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Entrepreneurs: Pay Attention — Or Not

Thursday, November 5th, 2015


Have you ever considered that the comments and musings of so-called influencers and thought leaders carry more weight than they should.

Insider anecdotes from tech often show just how wrong those at the top can be.

Steve Jobs didn’t believe anyone would buy big phones.

Or the mindset of Jim Clark, as revealed by Michael Lewis, author of The New New Thing, a book about the tech industry in the late ’90s.

“At the end of The New New Thing, Jim Clark, who has made a fortune out of the internet bubble, says he’s getting out because he’s scared. Why’s he scared? Kleiner Perkins, the VC firm, has given $25 million to this startup called Google, which he thinks is outrageous. Why would anyone give $25 million to Google? A search engine is just a commodity, everybody knows that, it’s a silly name.”

There are always experts who will tell you why whatever won’t work.

I’m not recommending that you just ignore or dismiss them.

What I am saying is that you need to take everything with a grain of skepticism and not buy it because of who says it.

Flickr image credit: MSLGROUP Global

Recreating Mom and Dad

Monday, October 5th, 2015


Do you ever wonder why so many consumer startups are similar?

Not in terms of the products or services, but the similarity of what each accomplishes.

Each is aimed at providing the wherewithal to accomplish a basic function of living.

From locomotion to meals to dates or just sex; from cleaning to shopping to errands to child/parent/pet care.

They are developed for a generation that is used to having everything done for them.

And then adopted by generations used to doing things for themselves.

No, that is inaccurate.

They are adopted by those of whatever age who can afford to pay.

If the Shoe Fits: Drizly, Tough Questions and You

Friday, October 2nd, 2015

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

5726760809_bf0bf0f558_mDid you see the story of Drizly Bear by founder/CEO Nicholas Rellas on LinkedIn?

Rellas wanted to disrupt the way liquor is purchased.

The idea was pure and incredibly simple: Alcohol delivery, connecting consumers to local retailers at the touch of a button to have alcohol delivered in just 20 to 40 minutes.

The problem is that liquor regulation makes the taxi industry look unregulated.

The question, given the amount of regulation and the fact that it differs state-to-state and even city/county-to-city/county within each state, was where to start.

Where many would have chosen to start in the least regulated market to get traction Drizly took the opposite approach.

We started Drizly in Boston, MA, a city steeped in alcohol lore and one that is so tightly regulated that there are no happy hours.

If you think he was crazy, then he was, as they say, crazy like a fox.

The definition of a tough (or hard) question is one of the the most critical things that everybody needs to know.

And it’s incredibly simple, too.

It’s something that every salesperson learns immediately, but it applies to any industry, field, situation or effort.

A tough question is any question that can draw a response of ‘no’.

Rellas believed if Drizly could address every regulation in Boston, then they could address regulations anywhere — and he was right.

What we formed was a cookie cutter model of adding supply to our network that now scales with minimal capital and human investment and has allowed us to expand to over 18 cities in as many months.

Rellas wraps your take-away perfectly.

So ask the hard questions. Answer them upfront. Be truthful about your answers. There are reasons why great ideas won’t, or didn’t, work. We fight those every day. Some are insurmountable, others are not. Knowing which mountain to climb is as much of the challenge as the climbing itself. But by not asking and answering the hard questions, for a new business or a new line of business in an existing one, we’re doomed to fail from the very beginning.

Image credit: HikingArtist


If the Shoe Fits: Innovation vs. Marketing

Friday, September 18th, 2015

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

5726760809_bf0bf0f558_mThere is a myth out there that large companies aren’t creative and don’t innovate.

Not only is it a myth, it’s pure BS.

Watch this video for a look at pure innovation as done by Samsung.

So why the persistent myth?

There’s a great answer in the comments.

In two years Apple will come out with the same thing for their semis, call it iPass, and be lauded as innovators. –CommanderCorner

It used to be that if you built a better mousetrap the world would beat a path to your door, but these days the mousetrap matters less than the mystique of the builder and the skill of the marketers.

Image credit: HikingArtist Video credit: Leo Burnett

Entrepreneurs: Think Security from Day One

Thursday, July 30th, 2015


There are dozens of startups working on wiring everyday products to become part of the Internet of Things (IoT) and a few weeks ago I cited an article that raising money in that arena was tied to building security into a product from the beginning.

Security used to be a function to which consumers gave little thought, but that is rapidly changing.

Anything can be hacked, but awareness was heightened recently when security experts hacked a Jeep’s entertainment system and took control of vital driving functions.

The result of their work was a hacking technique—what the security industry calls a zero-day exploit—that can target Jeep Cherokees and give the attacker wireless control, via the Internet, to any of thousands of vehicles. Their code is an automaker’s nightmare: software that lets hackers send commands through the Jeep’s entertainment system to its dashboard functions, steering, brakes, and transmission, all from a laptop that may be across the country.

And if none of this makes IoT startup founders rethink their cavalier attitude towards building tough security into their initial design, perhaps this comment from Colby Moore, a security research engineer at the cybersecurity firm Synack, will make them think twice.

“Really, the state of security on these things right now is pretty atrocious… A lot of these device manufacturers are just not security people and they really just don’t have security people on staff, especially when it comes to IoT start-ups. What they are doing is phenomenal with all of these new uses for technology. But security isn’t a concern for everybody. It’s ship now and patch later mentality.” (…)  If you are worried about it then don’t put yourself at risk. It’s kind of up to us to demand a higher security standard and hold the manufacturers to it.”

Flickr image credit: centralasian

Hacking Colorblindness

Tuesday, July 21st, 2015

Business Insider published an article today about glasses that let colorblind people see color, including the video below.

I’m sharing it to help along the effort for it to go viral, so more people will learn about this technology.

And also why you should never take anything for granted.

Entrepreneurs: the Truth about Warm Intros

Thursday, June 18th, 2015


The questions on Quora provide a fascinating look into today’s mindset, which makes for a giant time-suck, so I rarely allow myself the luxury.

However, Why are VCs so adamant about warm intros? caught my attention, because I am asked it so often.

Most of the responses were justifications from VCs, but two provided a refreshing dose of reality.

Not surprising that neither are VCs.

The reason they want warm intros is because they are too lazy to research things themselves and many of them don’t know anything about starting a company or building one. The smart experienced guys at the top who have actually done something are too busy so they have the dime-adozen MBAs they hire do grunt work. Since the d-a-d has never actually built anything, and doesn’t really know what you do, they want a “warm” intro. Warm means someone else they can blame if they screw up yet again.David Feldman, CEO, ZF Micro Solutions, Inc.

Classism. No further to look than that. Let’s not make it complicated by trying to avoid the unpleasant.Michael O. Church

The ‘warm intro’ investor bias is one of the worst, because it raises the funding bar to almost insurmountable heights, which limits the entrepreneurial pool and even reduces the chances of success.

Whether it’s laziness, fear of the unknown or insecurity outside of their comfort zone doesn’t matter — the result is the same.

Too many good founders/companies don’t get funded.

Flickr image credit: Alexx Malev

If the Shoe Fits: the Power of Working Alone

Friday, June 5th, 2015

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

5726760809_bf0bf0f558_mMore and more research is showing that real creativity is a more solo function than a team effort.

Susan Cain spells this out in a thoughtful LinkedIn post that is well worth your time, especially if you are a young founder raised on social media, with a penchant for crowdsourcing and Yelp.

Consider the words of Steve Wozniak in his memoir iWoz.

Most inventors and engineers I’ve met are like me—they’re shy and they live in their heads. They’re almost like artists. In fact, the very best of them are artists. And artists work best alone where they can control an invention’s design without a lot of other people designing it for marketing or some other committee. I don’t believe anything really revolutionary has been invented by committee. If you’re that rare engineer who’s an inventor and also an artist, I’m going to give you some advice that might be hard to take. That advice is: Work alone. You’re going to be best able to design revolutionary products and features if you’re working on your own. Not on a committee. Not on a team.

Then read, digest and tweak Cain’s ideas to fit your situation, then put the concepts to work in your company.

Image credit: HikingArtist

A Different Kind of Diversity

Monday, May 18th, 2015


I’ve had a lot of inquiries lately from managers who believe their teams have lost their edge.

Productivity is fine and they innovate, but in a predictable, prosaic way.

All were facing the same problem, but none could see that the source was themselves.

It is the same problem many bosses face, including Dan, whom I wrote about seven years ago.

So rather than spend my time and their money identifying the likely cause I sent each one this link and told them to call if they needed additional help.

So far I haven’t heard from any of them.

Flickr image credit: Denise Krebs

Entrepreneurs: Lessons From Founder Showcase

Thursday, May 14th, 2015

Ajo Fod

Today I attended The Founder Showcase.

There are a tremendous number of companies looking for access in the space of early ventures. It is hard to compete against all the din.

This year’s Founder Showcase included a few dozen interesting companies at the booths. So it is not strange how even a very sophisticated and advanced companies can get overlooked.

So, what do venture capitalists look for?

Each level of the selection process for a startup is brutal in its selectivity and uses a different filter. The filter applied at the Founder Showcase was one of popularity. This induces biases that businesses and investors wouldn’t have.

One  start-up, Quarrio, was the only company using AI to solve a hard problem – one of making data in tables accessible using plain English. It is a usable and complete product relative to others at the showcase. It was filtered out of the pitch competition.

The pitch competition included a selected few companies:

  • Makerblok: Making educational electronics for children.
  • Ampl: A bag that can charge all your devices so that you don’t have to worry about charging each device. Is cool but is too heavy.
  • Theo: MLS quality data (much more accurate in price compared to Redfin). Also there is an argument that there are many features/amenities that Real Estate agents desire.
  • keepe: This is a startup based in Seattle offering handyman services guaranteed in 1 hour.
  • Trato: This company serves up customizable legal documents to make it easier for the masses to do business.

The members of the VC panel are listed here.

On the Problem: VCs generally want to know how much pain is there in the problem. Who faces the pain and how much the solution removes the pain. How big the market is. 

Solution: They need to know how the startup solves the problem. How credible the solution is. If there is a technical moat around the solution. Sometimes the moat is market share. If so the biggest advantage is swift execution.

Scaleability: Building connections one at a time is hard. There has to be a plan to reach people quickly. There is a lot of noise around. There should be a plan to get the business past the noise.

Capital intensity: The question here is how much money needs to be invested in the solution before it starts cash flowing. High capital requirements increase the risk.

Team: Investors look for teams when investing. Teams increase stability and credibility. A team with a background in their field of expertise is more likely to create a moat of competence. Similarly a team that has worked together for a long time is likely to work well.

Generosity: Kickstarter is another example of a generous startup that has succeeded by making many other people succeed.

A life-sciences called Suntowater was voted the best in this Founder Showcase event overwhelmingly by both the crowd and the judges. It solves the problem of clean drinking water from the humidity in the air using electricity generated by a solar panel. This innovation is considered generous because it is most useful to the underdeveloped world.

The general recipe for a successful startup is to relate to people, then promise a great future and connect the dots.

Chamath Palihapitiya, Founder of The Social+Capital Partnership, had great insights to share about the makeup of a wildly successful startup in the future. One source of information is the trend in the tastemaker in society.

In an earlier era individuals and companies paid a lot to get attention from consumers through selection by the tastemaker: companies such as AOL who rented their landing page for millions or radio stations that chose the music to be played.

Now the mechanism of taste selection has become “likes” on Facebook where everyone has a say. The downside of this mechanism is the noise. Facebook is likely to face creative destruction as the pendulum swings.

Chamath thinks that the next generation of companies will have multiple lightly curated channels either selected by humans or by algorithms. An example is Patrion, where people support the art they like, similar to Italy during the Renaissance.

Fixing education is an interesting problem. Linda frames education as a way of learning skills. This is more enlightened than the idea of education for its own sake. Startups that solve a problem can expect better reception.

In the past software giants like Microsoft and Oracle were dominant.

There has been a shift towards SaaS.

The next shift is expected to be towards outcomes as a service such as Uber.

For the investors, Warren Buffets letter to shareholders says that he sat on money for over 1/3rd of the time.

Chamath expects a funding hiccup in 2-3 years. Many companies are raising a lot of money in the current bubble. The easy money has to end at some point. 

Companies that don’t have a sufficiently good product to market fit will suffer. But it’s mostly their employees who have given up pay to get stock options who will lose big.

Chamath’s advice to entrepreneurs is to raise money when the going is good and sit on it till the company figures out a good product to market fit.

Did you know that Peter Diamandis didn’t have 10M$ when he announced the 10M$ prize? Nobody asked about the money since he cleared the line of credibility. He had astronauts and the NASA chairman beside him when he made the announcement. Strangely, the winning team spent about 30M$ to earn the prize.

So, where did the money come from?

Peter approached about 150 people who declined to fund the prize. That is a lot of rejection!

Richard Branson declined to fund twice. After a lot of insecure moments, they found that there is insurance against unlikely events that could cover this event.

A private company going to space was considered unlikely, so he was offered a $3M premium to insure against the outcome. He negotiated it down to a 50k/month premium. Then it was a question of finding people who would support the bet on a monthly basis.  This spreads the pain out, but it lasted for ever.

Richard Branson marched in weeks before the prize was won with an offer of $250m to commercialize the winning tech so that he could have his picture taken with the winners.

… and that is how Venture Capital works.

Image credit: Alpha Sangha

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