Archive for January, 2007
January 31st, 2007
Today I attended the 2007 Entrepreneurship Conference at the Stanford Graduate School of Business. One session that I truly enjoyed and found very informative was the “Going Solo or Partnering” Panel. Below are three questions and answers I believe capture the importance of developing a solid team.
Moderator Andy Rachleff – Founder, Benchmark Capital
Panelists
How do you find good co-founders?
Consensus Answer: finding a good partner/partners is usually someone you have had a shared success with. It is someone you trust and whom you are willing to share every intimate detail about the business with. This person should be as passionate about the venture as you are and willing to risk it all and go to the end with you. There are only a few individuals that have all the necessary skills to run a business by themselves. An ideal partner would be a person who complements your strengths. It is okay to have some overlap but you really want someone who can bring differentiating attributes to the table.
How did you structure equity with your co-founders?
- Larsen- 50/50
- Rosenblum- split it equally with 5 people
- Sindhu- We split it 3 different ways, everyone agreed before we started
- Wang- 50/50
Consensus answer: it is important to figure out your founder’s equity early, otherwise it will cause major problems later on. All co-founders need to be clear on what they want out of the venture and how much time they are willing to put into it. You can prevent misunderstandings by setting up a metrics to measure each founder’s performance. Building a sustainable business is building something bigger than any one individual. You need to structure the company in a way that allows it to exist if a founder leaves. Also if the company takes off and exit opportunities arise, everyone needs to agree when to cash out.
Some important concerns that we believe should be addressed in your performance metrics include:
- Key product development milestones for key modules, first product, and whole product.
- Specifications and plans are needed for engineering and marketing. If you don’t have these it’s harder to know what to change to get different, and hopefully better results.
- Timetables that comprehend both internal dependencies and different levels of prospect and customer acceptance of your offering (e.g. it’s foolish to optimize a design when you can’t find anyone interested in the basic functionality).
Do you recommend starting a company by yourself?
Consensus Answer: No way! It is an extremely emotional and stressful process. You need someone to lean on and hold you up while things are down. You also need to be able to hold your partner up when they are having feeling low energy as well. Another benefit of having a co-founder is the ability to share ideas and listen to alternative perspectives. Furthermore, starting a company is such a time commitment it is almost impossible to do everything by yourself. With co-founders you can share tasks and relieve some of the workload.
January 30th, 2007
More quotes from William Feather’s “The Business of Life“
Uneasy lies the head that ignores a telephone call late at night.
It is a fine compliment to be able to say of a man that he quickens the pulse of any group that he joins. Some men are like that. They are alive. Through charm, intellectual capacity, physical fitness, manners, or some other quality, they command respect and attention. They compel the rest of us to appear at our best.
To make fairly sure that an unpleasant job won’t be done, plan to do it yourself.
Some people have the art of compelling others to be pleasant.
Feather observes in “The Jolt” something that many entrepreneurs discover in their first startup, that most of their credibility flowed from their employer.
In my early twenties this idea was impressed upon me. I had been doing newspaper work, and as a reporter for a leading daily I was usually received promptly and affably by mayors, bankers, manufacturers, actors, United States Senators, and even presidents of the United States.
I quit my newspaper work and called on a few friends of my newspaper days. I was not insulted when I presented myself, but I was not offered cigars with quite the same alacrity as in my newspaper days.
[…] most of us in our working hours are like actors. The power and dignity and age and good repute of the corporations for which we work clothes us, and adds to our effectiveness and acceptance by those whom we serve and who serve us.
The only way to be rid of worry about the things we have not done is to do them.
January 29th, 2007
I found an interesting little tool Website Grader which evaluates your website. It produces a score and a list of things you can do to improve it. Some of the things I don’t agree with, but most are pretty good. Last night I played with it and the best sites I looked at were 80-70/100 and the poor ones were below 20/100.
At first I thought the comments on meta-data were bogus, but it is explained better in the blog article Understanding The Magic Of Meta-Data. It points out that although search engines don’t use them exclusively, most SEO experts do recommend that websites use meta-tags. The Meta Description Tag may influence the description of your page. The Meta Keywords Tag is useful for synonyms and less common words. These tags can work in conjunction with your website text.
Also see an earlier post Philipp Lenssen’s Tips For Crafting a Linkable Blog Post.
January 25th, 2007
I had lamented that I always Google too late, but lately I’ve been getting better. Here are some tools to use beyond Google and LinkedIn for searching for different kinds of specialized information.
A9 let’s you search the contents of any books that Amazon carries, all of Amazon, and another 500+ speciialized information sources.
Citeseer, which seems to me to be more useful than Google Scholar, searches scientific and academic papers.
Krugle searches code examples and some related technical references.
January 24th, 2007
Last night I attended the IBDNetwork Strategies Series: Stepping on the Web 2.0 Scale. The event was hosted at Shasta Ventures and featuring guest speakers:
I noted a couple of good quotes, the first were two answers to “How would you define Web 2.0?”
Sam Schillace stated that Web 2.0 revolves around collaboration. It is a better model for interacting with customers and quicker release times due to user demand.
Jason Pressman believes an ideal Web 2.0 application should be built with AJAX or a LAMP Stack. The application should allow interaction with data that comes mostly from the users vs. company generated. He believes a good example of a Web 2.0 company is Logoworks.
The second were some detailed answers to ”What does it take to be a successful ad website?”
Jason Pressman believes that it needs to be a consumer conversation driven website for three reasons:
- Nobody is buying technology anymore, there is always more than one person developing the same technology
- Investors are buying teams that can execute and provide returns
- Investors want companies with defensibility, competitive advantage, IP, a good team
Pressman indicated that there were significant Web 2.0 opportunities for E-commerce: continues to grow, more people shop online; security has improved but needs to continue to develop; the key challenges are scaling and inventory.
There is also event recap on the Under the Radar Blog.
January 23rd, 2007
Over lunch today I attended the SVASE Startup-U Event: Do I Have What It Takes To Be An Entrepreneur? Which was held at Plug & Play Tech Center. The guest speakers were John Kim founder of Five9 and LeadMarket, and Steve Stephansen, Board Director of the Sand Hill Angels. It was an open discussion with a lot of questions from the crowd and good interaction. The five questions and answers I found most interesting were:
1. What characteristics are common amongst successful entrepreneurs?
Usually entrepreneurs are people who can’t work for someone else, they like new things, and feel that they can’t innovate in other companies, thus start their own. Other characteristics of a entrepreneurs is someone who is focused, is an expert in a particular area and has passion for their offering.
2. What types of commitments, sacrifices and joys can I expect as I get my new business started?
Being an entrepreneur is very time consuming. The biggest sacrifice you can expect to make is giving up your time. Since time is so prevalent in becoming successful, it is extremely tough for married entrepreneurs and even tougher with kids.
Steve Stephansen spoke on his personal experience of being a CEO. Looking back when trying get started and trying to raise capital there was no way I could be in a relationship. I was so stressed out! All I could think about was the responsibility I took when I accepted investor capital. My reputation and future in the valley was based on what I could achieve the money.
3. Is failure good?
Many people learn from failure but it does not necessarily mean it is good. These days, the people raising money have had successful exits. It is getting harder and harder for first time entrepreneurs to raise capital because there are so many people with similar technologies. It is okay to fail, but you need some success factor in the journey to substantiate your loss. Otherwise it could be more difficult to raise money the next time around.
4. What resources are available to help me avoid mistakes and make wise decisions?
John Kim spoke about his experiences. In my limited experience, it has been all about customer acquisition. If you think you have a compelling value proposition, you should be able to sell it before it is built. Early on we were sales focused. There was no time for “strategy planning.” We did not even think about raising capital, we were solely focused on finding customers. With nothing more than a laptop and a cell phone my partner and I went 32k into credit card debt but in 9 months we successfully grew to 900K in revenue.
5. If I recognize that I may not have what it takes to be an entrepreneur, what options do I have to realize my idea?
You can validate proof of concept with customers. Customers prove that there is a problem that needs to be solved. Once you know you have something, everything becomes easier. It is not about the “great idea,” it is about the execution on the marketing.
January 19th, 2007
Some quotes from William Feather’s 1949 book, “The Business of Lfe.” It’s a collection of short notes, letters, newspaper columns magazine articles. Very insightful, and something like reading a blog from the 1930’s and 40’s.
The way to get things done is to have a good assistant.
In closing a deal, what you don’t say may be more helpful than what you do say.
…every job has two salaries. One is the pay you get. The other is the mental satisfaction you derive from working for the company.
Business is scheming ways by which you can help your customers make an extra dollar in the hope that they will let you keep ten cents for yourself.
Business is showing a prospect how a job should be done and then having him give it to a competitor.
If you do not have the capacity for happiness with a little money, great wealth will not bring it to you.
Many people are thwarted by excessive ambition. They want a hundred thousand dollars but are unwilling to save a hundred dollars. They want a big house, but do not accumulate enough money to make the down payment on on a small house. They want to write a book, but will not learn to write a letter. Most men become successful and famous, not through ambition, but through ability and character.
January 19th, 2007
Everyone has advice for you about how to run your company! Even if it’s in the form of question like “When are You going to Get a Job.”
Friends and relatives who have only been employees may have your best interest at heart but not have the background or temperament to help you get your startup off the ground.
Starting a business is like becoming a new parent. When you are a new parent, everyone has advice. Sometimes you have to ignore friends, family and acquaintances’ best intentions. You’re the parent you know what’s best. Business advise is often the same way.
January 17th, 2007
Hugh Macleod posted “Random Thoughts on Being an Entrepreneur” earlier this week. I’ve picked the best five and added some of my own comments
4. Once you become an entrepreneur, you find the company of non-entrepreneurs a lot harder to be around. You’ve seen things they haven’t; the wavelengths alter, it’s that simple.
There are different perspectives in the world. There are craftsmen and brokers, salesmen and engineers, inventors and caretakers, just to name a few. It took me a long time to realize that I had an entrepreneurial frame of reference and that many folks around me didn’t. I think Hugh’s correct in that entrepreneurs can see possibilities that many other folks don’t, but the same is true of artist, engineers, and architects as well. I think entrepreneurs focus their imagination on business possibilities, where an artist may work in metal or an engineer in silicon.
6. Word of mouth is the best advertising medium of all. The best word of mouth comes from disrupting markets.
Creating value, exceptional or at least novel value, is another good way.
14. Smart, young, artistic people are always asking me which is a better career path, “Creativity” or “Money”. I always answer that it doesn’t matter. What matters is “Effective” and/or “Ineffective.”
I think what the more pernicious aspect to this is putting your creative life on hold to make money. As Robert Service observed “There are no pockets in a shroud.”
18. People remember the quality long after they’ve forgotten the price. Unless you try to rip them off.
In general, it’s best to assume that everything you do will be made public. If you are contemplating something that wouldn’t withstand that kind of scrutiny, try and find a more creative solution.
23. Running a startup is full of extreme ups and downs. Which is why so many successful and happy entrepreneurs I know lead such normal, stable, unglamorous, “boring”, family-centered lives. Somehow they need the latter in order to balance out the former. Extra-curricular drama looks great in the tabloids, but that’s all it’s ultimately good for.
I think this is probably the most important one. Steely Dan’s “Any World (That I’m Welcome To)“ opened with ”If I had my way, I would move to another lifetime.” But this is a teenager’s fantasy of getting away from home. Marriage and child rearing are not easy, much harder in many ways than doing a startup. But creating a decent workplace that provides a good living for your employees and value for your customers is easier when you are situated in a long term relationship and a family.
January 16th, 2007
As a follow-up to yesterday’s post on business goal for 2007, it’s also worthwhile to look at your own motivations and needs.
Richard Leider advises that you ask yourself two key questions:
- What do you want?
- How will you know when you get it?
The best reason to take part in a startup or to start your own software or consulting business is that it furthers your own personal development. It should allow you to work on the problems that you feel are important or to create something that leverages your creativity, experience, expertise, and passion.
We don’t tend to explore these as much in our engagements: team dynamics and shared goals are more where we tend to focus. It’s not a bad idea at least once a year to make sure you are working on what you want to achieve and you have given some thought as to how you are keeping score.
Previous Posts