A Chat With Howard Lindzon

Image by *Samantha Murphy* via Flickr

I just jumped on the Twitter bandwagon a few months ago. Contrary to the initial descriptions of Twitter–It’s like sending a blind text message to everyone you know–Twitter provides real utility if you follow the right people, using the right platform. I’ve got TweetDeck installed on my computer, with two columns, Everyone Else, which is friends/interesting people and News which gives me feeds from the Times, The FT and The Journal as well as Aaron Task of Tech Ticker, who’s constantly sending out news items.

In the everything else column I follow Howard Lindzon, a man who seems to live and breathe through Twitter. Lindzon is an entrepreneur and investor. He Twitters about the meetings he’s in while he’s at them. I have no idea what it’d be like to get a drink with the guy, but I know that he’d let the world know what it was like as he was doing it. He fires off messages constantly. And they’re mostly funny and informative.

As a result it makes sense that he just launched StockTwits, a Twitter based platform for users to follow the stock market. If you put a dollar symbol in front of a stock’s ticker in your message, StockTwits picks up the message and spreads it around. Lindzon says this creates a medium for getting “signal” not “noise” like you find on message boards.

I talked with him about his new company, the economy’s effect on start-ups and his most famous company WallStrip. And the picture above is what came up through Zemanta, so I went with it. Sorry Howard.

Let’s talk about Wallstrip, when did you come up with the idea and what was the goal?

I came up with it in early 2006. I had some free time on my hands, I was starting my blog, I watched Jon Stewart, I watched Jim Cramer on CNBC and I wanted to do financial video that was not so full of shit. None of the financial sites were doing web video. I wanted to do one a day, an idea a day like a video and create a show. It all began falling into place at begging of 2006.

What video or production experience did you have before doing the site?

I had no experience before then. More important for the web is the idea. Could it be viral? It could get spread around, go to others sites. I thought if you can create a Daily Show for financial video you have something. Everyone caught on to it quickly. The New York Times called it Saturday Night Live meets Wall Street, or Jon Stewart meets Wall Street. We developed our own style, but that was the goal. We wanted an irreverent, behind the scenes look at the stock market. We networked through the blogosphere to gain popularity. Then it was just trust to pull it all together.

I’ve read that the company wasn’t pulling in much revenue when it was sold to CBS. Was there a business plan in place for WallStrip?

We thought someone else, like Google, would figure out how to make money from video, but it quickly became apparent they hadn’t. Nobody’s figured it out. I thought the technology for ads would be around, maybe product placement would work, but we never got around to doing it.

What do you look for when you invest in a company?

I invest in the early stage of a company. There has to be a customer, a user, the product has to be done, it’s got to be something I could be passionate about. I try to find great leadership, someone I can relate to and get excited about. The business models don’t mean much in the beginning because it will change.

more about “StockTwits.com – Real Investors. Real…“, posted with vodpod

Let’s talk about a company you just started, StockTwits.

What I want when I travel, which I do a lot, is to tap into my portfolio from sources I care about. It’s a personal reader and conversation with people I respect. It’s up to date when I want. I wrote about this a year ago on my blog, but nobody else did it. Twitter is about ideas, and I want as many ideas as possible. That’s what the market is about–opportunity. If you go to a train station, there’s a bazillion trains coming and going.  All I want is idea flow all day.

If I can create a platform where ideas are exchanged, that’s a good thing. We’re circulating links faster than anyone can, think about Google finance. The links sit at the top of the page for 4 hours. At StockTwits you get new stuff faster. It’s a simple concept, it doesn’t need lots of employees or capital. It uses the power of web.

But couldn’t someone get overwhelmed by all the information? What if some fool gets on there spamming and spouting nonsense?

Our job is to keep pipeline full, it’s up to you to control that pipeline. If someone is an idiot you can unfollow them. It’s about discovery. You like this guy, you click around see who he’s following, and you can make good discoveries for information. The message boards of today are 100 percent noise, with no signal. In StockTwits, you create a list of who you follow. If you are sloppy, then sure it’s noisy, but its because of who you follow.

What are the revenue plans for the company?

I don’t want to share that. We’ve got like eight different plans from subscription to products to advertising to transactions, cant share revenue plans though. In the next month or so we should unveil something.

What about Twitter, lots of people hammer them for a lack of a business plan, are they missing an opportunity by letting everyone build programs off their back?

It’s not my company, so I don’t really want to comment too much on that. They can make money because they control the fire hose. I think they’ll make money in search, real search. I think if I was them I would charge a premium, charge for the API, and make me pay for it like I pay for my phone. I think they’re playing it a little dangerously, but its not my company, but I love them. There is no perfect answer, but they might be leaving money on the table.

Do you think its harder or easier now to start up a blog to compete in the news world?

It’s very hard to make money in content, I would never do another content site. Twitter solves that, it creates niches, if you say on Twitter,”You got to follow @howardlindzon,” under what context should I follow him? It’s not worth as much if you’re not a stock guy. You can say follow Soren if you want information on traded currency. Through Twitter I can send you 100 people over night. You get direct traffic to real people, so you can build a reputation much faster. To start a blog, you must love writing and keep costs low, while you struggle. Twitter is more direct.

But you can’t says as much through Twitter as you can on a blog.

There are some people that know how to blog and there are some people that know how to Twitter. Twitter is an art form.

Twitter is a much easier way to get reputation. You can stalk people on it and get their attention. A blog is fantastic, I love writing, but I think Twitter is going to hurt Typepad and WordPress, even Tumblr at a consumer level. I’m not as into blogging because I can Twitter a link and a comment. I have more Twitter readers than on an RSS feed. It’s where I spend my time. It’s about time management. The web is a new tool, it will evolve, so that’s why its exciting to be in the this space.

What changes for an investor or a start-up when the economy tanks?

Here’s what changes. The valuation’s come down, the mood really changes, the chain of command gets all screwed up. Pension funds are hurt, so they’re hurting the VCs, asking for a capital call. [see here for more on this topic.]

So, you’re hurting at the top, you lose funding because those angel investors are scared, then reality sets in and the valuations come down. But I’m bullish, good ideas will always get funded, it may take longer, you may have to more realistic. If you work at Goldman and you just lost a $400 thousand job, your expectation needs to come down about what you can make. It’s all based on earnings, so the salaries they got, that’s all shrinking. It’s the same in the VC world, there is less money, but you can assume same amount of people are trying to create something. But it’s not end of the world, there will still be people willing to take a chance and you’ll find smart people willing to work for less money.

It’s better when things are good, in a normal cycle people are happy, but now people are sad. It was happy for a while, but you’ve got to deal with the mood.

I have not seen a slow down in great ideas, I’ve never seen this many good ideas. I love it because the valuations are coming down, so i can participate. People are wiser about using the web now, so there is going to be plenty of opportunity. There will be more women involved, more women on web, which will be big and create opportunity. The next bull market will come where no one is looking.

Any advice for people coming out of school, or people looking to start new businesses?

You’re coming into an environment that’s 11, 12 years old. The guard is changing. After the first shake out, we have Amazon, Google, and Apple as survivors. Microsoft is a big a player but I wouldn’t say it’s a winner, they did Internet Explorer, but…

There is a humongous opportunity, to build great business. It’s never been cheaper to build a business. You can have virtual offices. You can go into an Apple store and get free Wi-Fi, you can stay lean longer than in 2000. Back then you need an ofice, a desk, your own wireless connection. Now its off you go. I think the social web is really in day one. Facebook is leaving money on table and there is huge opportunity.

The social web has lots going on, but you’ve always be thinking about the transaction. How you can get in middle of transaction. You’ve got to use social leverage.