Archive for January, 2010
35 Gut Checks When Founding Your First Company
If you are thinking about founding your first company, standing at the edge of the entrepreneurial swimming pool, trying to decide if you should dive in, here is a checklist (sort of a Meyers Brigg for founders) to help you figure out if this life is for you. It is based on my observations of the thousands of entrepreneurs who I have gotten to know over the past 4 years. I would say, if you’re answer is “No” to more than 10 of these statements, think very carefully about making the jump. There is no science or data to support this checklist. Strictly my own observations of what is required to enjoy and excel in this experience.
1) I tend to thrive in an unstructured environment
2) I am capable of teaching myself almost anything I want to learn
3) I do not need positive reinforcement from others in order to be happy/effective
4) I am primarily competing against myself
5) I am completely self-motivated
6) More often then not I get what I want
7) Money is not the primary metric by which I measure my professional success/progress
8) I am comfortable living a life that most of my friends and family will not understand or be able to relate to
9) I am a fantastic listener
10) I seek out help at the first sign that I need it
11) Work is by far and away my greatest passion
12) I handle disappointment well
13) I have more energy than most people
14) I love to win and hate to lose.
15) The concept of “the path” revolts me
16) I am above no task or role
17) I have friends and family who will support me even if I do not give them as much attention as I should
18) I have no fear of running out of money
19) The word “can’t” is not in my vocabulary. There are things that are extremely difficult to achieve, but nothing is impossible
20) Pressure does not derail me
21) I am not intimidated by anyone
22) I enjoy solving hard problems
23) I do not frustrate easily
24) I exercise regularly
25) I fundamentally believe in myself
26) I am highly experimental
27) I am a doer, not a manager of doers
28) Laziness and complacency disgusts me
29) I am an excellent judge of character and talent
30) I am rarely tricked. It is very difficult to deceive me.
31) I have an extremely low tolerance for incompetence
32) I have an extremely accurate perception of my strengths and weaknesses
33) I am not too proud to admit what I don’t know
34) Everyday accomplishments bore me.
35) I am going to change the world
Read Full Post | Make a Comment ( 31 so far )Charles Darwin Would Have Loved the Mobile Internet
Lately I’ve been thinking a lot about the human population as a system. I’m assuming there is a large body of work and thought that has been devoted to this subject matter. I have read none of it. I tend to subscribe to the concept that our species is acting as a whole, and from an evolutionary perspective, most of the changes/advances that we are experiencing are the result of our mental (as opposed to physical) capacity. So instead of growing a longer beak to adapt to secure food in a changing environmental context, we are genetically engineering corn to secure food in a changing environmental context.
With that in mind, I can see no greater step function in the advancement of our species than the rise of an information architecture that enables seamless transference and sharing of learnings between individuals and groups within our broader 7 billion person population. I’ve been thinking a lot about how the existence of this central data infrastructure is impacting our individual experiences and contributions to the system as a whole, and at the simplest level I’m arriving at the subject of decision making.
I’ve asked a bunch of people to estimate the number of decisions that a human makes in a day, and the responses have ranged from 100 to 1 Billion. I’ve googled this question and can’t find a generally accepted answer, largely because it hinges on one’s definition of a decision. These conversations quickly arrive at the question of conscious vs. unconscious “decisions,” and for the purpose of this discussion, let’s say that a decision requires conscious thought. Even by this definition, life looks a lot like one giant decision tree, and by that thinking, the optimization of decision making is an optimization of human life (and if the species is a system made up of 7 billion human lives, the optimization of individual decision is an optimization or evolutionary advance that will sustain our species)…I think
So I would argue that the development of a central information system shared by all humans within our system has fundamentally changed the way we make decisions…It used to be that there were two fundamental inputs into the decision of an individual: 1) that individuals prior/internal past experience and knowledge, and 2) the data readily available in his/her physical environment. So a caveman is deciding where to hunt for food: he 1) references his past experience of where the animals tend to hang out, knows he needs to find a watering hole, etc… and then 2) surveys his physical environment for data to inform his decision. The data readily available in our physical environment is absorbed through our senses, and manifests itself primarily in audio/visual/olfactory inputs. So after referencing his internal experience/context he looks for animal tracks (visual data), listens for calls or rustling in the bushes (audio data), and smells for scents and their relationship to the direction of the wind (olfactory data). The combination of these physical data sources and step 1 leads him to a decision to walk North.
Now let’s take the Cave man’s experience in 2010. Same goal: find a place to hunt…what’s his process for decision making? He still engages in step 1, and references his past experience and knowledge, still engages in 2 and take in the data readily available in his physical environment…but all of the sudden there is a 3rd readily available data source on which he can rely to find the animals. The mobile device in his hand is a gateway into a shared information system in which he can reference the real time experience and learnings of the other hunters in the area. He read’s his twitter feed, and see the Caveman 2 just killed a zebra 700 yards west of him, references his internal experience to know that zebras move in packs, and now he is in a position to make a better (optimized) decision on what direction to walk. Blow this experience back up to the system level, and now our species is more efficient in securing food and sustaining itself.
So now, there are two types of data ingestion that impact the optimization of our decision making processes and our lives: 1) a “pull” scenario like the caveman and the zebra, where we are actively seeking a piece of information to influence an immediate decision (the most clear example of the information architectures impact on our decisions), and 2) the “ambient data ingestion” scenario, where in the absence of a data requirement for a specific decision at hand, we are pulling on data with our excess bandwidth at any given moment (we can process something like 126 bits per second) that while not applicable to an immediate decision, is applicable to future decision within our day/week/month…An example being, I have a minute that I am waiting for the subway, I may be consuming less data in my physical environment than I am capable of, and I decide to read my blog reader. I ingest textual data in the form of a restaurant review, and when I get home an hour later, and it is time to make the decision of where to eat, I am better equipped to do so (with that piece of data pulled from the central and shared database). So the presence of a central data source is optimizing present and future decisions.
I think subconsciously, it is the availability of this data and it’s impact on the decisions in our life that is driving the “addiction” to mobile devices, and to a lesser extent the internet at a whole. Watching for that red light on your blackberry, waiting for the next email, is not necessarily a human waiting for an answer, but maybe just a human looking for a new piece of data, and a new decision to address. Which brings me to a broader question of the effect of this central database on the volume of conscious decisions we make in a day (my guess is it has increased that number), and more broadly the effect of an increased volume of decisions in the system on the output of our species as a whole…
anyone have any good reading on this stuff (ideally articles, not books)?
Read Full Post | Make a Comment ( 3 so far )Founders Beware: True “Advisors” Don’t Ask for Free Equity
Fred Wilson wrote a post over the weekend about the importance of role models to early stage founders. The discussion around this post led to the subject of Advisors and Advisory Boards, and I thought I’d take a minute to shed some light on the bright and dark sides of startup advisors. This post came on the heels of a meeting I had on Friday with a young entrepreneur here in New York with whom I was sharing some fundraising ideas. At the end of the meeting, we agreed that I’d spend a little more time reviewing his pitch with him and maybe making some introductions to angels, to which he responded “okay, so let me know how you want to structure that and we’ll go from there?” I asked what he was talking about, and it became clear that he expected to pay me for my advice/help. I further learned that another now-well-known entrepreneur/investor here in New York (for whom I sort of had respect) had taken a piece of his equity in exchange for “formal advisory services,” and although I didn’t say anything at the time, I was thoroughly disgusted by this “advisor’s” behavior.
Here is my advice to startups trying to secure advice and mentorship from experienced entrepreneurs and executives: advice and guidance in our community is abundant and free…equity in your company is not. This is not to say that you shouldn’t use early equity as a form of compensation to get your company off the ground, but be watchful of the scenarios in which you do so:
Scenario 1 (Complete Bullshit): You meet with a guy/girl who you think could add a lot of value and/or credibility to your project. At the end of the meeting, they say “I’d love to get involved. Typically I’d look for 1-2% of a company at your stage, and that 1-2% gets you an hour of my time every week and some great introductions and relationships.”
Savvy founder’s response: Run for the hills. This “advisor” is a complete predator. The value they add will not be worth the equity they are asking for, but more importantly, they are trying to take advantage of your lack of experience in this world. General rule of thumb: anyone who directly asks you for equity in your company without investment is a scumbag. Stay away.
Scenario 2 (Better, but still not good): You meet a guy/girl who you think could add a lot of value and/or credibility to your project. At the end of the meeting, they say, “Good luck, let me know if I can be helpful.”
Savvy founder’s response: Build a relationship with this person, continue to seek whatever amount of guidance they are willing to provide out of interest and belief in your project. If you find you are asking more of them than they are able to give, perhaps offer them the opportunity to invest on favorable terms in your company. If they believe in what you’re doing, and they have made enough money to part with $25-50K, they will be honored that you are asking…don’t be afraid to. But, if they say no, don’t say “okay, can I give you some equity to be formally involved?” If they aren’t going to pony up as an angel investor, a couple fractions of a point (point=1% of equity) is not going to incentivize them to go beyond what they are already willing to give in terms of time/advice/introductions. Granted, if you make this offer and they accept, they are not a scum bag (as is the case in scenario 1, but the truly righteous and high quality mentors in our community will not accept your freebee. So there is an adverse selection process that occurs when you try to build an advisory board through free equity allocations.
Scenario 3 (Makes Sense): You are missing a key piece of DNA in your company necessary to execute on your plan (i.e. non-technical founder engages outsourced development shop and does not have the domain expertise to effectively manage the project).
Savvy founder’s response: This is actually a scenario where I would advocate parting with some equity to get a “technical advisor” to help manage the project. But this is not really an advisor at all. The person you bring on will be performing a day to day role within your company. In reality, they look more like an independent contractor who is willing to accept equity (as opposed to cash) as payment.
My argument is not that an early stage founder should be stingy with his/her early equity…in fact quite the opposite. At the onset of a venture, the financial outcome of your company is pretty much binary: either you build something and successfully exit (make a lot of money), or you fail…a couple of points allocated toward increasing the likelihood of a positive outcome are well spent…just make sure they are being spent on actual work and output, as opposed to advice and guidance.
Read Full Post | Make a Comment ( 14 so far )This Makes JumpPost Happy
I’ve decided to leave my apartment when the lease expires on March 31. I sent an inquiry about an apartment I found on NakedApartments (I swear this is a real exchange and I really am looking for a new rental). Listing broker responds with the below:
Jordan,
Glad you contacted me. It’s good that you’re thinking ahead to your 4/1 move-in date. Anything that you see listed now is likely to be rented by the end of the week. I don’t want to waste you time by showing you a place that you’re not in a position to rent. Here’s what I’d suggest: Go to my company’s website, Rapidnyc.com. You’ll see that we have over 4,000 listings, many with low or no fees. You can browse apartments all over Brooklyn and get an idea of what’s out there. Then contact me again in March and I’ll find you an apartment in one day.
If you have questions, or would just like to discuss your apartment search, “make contact” with me so we can talk on the phone. I’d be happy to chat with you about what you’re looking for.
best,
Irene Antoniazzi
Rapid Realty
Wouldn’t it be sweet if I didn’t have to wait until 30 days before I am out on the street to start looking for a new place????? Yea…That’d be sweet….would also be sweet if I didn’t have to pay Irene 8-15% of a years rent…
Soon…very soon…
Read Full Post | Make a Comment ( 5 so far )Twitter Slows, What Blippy Thinks It Knows
Premise: Twitter’s fundamental innovation was a lowering of the effort required to establish a public voice.
So if you looked at the universe of public content creators, imagine a series of concentric circles, each representing an expansion in the volume of published voices.
Concentric Circles of Publishers
The inner circle would represent traditional journalists and authors. It used to be the comittment and effort required to publish your voice was a dedication of your entire vocation to that effort. Blogging platforms like wordpress and blogger then came along and lowered the required commitment from a vocational dedication to simply creation of long format articles that mirrored the structure of professional content creation, but without the effort of establishing employment/partnership with a 3rd party publisher for distribution. That innovation increased the universe of content creators from XX professional writers (lets call it hundreds of thousands), to XX+YY writers+bloggers (I just read an estimate that in Feb 2006 (pre microblog explosion) there were an estimated 200M blogs in existence). The addressable market for blogging platforms like WordPress and Blogger was constrained by the effort/time required by a user desiring a voice to consistently create long format (multi paragraph) content. At some point, their penetration reached a market of consumers who fundamentally desired a public voice, but who were not willing to put in the time and energy to maintain a blog. Then along comes Twitter and other mircroblogging platforms with an innovation that reduced the comittment required to have a voice from hours per week (on blogging platforms) to minutes per week. Twitter established the next concentric circle of publishers who desired a voice and were willing to put in a few minutes a week, but not a few hours per week, in order to maintain it and reach an audience.
Which brings us once again to the limits of Twitter’s addressable market, as defined by the population of people who may still desire a public voice, but who are not even willing to allocate the amount of effort/time that twitter requires in order to establish and maintain it. So Twitter’s addressable market of users in confined to the total number of people in the world who desire a public voice and the percentage of those people willing to put in the required active effort to maintain it (leaving aside the user who is only consuming content on the site but not creating it…which is a whole other discussion). I have no idea if the graph below is indicative of the company pushing up against those limits, or if there is some other explanation for the slowing in their growth curve, but I have no doubt that there are services on Twitter’s heels that seek to reach the next concentric circle of consumers desiring a voice, but who are too lazy even to actively engage in a microblogging platform.
One such service that seeks to reduce the active effort required to publish a “voice” is Blippy.com. Amongst the venture/startup world, I would say there is a lot of anticipation around blippy, which I believe many are incorrectly viewing as the platform which could create the next concentric circle of publishers by making a feed of content that is almost passively (read: zero active effort) broadcast to a user’s “reader base.” Once you sign up to Blippy, a feed of your purchases is published to followers. So the user does not have to actively put any ongoing effort into publishing content (not even writing 140 characters), so long as they let Blippy pull transaction level data from the creditcards, online accounts, etc…While that may be interesting to a body of readers in a similar way as to how ones tweets are interesting to followers, I would argue that a stream of purchase data is not a true “voice” and does not empower users on the publisher side to “speak to an audience,” which is the value that I think sustains blog and microblog platforms. So Blippy might look like a “micr0-micro blog” that would blow out another concentric publishing circle, but I don’t think that’s gonna be the case. Now, there may well be other forces that contribute to Blippy’s growth and allow it to become an interesting consumer service, not the least of which, is people’s general desire to communicate their consumption behavior (“i bought this expensive thing, and i want everyone to see that I did because it says something about my success and ability to spend”), but that type of value proposition does not seem to have the same potential scale as a true innovation in the race to give a wider universe of consumers a public voice. If anything, I’d guess that this type of passive data capture (also at the core of the burgeoning location based services market) will end up being a feature/input incorporated into true “voice providing platforms” like WordPress, Twitter, and whatever is after Twitter, as opposed to standalone replacements to the existent publishing platforms.
Read Full Post | Make a Comment ( 8 so far )FundlessFund Hijacks My Blog Today
Since my blogpost on Friday introducing The Fundless Fund (FundlessFund@Gmail.com), a lot of folks have stepped up with interest in contributing to the Fund, and a lot of folks have been asking exactly what The Fundless Fund is….the short answer is…The Fundless Fund seeks to add as much value to the growth and development of early stage companies as a Y Combinator or seed stage investor, without any equity or payment in return…it’s an accelerant powered by fellow entrepreneurs, created in the vein of furtherance of our collective effort.
Based on the response I’ve seen so far, it seems like there are a bunch of related parties (investors, lawyers, accountants, established companies) that would like to pitch in. That will be awesome for our “fund”, we just need to figure out exactly how to incorporate these parties into the mix without diluting one of the main values of The Fundless Fund, which is a complete alignment of incentives between the Fund and our entrepreneurs. What I don’t want this to become is another “me too” organization sponsored by Sillicon Valley Bank or some law firm who’s primary purpose is simply to get a bunch of decision makers together in the same room (a room that happens to don the banners of those service providers). I also have no interest in recruiting the 5 sexiest names I can get to sit on a panel, inviting a bunch of people to listen to a dog and pony show, and then prove to the 400 people who attend that my platform is strong enough to get 5 sexy people and 400 others to attend my event. Rather, The Fundless Fund will take those 5 sexy people who are willing to donate an hour to our platform, identify the 5 most promising entrepreneurs who will benefit from an hour of their time, and we will use our “bullet” with those sexy people to get the 5 entrepreneurs into 1 on 1 meetings where progress can actually be made. There is a place for networking events, and those groups and events are undoubtedly adding value to the New York Startup Ecosystem, but that is a saturated market that we’re not interested in playing in.
What we’re interested in doing is focusing a ton of high quality resources and attention on a much smaller number of people/companies…our goal is not to generate as much deal flow as possible, or to build the biggest community of NYC startup people…it’s rather to identify the brightest stars (whether first time or experienced) in our community and give them a leg up on fundraising, recruiting, and job search (if they’re not yet with a startup), all the while focused on a general transference of knowledge across the fund. We want to help the best of the best to not get lost in the shuffle and noise of a not-fully-networked New York Startup community. Why? Because it is our belief that those people with the most potential will build the biggest, most sustainable companies in the long run (but not without help). Our city needs to birth a few multibillion public technology companies to cement an enduring infrastructure around this burgeoning startup energy, and it is our responsibility as entrepreneurs to maximize the likelihood of that occurrence. Our fund is not a flash in the pan, looking for the next deal to bank/lawyer/account/invest in. We have a long term view of this city’s ecosystem and we’re going to do our part to make it as easy as possible for resources (capital, talent, advice) to find the stars that are going to build New York’s homegrown Facebook, Google, Amazon, etc…
There’s a lot of plumbing that still needs to be worked through, but we’re off to a good start. What you can do today to participate is as follows:
If you’re a startup/pre-startup that has raised less than $500K in the New York area, there are 2 actions for you to take today:
1) Email fundlessfund@gmail.com with a short description of you’re company or future company, a link to some online public presence (site if you have one, linkedin profile, blog, etc…), and a brief description of your needs:
- People: (description of hires you’re trying to make)
- Capital: (no details needed, just are you going to need to raise money in the next 6 months)
- Advice: (general guidance and mentorship)
2) Email fundlessfund@gmail.com and request to be added to our distribution list. Even if you’re not in a position to join the fund’s portfolio today, stay connected and we’ll keep you up to date on how the fund is evolving and the best ways to get involved.
If you’re a venture/angel-backed entrepreneur or if you used to be and can still speak to the experience, and you’d like to be involved in the operations of the FundlessFund (i.e. sit on the “investment committee,” donate your time to meeting with applicants and accepted people/companies, etc…):
1) Email fundlessfund@gmail.com with a link to some public presence online and description of what type of value/resources you’d like to contribute:
- Introductions to investors
- i. Angels?
- ii. Seed/Feeder Funds?
- iii. Venture Capital Firms?:
- Strategic Advice/Guidance & general mentorship of high quality early stage entrepreneurs
- Career Placement: do you want to help high quality talent land at your own startup or another startup in your network?
2) Email fundlessfund@gmail.com and request to be added to our distribution list. As we figure out the best ways to work with established entrepreneurs and executives, we’ll keep you in the loop and you can decided if/how you’d like to be involved
3) Email fundlessfund@gmail.com if you’ve build a platform like this in the past and would like to advise on the construction and implementation of the fund
If you’re an Angel Investor, Seed Fund, or Venture Capitalist spending time in NYC:
1) Would love your input and ideas: fundlessfund@gmail.com
2) If you want to interact with us going forward, request to add your name to our distribution list
NOTE: Thanks for your patience as we play catch up to demand…we subscribe to the concept of customer development…first step is to figure out what everyone wants, next step is to productize it and begin to scale up
Read Full Post | Make a Comment ( 1 so far )Introducing the Fundless Fund…get involved
I remember talking to Chris Dixon a while back about balancing his seed investing activity with running Hunch…at the time I looked at this from an investor’s perspective and thought to myself…”I would want my founder to be spending 100% of their effort and energy on the company that I put dollars behind.” He explained that his activity as an investor is what keeps his thinking fresh, and that the stimulus of these conversations and data points made him a better CEO.
I didn’t really have a chance to understand this phenomenon in my last company because I was playing in a market with little or no overlap to most venture ideas/startups. So even though I still thought like a venture capitalist, meeting with entrepreneurs and executives to discuss their companies and ambitions didn’t really present a whole lot of value to Untitled Partners. Now that I am building a true consumer internet company at JumpPost (where other founders’ thinking enhances and is directly applicable to my own efforts), I find myself engaging in and building a body of “investor like” interactions (despite the fact that I don’t have a fund to invest). I understand exactly what Dixon was talking about, to the point where I am actively allocating cycles of my week to meeting with entrepreneurs and people thinking about becoming entrepreneurs to discuss their businesses, pitches, products, fundraising strategies, etc…I don’t stand to gain financially from meeting with the next big thing (as I would if I was making angel investments), but I really like helping other entrepreneurs achieve their goals, and I get a ton of non-financial value from these meetings.
Charlie O’donnell wrote a post recently in which he called First Round Capital a “feeder fund for larger VC firms.” Meaning First Round, although a relatively small fund, has established great relationships with larger venture capital firms that are capable of writing the big checks that their companies might need. So the idea is, you join First Round’s platform and then one of the big guys (Sequoia, Benchmark, Accel) follows. Feeder funds, or seed funds, are the flavor of the month in the Startup Funding Ecosystem (see Dave McClures breakdown of this evolution in the market). I’ll say they are largely accompanying/taking market share from professional angels who perform a similar “feeding” function into other Angels, Seed Funds, and Venture Capital firms. This is all just to say that the startup investment landscape is largely driven by the referrals of trusted relationships. Investors rely heavily on signals to determine what is and is not worth their time, so the opinion of someone who’s judgment they trust (as signaled by an early investment in a company, or even a “hey, you should take a look at this…met the founder…it’s interesting”) is how investors decide which 10 of every 100 potential investments that come through their inbox, they are going to explore.
You might say that over the past 5 months I have been building a feeder fund…minus the fund…This was not a calculated move on my part, but rather a pretty organic evolution that has increased in scope as I have watched the yield derived from building my own company on top of a “platform”. A “platform” is any vehicle that creates a center of activity around a specific person or group of people. In the case of a venture capital firm, the actual fund is the platform that serves this function…So when you have $1 Billion behind you, a gravitational force pulls entrepreneurs, executives, and opportunities toward the people operating on top of that platform (investors, EIR’s, etc.). With exposure to all these parties gravitating toward the center of the platform, a VC is in unique position not only to identify relevant business opportunities, but also to realize those opportunities swiftly through the injection of capital or resources on hand. This is why being an EIR is such a cool way to build a company…the platform of a fund provides tons of exposure to interesting data/people/ideas provides fertile ground to develop a company.
In the absence of a fund, there are other types of “platforms” that an entrepreneur can leverage to increase exposure to opportunities and people. Polaris’ DogPatch Labs (great job at Hackers & Founders last night) is an example of a platform, where if you sit in a shared space attached to a brand worth $1 Billion (even if you are not the one deploying it), you catch some fraction of the gravitational force that the Polaris itself commands. Affiliations with networks of entrepreneurs like First Growth or even Meetup (to a much lesser extent), are ways of tapping into an existing platform’s pull, and hopefully using that pull to propel your startup further than it would go independent of any platform.
I have decided to build a new platform, Fundless Fund, and I invite you to participate in it. This blog is one of the cornerstones of that platform, insofar as it has reduced the cost and effort required to market the value proposition of a young platform to a wide audience. I’ve combined that marketing channel with some embedded pieces of value that I have managed to acquire through my experiences in venture capital and entrepreneurship, and now I would like to roll them into what I will call my “fundless fund.” At some point in the future, perhaps when I make enough money to fund this “fundless fund,” (or perhaps when I establish enough credibility to have others back it), maybe this platform will be strengthened by the financial resources to accelerate growth within it, but for now, I am happy to announce the first day of The Fundless Fund. The core values and opportunity that the Fundless Fund presents are as follows:
1) integrity
2) extreme candor
3) information not readily available elsewhere
4) exposure to potentially accretive ideas
5) exposure to a body of entrepreneurs and executives who have been filtered through the perspective and rigor exemplified by my posts (I’ve basically built a map of the smartest people I like in this world…which I think I will publish in a couple of weeks)
6) jobs: if you’re a star, we’ll give you a job or introduce you to some cool people who are looking to hire stars
7) money: if you’re company is fundable, happy to introduce you to as many Angel Investors, Seed Funds, and Venture Capital Firms as we can…If not, we’ll try to tell you what you need to do to get to a point where you are fundable.
This is pretty much an experiment in adding a new layer to Dave McClure’s Startup Funding Ecosystem. I’d imagine it is a layer in which any entrepreneur or executive who would like to further the entrepreneurial movement as a whole might be able to contribute (independent of whether or not they have yet made the bucks to do so economically). If there proves to be value in fomalizing this already existent layer in the stack, I will try to bring on some great people and partners to strengthen the effort.
As this fund is fundless, we’ll be very psyched to receive anyone who wants to throw some value into the mix. If you’re great at organizing events…awesome…if you want to hack together a shitty website for the “fund”…awesome…if you want to meet young entrepreneurs and are in a position to provide the types of value I outlined above…awesome…if you have ideas on how to actually do this well…awesome. If you want to vote this up on HackerNews, post it on Digg, or do anything else to get the message out to entrepreneurs and would be entrepreneurs that help is available and 100% free…donated by people who are trying to further out collective effort…awesome…Get involved by emailing FundlessFund@gmail.com (ideally with some link to your public presence online).
Note: I still spend 90% of my cycles on JumpPost, so patience with the speed of development/action is appreciated until we “staff up” a bit.
Second Note: If you think this is a dumb effort, or have any ideas about how to make it less dumb…please comment
Read Full Post | Make a Comment ( 15 so far )Effects of Entrepreneurship of Savings (Graph)
I’d like to appologize in advance of this post to my parents, and especially my mother, who is going to freak out when she sees this graph… sorry mom.
In March of 2008 I left the posh world of venture capital to become an entrepreneur. I told myself at that moment that I didn’t care about my personal comfort or the luxuries to which I had become accustomed…in fact, in some perverse way I actually hungered to “go to $0.” I remember thinking that in order to truly understand mainstream America and the masses of our population, I needed to experience some sort of financial struggle. Turns out I was right. A huge part of JumpPost is about increasing consumer liquidity and putting a little extra cash in people’s pockets. Doubt I would have arrived at this concept while making gobs of money. Anyway, below is a graph of what entrepreneurship does to your bank account. If you’re not prepared to ski down this run, you might think twice about getting on the lift…
Sorry about resolution: image is clickable, so you can expand to see the gory details:
5 Reasons Why Lying is Stupid in Startups (and Life)
1) You spend more energy/bandwidth maintaining a lie than you do dealing with the adverse effects of telling the truth: This is the main reason why I have categorically banned mistruths from my life (I’d say, by the way that 0% mistruth is almost impossible, but I have gotten damn close over the past 6 months or so). In the near term, there are so many opportunities to “facilitate your path” through a small mistruth. I challenge you to count the number of mistruths you tell in a day (I’ll bet it is north of 5)…It may seem like these mistruths are making your life easier (getting out of meetings you don’t want, getting meetings you do want, etc…), but I would argue that even the mistruths that are intended to make life easier end up requiring more energy than their truthful counterparts. Let’s take the example of a friend who would like to work at your startup, who you don’t think is the right fit. When they email you to ask for a coffee and you have 15 other things on your plate, the near term easiest solution would be to say “I’m slammed this week…can we try to catch up next?” That clears you inbox in 10 seconds and you can move on to areas where you’d like to focus. But what happens when that person email you again next week? Now you need a new excuse, so you say “hey man, I’m traveling this week…I’ll ping you when I get back.” That’s an additional xx units of bandwidth you spent creating a more complex excuse not to meet. Then, when you do bump into this friend a month down the line, and he asks how your trip was, the entire balance of your interaction, and every interaction that follows, must exist with maintenance of your initial mistruth about being out of town. That’s a lot of mental bandwidth to expend.
Now let’s think about what the case where you had taken 2 minutes, instead of 10 seconds, to address your friend’s initial request honestly but respectfully. That’s 60 seconds of analysis as to why this person is not the right fit, 30 seconds on what you’d like to communicate to them, and 30 seconds to write, “hey man…the first 6 months of this company, we have very specific needs with regard to domain expertise. If something comes up that seems right for you, I’ll let you know, but happy to grab coffee and talk about who else I know that might be looking for someone like you.” Now, you won’t feel uncomfortable seeing this person, you don’t have to maintain any mistruth, and although you may not have given them what they really wanted, you are still being a solid friend and helping out where you can. Life is FULL of these opportunities to take an extra pause to think about what you really want to say, as opposed to what’s easiest at first glance.
2) Interesting ideas and conclusions occur at the point where you analyze a temptation to lie: Simply by training yourself to pause before delivering a mistruth, you will begin to think more deeply about the points of friction in your life that evoke such an inclination. Analysis of these points of friction can lead to proactive reduction in occurrence. Pay attention to these points instead of glossing over them with an easy lie and you can begin to consciously influence their frequency. For example, when an investor asks you “so what worries you? What keeps you up at night?” you could either give the stock answer which reveals a minor concern and represent it as your largest concern, (and then repeat this answer every time someone ask you this question)…or you can tell them the actual greatness weakness in your model…you might think that you are hurting your chances of raising capital, but in actuality revealing this weakness will force you to resolve/strengthen it (maybe even through a dialog with said investor). Once strengthened to the point where this weakness does not prohibit investment, you will no longer feel inclined toward dishonesty when faced with the question. Short term you may increase the risk of securing fundraising, but long term you are decreasing the risk of failure….
3) You set a context for interaction that results in other people telling you the truth (better data): If you make it clear that you will never lie to a party with whom you are interacting, that establishes a plane of trust that is usually reciprocated. People feel much worse about misleading someone who they know is being completely honest with them (as opposed to a dynamic of gamesmanship in which misdirection and indirect communication on both sides is understood). You would not believe how frequently professionals set this indirect tone when engaging with external parties…waste of time, energy, and generally a very myopic approach to maximizing value of relationships. By establishing an environment of honesty and direct communication in any interaction, personal or professional, you will receive a flow of more accurate data on which to base decisions and opinions. Better data equals better decisions.
4) Being direct about what you want usually gets you want you want: Ask for the order, whatever it might be. Trying to extract value through indirect communication takes longer and often fails. Example: When I began to raise my first seed round I met with a friend who is an entrepreneur and seed investor. I hadn’t really asked anyone for money yet (and I felt a little uncomfortable doing so), so I pitched him under the guise of “seeking advice.” When the meeting was over, he said “I hate it when people aren’t up front about what they want. If you are asking me for an investment, ask me directly.” He forced me to “ask for the order” and from that point forward I had no problem doing so with everyone else. After that I started asking people for investment instead of advice and guess what I got?
5) Sometimes you get caught: this one is straightforward…when you get caught in a lie you lose credibility and damage your relationship with the recipient as well as your overall credibility.
There are many more reasons (ethical, karmic..etc…) why setting a personal goal of zero lies per day is a righteous endeavor. The purpose of this post is simply to outline some of the more practical and tangible effects of eliminating mistruth from your existence. So now I have established a plane of truth with every one of you. Anything I tell you and anything you ask me (professional or personal), my response will be 100% truth. Fire away.
Read Full Post | Make a Comment ( 5 so far )The Practice of Patience (Founder’s Tip)
The past couple of days at JumpPost have been an exercise in patience. This is not a trait that comes naturally to me, nor is it one that I’d imagine most entrepreneur’s are born with. Sort of by definition, we are a group who wants change to happen faster than it would evolve without our efforts. I am reminded of one of my favorite quotes (stolen from Fabrice Grinda) by Joel Barker:
“Vision without action is merely a dream. Action without vision just passes the time. Vision with action can change the world.”
So what happens when you are long on vision, and stirring to create action, but there is some external force on which your desired action is dependant? Frequently in a startup, the most important thing in the world to you and your company, is number 15 on the to-do list of an external party (whether that party be a bus dev partner, service provider, investor, or even employee). There are two responses that a founder can engage in when waiting on external action:
1) application of pressure: you want your answer/data/deliverable and you want it now. Email/call/hound the external party until you get it. My experience has been this strategy can yield fruit as a last resort, but more often than not, it will just move you down the list form 15 to 20 (or maybe even remove you from the last all together).
2) Acceptance: the world does not revolve around you and your startup. Start pushing other balls forward while you wait for this one to unfold. Nothing wrong with staying in front of this external party, but do it in a way that respects their right to prioritize their own efforts and actions. This might mean that you let a time sensitive opportunity pass you by, or that you need to delay a number of other actions that are dependent on the outcome of this external event, but building a company is a marathon, not a sprint (note: I do like to sprint some miles when the opportunity presents itself). In the long run, preservation of important relationships and a healthy working dynamic between you and the parties with whom you interact will yield fruit…so don’t freak out when things take longer than you want them to.
It takes practice to sit down at your computer, stare at the bright red “high importance” item on your to do list, and then to compartmentalize and look beyond it so that it does not distract you from knocking out the 10 “medium importance” items that are sitting behind it. I’ve written before about the importance of momentum…and one of the biggest killers of momentum, at least personally, is waiting on something that you do not control…The practice I have developed over the past couple of years is a practice in acceptance. Very few events in the life of a startup are apocalyptic (though they may seem such in the moment)…some things fall your way, some don’t, so staring at this “high importance” item and then saying “have I done everything I can possibly do to make this item break my way? Yes? Okay, what else can I accomplish today?” is a dialog with yourself that is worth developing.
Read Full Post | Make a Comment ( None so far )Give us your [rich], your tired, your huddled masses longing to be free
Yesterday I dropped into office hours at a venture firm who I didn’t really know, but wanted to meet…the format was basically 5 or 6 entrepreneurs sit down and chat with the investors for 30 minutes in an informal conversation about everyone’s efforts. My understanding is that if the venture firm thinks you’re high potential, they’ll give you a desk for 3-6 months. That desk comes with free internet/coffee/conference rooms and the opportunity to collaborate with a bunch of other startups and share learnings and ideas…there’s also one dude from the firm who sort of hangs out there and spends time working on his own projects, but also providing guidance to the folks in the space…this model is a great contribution to the NYC startup community, and one which I think will yield fruit for the firm. What amazed me, however, was not the new presence of this firm in NY, but rather the backgrounds of the other entrepreneurs in attendance.
For the last year, I have been listening to members of the New York startup community speculate about the migration of talent away from wall street toward entrepreneurial endeavors post financial apocalypse. I largely viewed this thesis to be wishful thinking, as having worked on wall street myself after college, “investment banker” is not exactly the psychological profile I envision when i think of early stage entrepreneurs…but yesterday was the first real data I have absorbed which makes me question my skepticism. It’s one thing for talented engineers who were engaged in algorithmic trading pre-meltdown to be recruited away to established venture-backed startups that could afford their 6 figure salaries. But it is entirely another when 4 of the 5 early stage founders with whom I met hailed from Merrill Lynch, Citigroup, Morgan Stanley, and DE Shaw respectively (amazing btw that when I went to link to Merrill’s website using Google Chrome browser, I get this message:
| An incompatible browser has been detected and your page layout and/or functionality may be effected. |
| This Merrill Lynch website (www.ml.com) is designed for viewing in the below browsers: |
| Microsoft Internet Explorer (I.E.) 5+ | Download |
| Netscape 7+ | Download |
| Firefox 0.8 + | Download |
| Anyway, these are not guys who grew up programming in their garage before being scooped up by wall street recruiting at MIT (in fact one of them had spent $100K of his own hard earned wall street cash on an outsourced website for which he did not even know the language in which it was written…note: i actually liked that guy and thought he was pretty smart despite this shocking stat). Rather, they were bright and ambitious young guys to whom Wall Street had obviously fallen from grace. |
Through an investor’s lens, I think there will be some winners out of this generation and profile of NYC entrepreneur, but if I had to guess, I’d say it may be a little early to put my dollars into this group of folks. I’m more interested at the point where this class of wall street emigrants matures over the next 12-18 months (and natural selection/financial recovery seduces the ones who aren’t cut out for it back to wall street). Those who remain, will likely represent the conversion from would-be lifetime financiers to would-be lifetime entrepreneurs, and they will be the ones to create companies that contribute to the renaissance of NYC entrepreneurship.
So, I know the sample size is relatively small, but I was excited to see the talk of a talent transfer in NY manifested in real life. I’m assuming venture firms have had this empirical data point for quite some time, which can only hearten their recent commitments to our geography (see “NYC Venture Capital War” for more on that), but it was strange and refreshing to experience potential history in the making first hand.
Read Full Post | Make a Comment ( 8 so far )Newsflash: Your Startup Is Not In The Playbook
A former investor of mine, Fabrice Grinda, recently wrote a blog post enumerating the reasons why businesses that are started with two co-founders are more likely to exit big than are those with a single founder at the helm. That line of thinking seems to be the common sentiment at least in the venture world, and one which having seen more than a thousand founder/cofounder setups while on the venture side, I think I would tend to agree with. When I started thinking about leaving General Catalyst to start my first business, I mapped out a progression of events necessary to take the plunge and build a company. The planned progression of events went something like: 1) idea, 2) diligence, 3) cofounder, 4) quit job, 5)raise capital, 6) build product, 7) achieve seed stage milestones, 8 ) raise more capital and scale.
This play book is sort of a standard one that I had heard many entrepreneurs and investors tout, and not having been through it before, I largely executed according to plan (minus 7 & 8 that is). What I’ve learned, however, is that someone else’s play book is only a guide, and to execute against it without flexibility and recognition of your own context/data is a mistake. Nothing in startup world happens exactly as you expect it to. Sometimes a recognition that you need to write your own play book can prevent what I’ll call “inorganic progress.”
“Organic progress”, to me, is when the events in an operating plan occur as the result of successful completion of tasks/goals/learning on which that new event is dependent. In other words, progress that occurs naturally or without force. An example of organic progress would be when a management team builds a product, puts it out to consumers, people buy this product, and THEN they design a customer service program to support their newfound customers.
“Inorganic progress”, then, would be occurrence of an event ahead of completion of the tasks/goals/learning on which that event is dependent. Or, forced progress. The company builds a product, puts it out to consumers, and then designs a customer service program in anticipation of its first customers…although it may seem that management is getting ahead (or making progress) by finishing their customer service design quickly, they are doing so without the data/learning of customer feedback, and thus an event (the customer service design) occurs before it’s antecedent (inorganically).
It has been my experience that when progress is forced, although potentially forward moving from an aesthetic sense, this is progress in a wrong direction. The customer service design, when created through inorganic progress, will not address the needs of the company’s customers, thereby creating an operational inefficiency that would not have arisen had management allowed this piece of progress to develop organically.
As it turned out in our last company, steps 1-4 were in line with the concept of organic progress. My immediate instinct when starting JumpPost was to replicate a known play book: 1) idea, 2) diligence, 3) co-founder, 4) give up job opportunity in venture capital (replaced quit job), 5) raise capital. What I realized when I began executing on this play book, however, was that I had a previously non-existent understanding of the difference between organic and inorganic progress. Steps 1 & 2 were the same, but as I began to work on 3, I realized that recruiting A level talent, and especially a cofounder, could be a 6 month cycle. A number of people I am close with expressed an interest in cofounding the company, and had I been executing to “plan,” I would have taken one of them on before moving forward to step 4, but this didn’t seem “natural.” Why? Because I was missing two antecedents to this decision. The antecedents, in this case, being 1) an understanding of what domain expertise would become most important to our company, and 2) an understanding of what caliber of talent I could expect to bring on board pre vs. post venture financing.
So…I sort of tabled the old play book, continued to meet with interesting people, but began executing the subsequent steps before completing step 3 (cofounder)…As soon as I moved past step 3, another deviation from the play book arose. The play book would have said I needed to raise capital in order to develop the JumpPost product (especially without a technical cofounder), but again it didn’t seem natural…what I realized was that I wasn’t ready to commit to investors a single vision for the Company without the data of product/market fit behind us. So I read a lot about a new play book, rooted in the philosophy of customer development, and then began recruiting a team to build something ahead of financing. Now, we will begin to acquire the data needed to complete step 5 (fundraising) organically.
I ran into Chris Dixon on the street in our neighborhood a few weeks ago, and after chatting for a bit about this blog, he asked about JumpPost. His first question was “how are things going? still searching for a technical cofounder?” From an investor’s perspective (and Dixon is another example of a guy who has seen a thousand startup teams, and subscribes to the “cofounder law” for many of the reasons Fabrice articulated), acquisition of a cofounder (step 3) was a data point that would indicate where I was in the progress of a conventional startup play book. Although my answer to his question was, “yea, I guess so,” the reality was I was well beyond this step in the play book, but only because I decided a while ago that I would design a new play book, drawing on conventional wisdom for sure, but not without a few of my own creative plays mixed in.
So all this talk of organic and inorganic progress is just to say that while I recognize Fabrice’s points about the benefits of a cofounder, I will not take on a “cofounder” until it organically presents itself. As JumpPost progresses, I view every early hire, part time contributor, and even advisor as a founding member of our company and I rely on them all as a sort of “aggregate cofounder.” The interesting part is we are going to hit step 6 (product) and have a real good shot of hitting step 7 (achieve seed stage milestones) of the old play book, before executing on steps 3 (cofounder) and 5 (raise seed round). It just happens that this was the most organic and natural path of progress given all the events/goals/learning that we have experienced to date.
So, I guess my advice to entrepreneur’s considering Fabrice’s (and common wisdom’s) suggestion that “2 [founders] > 1” would be, “yes, a cofounder does represent a huge amount of value when starting a business…BUT there are many ways to skin a cat, just make sure you don’t do it inorganically.”
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