Archive for April, 2007

Dead Man Dancing

April 30, 2007

What a great story: Dead Man Dancing (by Matt Trossen)

He talks about his company facing financial crisis from the lens of a fully committed founder.

I have found myself on occasion staring into the unknown, wondering if I had made catastrophic decisions. Wondering if I had simply made a string of wrong decisions at various points that have had cumulative negative effect. And wondering if I was on exactly the right course, and just needed to keep going. When you’re a founder or leading a startup in some capacity, those around you often cannot give you good feedback, and those that can, often know you have to go through the tough episodes yourself.

I like how Matt points out that he isn’t romantacizing. I concur completely. When we spell out these thoughts — to ourselves or to others — they come out sounding like the romantic adventure of a hero. And that is not the intention, nor the meaning, at all. Dealing with danger is part of the ‘right stuff’ that ultimately makes an entrepreneur. I think a lot of this is not natural — or if it is for some, they are gifted with a beneficial bias, not a perfected mindset. The mindset has to be shaped over the years. The thing is, as with successful people in all walks of life, they often shield the world from their own hardship. Out of modesty…as in not wanting to talk about themselves, or the opposite…out of calculated persuasive benefit (so they do indeed look heroic to others). Or out of pain…as with other painful experiences in life, sometimes they just are not fun to discuss, during or after the experience.

This type of subject matter is also why I like Paul Graham’s writings so much. He does a good job articulating subject matter about founding companies in a very personal and nuanced way. Just recently, he posted an article that specifically mentioned how many founders are not only ‘hackers,’ they are gun shy, timid, unsure, and processing enormous emotional stress to move forward.

Quote: “What investors still don’t get is how clueless and tentative great founders can seem at the very beginning.”

This is in high contrast to the gung-ho portrayal of founders generally. Some emerge that way, but they don’t start that way.

Whether or not company founders achieve their ultimate dreams and end up with fistfuls of cash, I do think founders of companies are perhaps one of the greatest subset of the population in terms of self awareness, contemplation, and reflection. They gain these rewards because they are often forced to suffer one way or another, within the framework of a very productive endeavor.

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Seattle’s Best – epicenter of global marketplace?

April 30, 2007

I’m working on a longish essay on China, globalization, World Is Flat themes. But it occurred to me that Seattle’s Best might provide a shorter lesson but equally important insight on ‘butterflies in China.’

See, Seattle’s Best is not just a place that sells coffee. The store contains things that were purchased from all kinds of industries and markets, especially considering the customer traffic and all their accompanying possessions.

This thought, of course, dawned on me while sitting at Seattle’s Best, so it was easy to simply look around and take in a random sample:

Furniture
Chemicals
Coffee Beans
Packaging
Juices
Water
Holiday retail
Leather
POS systems
Payment processing
Credit card issuers
Commercial printers
Lighting
HVAC
Electricity
Architecture
Real estate
granite
marble
copper
media
garbage collection
paper
textile
semiconductors
education
publishing
cell phones
telecommunications
eyewear
makeup
watches
jewelry
tea
paint
labor
security
delivery
music
music players
hair care
denim

After a few minutes, I just quit listing because I realized the list would be endless. In fact, I propose that Seattle’s Best can be substituted for Six Degrees of Kevin Bacon, and any kind of enterprise (even cottage industry) can be connected back to Seattle’s Best within six degrees. Try it in your head. I am working on a better way to illustrate.

Why Entrepreneurs Fail

April 28, 2007

Entrepreneurism is broad, and I mean to be interpreted broadly, but primarily in the context of starting a productive venture from scratch.

The number 1 reason why entrepreneurs fail is a confusion in the order of importance between logic and passion. When entrepreneurs venture out, they often do so motivated by a deep passion–either for themselves, their idea, getting rich, serving their hallowed customer or for some other object of their passion. Armed with such passion, they are compelled to set out into the unknown. They take a risk and set sail.

This productive wanderlust is desirable, but only as an engine steered by unmerciful logic. Ventures these entrepreneurial protagonists pursue, by nature, do not have the benefit of already being established. Thus, in contrast to a regular job, the entrepreneur cannot merely follow known processes or even improve upon what exists. The act of venturing is one of discovery and then of building and then of refining, with the goal of course being to ultimately create a business of great value. On a continuum of intellectual demand, the “job choice” of entrepreneur might be compared to dual roles of inventor + marketer, film director + producer, or architect + developer. Admirers of such professions know that these all require tremendous mental dexterity individually, let alone in combination.

Yet passion tends to distort reality. The notion of the “future working itself out” is an alluring cop out as the entrepreneur passionately burns through time, energy, and money pursuing an ill-defined endgame on an ill-defined path to get there. And inevitably, when a cycle of failure sets in — missed deadlines, shortfalls in sales, expenses not turning into expected results — objectivity and reason become even further blurred by the mind-bending distractions of doubt; of answering to the disappointment of investors (or spouses and underpaid cohorts); of blaming “uncontrollable” variables that seem to haunt the entrepreneur and the venture with relentless ferocity.

Depending on the venture, the resources in play, the level of gamble, the level of partial success, it lasts until this passionate entrepreneur sputters to a stall. Truly, in this analysis, it doesn’t matter whether the venture was a colossal failure or it turned into a wee little business. The envisioned level of success was not achieved. The entrepreneur failed. And even at this end, most entrepreneurs still let their passion reign as they refuse to admit–even to themselves–that the failure was a result of their own error in judgment (whether at the beginning or along the way).

Yet, no research scientist would admonish himself for an error in judgment at the onset of an experiment. Indeed, the nature and purpose of an experiment is to test a hypothesis. And upon review of data, the idea is to improve upon relevant judgments and set forth further experimentation. The researcher contains the cost and time of testing hypotheses along the way in order to arrive at some destination of study. Also, along the way, the (good) researcher is ardently dispassionate, in a sage attempt to avoid bias in interpreting results. The researcher is able to remain passionate in purpose (as in, an engine), while allowing his objective logic to drive (as in, steering wheel).

The entrepreneur is similarly and necessarily required to make predictions, judgments and conclusions from start to finish. And wherever the failure along the way, that’s where the error in judgment is to be found.

This truth is almost foreign in the stark contrast with the chorus of excuses: “We could not predict the market timing” … “Funding for our type of business dried up” … “Larger competitors stole the market” … “The development team did not deliver” … “Pricing pressure made it impossible” … “My partner was at fault” … “Unforeseen costs killed us.”

These are all, in fact, errors in judgment. If the error shows itself early, could it not have been predicted from the onset? If it emerges later, was there not an opportunity to set a new coarse?

Not all businesses can succeed, no matter what. Some ventures that start for all the right reasons and operate under sound logic along the way, still will fail. Perhaps my title should be “why most entrepreneurs fail,” or perhaps better, “why most ventures fail.”

All fail because of an error in judgment. Most fail because of one or more avoidable errors in judgment. And, of these, most errors occur because the entrepreneur’s logic plays second fiddle to emotion (the less savory word for passion).

Pinger

April 27, 2007

Pinger is a very nice mobile application startup. (Note, not Austin, as I’ve been trying to profile mostly local co’s, but this caught my attention)

In a nutshell, Pinger lets you send voice messages in the same way you would send text messages. By same way, I mainly mean, without the possibility of actually connecting with the recipient in a call. I love this!

Sometimes you just want to send a message, not invite a conversation. This is especially true if you want to broadcast out a message to several people at the same time.

Leaving a voice message has some perks to leaving a text message, but I won’t waste your time describing what’s more a matter of preference than anything else.

My question is, how different is this than MMS service? I haven’t used MMS much, but it can do the same thing. I just tried it with my phone. The UI is a bit cumbersome, but not terribly so. Kudos to Pinger for bringing this very cool trick to my attention, but why Pinger and not my native MMS? Just curious, maybe costs of MMS? I would love to know. (Oh, how I hope it’s not just because with Pinger you can send messages to Myspace and other neat tricks for kids.)

Pluck, another Austin startup

April 26, 2007

What is Pluck? Well, I’m mainly sideline spectating, but it would appear they are a broad-based offering/solution company for brands on the Web that want to “do social media/web 2.0 stuff.” I believe Pluck started with a feed reader. In fact, my friend Ben had a hard time understanding why a company that was doing a feed reader deserved anything more than a blue ribbon at a science project fair.

Well, Pluck is obviously about more than a feed reader, as they have discontinued support for it. Rather, Pluck is about solutions. Reuters has a coinvestment in Pluck. And they have a customer roster of household names — USAToday, Fox News, Houston Chronicle are a few they feature.

So, I don’t know what all the solutions are and I don’t know which ones are “selling.” One that seems interesting is called BlogBurst. This service hooks up popular bloggers with bigtime site properties that want to increase their content to push traffic. In more geek-speak, it appears they are matching contextually relevant content from external properties with in-house content under the umbrella of the primary property (as in, the masthead still says Newsco.com and flies its colors). I’m sure they mix in services and utilities to grease the skids to make this work. Sounds a little like Reuters for blogs, but I don’t know enough about either Pluck or Reuters “under the hood” to say.

I like the BlogBurst concept. It gets me thinking. Long term, I still think there is an editorial function to the big media properties (like USAToday.com). This is even with the spread of feedreaders, del.icio.us, blah, blah, blah. The editorial function will probably become increasingly about finding, sorting, and organizing content but still will include actual editing. In B.G. times (Before Google), the reliance on these sources for content origination was much larger. Now content is everywhere. A.G., the value is being the best at presenting me with the perfect mix of content, perfectly presented.

Keeping up with the times is tough. So a solutions company like Pluck makes a lot of sense for the big properties. This is a true case of “my success is your success.” Chances are very good that if Pluck is very successful, that will have a lot to do with their customers being very successful. And vice versa.

Greenling: Food 2.0?

April 26, 2007

Greenling is not exactly the typical high tech startup. Their product? Organic vegetables. Their service? Delivery to your door of high quality, fresh, organic vegetables.

Based in Austin and growing “organically” if you will, it will be fun to watch.

Grocery delivery? “I thought that was a dud.”

Why does this seem to work where grocery delivery never took off in the dotcom days? Well, grocery delivery actually has worked, in certain markets. Peapod, for example, still delivers in select densely populated markets. And many grocery chains offer in-house delivery services in selected regions.

Smarties in the business figured out that geographic factors have a lot to do with the opportunity for success in grocery delivery. What Greenling is perhaps figuring out is that product specialization might be another, perhaps better, success factor.

Let’s take a look:

As I wrote about in a previous post, choice abundance in the grocery store is off the charts. Offering a delivery service for 40,000+ items sounds like a logistical nightmare. By specializing, this “sku count” gets cut dramatically. Even if Greenling put in new categories one day, such as meats, they can still control expectations. By setting up the brand with a specialty focus, there will never be an expectation to get a 3 oz tube of Crest Tartar Control Peppermint flavor toothpaste along with my produce.

On the other side of the coin, as a consumer, the specialization is more compelling than grocery delivery in general. The mental leap from Albertson’s to home delivery is actually gigantic for families. Grocery shopping is an integral part of our survival routines. Even if home delivery makes sense, getting people to make this leap is challenging. It’s a big behavior shift and the level of convincing required to make it is high. Catalyzing trial is much easier said than done. But, with a specialization, the mental shift is easier. Organic is specific. Produce is specific. Fresh organic produce is very specific. It is either challenging or impossible to go to Albertson’s to get fresh organic produce with the selection Greenling offers. So the behavior switch is natural. If a consumer has a desire for this type of product, there is no behavior switch–no mental competition of inertia. In many ways, home delivery is secondary; it’s about being the choice brand for the product itself–organic produce. In other words, home delivery is a great feature, maybe even the compelling feature for many customers. But I don’t think it’s the core value proposition.

Unfortunately, I like my steady diet of fast food and Diet Coke too much to sign up just yet. But one day, I’m sure I will grow up diet-wise and on that day, I hope Greenling can deliver to my zip code!

Financials and maturity in startups

April 25, 2007

I read a couple posts (here and here) this morning about how GAAP standards in accounting can do more harm than good, particularly for startups trying understand their business and trying to interpret performance.

I also think this applies to early stage projects in both reporting and projecting financials. I find that helpful “compromises” in terms of presentation of numbers is important. Obviously, abiding by standards is important when you’re communicating to external audiences, and along the way when you’re reporting “official” statements.

However, spreadsheating financials is often done best not only quick and dirty but nuanced to your business as well.

Many first time entrepreneurs (whether “small business” or “startup” types) fixate on conforming to what is seen in textbooks. This tends to make the financial part of planning the business cumbersome while the entrepreneur is trying to bring a vision to reality.

I find it’s a more helpful exercise to simply try to express the vision with numbers naturally, try to understand that, refine, and repeat.

For example, most startups deal with cost of acquisition of some kind. Particularly with projections, a team’s ability to develop some model and understanding of how this works is crucial. While this is a metric that doesn’t naturally spill out in a financial statement, it’s way more important to understand for most startups than how to properly account for depreciation of fixed assets. Obviously that, too, becomes crucial as the business scales, but doesn’t do much for understanding and reporting on a startup.

I find it strange that engineers/software guys in startups tend to not spend too much time with financials and/or avoid those meetings/roles all together. Odd since these guys are generally good at math. They aren’t necessarily good at constructing a financial statement. Why? Because they were learning to hack when their business major peers were trying to keep themselves awake during intro to accounting courses.

This needn’t be. When I start a company or join a startup again, I will insist that anybody considered to be on the core founding team have a good understanding of the business from a dollars and cents perspective. Everybody should be able to, with a blank whiteboard or virgin spreadsheet, be able to crudely develop a model of the business and how it intends to make money.

To beat a dead horse, I think it’s a self-limiting behavior to avoid a core subject matter critical to your success. In a startup, this would be core subject matter, no matter your role. I also find it patronizing and bad for chemistry for “business-side” founders to limit financial discussions with the “tech-side.” Give me a break. This is often done in the name of “shielding” the tech team from unnecessary detail, when in reality it is more likely a power play. And for those developers who would tolerate or welcome such “shielding,” I would suggest that this is akin to standing outside the fire and a sign of problems to come.

Interesting personal story of fired professor

April 23, 2007

Professor has provocative class discussion on VA Tech shooting. Professor gets fired. Professor posts 4 clips of explanation of his story.

1st Video

Two points:

1. Obviously, I think that political correctness is rampant and dumb. It has a numbing effect on education, creativity, and debate. Unfortunately, college campuses are breeding grounds for political correctness where they should be ‘walled gardens’ attempting to prevent its ill effects.

2. Kudos to the professor, Nicholas Winset, for using YouTube to give his side of the story, and demonstrating what an educational tool YouTube can be. Because of the instant ability to publish and broadcast, it serves as a great case study tool. Or to borrow a phrase, “great for Monday quarterbacking.”

Quote of the day

April 23, 2007

quote

seen on 2nd and Colorado, Austin, TX at:

design within reach

Mac, Firefox, Camino, non-IE uptake

April 22, 2007

IE still is the far and away leader. But that matters less and less every day. The opinion leaders of the Web use other browsers in large numbers and use Macs in large numbers as well. Not keeping these users top of mind makes no sense for companies in the innovation business. Yes, even today some companies release software that is not Mac supported or requires IE. But I’m sure anybody developing anything meaningful for the general market now, would not start new projects making this error. The exception of course is software developed for specified environments–i.e. internal corporate software. Of course, these developers would be wise not to box themselves in either. Why would you?

I only write this because I remember working on projects several years ago where the custom was to focus on IE and make market coverage tradeoffs with ease. The bigger question back then was versions of IE. Rare was the client who would demand QA testing on Netscape.