Finding Partners

Written by Theresa Shafer. Posted in Startups

The best way to find partners is your inner circle, the people who you have a shared success with. Starting a company is like a marriage, you really want to know and trust your partner.

Another place to look is a web site where you can post a job description for a programmer. They have a “will work for equity” section as well as a volunteer section.

Another place you could post a ad for programmer is or Results from these sites as well as overseas are mixed. You need to manage them and I would not look for partners there.

Selling Around IT in Larger Firms

Written by Theresa Shafer. Posted in Consulting Business, EDA, Startups

Large firm IT departments are “gatekeepers”. Their job is to keep the enterprise network computing infrastructure safe and operational. New software from a new vendor is almost always viewed as a threat. Most of the time, they will say NO to any new software. Most of the time our clients have to sell around them. Here’s five tips for doing that:

  1. Provide a service (deliver the results of you running your software) instead of selling software.
  2. Package your offering as SaaS at a price that’s below the radar of IT.
  3. Leverage an existing partner: Who else is your prospect buying from?
  4. Find someone who is in a lot of pain whose needs have been ignored by IT.
  5. Find someone whose needs span more than one IT administrative boundary, so that no single IT group views satisfying the need as their obligation.

A related article “Selling Around The CIO” which is well worth reading to understand what likely counter-attacks from an IT group will look like. In particular we advise clients to prepare for three audiences in a sales presentation: business, end user, and IT. The objective of the IT oriented presentation is simply to neutralize as many potential IT roadblocks as possible. It can be given directly to the IT folks or supplied as ammunition for your internal champion if needed.

Another blog entry worth reading on this topic is Ori Weinroth’s summary from the 2006 Office 2.0 Conference on “Is IT the Enemy of Office 2.0

SDForum Quarterly Venture Breakfast with PWC’s: Seed Investments

Written by Francis Adanza. Posted in Startups

This morning I attended the SDForum Quarterly Venture Breakfast with PWC’s Seed Investment Report given by Steve Bengston from Emerging Company Services (ECS) group at PricewaterhouseCoopers. In the United States, last year the reported amount of VC investments totaled to $25.5B. Of the 25.5B, 1.2B was invested at the seed stage across 311 companies.

Moderator Allison Leopold Tilley, Pillsbury Winthrop


Moderator question to the panelist: Are Steve’s numbers correct?
Bill: Steve’s numbers are accurate, however it only captures the reported data. Most early stage investments are made by families, friends, and unorganized angel groups, all of which do not report their investments. I am not sure what the exact number is, but I estimate that there are 2-3 times more dollars and deals that were not reported last year. The majority of companies are funded by non institutional non traditional capital.

Larry believe Bill’s assumptions are true given there are more than 500 social networking sites alone and only 311 deals were made last year. Larry also believes that the failure rate of companies funded through non institutional capital is incredibly higher.

Moderator question to the panelist: What is the definition of Seed/Early stage investments?
Jim: Seed investments are made into companies in their infancy stages. Usually do not have a flushed out management team, product is not finished, and teams working within their garages. Playing the game this early is hard. 80% of seed companies die and never secure another round of funding. We are swinging for the fences, trying to hit home runs. Thus we need to invest in many companies, to diversify our risk. Teams that do not meet their milestones get cut lose.

Bill: The days of pre-product, pre-prototype, pre-revenue are over unless you are a brand name executive with multiple successful exits. The best way to convince an investor is with paying customers. Do not waste time on a business plan telling us what you are going to do. Build your credibility and substantiate your offering with customers. We look for guys who can sell.

Audience question: From first point of contact, how long does it usually take to secure funding?
Richard: From the very first time we meet, we begin an evaluation of you. How you present yourself, how you articulate your vision, your credibility of being able to execute on your plan, etc. This is the beginning of what is known as our due diligence process. On average, it takes 12 months before a check is cut.

Startup Epicenter Offers Intensive Workshops, Challenge & Festival

Written by Sean Murphy. Posted in Events, Startups

Startup Epicenter has just announced two back to back entrepreneurial education events that together offer an intensive program designed to help you prepare for the grueling demands of an entrepreneurial journey. SKMurphy is a sponsor for the events.

The program on March 29 starts at 2 in the afternoon, which leaves your morning free to attend the Compelling Demos Workshop that we are presenting with Peter Cohan of the Second Derivative.

The final program hasn’t been announced but they have already previewed an impressive line-up of VC’s (and Angels).

  • Clint Chao, General Partner, Formative Ventures
  • Dan Grosh, Partner, Nosal Partners
  • Ken Elefant, General Partner, Opus Capital
  • Carol Sands, Founder & Managing Member, The Angels’ Forum / Halo Funds
  • Jim Simmons, Entrepreneur In Residence, Draper Richards
  • John Steuart, Managing Director, Claremont Creek Ventures
  • Rich Simoni, Partner, Asset Management Company
  • Richard Redelfs, General Partner, Foundation Capital
  • Will Price, Principal, Hummer Winblad

Apply here to take part in the intensive workshops. Send a 1-2 page executive summary and at least two of the following items to be considered for one of the openings for this program.

  • web page – secure view acceptable
  • link to product demo
  • blog link
  • video on YouTube,etc.
  • Customer Referral/Testimonial(s)
  • 1-2 paragraph description (your 30-45 sec. pitch)
  • Financial Estimates
  • PowerPoint funding pitch presentation

Please do not send: Business plan

E-Mail to Applications-at-StartupEpicenter

It’s a rolling admissions process that starts tomorrow, March 2nd.

Building Communities using Search Co-op

Written by Theresa Shafer. Posted in Consulting Business, Startups, Tools for Startups

We have added Google’s Search Co-op to our Resources page. As an entrepreneur, you need to dabble in so many fields. Some areas of expertise an startup needs are legal, accounting, funding, marketing, sales, public relations, recruiting, hiring, partners, and advisers. We work with some great experts and partners and you can take advantage of their best practices, checklist and templates. If you need help with Learning the Business Side of Consulting, Growing My Software Startup, or Developing a Product, take a look at the resources we have gathered together.

If you would like to suggest an additional site that we should add, please use the Contact Form to suggest it.

One Search Co-op feature I would still like is an article rating system. I would like readers to quickly rate how useful the article was for them.

VC Investment in Asia and What It Means to Korea

Written by Francis Adanza. Posted in Events, Startups

Tonight I attended a KIN / KASE Event: VC Investment in Asia and What It Means to Korea. The guest speakers were Han Kim, Partner at Altos Ventures and Tae Hea Nahm, Partner at Storm Ventures.

I have heard many VC’s speak on how they evaluate investment opportunities and what their criteria for investing is. What I really appreciated about these two talks was that these VC’s spoke very honestly about the types of investments VC’s make and the value they bring to a company. What follows is my attempt at an accurate summary of the two talks.

Many entrepreneurs believe if they raise venture capital they will become successful. VC’s do not increase your chances of success. In fact they help:

  • Increase your burn rate
  • Re-shuffle your management team
  • Speed up your sales process

While these might seem like good things, they can work against your objectives as an entrepreneur.

When companies are self-funded, people tend to be much more prudent with their money. Venture backed companies tend to spend money more quickly and less carefully. VC’s like to bring in their own personnel to steer the ship. Even though this seems like an effective strategy, success is more often driven by those most passionate about the business. Due to the nature of their business, VC’s accelerate the sales process. If the recipe is not yet determined, wrong messaging can be detrimental to the companies marketing efforts.

If you look at the numbers you will find that first tier firms like Kleiner Perkins and Sequoia Capital have win percentages of 30%. That means 70% of their investments fail. What do you think the chances are of venture backed companies that were not financed by one of these firms? Startups should not focus on raising capital but focus on creating a successful company. VC’s look for investments in companies that already have achieved a certain level of success. They leverage that success in order to grow faster and create a greater exit.

Why isn’t there more investment in Korea? The people are well educated, hard working, and willing to work for less. We believe that since there are only 50 million people in Korea, the economy is not big enough for most VC investments. We also believe that government issues have held a constraint on the country’s ability to globalize many of their products, thus preventing foreign investments.

Clark Dong: Software Startups Don’t Need VC’s To Start

Written by Sean Murphy. Posted in Blogging, Startups

Clark Dong gave an interesting demonstration of a new action item tracking tool for startups called TaskPick at last night’s SDForum Startup SIG. He came on after my show and tell on how and why we use Central Desktop in our practice. He was articulate and energetic and I was very impressed with his approach.

Software Startups Don’t Need VC’s To Start

I did some Googling and came across a long comment Clark Dong made on VentureBeat last week that I wanted to highlight (this is an excerpt from a longer comment, text was not bold in original).

Last fall I started a new web 2.0 company in the team collaboration space. And for this new company I have chosen not to go the VC route. Why? They are asking for way too much (50% off the top) and frankly I can get it going without them (i.e. I don’t need to kiss up to them). The VC model was created in the early days of the semiconductor era when an entrepreneur needed millions of dollars of startup capital before they could can make a run at it. That is no longer the case. It is now possible to start a play, tighten the belts a little, and reach revenue. The capital equation of the new startup world has changed.

So what is my current view on VC?s? I think they are a dying breed. It is now easier than ever to start companies in the web space. Open source tools and nearly free on-line services means you can become very productive quickly without needing lots of money to spend on development tools or infrastructure. Hosting services are almost free and will only get more reliable, faster, and have larger storage. For those venture funds that can not adapt quickly and add more value to entrepreneurs, they will find themselves with lots of money but not able to participate in this new round of web innovation (sure, the semiconductors and the networking plays will still need startup capital). VC served a useful function back-in-the-day, but the clock is ticking for them.

My Take: Return to Normal From DotCom Bubble

I think a lot of folks got into Venture Capital during run up to the last bubble who had fewer skills and less experience than was required for them to be successful in the much less hospitable environment that developed after 9/11. But I look at it more as a correction back to more “normal levels” of active VC’s than their incipient extinction.

Implication: More Competitors

I haven’t worked out all of the implications for the dramatically lower cost of starting a new software/SaaS firm, but to a first order it would seem to place a higher premium on strategy and business development: in particular the need for differentiation is now greater because you are likely to be faced with more competitors.

What’s Your Passion?

Written by Theresa Shafer. Posted in Consulting Business, Startups

Don’t forget the dream to change the world that got you started: your passion is an important element of craftsmanship and a commitment to excellence.

What’s Your Passion?

Recently, I chatted with a well-established consultant–she’s been working for more than a decade. She was having trouble developing a short elevator pitch to describe what she did and how she helped people. This can be a problem when you are starting out, but she had clearly been successful for a while and this was something else.

Sometime I do this or do that, sometimes I work with this group inside the company. It all depends.

If you have been consulting for a while, or bootstrapping, you can lose your passion. How are you going to change the world? What was dream when you originally got started? What is your passion?

Find Your Passion?

Pay attention to the activities, challenges, and accomplishments that give you energy. De-emphasize, outsource, or partner to address issues or customer needs that you cannot summon enthusiasm for.

Related Blog Posts

Bootstrappers Breakfast – Bootstrapping Startups Invited

Written by Theresa Shafer. Posted in Startups

Join other bootstrappers–startup CEO’s, CTO’s, and founders–for breakfast and discussion. We meet at different restaurants in Silicon Valley from 7:30-9AM, your only cost is your meal and a tip. Come compare notes on operational, development, and business issues with peers. If you are serious about your business and are open to discussing substantive issues and helping your peers, please join us.

What is Your Website Grade?

Written by Theresa Shafer. Posted in Startup CEO: Question of the Day, Startups, Tools for Startups

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.

Hugh MacLeod’s Thoughts on Being an Entrepreneur

Written by Sean Murphy. Posted in Startups

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.

Update July 21, 2009: I just realized that I have done two distinct blog posts using this same blog post by Hugh MacLeod as a point of departure. See also “Hugh MacLeod’s Thoughts on Being an Entrepreneur 2” They make for interesting reading back to back.

Thinking About Your Business Goals for 2007, Part 2

Written by Sean Murphy. Posted in Consulting Business, Startups

As a follow-up to yesterday’s post on thinking about your business goals for 2007, it’s also worthwhile to look at your own motivations and needs.

In an extending interview in Fast Company “Are You Deciding On Purpose,” Richard Leider advises that you ask yourself two key questions:

  1. What do you want?
  2. How will you know when you get it?

He continues:

“People really do have their own solutions. The problem is, either they don’t know how to discover them, or they avoid discovering them. But if you want to come up with good decisions for your work and your life, simply ask those two questions-because it all comes down to very simple things.”
Richard Leider  in “Are You Deciding On Purpose

He further suggests that there are four key factors to consider when thinking about your business goals

“First, discover how to live from the inside out. You absolutely have to start with yourself, not with the external demands of the situation. Second, discover your gifts. What is it that makes you unique? What song do you want to sing? Third, discover what moves you. Where do you find joy? A decision that connects with your own emotions is much more likely to succeed. And fourth, discover solitude. Go to a special place where you can find quiet. If it’s the mountains, take the time to get there. If you can’t go there, create a space in which you can find a similar peace of mind. In solitude, you’re much more likely to deal with the first three elements of this process.”
Richard Leider  in “Are You Deciding On Purpose

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.

Thinking About Your Business Goals for 2007

Written by Sean Murphy. Posted in skmurphy, Startups

Thinking About Your Business Goals

We went through a brief planning exercise with our clients, and some prospective clients, that several found useful. Since it’s not not too late to do some planning for 2007, here are a few questions that should answer on a single piece of paper (perhaps even a 3×5 card you can carry with you)

  1. What went well last year? (If you haven’t celebrated do so now)
  2. How will you build on your 2006 success?
  3. What key value or attribute of your business do you want to enhance?
  4. What are one or more activities or initiatives you plan to stop doing in 2007?
  5. What is your target for growth next year? Are you ready for growth?
  6. What are the major risks you face in 2007; how will you mitigate them?

Mike Van Horn On Techniques For Faster Growth

I blogged about this last year in Mike Van Horn on “Are You Ready for Growth?” but it bears repeating here.

  • The better teams you can build… the faster you can grow.
    People who grow companies rapidly know how to put a good team in place, then move on to the next thing. They become a leader of independent teams.
  • The better you use your time–the faster you can grow.
    Invest your time strategically; be less concerned with saving time or managing time.
  • The more you think things through ahead of time–the faster you can grow.
    That means planning, including strategic plans, action plans, and project plans, with built-in review and accountability.
  • The savvier your advisors–the faster you can grow.
    You let go of the “lone ranger” approach to running the business. As your business grows, get advisors who are one step ahead of you.
  • The more you insist on top performance… the faster you can grow.
    Do not let mediocre performers dictate your rate of growth, whether they are employees, customers, vendors, or professionals.
  • The more knowledge you can get out of your head and the more systematized you get–the faster you can grow.
    Create manuals, checklists, and training seminars that teach employees all the magical things that you think only you can do. Then you and your people can focus attention on the big, creative challenges.


3 Ways to Build Credibility with Prospects

Written by Theresa Shafer. Posted in Consulting Business, Rules of Thumb, Startups

Here are three ways for building credibility.

  1. Referrals
    A referral is an introduction to a prospect with an endorsement. A referral allows you to borrow credibility from a trusted third party. They spring from shared success with your customers or former co-workers, someone who knows your potential and can vouch for you or your team’s ability to deliver. Meaningful referrals do not originate from a casual contact, someone you have met and spoken with only a few times: without a history of shared success they cannot substantiate your ability to deliver value.
  2. Speaking Engagements
    As soon as you are in the front of the room doing the talking, most people in the audience will give you the benefit of the doubt as a credible expert. Obviously once you open your mouth you can rapidly undo that perception. A successful speaking engagement combines a clear presentation of your thoughts not only in a strong narrative on a topic that’s of use to potential customers, but also in your answers to real questions from the audience.
  3. Writing Articles
    It may be easier to communicate your knowledge of your prospect’s issues in writing. Especially if you are someone like me who doesn’t enjoy public speaking you should work at the craft of clear business and technical writing. Most articles these days are presented on a website (e.g. blog entries like this one) or in an email newsletter. In either case you should consider writing in HTML and adding links to provide substantiation of your key citations.

January’s Silicon Valley NewTech Meetup

Written by Francis Adanza. Posted in Startups

Last night, I attended the January Silicon Valley New Tech Meetup.  For those of you who do not know the format of these gatherings, it is very simple.  Each group of presenters is allowed five minutes to pitch their offering and then the crowd is allocated five minutes to ask questions.

The first presenters were the founders of inChorus.  inChorus has a very complicated technology that leverages the knowledge of its users.  Users post projects/problems on the site and people who feel they have knowledge of the subject matter respond with their insight.

The second presenters were the founders of Pinger.  It was obvious that their pitch was well rehearsed and timed perfectly.  The presentation was articulate, timed, and informative.  It was easy to see the problem and the value of their solution.  To me, the most compelling part of their business model is that they do not have to partner with any of the cell phone service providers.  In a very competitive cell phone market, startups usually design technology that can only be used with the service provider’s permission.  I really like the fact the Pinger understands this challenge and designed an application that works around this obstacle.

The third presenters were from  The presentation was very casual and conversational.  The presenter really opened the door for crowd interaction.  If you visit their website, you will be blown away by the graphics and the imagination of the sites users.

The last presenter was from  I found the site to very similar to consumer digest reports.  It is a customer reviews and ratings service. is trying to leverage the power of its users to rank and compare consumer products.

You Need to Be a Little Crazy

Written by Sean Murphy. Posted in Books, Quotes, Rules of Thumb, skmurphy, Startups

Theresa heard a radio interview with Barry Moltz in 2003 and suggested that I get his book. In December 2003 I purchased a copy of You Need to Be a Little Crazy and when it arrived from Amazon I put it on my to-be-read pile where it languished until early this morning when I read it in one setting, making notes in the margin and jotting down page numbers for quotes I was going to harvest for later re-use on a 3×5 card as I read.

Two Images of Startups

Written by Sean Murphy. Posted in Quotes, skmurphy, Startups

I had lunch today at El Cerrito with an old friend from college who has done a number of successful startups. We talked of old classmates, children, the energy we had in our twenties, his new son, and my new granddaughter. And we talked about what it was like to do a startup. He left me with two words pictures that I have transcribed below, because I think they capture two different aspects of startups.

The first is the startup experience as a hurdles race:

Doing a startup is like running a high hurdles race early in the morning before the fog has burned off and before the setup crew has all of the hurdles positioned correctly.

The starting gun goes off and you can see perhaps a dozen feet in front of you. You can hear the grunts of the other racers and the scuff of shoes on the track. You take off running and the first hurdle appears out of the fog. You clear it easily and then realize that you are slowing down slightly, expecting the next one, but the setup crew has not put it out.

Then suddenly it’s in front of you and you barely clear up. You can hear some of the other runners stumbling but ahead you hear others racing ahead of you.

You have to set a pace to catch them but you cannot just put your head down and run because you have to keep a lookout for another hurdle to appear at the limit of your fogbound vision.

The second was based on several experiences he had working with VC’s. An avid cyclist, he thought of the entrepreneurial journey with a VC as having two distinct phases: in the pack and near the finish line.

Working with VC’s is like a bicycle race. At first you are all in the pack and everyone works together, alternating position to draft and move faster together than the solo leaders.

But as the finish line appears the pack breaks up as each cyclist tries to cross it first. Even if the VC’s have been good partners for most of the journey, they can’t resist the temptation to break away and gain the advantage at the finish line.

Update Jan-21-2010

  1. “Your twenties are always an apprenticeship, but you don’t always know what for.” Jan Houtema
  2. A great quote that  I used again in April 2008 but couldn’t source it. Paul Graham has it in his quote list. But while Houtema is a legitimate surname, I can’t find the one named Jan. I suspect, like Tara Ploughman, this is another pseudonym Graham has adopted.
  3. Steve Blank offers a framework for evaluating startup leadership requirements in “I‘ve seen the Promised Land and I might not get here with you” that addresses all of situations my friend describe: hurdles, the pack, and the end of the bicycle race.

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