like that,” Muller continues, “not just for creative projects like Kickstarter, but for education, for fundraising, for new businesses, nonprofits, and so forth. That’s where the exciting stuff is, not another social game on Facebook.”

The curse of hot-trend status is the accompanying increase of jumpers onto the bandwagon. “If you have a crap product and you add game mechanics thinking that’s going to increase your engagement,” warns Muller, “that’s the equivalent of polishing a turd.” The predicted expansion of gamification into nearly all aspects of life breeds conjecture about the long-term effects of everything being fun. What about walking uphill both ways to school? Isn’t there something character-building about a struggle, something hard-earned? Will the gamification generation be a bunch of namby-pamby twerps who quit the moment something – technology or a task – doesn’t go out of its way to engage them? “We’re going to get increasingly literate when it comes to game mechanics. So we’ll know this is a manipulation of our motivations, but we’ll want that outcome, so we’ll suspend disbelief,” Muller says. “[Game mechanics] allow us to think differently than we would without them. And when it aims for an objectively good goal, that’s inspiring. If the goal is purely time-wasting, that’s where the critiques have some merit. If it’s just about breeding compulsion, then it’s potentially dangerous.”

Join me and Buster Benson for our session, Gamechanging: Turn Your App Into a Cooperative Game, at 2pm on the March 10, the first day of SXSW Interactive.

There’s a maddening amount of sound and fury these days on the subject of startup financing. Just yesterday, startupland’s enfant terrible, Jason Calacanis responding to a blog post by venture capitalist Bryce Roberts, made a bravado-drenched comment that’s become typical of the discussion:

“VCs, especially small ones…are no longer needed in the food chain…Small VC funds don’t provide enough value and are going to be disintermediated in the new world where money is table stakes.”

More than just inaccurate (in my experience), this kind of pronouncement plants a dangerous idea in the minds of young entrepreneurs.

Mark Suster said it best in his TechCrunch post yesterday: “To encourage people to run from skilled investors is bad advice. Ask anybody who has worked with a hand-on early stage investor (Fred Wilson, Josh Kopelman, Jon Callaghan) and they’ll tell you they wouldn’t do it any other way.” Amen.

The measure of a friend is whether (and how) they’re there for you in the worst of times. The same should be said of investors. When times are good, we founders are all about the upside. We obsess over valuation, deal terms, and “creating a market” for our stock. The number of available investors skyrockets during these good times, too, valuations and terms improve, driving the greed cycle upward. But when the shit hits the fan, especially when money’s involved, people are always surprised by how suddenly and shockingly things change. Then no one wants to talk about it afterwards. In that spirit, I think it’s important for me to tell a personal story of how a set of early stage venture capitalists had my company’s back through some very tough times.

Get Satisfaction, the company I founded with Amy Muller and Lane Becker, raised it’s original $1 million round of funding in August of 2007 from First Round Capital (FRC), O’Reilly Alphatech Ventures (OATV) and SoftTechVC. It feels like a million years ago, but the startup environment was riding a fresh wave of investment enthusiasm after the $1.5billion YouTube acquisition and the Web 2.0 surge, in the warming glow of an acquisitive Yahoo and Google, and an economy that still looked robust (ha!). This new class of micro-VCs was really just taking shape as a distinct category. FRC, OATV, True Ventures, SoftTech and others had all recently raised their first funds. After we closed the round, we had a clear directive–get market traction and initial proof of a scalable business model. Not too much; just enough to tell a compelling momentum story. The path had been paved by others before us: we’d go from seed round to $4million Series A financing with timepiece precision.

In retrospect, I can see the many wild-eyed assumptions we were making about how the next year would unfold. With a year of capital on hand we knew we’d have to start raising money in about six months (rule of thumb is that it takes 6+ months to raise a full round). This meant that in this incredibly short time period we’d have to:

• get compelling market traction, and build out an evidence-based financial model
• have a financing environment that was at least as favorable as the one we were currently in
• avoid being undermined by changes to the market that would challenge our position

As daunting as these conditions seem looking back on it, they’re basically the same as any seed stage company raising $500k-$1million today, give or take six months. It’s a very short window to get the stars to align.

Flash forward to April of ’08 and it appeared we’d made a good bet, in no small part due to the many hours Rob and Bryce had spent coaching us, and connecting us to their networks. We had strong growth in all our key indicators. The market seemed to be holding it’s own. We’d seen no new competitive threats. So we wrapped up our story up and went a-pitching.

The fundraising effort got off to a great start. Thanks again to our investors, we had a full calendar with top-tier VCs, steadily mastered our song-and-dance number, and before long were in active discussions with a few great firms. We started to get invited to partner meetings. I even bought swanky new shoes for the occasion.

And then something happened. Sometime in early Summer we started hearing from our investors that they were seeing Series A deals dragging or getting derailed for hazy reasons. A dark mood was beginning to descend on Sand Hill Road, which would bloom into outright depression a few months later after the financial collapse and Sequoia’s infamous RIP Good Times deck. We started worrying that our strong consumer adoption and a big anchor customer wasn’t necessarily going to be enough to close the deal. The compelling narrative of a few months before was now being dismissed as unconvincing. And sure enough, our active VC discussions started to fizzle. “Come back when you’re further along” was the refrain. By mid-July, it became obvious that we were not going to raise a round before we ran out of seed capital.

This is a terrible moment for any entrepreneur, the moment where the end is at hand and you seem to have no options left. With my partners by my side, I was crushed that I’d missed the mark. Our progress that seemed so promising a few months before was now indistinguishable from abject failure.

As it turned out, this was a moment of truth. Not for us founders, though; for our existing investors. They were seeing the same raw growth in our business that we were. We had plenty of work to do on figuring out the business model and building our team, but in their eyes we clearly “had a tiger by the tail.”

A “spray and pray” investor has only one path to deal with companies that fail to raise their next money. Write it off. Move on to the next investment. In major market downturns, the sudden disappearance of these investors is so striking it may as well be engraved in the geologic record.

To be clear: much of the time it’s probably the *right* choice to let a company die a peaceful death at this stage. While it’s hard for entrepreneurs to let go, it can be much worse to drag out a business that is not going anywhere. Good investors will work with founders to apply euthanasia with dignity. This is why many good firms have a “no bridge round” policy, in order to minimize the temptation of postponing the inevitable. [Note: an essential part of any VC diligence is to talk to portfolio founders who've had their businesses shut down]

But in this case theese deeply involved investors, Bryce and Rob, made a different move. They were as surprised by our Sand Hill defeat as us. There was the sense that we were getting caught up in an undertow that hinted at a new pessimism. This business was a not a horse they wanted to put out of its misery. They wanted to make sure it kept racing,. They rallied, and helped us put together an “inside round” with current investors. It wasn’t an easy path: it meant they were taking a risk with their partners and LPs, and we were taking on a lot more dilution and increased accountability. Frankly, though, that was not even a consideration. This was about survival.

It’s been two and a half years since that fateful turn, and we’ve been fortunate to grow an incredible business, bring on some great new investors including Azure Capital who led our most recent $6million financing last September. The future has never looked brighter for Get Satisfaction, and last I checked, our original investors couldn’t be happier for sticking with us through that sticky situation.

If you’re a founder you will almost surely go through challenging times of some kind. It’s impossible to predict what situations you’ll face, or really, how anybody will behave. What you can do is opt for investors that have a track record of active integrity (seriously, neutral/non-evil is not good enough), and build real, honest relationships with them.

Fortune cookie version: the investor you want is already suited up for handling the turbulence that makes others lose their lunch.

(Note: The brouhaha surrounding the pros/cons of AngelList this weekend has been dominated by investor opinions. It was great to hear from another entrepreneur, Micah Baldwin of Graphic.ly, talking candidly about his experience on the service: Is AngelList Creating False Hope?).

The following is an Ignite presentation I did in 2009, not long after the financial collapse. It’s interesting to look back on it two years later.

[This post originally published on 24 Ways to Start on December 22, 2010]

In his book The Selfish Gene, evolutionist Richard Dawkins describes organisms as “robots” designed and controlled by their genes, whose only goal is propagating themselves. In his view, the motivations of humans and other animals are merely artifacts of the blind algorithms grinding away inside our genome.

Entrepreneurs these days can’t stop talking about a different set of algorithms for optimizing startup survival and success. Build the minimum viable product, test and iterate, work on only what customers actually buy or use, pivot. Today’s entrepreneurial Golden Path can look a lot like the reductionistic mutation and selection process that Dawkins describes.

The above Customer Development/Lean Startup algorithms sure are useful, but on their own they’re no more a recipe for startup success than a healthy diet and a good night’s rest are the path to winning a marathon.

Startups are not like Dawkins’ organisms. At their best they are vehicles for our passions, our desire to remake a world that’s better than how we found it. Whatever the process, it is a startup’s relentless focus on a higher purpose that attracts a great team and transforms markets. But all too often these days I hear entrepreneurs talking about their vision as if it’s a major risk (“it could blind us to what customers really want”) rather than the locus of their real power.

“Whatever you do, don’t be idealistic.” This is what an early venture capitalist told my co-founders and I when we pitched him our idea for a new way for companies and customers to communicate we called Get Satisfaction. In our minds we had glimpsed the future: people collaborating openly with companies on the social web. It was clear to us that the result would be more empowered, happier customers, and more humanistic organizations. This one idea was what got us all out of bed in the morning. It was not only a purpose, it was a design principle for everything we did.

Despite the doubts of some industry insiders, we never considered hedging; instead we embodied our vision, heart and soul. Long before we had a product we spoke at conferences, blogged regularly, and courted the press to tell our big market story. We welcomed a new era of “people-powered customer service,” and within a few months of launching our product we threw our own conference, “The Customer Service is the New Marketing Summit.” There was no turning back.

At a high level, we had asserted what we thought was going to matter to the market rather than waiting for the market to tell us. We had certainly taken a risk being so bold (because that’s what startups DO), yet we gained a palpable advantage that impacted everything: our brand had become synonymous with a point-of-view. Why did this work so well for us?

We were well positioned as the market caught up with us (the rise of “Social Business,” thanks to Twitter and Facebook). Had we waited until the wave had crested we would have been just another opportunist chasing a trend. Our early commitment translated to trust and leadership, which in turn led to significant customer traction.
We did pivot the business, developing several lines of service directly informed from what we learned from customers. But those customers had been attracted to our vision in the first place–their feedback was well aligned with our ideals
Thanks to the design principles that rose from our ideals, we had a means of deciding what to build and how to build it beyond the ad hoc suggestions of users. Where there were conflicts (e.g. how to allow companies to remove user posts without compromising transparency) we innovated.

Like any startup, we’ve struggled with a thousand and one small and large issues along the way. It can feel like “death by paper cuts” at times. Having a higher purpose keeps the whole team focused on what matters without sacrificing adaptability. While intelligent design may have no role in biology, it is invaluable to creating a startup that can lives up to your dreams.