Nabeel Hyatt on the Next Consumer Startup Model: Metrics + Creative

2/14/12Follow @gthuang

The best interviews surprise you. You go in expecting to talk about one thing, but your subject makes you think about something else—in this case, an emerging trend that people are talking about, though it doesn’t have a name yet.

Last week I spoke with Nabeel Hyatt, the Boston-area techie best known for starting Conduit Labs, a social music games company, and heading up Zynga Boston after the gaming giant (NASDAQ: ZNGA) bought his startup in 2010. Hyatt has just left Zynga and gone off to join Boston-based Spark Capital as a venture partner, focused on investing in consumer tech startups. (Hyatt is leaving Zynga Boston, 45 employees strong, in the capable hands of fellow Conduit team member Fareed Mosavat.)

There has been a lot of talk in the press about Hyatt’s move from entrepreneur to VC. But what got me interested was thinking about the ideas that define his career, not just through his time at Conduit Labs and Zynga, but also from his earlier days at Ambient Devices (a consumer electronics spinoff from the MIT Media Lab) and Teamtalk and Interphase Designs (remember “new media” in the late ‘90s?).

As Hyatt explained, he has long been interested in consumer technology paired with the disruption of a market—whether it’s games, media, or electronics. Perhaps more fundamentally, he has been drawn to problems that require a strong pairing of creative and technical thinking.

It’s that last part—the tricky balance between the creative and the technical—that got my attention as we talked. Because that balance lies at the heart of many consumer-focused Web companies I’ve talked to recently, from Gemvara to Gilt Groupe, from Amazon to Zappos (OK, technically the same company, but their cultures are pretty different). There is a strategic tension between being metrics-driven and being creative; being rational and being emotional; and making decisions based on left-brain thinking and right-brain thinking.

What’s more, Hyatt thinks that tension is the basis for the next-generation model of building tech companies, one that strongly advances the “lean startup” and “customer development” methodologies that have been in vogue for the past few years. Unfortunately, you’ll have to put in lots of work to learn the details…or start creating them yourself as a startup. And that’s Hyatt’s point: an open dialogue about the next model needs to happen in the entrepreneurial community, in Boston and beyond.

Here’s an edited transcript of our chat:

Xconomy: What will you miss about Zynga Boston and being an entrepreneur?

Nabeel Hyatt: There are two things I was leaving. Zynga is still on a growth path. It’s a real unique, interesting company that I loved working at. Second, a team that I helped build and had been working with for the last three or four years that was really a family. Both of those things were hard to walk away from. My hope is they’ll continue strongly and continue to grow.

X: And how does it feel going over to the Dark Side?

NH: [laughs] There is a bit of culture shock. But I’ve gotten a feel for it over the last couple of years investing in and mentoring startups. Now all my investment activity will be through Spark.

X: So why join Spark in particular? Does it boil down to personal relationships?

NH: It was as much about Spark as it was about being an investor. The way I think about being an entrepreneur is being able to control the people you work with. At a large company, any person walks in tomorrow and they can be good, or they can be incompetent. I have a lot of respect for the people I’ll be working with [at Spark]. You go in because of the team.

X: Let’s talk about the unifying themes throughout your career, from Ambient to Conduit Labs to Zynga to Spark Capital…

NH: First, I’d say everyone tries to construct a cohesive narrative out of the jumble of decisions they make. I’m no exception. [Across] online gaming, consumer electronics, mobile, and sports media, in all of them, one central theme is I tend to be very focused on customer experience and the product as it’s seen through consumers. I’m not amazing at enterprise sales. In all, it started out less me being attached to a market than that there was a market to be disrupted. There were years where starting a game company didn’t make sense. For a startup to grow astronomically, to go from four guys in a basement to a large, public, billion-dollar company, it’s not natural. It’s entirely unnatural. You have to think about what are the exceptional circumstances that will lead to such an out-of-the-ordinary outcome. A lot of that has to do with where the market is.

So, [my themes are] are consumer facing, markets right for disruption, and, third, a balanced mixture between a technical challenge and a creative challenge. I studied engineering and then went to art school. [Throughout my career] I’ve been wearing both a design and engineering hat.

X: Given how the social Web has evolved since the days of Conduit Labs, what are you seeing out there now in terms of startups?

NH: There’s still a lot of opportunity for there to be a Zynga of many other categories, one that leverages social and Facebook. We’re long past the days of the plucky game startup. Despite all the heat around social mobile, it still feels like the wild west. I’ll spend a decent amount of time with mobile and consumer-connected devices, though they have inherent challenges around manufacturing.

X: So what’s the future of consumer Web and mobile startups in Boston?

NH: I don’t obsess about Boston, or any city’s particular image. My drive and focus comes from a small band of entrepreneurs trying to build something game-changing. That in itself is exceptional.

I think it is hard to grow a consumer product. Part of it is the at-bats. If you look at Pinterest, or Facebook years ago, what you’re not staring at is the thousand failed experiments. But there are enough consumer startups [here], and there are entrepreneurs who are going to figure out amazing things for consumers.

With the number of startups up and cost down, the question for the past couple years is: companies are seeing a little bit of traction and growth and trying to figure out how to double, quadruple, 10x it. That’s where the real struggle is—how to turn that into escape velocity.

X: What did you learn from Zynga about achieving that escape velocity?

NH: Well, that’s a 45-minute to five-day teaching session. Some startups just don’t work. But I think startups are a lot more sophisticated about their product development than they were five years ago. Thanks to people like Eric Ries [lean startup] and Steve Blank [customer development]. But in the last two years, it hasn’t grown at all. We’ve hit Product Development 101, but no one’s really advancing the field, in being a hypothesis-driven startup. I think that’s the next conversation worth having. That’s our craft, the product we’re building. In product development and customer development, we’ve made huge strides. In the next couple years, I’ll be pushing for everyone to get to another level.

X: Whatever the new model is, won’t it be different across subsectors like mobile vs. Web vs. consumer electronics?

NH: No, I don’t think so. They are a lot more alike than they are different. It will not be true for enterprise [companies] though.

X: That’s really interesting. So you’re saying there’s a new unifying model for consumer tech startups waiting to be developed?

NH: It certainly happened with customer development and lean startups. Now it’s incredibly important to say, I don’t have all the answers here. There needs to be a more open dialogue around how a metric-driven approach can meld with a fundamentally creative process, in a way that makes both of those things stronger, not in conflict. There are companies doing it, but there’s no dialogue.

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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