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- 10/06/12--06:03: _Personality Matters...
- 10/08/12--11:24: _Startup Offers Fail...
- 10/09/12--07:26: _12 Things Startups ...
- 10/09/12--09:31: _Bravo's 'Start-Ups:...
- 10/10/12--07:19: _All The Gold-Plated...
- 10/11/12--06:27: _We Are Very Excited...
- 10/15/12--05:42: _The Hidden Losers I...
- 10/16/12--06:32: _Circa Wants To Save...
- 10/18/12--05:34: _How To Become An Ex...
- 10/18/12--08:24: _13 Powerful Women R...
- 10/19/12--05:55: _Airtime Has 400 Dai...
- 10/20/12--08:34: _It Must Be Really F...
- 10/20/12--06:30: _7 Basic Money Mista...
- 10/21/12--06:00: _Before Picking A Co...
- 10/22/12--08:46: _Mark Zuckerberg: 'I...
- 10/23/12--04:30: _Larry Page's Colleg...
- 10/23/12--15:16: _4 Mistakes Young En...
- 10/24/12--05:00: _5 Things I Learned
- 10/25/12--05:00: _Do You Have What It...
- 10/25/12--09:10: _A Silicon Valley In...
- 10/06/12--06:03: Personality Matters More When You're Interviewing For A Startup Job
- 10/08/12--11:24: Startup Offers Failed Entrepreneurs A Million-Dollar Signing Bonus
- 10/09/12--07:26: 12 Things Startups Want To See On Your Resume
- Yahoo Japan is a joint venture between Yahoo and Softbank. Softbank was, until a few weeks ago, preparing to pay Yahoo ~$3 billion for its stake. Already stalled over price, that deal is probably off the table for now. Loser: Mayer.
- Yahoo CEO Marissa Mayer was probably going to use at least some of the money for a dividend or share buyback. Loser: Yahoo shareholders.
- Mayer has already pledged $3 billion of the $3.65 billion Yahoo netted from its sale of Alibaba stock to shareholders, so she was probably keep some of the Yahoo Japan money to buy startups. That's not going to happen now. Loser: Startups and their venture capitalist backers.
- 10/18/12--08:24: 13 Powerful Women Running Today's Biggest Startups
- 10/19/12--05:55: Airtime Has 400 Daily Users
- 10/20/12--06:30: 7 Basic Money Mistakes That Kill Startups
Failing to factor in fixed costs when pricing. Don’t forget to add all pesky “overhead” costs, with fixed elements, like rent, insurance, and administration, and variable elements, like delivery, customer support, and commissions. Always use a break-even analysis to measure what volume and price are required to offset total costs.
Thinking you are profitable once money begins to flow in. Money flowing in has to exceed all costs, including the cost of inventory and credit, before there is a real profit. Many startups see initial revenue from customers, and love the fast growth, but fail to anticipate the cost of early vendor payments, monthly overhead costs, and later taxes.
Considering the job done once a client has been invoiced. A startup must insure that the payments are collected per agreed terms. A required metric is average days to payment compared to expected. If you expect payment in 30 days, many customers will stretch this period to 45 days or even 90. This difference will kill your profit margin.
Not paying close enough attention to cash flow. In startups, cash is king. If you fail to pay a cash obligation when it is due, the business is technically insolvent. Insolvency is the primary reason firms go bankrupt, even while making a profit. Entrepreneurs should sign every check and manage cash personally, rather than delegate this task to anyone.
Not producing and reviewing financial reports regularly. Too many entrepreneurs hate the numbers side of the business, so they assume their accountants will warn them of danger signs. But administrative people rarely see the big picture, which you need for profitability and survival. It’s well worthwhile to learn the basics and use financial reports.
Not having a budget. A budget is the financial plan and road map to get you from your business plan to profitability. Without a road map, you can be lost and not know it. Make sure you have a budget which is specific, measurable, achievable, realistic, and timed (SMART). Prepare it, update it regularly, and use it.
Wasting money unnecessarily. Every business ends up buying things they don’t need, or paying more than they should, due to lack of attention and lack of negotiation. Review supplier terms regularly, and don’t be afraid to shop around. Take advantage of early payment and volume discounts, where possible
- 10/21/12--06:00: Before Picking A Cofounder You Have To See How You Fight
- 10/22/12--08:46: Mark Zuckerberg: 'I Have This Fear'
- Facebook started as a hobby, not a company. “I started building Facebook because I wanted to use it in college…we weren’t looking to start a company,” he said.
- Zuckerberg assumed someone else would create the company Facebook is today. "I thought that over time, someone would build a version of [the college-only Facebook] for the world, but it wouldn’t be us — it would be [a large existing software company] like Microsoft.”
- Facebook grew slowly compared to companies today. "It took a year for us to get to one million users and we thought it was incredibly fast,” he said.
- Zuckerberg doesn't understand the notion of wanting to start a company before deciding what you what you're going to build. "Facebook, I didn’t start to ‘start a company’… it was mostly just through wanting to build it and having it be this hobby and getting people around me excited. It eventually evolved into a company… but I never understood the psychology of wanting to start a company before deciding what you wanted to do,” he said.
- Facebook learned what features to build by watching its users. For example, it didn't launch photos out of the blue. It noticed users were swapping their profile pictures every day, and that it'd probably be useful to create a broader photo sharing tool. "We really listened to what our users wanted, both qualitatively listening to the words they say, and quantitatively looking at behavior that they take,” he said.
- If you decide to start a business, make sure you're starting something impactful. "A lot of companies I see are operating on small problems, and that’s fine if you want to be an entrepreneur, but the most interesting things operate on a fundamental level.”
- 10/23/12--04:30: Larry Page's College Friend Has Launched A Cool New Startup
- 10/23/12--15:16: 4 Mistakes Young Entrepreneurs Make That Waste Time And Money
- 10/24/12--05:00: 5 Things I Learned
- 10/25/12--05:00: Do You Have What It Takes to Disrupt an Entire Industry?
Working for a startup is exciting. It's also a lot different than working for a company that's been around for hundreds of years.
And being successful at an established company doesn't mean you'll thrive at a startup.
He thinks there's a much higher standard when it comes to personality fit at startups than there is at older companies.
"[Startup candidates] don't get denied because they lack a technical skill," Bellows told us. "If you're smart enough you'll figure out the skill sets you need."
"However, we spend so much time with one another, that if you don't get along with others, it's a big deal," he says. "Whereas at a bigger company, if you went to the right school, you'll do fine."
There's a lot of what Bellows calls "constant inevitable chaos" in startup culture — one example is changing a meeting location at the last minute because of an office renovation. A good employee has to be able to handle the chaos.
When interviewing candidates, here's how Bellows decides whether there's a personality fit:
1. Are they genuine?
At the beginning of the interview, Bellows likes to throw in the test question: "Have you tried the product?"
He told us that a lot of candidates will lie, but it's hard to lie through a technical question and eventually "the cracks begin to show."
If they don't lie and are genuine about their answers, then they prove that they're not "just putting their best face forward." Bellows said that this is where you get a sense of what they think is interesting and whether they'd be a good fit for the company.
2. Do they have a sense of humor?
This isn't whether or not they can tell a funny joke, but rather, they need to show that they don't take themselves too seriously.
"Life in a startup requires flexibility and if they're too serious, they won't be able to bend with the wind as things change."
Yesware is a two-year-old startup and currently has 12 full-time employees ranging from the ages of 22 to 45. The company is made up of approximately 75 percent engineers and 25 percent marketers.
It's hard to hire in tech.
A startup called Twice is offering a $1 million cash and equity signing bonus to anyone who launched a startup through accelerator programs Y Combinator, 500 Startups, or TechStars and now needs another job.
Twice is calling it a $1 million "acqui-hire."
It's a smart move.
There will probably be lots of competition for the offer.
Here's the press release from Twice:
Twice Launches $1MM Restart Fund for Top-Notch Startup Talent
San Francisco, CA -- October 8, 2012 -- Twice, the first concierge-style marketplace for buying and selling secondhand fashion, today announced the launch of Restart Fund, which will offer $1MM to acquire any Y Combinator, 500 Startups, or TechStars company or similarly well-qualified team. Most Silicon Valley insiders are familiar with Start Fund, which provides $150,000 in funding to every graduating Y Combinator startup, and the name Restart Fund is a tongue-in-cheek nod to this initiative.
Since its inception nearly two years ago Start Fund has proven to be a savvy move, but it has also fueled a spurt in seed funding that has resulted in many promising teams unable to raise a Series A. And even in the best of times, popular wisdom holds that 9 out of 10 startups fail -- often due to circumstances well outside their founders’ control. The Restart Fund is a bold step toward filling this gap in the startup ecosystem--bringing top-notch engineering and design talent together to focus on a business with proven traction, a large market, and ample resources.
“Given the current state of Silicon Valley’s hiring environment, it’s a super smart move for Twice to acquire a talented team with proven execution ability but whose own products haven't found traction,” said Elad Gil, founder of Mixer Labs, former Twitter VP, and Twice investor.
Restart Fund was developed by Twice’s founders based on their personal experiences as entrepreneurs. “My co-founder Calvin and I quit our jobs at Google and began working on a micropayments business, but we were never able to hit product/market fit. We were left wondering what to do,” said Noah Ready-Campbell, CEO of Twice. “We were approached by several big companies about talent acquisitions, but we knew we still wanted to work on something that had a lot of opportunity for growth. If Restart Fund had been around, it would have been a very interesting option.”
Due to the rigorous application process, membership in a top startup accelerator is the primary criterion for an offer from Restart Fund, though acquired teams must also pass Twice’s standard hiring screens. “We were accepted into Y Combinator, so we saw firsthand the quality of our peer companies,” explained Twice CTO Calvin Young. “This happened right around the time our micropayments business was slowing down, so we ultimately chose to decline YC, but some of the best engineers I’ve ever met have gone through the program.”
This engineering strength is the primary reason Twice chose to create Restart Fund, as the operational nature of the company’s business poses significant technical challenges to overcome. “In order to take photos efficiently, for example, we’ve had to develop many custom image processing tools, and basically ended up building our own internal Instagram,” explained Mr. Young. Given that the company sells clothing, the look and feel of its site is extremely important. “In our view, designers are without question as important to the product team as engineers,” he added.
Question: What types of things should job seekers include in their resumes if they're trying to get hired by a successful startup?
1. Constructive Feedback for the Startup
"Startups love feedback, especially when it's actionable and more interesting than your generic, "You need SEO" idea. Successful startups need thinkers and movers, so in addition to providing great feedback, share how YOU can help improve the business and how you have already carved out a pretty neat role for yourself in the company."
2. Innovation Differentiation
"Bring something different to the table. Not only in your resume, but in pitching yourself. In addition, bring ideas with you. Approach the company having done your research, and make recommendations based on where you see opportunity. Then relate it to your experience and how you would contribute."
3. Forget Your Resume!
"Do something that makes you stand out. If you haven't done anything especially impressive to make your resume pop, impress with your initiative. Get to know the product extremely well and make recommendations. Build something. Send snail mail. The more enthusiasm and commitment you show, the more likely they are to decide you're worth bringing in. Resumes and cover letters are not enough."
4. Prove Your Proactivity
"You can be incredible intelligent and experienced, but unless you are proactive and able to think on your feet independently, it doesn't matter in the context of a startup. You need to "tell" that you are proactive by highlighting experiences where you have created something new or worked alone, and you should "show" that you are by quickly and energetically following up with your interviewer."
5. Embody the Corporate Values
"Culture is really important at successful startups like Airbnb and LivingSocial. Most of these firms publish their corporate values publicly, so make sure that you review the lists and incorporate the concepts into your resume. It will not only help you determine if you're a fit for the firm, but will also help the firm to really envision you among their employees too."
6. Share Your Story
"Show them that you either have a history of innovation, or perhaps make an innovative suggestion for the company when you reach out to them. Startups want to bring on people that can help take them to the next level."
7. Are You In It for the Long Haul?
"Demonstrate that you want to grow with the company. Nothing makes me happier than knowing someone respects the startup model and wants to be part of the company's core. Use the cover letter to show your interest in the company and why you think you're a good long-term asset. Saying you're willing to do things that aren't "your job" doesn't hurt either."
8. A Startup Spirit
"Startups look for a can-do entrepreneurial spirit in their employees. Instead of showing how good you are at following the rules, show off where you've taken initiative or started your own project."
9. In-House Referrals Always Help
"Stand out by providing a reference from one of their existing employees. Companies love hiring based on recommendations of existing staff, so network your way into a job to stand out. As an alternative, demonstrate your value and initiative by tackling a small project on behalf of the prospective employer and showing it off on your cover letter."
10. Remember Your Hobbies and Humanity!
"Big, funded startups can get skilled individuals for any role, but they are building their businesses for the long haul. Most will care more about culture and making sure there is a fit. Always include at least one line about your interests. Whether reading or camping, coaching youth or running marathons, these insights will tell the company more about you and will make you stand out."
11. Fearlessness of Failure
"A resume is merely a conversation starter that gets your foot in the door. Be ready to talk about experiences that show you are not afraid to fail and showcase how you've taken risks in the past. There is nothing wrong with showcasing a failed attempt at entrepreneurship because it shows that you can operate with an entrepreneur's mind within a more mature startup organization."
12. Can You Do the Hustle?
"Show them how you 'pounded the pavement' to get the job done. At successful startups, a seemingly easy task is often littered with obstacles that employees need to overcome. Demonstrate that you've gone above and beyond, such as driving hours to see a client in person or staying tethered to your laptop on a weekend to be responsive to customer inquiries. Hustle goes a long way."
The Young Entrepreneur Council (YEC) is an invite-only nonprofit organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.
Read more posts on Young Entrepreneur Council »
Bravo has released a trailer for its upcoming show Start-Ups: Silicon Valley that follows the lives of six young entrepreneurs trying to make a name for themselves.
But the footage reveals that nerds like to have fun, too. A lot of fun. The two-minute promo is filled with beautiful people drinking, partying, dancing, bikinis, crying, and of course, working.
That has made the show controversial in Silicon Valley's insider tech circles, where it is not culturally acceptable to discuss one's enthusiasm for pursuits outside of work.
The show's stars give lip service to this precept.
"I live, breathe, eat, s****, daydream my company," Dwight Crow says.
Crow also says he has a "work hard, play hard" mentality, which becomes evident when we see him throwing back a bottle of champagne.
Journalist-entrepreneur Hermione Way, who at one point is seen bawling her eyes out, says the future of the world is in their hands.
"Geeks are definitely the new rock stars," Way says.
The show, executive produced by Randi Zuckerberg, premieres November 5 on Bravo. Check out the trailer below.
There are too many new startups coming out each day to keep track of, but today we stumbled upon three which are actually pretty cool – world changing even.
Here they are, in order of world-changingness, from "oh, handy" to "wow, that'll shake up humongous industries."
Silvercar makes business trips easier. One of the more annoying parts of a quick business trip is the hassle of dealing with renting a car. It's expensive. There are hidden fees. It takes forever. SIlvercar, which just raised money from Michael Arrington and others, wants to make it simpler. It will rent just one kind of car, Audi A4s, and it will rent them to you through a mobile app. That's it.
Oyster is a Netflix/Spotify-for books. GigaOm reports that Peter Thiel has invested $3 million in a company called Oyster. Oyster will be a mobile app with its own library of books that consumers will pay a monthly subscription to get access to. The book industry is actually a kind of small industry with revenues in the tens of billions. Still, books have influence beyond their commercial value, so this is a pretty big deal.
Holy cow, Lit Motors could change everything in China, India, Europe, and in the U.S. Lit Motors is making an electric motorcycle with doors, two pedals, and a steering wheel. It has a prototype called the C-1. It will have a range of 200 miles on a single charge, and it will go 0-60 in under six seconds. It has built-in gyros to keep it upright at a standstill, at speed, and in a collision. It'll eventually cost $14,000. It's going to be an uphill battle, but if Lit Motors can get this thing on the road, it would turn the auto industry upside down, starting in the developing world, and maybe even in the U.S.
It's bad news for Yahoo, Yahoo shareholders, Marissa Mayer, Silicon Valley VCs, and tech startups.
There’s a lot to like and a lot to hate about Circa, the new company by Cheezburger Network and reality TV star Ben Huh and SocialThing and SimpleGeo co-founder Matt Galligan. It launches today and is on “a mission to fix journalism.” As with most things that aim to fix journalism and are run by people who aren’t journalists, I expect the press to have mixed views. I do as well.
But what it’s not is a copycat, a rehash, or derivative. People will compare it to things like Flipboard or Pulse, but Circa – love it or hate it – is trying to do something much different, much grander. Give Huh and Galligan credit for one thing: An original stab at the problem, not simply a prettier or more immediate way to display news on mobile devices. And it’s a solution they’ve been mulling for more than a year.
Chris Yeh knows this. He was once a nobody and now people pay attention to him because he's managed his reputation.
Over on Sulia he's written a brief guide for people who want to take advantage of the new paradigm and become viewed as experts and insiders – even if they don't know anybody or have any experience.
Because it seems like I'm one of the few people in Silicon Valley without any technical background*, a lot of "hustlers" ask me what they can do to be successful.
The first thing I tell them is to attach themselves like a lamprey to smart technologists--something I've been doing since 1995. And not in a "I'm looking for a technical co-founder" kind of way. More like a "Could you use a marketing weasel?" kind of way.
But people are so suspicious of us business types these days, you need to do more than that. As one young coder I spoke with noted, "If a person is wearing a suit, I know they must be at least partially evil." It's especially hard if you're young and inexperienced--at least old dudes like me can claim the value of having been there and done that, even if "there" is Chapter 11, and "that" is lose investor money.
So I give them my fool-proof plan to become an expert.
1) Pick a space
2) Register a memorable domain name and start blogging
3) Interview real experts and post the interviews
This gives you a perfect excuse to network within an industry and meet all the important people.
Sadly, I've only had one person ever follow my advice, though he's really run with it:
I even did an initial interview with him to kickstart the project--the link is to prove I knew Tim before he hit the big time:
Read more ›
Perhaps I would have had better success had I emulated Maneesh Sethi, and called the approach "The Sex Scandal Technique":
Read more ›
Maneesh is the younger brother of my old friend Ramit Sethi, and he clearly sprang from the same entrepreneurial stock. Here's how he describes his technique:
“So what’s the point Maneesh? Are you expecting a lot of readers to watch?”
“I don’t really care man: With my podcast, I have an excuse to meet my biggest role models, get an hour of free consulting with them, and great content for my readers.”
Maneesh has used this technique to do things like become a DJ and party with Tim Ferriss.
Hopefully, his younger and sexier voice can spread this knowledge to more of us "hustlers"!
* Technically, I do have an engineering degree from Stanford, but it was in Product Design, not Computer Science, and the last programming language I learned was Pascal, in 1992.
Some very powerful women sit behind many of today's most promising new companies.
Meet the inspiring women leading today's biggest startups to success.
Sophia Amoruso and Deborah Benton
Company: Nasty Gal
Titles: Founder and CEO, COO
Sophia Amoruso bootstrapped her clothing company to more than $30 million in annual revenue. Since raising outside capital, her company now generates more than $120 million annually.
This past summer, Benton joined Nasty Gal as COO from ShoeDazzle. She's been called the Sheryl Sandberg of LA, and she was a director of dotcom bubble darling, eToys, in the early 2000's.
Company: Stella & Dot
Titles: Founder and CEO
Herrin began her startup career straight out of college and, by age 24, she founded her own successful venture, Weddingchannel.com.
Now she runs Stella & Dot, a jewelry selling startup that's worth about $400 million.
Title: President and CEO
Springer has a strong sales background and she began her career at Ziff Davis. Now she's heading up Manta, a private tech company that's created an online community for millions of small businesses.
It was founded in 2005, so it's a stretch to call it a startup, but either way Springer has done wonders for the company, which is now valued at about $375 million.
See the rest of the story at Business Insider
Sean Parker's video chat startup Airtime only has 400 daily active users, Jenna Wortham at The New York Times reports.
Parker wouldn't provide specifics to Wortham, only suggesting it was off. We've heard grumbling from startups that AppData can be off by as much as a factor of four. Giving Airtime the benefit of the doubt, that would mean it might have 1,600 daily users.
Regardless of whether its 400 users as AppData says, or 1,600, it's a massive disappointment for the four-month old startup that has $33.5 million in funding.
While Airtime is struggling, we wouldn't count it out just yet. It's got a lot of money in bank and Parker seems motivated to prove he can be successful. Unlike Bill Nguyen, whose similarly overhyped and overfunded startup Color just flopped, Parker isn't checking out. He's still involved.
In July, Parker complained about entrepreneurs becoming VCs instead of building new companies. Earlier this month, Parker also called this era the most 'toxic' time in Silicon Valley because people just want to build something small and sell out to Facebook or another big company.
He could just be bluffing, but it sounds like he wants to build Airtime into a viable company.
It must be really frustrating for first-time entrepreneurs to look at Color or Airtime.
While they're struggling to raise money for their startups as unestablished names in tech, serial entrepreneurs like Sean Parker and Bill Nguyen are able to raise tens of millions of dollars on almost sheer clout -- and then their businesses flop in a matter of months.
Color raised $41 million and was just acquired by Apple for only a few million. While it's still early for Airtime, which raised $33.5 million pre-launch, one of the co-founders has already departed and the site only has about 400 daily active users.
Studies prove it takes first time founders much longer to raise rounds than serial entrepreneurs -- 21 months versus 37 months on average, according to a Harvard research report. But a lot of first-time, bootstrapped entrepreneurs don't have 37 months to spare before they run out of money and their startups fold.
Even the smallest sliver of Color's or Airtime's fundraises would give many first-time entrepreneurs -- who have enough drive but not enough resources -- a fighting chance.
Of course, there are a lot of VCs who have taken gambles on first time entrepreneurs. Some even prefer them because they're more naive, and they're not afraid of startups -- they don't yet realize how difficult founding a company can be.
But in cases like Airtime and Color, why would an investor throw so much money at already successful, financially stable founders when they could be investing it in young hustlers who still need to win?
For starters, serial entrepreneurs are statistically safer bets for investors. One Harvard study found that VC-backed entrepreneurs who have already taken a company public have a 30% chance of succeeding the next time around. First-time entrepreneurs' likelihood of success is only 18%. Even entrepreneurs who have tried once and failed have a higher chance of success than new entrepreneurs at 20%.
And as far as proven track records go, few people look like better investments than Nguyen or Parker. One of Nguyen's companies exited for $850 million in stock. Another, LaLa Media, was acquired by Apple for $80 million. Parker founded Napster and was Facebook's first President.
And although neither may be as financially driven as a first time entrepreneur, they have other reasons to strive for success.
"The expectation thing definitely weighs on me," Parker told Dealbook. "There’s a sort of fear of launching something and failing. How can you as an entrepreneur that’s had success, has a reputation, ever build the courage to go and do something again?” he says.
Then there's the fact that serial entrepreneurs fail fast. Betterworks, for example, shut down less than a year after raising $10 million. Its founders, which both had successful startup exits prior to Betterworks, probably returned a good chunk of change to investors when they called it quits.
Even Color could have gone much worse for its investors. Nguyen's company still has a reported $25 million in the bank, and it was acquired for $2-5 million, so most of the $41 million won't be lost.
First time entrepreneurs, however, don't always know when to stop and they may keep pivoting until all of an investor's money is gone.
In terms of the frustratingly large investments Color and Airtime received versus the few hundred thousand dollars first time founders struggle to raise, it comes down to the fat versus lean startup debate.
And, from the lean perspective, first-time founders might be better off.
"I have never, not once, been successful with an investment in a company that raised a boatload of money before it found traction and product market fit with its primary product...But it has happened...You can also win the lottery. The odds aren't great that you will. But millions of people play it every day. I don't."
Many startups fail before reaching that magic “cash-flow positive” position they have been striving for, despite seemingly reasonable financial projections. A closer analysis often indicates the cause to be a lack of diligence in handling common business finances. These mistakes are usually masked by excuses, like the economy turned on me, or my competitors played dirty.
I found a good summary of the most common mistakes in a new book by Kelly Clifford, “Profit Rocket,” written primarily to help you on the other side of the equation – skyrocket your profits. I’m sure all you accountants will agree that fixing the mistakes listed here does not require rocket science, but I’ve seen them so often that to be forewarned is to be forearmed:
Above all, avoid self-sabotaging behavior that you may not even be aware of, like blaming others rather than taking responsibility for all decisions, or not charging what your product or service is worth, due to lack of current market information or a personal bias.
For example, I find many entrepreneurs are certain they can make a profit on a 20% margin, even though most of their competitors target 60% margins, or even higher. Unless you are a Walmart, with very high volumes and an existing infrastructure, you won’t survive for long on a 20% margin.
It’s fair to use your vision, creativity, and innovation to change the world with new and better products and services. But don’t forget that the underlying laws of finance are harder to change, much like the laws of physics, so try not to ignore these basics. In business, when you lose money on every sale, it’s hard to make it up in volume and be profitable.
Read more posts on Startup Professionals Musings »
I often get asked about finding cofounders and I usually give the standard list of characteristics of what I look for in a founder. And I emphasize the value of a founding team with complementary skills sets – i.e. the hacker hustler designer cofounder archetype for web/mobile apps. But Jessica Alter, Cofounder & CEO of FounderDating, pointed out that cofounders did not mean two founders in the same room. She suggested that I was missing one of the key attributes of what makes successful startup teams powerful. She suggested that how cofounders fight was a key metric in predicting the success of a founding team. So I asked her to write a guest post.
I think about [cofounding] teams a lot – an insane amount. And, not surprisingly, I frequently get asked what to look for or what to think about when starting the process of finding a cofounder – a true partner to start your next company with.
Like second nature, I start to recite a list of important attributes: complimentary skill sets, common visions, the notion of not trying to make someone fall in love with your idea (because the idea will likely change and then where are you?). There are plenty more and they are important. But a few weeks ago after I sat on a panel about cofounders at Startup2Startup there was a small group dinner conversation to dig deeper on the topic. Garry Tan (Posterous, YC), in recounting his personal experience said, “success can cover up a lot.”
And it clicked in my head – one of the key things to pay attention to in a search for a cofounder is how you fight.
How you fight with your potential cofounder(s) matters for a lot of reasons, the simplest of which is that you have time to fight – meaning you’ve worked together long enough to hit disagreements or bumps. It’s one of the most common mistakes we see. I literally just received an email from someone (that I don’t know) asking to me to meet with them so that they can circumvent our regular process because, “I don’t feel like I have time for the regular FounderDating process.“ Quick advice to people that think finding a cofounder is a box to check and “don’t have time” – you won’t find someone and if you do the relationship is unlikely to last. You’re looking for an employee, not a partner.
We tell all our FounderDating members that we’re a great starting point to connect with amazing people all with high intent to start something. But in order to figure out if you can work together you have to (wait for it…) actually work together. That could be starting a side-project, heading over to a Startup Weekend or other hackathon, working full-time for a few months or some combination of those options. However you do it, you need to build something together. It doesn’t ultimately matter it if ends up being the right product, you will still have areas you disagree on throughout the process. Ask yourself: Have we had disagreements? If you haven’t, maybe you should consider a longer courtship period.
Consider what real startup life is going to be like. For a long-time (longer than you plan) things are not going to work and you’ll have to figure out what to do – together. If you do eventually reach a point where the company is making real progress, you’re still going hit crazy challenges on a regular basis that you’ll have to navigate together. This pressure – which is compounded by the sound of the ticking clock if you took money – will up the stress levels and hence the propensity to disagree.
If you don’t have at least a taste of what that’s going to be like, not only have you not done your homework, but also could be in for a rude awakening. So, let’s agree you’re going to fight. That, in and of itself, doesn’t mean anything. In fact, it’s quite healthy. What matters in real life is what are the fights like? Do they escalate rapidly or become knock down, drag outs? Can you recover quickly and keep moving? Entrepreneurship and early stage companies are about moving fast; if you’re caught in a disagreement for days at a time it means decisions are not being made and/or people are walking around feeling resentful. Either one will eventually lead to failure. Ask yourself: When we fight do we get over it quickly and respectfully?
What Are You Fighting About?
Finally, and this is insanely important, it matters what the fights are about. Are you fighting about whether a button should be green or blue or are you fighting about whether or not you want to raise money?
A lot of people approach finding cofounders as just a skill set need and believe once that box is checked, everything will be smooth sailing. Complimentary skill sets are important and if you’re fighting about one functional area (e.g. design, product) it might be a sign you have too much skill set overlap. But if it were just about complimentary skill set matching it wouldn’t be very hard.
What’s difficult is making sure you’re aligned on the softer side: Why do you want to build a company? What kind of company you want to build? What are your working styles? What are your values? What are your other priorities (family, etc.)? We don’t care if entrepreneurs want to build lifestyle businesses or go for IPOs, if they are tethered to their email or check out at 7pm – that’s a personal decision. But you better make sure you’re on the same page as your potential cofounder about those topics. These are the issues that break up relationships, not button colors.
Ask yourself: What are we fighting about and why?
Make no mistake; I’m not suggesting you should manufacture a fight. But every relationship has ups and downs, the ones that last are able to bounce back from the downs quickly and respectfully and be better for it. So give yourselves permission and time to fight and reflect on how you do it before you take the leap together.
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On Saturday, Mark Zuckerberg spoke at Y Combinator's Startup School event where he gave engineers and founders business advice.
One of the most interesting things he discussed was a personal fear.
Zuckerberg said he was afraid of getting stuck working on something insignificant.
“I have this fear of getting locked into doing things that are not the most impactful things you can do," he said.
"I think people really undervalue the option value in flexibility. Explore what you want to do before committing," he told the room of entrepreneurs. "Keep yourself flexible. You can definitely do that in the framework of a company, but you have to be weary of working at a company and getting locked in. You’re going to change what you do.”
Imagine hanging out with Larry Page in college while working on your Ph.D., sharing an office with him and then choosing to join a virtual-worlds startup called There Inc. instead of the thing Page was working on.
You know, the search engine with the funny name.
Hindsight is 20/20. Fortunately, for Ben Werther, life doesn't offer just one make-it-or-break it chance.
Today Werther is bringing his own highly anticipated startup out of stealth mode. It's called Platfora and it has some big-name backers including Andreessen Horowitz, In-Q-Tel (a CIA-backed venture fund), and Sutter Hill Ventures. Platfora raised $7.2 million in its first formal financing round about a year ago.
To be fair to Werther, he cut his teeth at some pretty well-known companies before heading out on his own including Siebel Systems, Microsoft, and Greenplum, an early big-data analytics startup bought by EMC in 2010.
Platfora is a search engine of sorts, too—but instead of searching the Web, Platfora searches data stored in Hadoop databases.
Hadoop is an open-source version of MapReduce, a technology developed at Google. It allows companies to store humongous amounts of data on inexpensive servers and storage but as they store more data, they face two problems: 1) people can't easily turn all that data into charts and 2) it can take a long time—minutes—to get results when you ask a question.
Platfora solves both of these problems by letting business users run fast searches and reports against Hadoop and producing visual graphs and charts, too.
Plus, it's easy to set up. Where most business-intelligence software takes weeks to install and requires specialists to set up designated reports, Platfora can be ready to go relatively instantly, Werther says.
"We got the first standing ovation from a customer that I've ever got in my career," Werther told Business Insider. The customer had "petabytes of data" stored in a data warehouse. "We went in there with our software on a USB stick. Within about three hours they were looking at their data visually."
Platfora is one of a new crop of tools that have venture capitalists really excited. Ravi Mhatre, managing director of venture firm Lightspeed Venture Partners previously told us that he expects these new visualization tools to disrupt the $30 billion "business intelligence" software industry that is dominated today by SAP's Business Objects, IBM's Cognos, and Oracle's Hyperion.
"We're talking an industry today that's probably $20 [billion] to $30 billion that I think, overnight, is going to be replaced by a completely new set of platforms," he predicted.
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I mentor many college students, including those at Colgate University (my alma mater) for the school’s own entrepreneurship program, TIA – Thought Into Action Institute.
There are a few classic mistakes that just about every young entrepreneur makes when starting a business. Avoid making these to save yourself precious time and money.
Mistake 1: Spending too much time developing the product and not enough time selling it
Most young entrepreneurs spend far too much time in the “lab” before ever getting out in the field. Tinkering too long with a prototype and deliberating on patent filings are common mistakes that should be avoided, and are typical for young people who spend most of their time in the classroom. After all, you’re generally rewarded for the amount of time you study and are given weeks to complete assignments rather than days. School is an environment that lends itself to deliberation rather than execution. Never be afraid to put your best complete product in front of customers and try to sell it. If you don’t have sales (acquisitions, users, etc.), then you don’t have a business.
My motto is, “Sell first, build later.” There is no such thing as a perfect product, just a complete one, which is why I’m such a big advocate of Eric Reis’ The Lean Startup, and the MVP (Minimum Viable Product.) An MVP is an example of the minimum product that you can show a customer that works and that he will pay for.
If you spend too much time trying to perfect a product before getting customer feedback, then you’re going to waste precious time that you could be spending interacting with your customers finding out what will get them to write you a check and to come back for more.
Mistake 2: Being afraid that someone will steal your idea
Too many students let fear guide their decisions when bringing a product to market. Never be afraid to test your product before you think it’s ready. The naysayers will tell you that it doesn’t work, and, those who love it and give you useful feedback will be far too busy to ever take your idea and put it into action anyway.
Creating a company is hard work, and very few people are just going to take an idea that isn't even proven to make money yet. If you need to find a developer, file a patent and incorporate, sell your product to clients, and do all the other things that a startup needs to do to get going, then your copiers will too. Ideas are everywhere, but there's no such thing as a million-dollar idea, just million-dollar execution. And you need to get your product in the marketplace in order to gain traction and execute.
Mistake 3: Thinking that you are your customer
You are not your customer. The way you would use something is not necessarily the way that your customers will use it. Let them tell you what they will pay for, and then deliver it to them. If people aren’t willing to vote for your product with their wallets by buying it, signing up or making some other economic decision, then you must find another model. I encourage most students to take a step back and instead of creating a complicated business, just go out and sell something. Buy an inexpensive product for which you can retain a margin, and sell it. Get in the habit of selling because business is about sales.
Mistake 4: Trying to monetize ideas rather than monetize sales
If you ever want to take a test to find out where your business is really at, write an email to a few of your close friends and describe to them the next two months of your operations. If your email contains too many "could be's", "might-be's" "needing to find the right developer" type sentences, then chances are you have a project and not a business. When you have a business with sales, you will talk about what you need to do to monetize more sales. You move out of dream space and into reality.
Once you have a business model that actually works, the excitement of endless possibilities of monetization will be replaced by what you need to do specifically to sell more of what people are already buying. Until you find out what those revenue streams are, you need to keep iterating until they become apparent.
To talk about the many ways to monetize something before figuring out plainly how your customers will pay you for it is always premature. Monetize money first, then monetize your additional ideas later.
When I started my business with two other partners at age 24, I was a great consultant—but a mediocre business owner. Like many others who start their own businesses to do what they love, I was completely focused on executing the work, and I had a lot to learn about running the business itself.
Over the past few years, I’ve run into more than a few surprises while running the business with partners, and I’ve learned a number of lessons about what it takes to run a successful new business:
1. Cash flow is, and always will be, king.
When you’re used to having your paycheck deposited directly into your bank account every two weeks, dealing with the cash flow of your own business can be a bit of a shock. If you work with clients, invoices will be paid late (it’s not a matter of if, but when), and even highly profitable businesses can become strapped for cash at times—especially early on. Every entrepreneur should have a personal emergency fund in place in order to keep a cool head before business cash reserves build up.
2. Your business needs a long-term vision to thrive.
When we started our business, we had no vision beyond the next year or so, which led to fear and stupid, short-term decisions. You can’t predict exactly where your business will be in the long term, but at least make sure you discuss the vision with your business partners so that you’re all working toward a common goal.
3. Fear and lack of focus are your worst enemies.
It took us nearly two years to realize how much fear was driving our business decisions. We were taking on design projects that were distracting from our larger focus, simply because we were afraid that if we turned them down, the next big opportunity might not come along. Once we finally got over this fear and started turning away the design work to focus on our bigger vision, our business really started to take off.
4. Create HR policies early on.
We were essentially clueless when we hired our first employee four months into starting up. We thought we were creating a laid-back culture by avoiding a set number of vacation days or other policies for our staff. But the truth is, defined vacation days give employees a guiding framework that can reduce the stress of trying to decide what is too much or too little vacation time. When we finally met with an HR consultant, we realized that our lack of policies could leave our company vulnerable to legal gray areas.
5. Invest in a good business lawyer.
Our clients hire us to be the expert in our area, so why shouldn’t we seek outside help in areas that aren’t our expertise? We started our business with a $3,000 personal investment, and all of it went toward having a lawyer draft up our business contracts. My only regret is that we didn’t spend more to have the lawyer review everything at the start of the business. Make sure you’re protected for both worst and best case scenarios.
Allie Siarto is the co-founder of Loudpixel, a social analytics company focused on social media monitoring, insights, measurement and infographics. She also runs a project called Entretrip, a co-traveling for location independent entrepreneurs.
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What extraordinary abilities does Jack Dorsey possess that have enabled him to tackle and disrupt the payment processing industry?
Certainly nothing in the Twitter co-founder’s career history hinted that after conquering the social media world, he would build a successful disruptive payments company—much less one that is valued at more than $1 billion by investors just three years in.
Square, a free dongle that attaches to any smartphone or tablet, allows users to accept credit card payments for a nominal 2.75 percent fee, without lengthy applications to fill out, background checks or setup fees.
Likewise, the hugely popular on-demand car service Uber wasn’t born out of a transportation company. iStock Photo wasn’t spun out of Getty Images, Airbnb wasn’t incubated by Starwood Properties or Hilton—and my company 99designs wasn’t a fancy design agency creation.
Regardless of what industry you examine, you’ll find it’s typically not the experienced players—the people with existing high-powered relationships within their target industries and multi-million dollar R&D budgets — who end up creating the “next great thing.”
Why is it that established companies fail to innovate, despite lofty mission statements, massive R&D teams and budgets, and deep industry connections?
It comes down to what I think of as the “we’ve always done it this way” syndrome. A payments company like First Data likely couldn’t begin to imagine doing away with setup fees, monthly statement fees, terminal rental charges and an arduous and painful application process that can take weeks. After all, they – along with every other payment provider – have created successful, profitable mega-companies by following a set formula. Why on earth deviate?
More often than not, it takes an outsider with little to lose to see things differently, tackle and eliminate the pain points in an existing industry, simplify processes and cut costs. After all, it wasn’t eHarmony or Match.com that decided to launch a free, ad-supported dating site, figuring they just might pull in significant revenue. Instead, Markus Frind created POF (formerly known as PlentyOfFish) as a recent college graduate, and manned the dating site for four years on his own before making a hire.
It’s now a multi-million dollar business with 30 million members who send an average of 15 million messages to one another a day and rack up a collective 10 billion page views monthly.
Of course, there are plenty of outsiders who have launched “disruptive” companies that, in reality, did so little disrupting that they quickly fizzled out. We only hear about those that shake things up so severely that the affected industry will never be the same again – the equivalent of, say, a magnitude-7 earthquake hitting a major city. So what’s the key to success for outsiders who manage to go big and win big?
Questioning the status quo, cutting costs, eliminating hassles, bypassing middle-men, and removing fees certainly go a long way. But being naïve, clueless or wildly – and perhaps inappropriately – ambitious also helps.
When my company SitePoint became the first major Web design book publisher in 2002 to sell millions of dollars worth of books a year direct-to-consumer (rather than relying on distributors and retailers), the company was executing a business model that was a 180-degree spin from traditional publishing houses like O’Reilly, Wiley and Pearson, which relied on retail stores for the majority of their sales and revenue.
According to the Harvard Business Review, disruptive companies earn 20x more money than their stay-the-course peers. Those peers moan and groan – and may even hire high-paid Washington lobbyists to try to keep their new competitors at bay. Some continue to fight relentlessly, while others finally just whip out their wallets. Witness Getty Images’ acquisition of iStock Photo in 2006 after seeing how successful a crowdsourced professional photography company that sells images from millions of independent photographers via a self-service platform could be.
In a similar vein, Match.com bought POF free-dating competitor OkCupid in 2011 (much to the grousing of many OkCupidites.) But many disruptors aren’t selling out. And who knows—we may soon find that they’re the ones buying.
Where will you find the disruptors of tomorrow? Everywhere—literally. Step outside, cast a glance skyward and you just might catch sight of a plane operated by newcomer SurfAir.com, an all-you-can-fly airline serving popular California cities (for starters) including Palo Alto and Los Angeles. Founded by Wade Eyerly, 33, who previously worked as a National Security Agency consultant, Department of Defense intelligence officer and political campaign worker, the airline provides members with unlimited short-haul flights on a private plane without the hassles associated with traditional airlines such as security, check-in counters, crying babies or toddlers who kick your seat.
Eyerly is undoubtedly shooting high. Yet SurfAir is a disruptive idea that just may—to the chagrin of the major airlines—take off. Will yours? There’s only one way to find out.
Matt Mickiewicz started his first company while still in high school, and has leveraged his early success into three profitable businesses which have have published 50+ web design books in 20 languages, paid designers over $30 million for their graphic design work through 99designs, and helped entrepreneurs sell over $60 million in websites and domain names on Flippa.
The Young Entrepreneur Council (YEC) is an invite-only nonprofit organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.
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Let's face it: The tech scene is dominated by men.
Adeo Ressi, CEO of the Founder Institute, hopes to change that over the next few years.
He's well-positioned to do so as an insider's insider in the tech industry.
Then he started the Founder Institute, which is aiming to export the Silicon Valley startup model around the world. As such, he's actually in a perch where he can help launch the careers of women entrepreneurs.
"There is a fundamental problem that (women) are so vastly underrepresented in leadership at technology companies," Ressi says.
Estimates are rough, but at the high end, no more than 7 percent of tech company founders are women—and depending on how you count, it may be as low as 2 percent.
"In my view, that's a travesty," Ressi says.
But here's the challenge: how to increase the number of women in tech without introducing a double standard.
What he's done at the Founder Institute is make sure, via marketing and outreach, that there are a large number of female applicants, which in turn increases the number of up-and-coming female entrepreneurs. The Founder Institute also launched a Female Founder Fellowship program in 2011 to attract more women to apply.
So far, it's working.
Since implementing the FFF program, the accelerator has increased the percentage of female-founded companies it backs from 16% to 36%.
Ressi hopes the Founder Institute can be a catalyst for change among other accelerators and incubators, but says that it won't happen overnight.
"I want to see a point in the not too distant future where 50% of all the new startups are founded by women or have women in the founding team," Ressi says. "I don’t believe that there will be equal opportunity right away because the number of people who are funding those businesses will still be majority male."
Ressi also hopes to see the number of female investors increase and become equal to the number of male investors within the next few years, because funding discrimination is a huge issue that female entrepreneurs face.
That, Ressi believes, will be the tipping point.
But changing the venture-capital world—a cause Ressi has championed—is a chicken-and-egg problem. Venture-capital firms hire very slowly, and partners frequently recruit successful entrepreneurs whom they've previously backed, who are typically men like themselves—a dynamic which accentuates and perpetuates the gender imbalance.