Values are about taking chances — if it were an obvious choice, you wouldn’t need a value to guide you on how to make it. Value choices are rarely about right vs. wrong, they’re more often about one right vs. another.
To clarify our approach and our values, we (the Bloomberg Beta team) wrote up a few practices – effectively, the first draft of an internal operating manual.
Today, we’re taking a chance and publishing our internal operating manual, in its entirety.
One of the things we believe at Bloomberg Beta is that the current process for raising money in startups isn’t as good as it could get. For example, we’re a little confused as to why funding for startups comes in discrete rounds vs. being more continuous. We wonder why so much of the process is kept secret.
We value openness, because we believe we all make better choices when we expose ourselves to the input of others. We were one of the many who invested in AngelList because we philosophically support what they are doing to make early-stage investing easier to understand and do.
In part, we’re inspired by what Bloomberg’s product did in its earliest days — it took previously-controlled financial data (the prices of bonds) and posted them on a system where everyone could see the same price. At the time, that was daring. Plenty of people made their living by controlling that information. Being transparent is chancy.
You can gain advantages by keeping information to yourself. Though, as we thought about it, more and more of those advantages to secrecy — at least in the world of startups — seem like mirages.
We started asking ourselves why startups and investors generally keep the terms of their investments confidential. We didn’t have a great answer. We think that more shared data on funding startups will make us all better at it.
Around the same time, we started writing up our emerging practices for how we were running our fund — our “internal manual” — and then we wondered why we had to keep that to ourselves. So many of the questions we answer — what are we looking for in an investment, how long does it take to figure out whether we want to work with a startup, even whether we expect a formal slide presentation, etc. — are ones we found ourselves repeating in meeting after meeting. Some of it we think is distinctive, some of it totally commonplace, but it all reflects how we work.
We admire the success and support of more established venture investors; we also think we want to try things our own way.
We’re putting our manual on Github because we want it to evolve, on the record, over time and — to the extent others have input — we think it’s a way to collect comments and proposed changes. (We also think there is a trend of practices invented by software engineers — version control, in this case — taking over other aspects of work life.) Who knows, maybe someone will take us up on the open license to fork, remix, and make the manual their own.
As part of our effort to be transparent, in our manual we’re disclosing the average price of our investments to date. (You’ll have to read the manual to know.)
And we also started telling entrepreneurs that we’d be delighted to disclose, jointly with them, the specific terms of our investments. No pressure. But one intrepid team took us up on it.
Gina Trapani and Anil Dash are building ThinkUp, and they shared their plans earlier this week. ThinkUp helps analyze your participation in social networks so you can see yourself more clearly and participate online in a more honest, authentic way. ThinkUp is an active open source project which Anil and Gina helped create for the White House, and now they’re making it more accessible (today, to use it you have to install it on a server… not what most consumers are prepared to do). Gina and Anil are known to many in the startup community, and stand for much of what we stand for — trying to get it right, sharing your views in public, and bringing humanity back to our experiences online.
We invested $200,000 in ThinkUp in a convertible note with a 20% discount and a $6 million conversion cap. There, we said it.
We’re open to ideas for other ways we can make the process better, and be more transparent. We’re doing this so we can all get better at making startups work.