Federal Communications Commission 445 12th Street, SW Washington D.C. 20554
July 14, 2014
Re: Open Internet Remand, GN Docket 14-28
Dear Chairman Wheeler and Commissioners Clyburn, Rosenworcel, Pai, and O’Rielly:
Y Combinator is Silicon Valley’s premier early stage investor. Y Combinator has been investing in early stage startups since 2005 and now has a portfolio of over 700 companies valued at over $20 billion and creating over 3,000 jobs at quickly growing companies, many of whom are aggressively hiring. Y Combinator was an early investor in Dropbox, Airbnb, Stripe, Scribd, Heroku, Pebble, Twitch, Loopt, WePay, Crowdtilt, Teespring, Codecademy, Hipmunk, Coinbase, Cloudkick, Wufoo, ZenPayroll, SocialCam, Parse, and reddit.
The New York Times called Y Combinator “Silicon Valley’s Startup Machine”; the Times also described Y Combinator’s demo days, where our early stage companies present their products and services to “450 of the world’s richest and most influential technology investors” as “a biannual milestone, Silicon Valley’s version of the N.F.L. Scouting Combine.” We were the subject of a book by the Times’s former Digital Domain columnist, The Launch Pad, in which Eric Ries called us “a national treasure, a Silicon Valley seed fund that is mass-producing new startups,” and Marc Andreessen declared we were the “white-hot center of the new Silicon Valley startup ecosystem.” Within Silicon Valley, receiving funding from Y Combinator often carries more credibility than a degree from Harvard or Stanford. We receive thousands of applications from companies for fewer than 60 investments -- an acceptance rate lower than any of the nation’s top universities.
I was lucky enough to be in the very first round of Y Combinator’s investments and created reddit.com with my college roommate Steve Huffman. We were two recent college graduates with no connections and $12,000 in funding, raised from Y Combinator, building something from a pair of computers in a small rented apartment in Medford, MA. Today reddit is a top 50 website with over 110 million monthly unique visitors -- more traffic than CNN.com or NYTimes.com. We lived the American Dream thanks to the open internet and today I’m a partner at Y Combinator.
How? The world isn’t flat; but the world wide web is. It must remain that way.
We need the FCC to keep the level playing field that let me--and so many others--succeed as entrepreneurs. The reason so much innovation and wealth creation has happened in tech over the last decade is that any American with her laptop and Internet connection could build a startup and compete with incumbents (and even beat them) without a team of lawyers and without a large budget to pay for priority from ISPs.
Let me be clear: we need a bright-line, per se rule against discrimination, access fees, and paid prioritization on both mobile and fixed.
Title II of the Communications Act seems the most appropriate way to properly define broadband ISPs to be offering telecommunications. Speaking on behalf of Y Combinator, I’m urging you to adopt such a rule.
The rule you have proposed, based on Section 706 of the Telecommunications Act of 1996, would not suffice. We know Section 706 cannot support a rule against discrimination, access fees, and paid prioritization because the appellate court in Verizon v. FCC ruled on these matters. The Court wrote: “We think it obvious that the Commission would violate the Communications Act were it to regulate broadband providers as common carriers. Given the Commission’s still-binding decision to classify broadband providers not as providers of ‘telecommunications services’ [under Title II] but instead as providers of ‘information services,’ … such treatment would” violate the Act. The Court held that, absent reclassifying broadband providers as Title II carriers, the FCC would be treating broadband providers as common carriers unless it left open room for “substantial room for individualized bargaining and discrimination in terms.”
Therefore, the FCC cannot impose a nondiscrimination rule--unless it classifies broadband providers under Title II. The Court also held that, without classifying broadband providers under Title II, the FCC could not ban charging fees for priority access, even though the FCC recognized such fees would be a “significant departure from historical and current practice.” The FCC could not ban such fees without Title II because banning the fees would leave “no room at all” for individualized bargaining and discrimination, which is necessary under Section 706. The Court simply couldn’t have been clearer: so long as the FCC refuses to classify broadband providers as “telecommunications services” under Title II, the FCC cannot ban ISPs’ technical discrimination, access fees, or paid prioritization.
While the Chairman has sought to protect innovation through a “commercial reasonableness” test and a “minimum” service guarantee, unfortunately neither would provide startups any relief. No startup has the funds and lawyers and economists to take on billion-dollar ISPs in an FCC action based on the vague legal standards in the proposal. Indeed, the startup ecosystem needs a bright-line, per se rule against discrimination--rather than a multi-part, totality-of-the-circumstances standard with a case-by-case approach or even a mere presumption against discrimination. Anything less would cause considerable uncertainty for entrepreneurs and investors and provide little comfort, as startups and small businesses are resource-constrained and need to know that access to the Internet will remain neutral, as it has been in the past.
And, even with access to at least minimum service (often metaphorically referred to as a “slow lane”), startups would struggle to compete against those who were able to afford paying for a fast lane--or an exclusive fast lane. Even the slightest discrimination or paid prioritization significantly affects startups, as microseconds matter with both webpage-loading and real-time content. That discriminatory treatment harms startups is reflected by the outpouring of dissent from startup founders and investors alike. The fate of reddit may have been very different if Comcast had discriminated against our little two-person-startup in favor of the NBC.com news portal and the sites of other news giants.
Only reclassifying broadband as Title II will protect an open and neutral Internet. In pursuing reclassification, however, the FCC should choose to forebear from regulations unneeded to promote competition and innovation. As recommended by the EFF, the FCC should “explicitly reject any telecommunications regulations beyond specific and narrow prohibitions and requirements designed to create a fair and level playing field for innovation and user choice.”
Over 190 companies, 100 investors, and hundreds of thousands of average individuals have already spoken up to oppose the Chairman’s plan and call for nondiscrimination and a ban on new tolls. Even before initial comments are due, several companies have called for Title II reclassification; these include Kickstarter (doing so in the Washington Post), Etsy, Codecademy, Dwolla, General Assembly, CodeCombat, Contextly, and OpenCurriculum. Leading investors in technology startups, including Union Square Ventures and, now, Y Combinator have also urged the Commission to pursue Title II.
Competition is the fuel of the free market. We demand it not only as investors looking to invest in the next multi-billion-dollar American job creator, and not only as entrepreneurs who want to start it, but also as consumers who want to see innovation continue to thrive. Our sector requires a level playing field in order to lead the world, create jobs, and produce tremendous value for the United States economy.
Mr. Chairman, you say you oppose a two-tier Internet and want to preserve Internet openness, so let’s reclassify broadband as the public utility we know it to be. Ensure that the Internet thrives as a platform for free commerce and speech for generations to come. May the United States of America continue to lead in innovating on the greatest free market the world has ever seen.
Alexis Ohanian Partner, Y Combinator Startup founder, reddit
Traction: Everyone wants it, here’s how I think about generating “buzz”
Below is an excerpt from my national bestseller, Without Their Permission -- if you dig what you see here, I think you'll really like the rest of the book! I get asked about "traction" on an almost daily basis so it made sense to publish this for anyone to read. Enjoy!
I’m not a businessman, I’m a business, man. —Jay-Z, “Diamonds From Sierra Leone”
I believe in startup karma.
Being the kind of person who’s always asking for favors and hustling others is a reputation that not only gets around, it sticks. It’ll work in the short term, and perhaps there are some exceptions to the rule who have made it work in the long term, but being someone who’s always asking for favors makes the already difficult job of starting something new immeasurably harder.
Instead, look at every meeting as a chance to do someone a solid. This especially matters when dealing with representatives of the media, because just buying them a coffee doesn’t mean you’re getting a front-page story. Look at every meeting as a long-term investment. She’s not writing about your startup? That’s okay!
Be helpful. What’s she thinking about right now? Some kind of trend is going on in X that’s not been covered yet, and she’s looking for a founder doing Y. If you can connect the dots, make the introduction for her. You’ve just helped two people with one e-mail. Cha-ching. More good karma.
Over the years, you can build a reputation as a connector in your field. Connectors are a journalist’s trump card when they need to get a lead on an unreported idea, or when they need an introduction in order to land a useful interview. This is a valuable position for you to be in, because it means you’re going to stay at the tops of their minds. When your journalist friends are writing about something in your field, whom do you think they’re going to reach out to first?
Never Turn Down Cannoli
In between bites of cannolo (yep, that’s the singular form of cannoli), I was explaining to Rachel Metz, freelance reporter for Wired, why reddit.com was going to become the front page of the Internet. She seemed interested, but she could’ve just been enjoying her cannolo.
I’d taken the Fung Wah bus down from Boston to meet with her in downtown Manhattan because a few weeks earlier, I’d met a friend of hers named Jennifer 8. Lee. Jenny had attended a Halloween party that Steve and I had thrown at our Somerville home and office—which should explain the above photo—and we hit it off. We discussed the subject of her book proposal, which happened to be, of all things, Chinese food. I managed to impress Jenny with my knowledge of Chinese cuisine, so we got to talking that night and that led to her introduction to Rachel.
A few days later, Rachel would confess to me that while she initially wanted to write a story about reddit, she felt we’d become friends and that it wouldn’t be professional for her to pursue the story. That was fine by me. No Wired story came from that, but I got a new friend in Rachel, one who happened to mention reddit to her editor at Wired, Kristen Philipkoski. Kristen, the wife of Kourosh Karimkhany, was doing business development for Conde Nast and heard from Rachel about a pair of plucky founders in Boston working on something interesting called reddit.
And then one day (February 22, 2006, to be precise) this e-mail popped up in my inbox:
I’m a friend of Rachel Metz. I’m also the director of biz dev for CondéNet, the internet arm of Condé Nast, which, as I’m sure you know, publishes magazines like Wired, GQ, Vogue, New Yorker, Vanity Fair, etc. I’m intrigued with your technology and was hoping to set up a time to talk about possibly working together. I’m open the rest of the day today and Thursday, but will be traveling for a week starting Friday. Do you have time for a phone call? Also, are you based in Boston?
Little did we know that exactly one year after that fateful party on Halloween, Steve and I would be celebrating the acquisition of our company. As if you needed more reasons to throw a Halloween party. Or eat cannoli.
Everyone Is the Media
The traditional public-relations industry model is broken. Good riddance.
The only time I ever wrote a press release was when Condé Nast made me do it for the announcement of our acquisition, and I wasn’t about to argue with the company that had just bought my company. Full-disclosure: Since writing this book, I’ve had to edit a press release the PR firm hired by my publisher wrote on my behalf. But the truth is, I’m not certain that press releases are as relevant as they were in the twentieth century.
These days, everyone you meet is part of the media. Every relationship you enter into, whether it’s with a customer or a writer at The Wall Street Journal, is a long-term investment. No self-respecting journalist wants to feel like all she does is publish press releases as “news,” although some do. The idea that a press release is magically going to compel someone to talk about what you’re working on is absurd. At a time when none of us have enough time to pay attention to all the content the Internet produces, you can be sure the professionals who are pitched every minute of the day certainly don’t have the spare cycles. This means you’re going to have to make yourself known. Here are some things to keep in mind as you do that.
If you’ve been doing your job as a founder, by now you should be an expert in your industry (and maybe even in a few others as well). Use that to your advantage when talking to the media. It gives you insights on bigger trends that are valuable to journalists, so be helpful—even if it’s not directly helping you or your company, it is actually still helping you and your company. Anything you can do to help someone else do his or her job better is going to win you that valuable startup karma. Noticing a trend in X meets Y, offer an introduction to some other experts in X meets Y. Be helpful!
Remember the RentHop team from chapter 4?1 While Lee Lin was getting his broker’s license, he found himself noticing trends. He validated that hunch when he and his co-founder, Lawrence Zhou, started mining mountains of New York rental-price data that revealed everything from how much more people are willing to pay for a doorman to how much less an apartment is worth for every block it sits away from a subway stop. At first, they had no plans to publish any of what they’d learned. Once Lee started promoting RentHop, however, he realized that these data were a tremendous resource. Whether it was a blog post he wrote charting the optimal time of day to search for rentals in New York (spoiler: between 9:00 a.m. and 10:00 a.m.) or a statistic a journalist could cite for an article, it was a piece of added value that bolstered his company’s reputation as experts in apartment rentals.
Every time Tim does a great job breaking down exactly how he does everything he does, it’s being helpful. Over time, he becomes known as the guy for getting things done (not always in 4-hours, mind you) then turns around and does solids for people like me. Building for the long-term.
Speaking of which, I’ve got an entire class on online brand building (lessons from reddit, breadpig, and hipmunk) with specific examples of everything from low-cost social media campaigns I used to make people love our hipmunk chipmunk to the sticker strategy that spread reddit aliens all over the world. Grab some popcorn, it’s long.
Pitch the Right Journalists the Right Way (by Not Pitching)
Okay, you’ve found them. Warm introductions to mutual acquaintances from people who know you both well always help, but there’s nothing wrong with a cold pitch. Just be concise. I try to write e-mails in fewer than five sentences. Precision with impact is one of the most effective writing skills one can have. The best way to get coverage is to not pitch your product. Journalists are human beings. Whether they write for [insert your favorite, most venerable news organization here] or they just launched their first blog yesterday, they do not exist just to write about you or your big idea. Sorry, but it’s better you hear it from me now. In order to earn their attention (and their goodwill), you’re going to have to give them something. Pitch by not pitching—be helpful. You know what they’re into, so send them a link to a breaking yet underreported story you think they’d appreciate. If you can introduce them to a fellow founder who’s working in a sector they’re covering, offer it to them. Know they love futuristic watches? Let them know when NOOKA is having a sale. When and if the time comes to make a pitch (you’ll know it when it happens), then do it well.
Tell Stories Around a “Peg”
Pardon the jargon, but it’s helpful to know how journalists think. Big trends, things that people are talking about, are “pegs” that you ideally want to anchor to your pitch. It could be as blatant and timely as the Olympics, or it could be more subtle. During the famed billion-dollar acquisition of Instagram by Facebook, Michael Seibel, CEO of SocialCam, a mobile video-sharing app and portfolio company, rode the wave of media attention surrounding the acquisition. It was no surprise that over the next few days, articles buzzed about who would be “Instagram for video.” It didn’t surprise me one bit when SocialCam was there in every discussion.
Over time you’ll develop an eye for it. If you’re reading about a particular idea that’s got everyone’s attention, find a way to connect your own story to it. If you don’t get written up, or quoted, or appear to have gotten anything in return for your time, don’t fret (and remember what I said about these people not existing to do you a favor). There’s always value in taking the time to meet someone. You shouldn’t always be pitching, anyway. Build long-term relationships and they’ll pay long-term dividends.
Don’t Forget to Document Your Startup
Take photos around the office, screenshots of early builds, et cetera. No matter how things turn out, you’ll appreciate having these memories later. In the meantime, it’ll be useful in a blog post or tweet. And if things turn out really well, people will come to really value those behind-the-scenes photos or embarrassing early builds.
For instance, here’s a photo of Steve and me from just days after we’d launched reddit.
The first photo taken of Steve + me as “reddit founders” – photo courtesy of Trevor Blackwell
Please, please have a decent high-resolution photo of your founders readily available. I’ve had to arrange last-minute photo shoots for founders who were about to land some great press but didn’t have a single decent photo to send. Your smartphone won’t cut it. Borrow the nicest digital camera you can find from your nicest friend and take some photos. If nothing else, you can send them to your mom.
For good measure, record the stages of your product, too, even if it’s only so you can look back on them with a hearty laugh. No matter how your company turns out, you’ll appreciate having a record of its evolution. I use this first version of reddit as an example of just how embarrassed you should be by your first version.
Attentive readers will notice I managed to get –1 karma, because Steve is a jerk.
Once You Get Press, Make a Note of It, Then Get Rid of It
This has been my policy since the day we finally got a taste of attention from the mainstream media. It was a different Internet back then, and it took me months of hustling to finally get someone to write about us. Oddly enough, it was a British newspaper, The Guardian, that wrote the first story—six months after we’d launched. It was great to see the increase in our traffic when a digital publication would write about us, but there’s something to be said for that palpable version of the news. The Guardiankindly sent us a few print copies. I reread the article, imagining better quotes I could’ve used, and brought it with me on my next trip back home. My parents had hoarded just about everything I did since I was a little kid (only child, remember), and my mom was thrilled to see her son’s name in print (I couldn’t tell her that it was less exciting than digital, which would have enabled us to actually get click-throughs to our site).
This started a tradition I continue to this day. Even though Mom is gone, I personally send my dad all the press I ever get, because I don’t want to see it. I don’t want to think about it for more than a day. It’s a twenty-four-hour rule. I think I heard a football coach talk about this once in an interview. Feel good about the win for twenty-four hours, and then get your mind off it and think about next week. Same goes for losses, too. But I especially don’t want to dwell on past accomplishments, and I recommend the same for my portfolio companies.
As a startup founder, you’re a cheerleader. You should always have a recent e-mail, or tweet, or quote from one of your users who love you readily at hand. Go a step further and keep a mailing list of those superfans who love you so much they’ve said they’d be willing to be interviewed about your business. List those people on a spreadsheet that you share among your team, and when you encounter a superfan, ask her if she’d be willing to be contacted by the press at some point and have a testimonial on record.
Each superfan should have his or her own row on your spreadsheet. Establish columns for a favorable quote, home address, occupation, and e-mail address. Always respect a person’s privacy and explain why these tidbits are so helpful; years later, when this list gets long and you’re trying to help a journalist who’s writing about graduate students in the Bronx using [insert your type of product or service here], you can get him connected to the perfect person.
Keep another spreadsheet for press hits, designating columns for important sort criteria like name, e-mail, publication, a pull quote from the piece, and the URL. This becomes your press contacts list. PR people will brag about the size of these as though they were in a locker room, but, as always, it’s not about size—it’s about how you use it. You’re building relationships. It does not matter how many people you have on this list if none of them give a damn about what you have to say.
Start small. As I said earlier, it took six months before any mainstream media wrote an article about us, and until then I was reaching out to anyone who had a blog in tech or media. As you grow beyond your niche, you’re going to be forced to connect your idea to bigger trends and find ways to humanize it with real people telling real stories.
Traction starts with a product people want; as word spreads, you’ll start seeing the week-over-week and month-over-month growth that gets investors pulling out their checkbooks and briefcases full of money.
Actually, most investments are done via duffel bags full of cash—or via wire transfer.
Get started being awesome. None of us know what we’re doing, but trying is how we learn.
Fun fact: This campaign is running at 30 locations that generate 2.7M weekly impressions (and we're running for 2 weeks so that's 5.4M impressions total!).
The benefit of having a digital ad is that we can change the messaging almost instantly -- depending on the FCC announcement on Thurs, we can adjust our messaging ASAP and feature a new ad in that spot because it's digital, making us more nimble and newsworthy. That would be impossible with traditional printed advertising.
Bonus fact: The average 18+ adult walks an average of 18 blocks in the city each week, so they are more heavily exposed to this type of advertising. There aren't a lot of billboards in DC proper, and this was the more effective way of reaching government workers and the FCC and it looks pretty damn cool, too.