Archive for the ‘Startups’ Category

Great advice to help communicate about what the hell you’re doing!

September 27, 2010

Got this great pearl from here:

A Sack of Seattle

“Your elevator pitch should follow a simple “ad-lib”: We focus on ______ (target customer) who need _________ (market need), so we provide _________ (feature set) and we charge them ______ (business model). This standardized elevator pitch actually simplifies some of the challenge that the founders have been facing in explaining their business to mentors. His idea is to adjust the answers to the blanks until the statement feels exciting and feels like it accurately describes what you do. I couldn’t agree more and hope the founders take this to heart as they hone their business plans.”

For fear of mucking with a rather eloquent piece of advice, here are a couple thoughts

1. Where it says “need,” “want” works in the realm of consumer stuff.
2. Businesses are fluid and startups are especially so, so “not completely sure” is probably the truth in some of the blanks. It would be nice if that “not completely sure” were limited to one or perhaps two blanks. Never mind funding, it’s kind of hard to lead a team much less build a business if these things aren’t both understood and explainable.

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Snappages … another Austin bootstrap!

May 16, 2007

Snappages is a new site by Steve Testone’s Test 1 Studios here in Austin.

It looks like an online iPhoto/flickr, Myspace, and Calendarhub in one. The UI looks pretty slick for all the functions. The calendar looks pretty good and I might give it a try. It doesn’t look like there are too many users yet, but I can’t tell for sure because it doesn’t let you see the community. Maybe that is planned in the future.

I’m curious what the angle is. I still think there is a lot of opportunity online for basic toolset combinations, but without any angle or focus, I don’t know where all the users will come from.

Also, I was surprised to see it all looks built in PHP. Not that there’s anything wrong with that, but it just seems a new generation of this type of web app would be in Ruby on Rails.

The UI also feels like the beginnings of a nice Web desktop.

Clans and teams

May 6, 2007

Startups are usually the product of teams. Sometimes a single founder is clearly the driver and other people might call a startup “his startup” and they would only mean one person.

Usually, it’s a team.

Where does this team come from?

Usually some or all of the team has already worked together. They know each other. They trust each other. They have a lot of context outside of the startup.

Sometimes these teams are years or decades in the making. Even if different participants haven’t always been working together, they somehow stay part of the same group all along.

If this team, or a part of it, starts to find success, they might also find a following. People come to respect these people, want to be part of their group, etc. The team becomes the core part of a clan.

I’ve been reading some articles about teams and then had a conversation with Tony Frey of Spiceworks. He mentioned the term ‘clan’ several times. That conversation and my casual readings have led to this post.

Startups need teams. I don’t think a team made of people who didn’t know each other before their startup is nearly as good as a previously established team. This is especially true if the team has achieved clan status. A team that enjoys clan status has a much easier time recruiting, raising money, evangelizing, getting “lucky breaks,” and having great Christmas parties!

Teams don’t form over night. So if you think a startup is in your career, whether a year or ten years from now, spend time interacting with people with this in mind. Figure out if you can make a team out of people you meet or know. Or figure out if you can be part of one that’s already taking shape. The social proof alone of being a part of a talent-filled team is a career must-have.

I’ll finish with a little levity that contains a lot of truth. John Doerr, the famous Kleiner Perkins VC, once commented a good startup team is one you “wouldn’t mind getting into trouble with for five or ten years.”

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.

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.

More research into the startup scene issue

April 20, 2007

A startup entrepreneur Adam Kalsey waxes elequently on the Sacremento startup scene…sounds like some of the same issues from another capitol city. 🙂 His article. It also references this piece, by Ben Metcalfe about the UK startup scene issues.

I thought both were genuinely interested in the recipe and for improvement, not just drawing attention to a hole. Both seemed to focus on good networking and really hard work (never ending work days).

Ben also drew attention to capital availability. I thought it was interesting that he pointed out that not only is there not much VC capital in the UK, but also that what is available actually gets invested internationally — mainly, in Silicon Valley companies. He also, along the same lines, rejected the thought that location of the capital itself and the managers of it, was critical–thus negating the ‘ecosystem’ theory. I think his point about lack of capital availability could be summed up as follows: it’s not really where the capital comes from, it’s where the investors want it to go. Most VC investors, regardless of their own location, invest in Silicon Valley.

I think this is very interesting. Adam’s location underscores the point. Sacremento is maybe two hours from Silicon Valley, depending on where you define Silicon Valley. So clearly proximity to capital is relative and it would seem, relatively unimportant.

Culture, problem solving, and the types and methods of solving those problems seems more central. Sharing without hidden agenda seems central. Genuine interest is clearly involved.

Not to get too “new age” but some of the themes bear resemblence to self-actualization. It’s not that startup folks in Sacramento or the UK — or Austin — aren’t talented or are not doing meaningful work. There’s simply a lack of convergence/support between startup teams and the community at large. Everything just kind of clicks in the Valley.

For grins, I hopped on indeed.com, a job site, and searched
“startup” for Austin, TX and for San Francisco, CA. It’s not that I wasn’t prepared for more quantity in San Fran. That’s reasonable. It’s that the difference was unbelievable! In the Austin search, most results had to do with the “start-up” process related to installing HVAC equipment, which I assume means what it sounds like. But even when I filtered out “A/C” and “HVAC”, I still got pretty limited results. Sure, there were some. But with SF, not only did I not have to do this filter, the results were what you would expect. Pages of job-postings touting well-funded startups, web 2.0, and bleeding edges.