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

Bill “Badger Bill” Whyte, founder of W.S. Badger, with $16 million in revenue and 100 employees, is an excellent role model for any entrepreneur who wants to grow and run a successful, socially responsible business that treats its people fairly. His thoughts on the subject are succinct and simple.

“You can be financially successful and be a big jerk, or you can be financially successful and be a contributor to making the world better. I know which way I’d like Badger to move.”

Other great founder role models include Anand Sanwal of CB Insights and Marc Benioff of Salesforce, among many others.

However, if you are looking instead for a role model that represents the worst of Silicon Valley look no further than Evan Spiegel.

Spiegel’s boundless arrogance was on full show in the company’s first earnings call with analysts.

During the event, many analysts’ questions about the company were dismissed by Mr. Spiegel. None of the executives made a particularly impassioned case for why the business would be a success over the long term.

But what else would you expect from founders who already dumped much of their stock?

Spiegel, his co-founder Bobby Murphy and Snap’s largest venture investor, Benchmark, sold significant amounts of their stock when the company went public

Along with the current $2.2 billion loss is the whistleblower lawsuit claiming the pre-IPO metrics were inflated.

Malcolm Berko provided the best comment I’ve seen regarding all those who ignored the warnings in the prospectus, bought the stock, and are complaining.

When greed succeeds, everyone smiles. When greed fails, everyone wails.

Image credit: HikingArtist

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

Yesterday we looked at how dangerous it is to substitute what-we-wish for what-really-is and I promised you a look at startups that died as a result.

Which is what I’m going to do, but not by reinventing the wheel (there’s enough of that without a contribution from me,)

CB Insights put together a great list of 178 failed startups — why they failed as told by their founders or, occasionally, an investor — including links to the full articles.

I hope you take the time to read through, especially those that parallel your own markets, circumstances, etc.

Save the list as a reference; the lessons learned could keep you from stepping in the poo now or somewhere down the road.

Image credit: HikingArtist

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

How much do you rely on the so-called “wisdom of crowds” when you’re making decisions?

Do you think for yourself or check everything, from where to eat to the best language to use, against the “wisdom of crowds?”

If this election taught you nothing else it should have taught you that crowds aren’t particularly bright.

Stupid is more accurate

When I wrote The Value of Thinking in 2013 I asked a simple question.

But what happens to the crowd when everybody stops bothering to think?

At that point the old saying, everyone has a right to be stupid, but some just abuse the privilege, kicks in with a vengeance.

In the March redux I said,

…crowdthinking has increased geometrically, while independent thinking, let alone deep thinking, has decreased in proportion. You have only to consider the questions on Quora and the crowd’s actions/reactions at any political rally to see just how bad it’s become.

From failed startups to Tuesday’s election the wisdom of crowds has led down more garden paths than can be counted.

But for the legion of readers who demand hard data to back up common sense I give you the words of Anand Sanwal and the data of CB Insights.

Can we please never utter ‘wisdom of the crowds’?
I know lots of management consultants sold corporations on this “wisdom of crowds” nonsense, but can we now stop?
Here is what the crowd thought of Trump’s chances over time.
Totally, utterly stupid crowd.

Stupid crowds do immeasurable damage.

Image credit: HikingArtist and CB Insights

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

A post on Medium from Alexis Tryon considers something that many entrepreneurs face, i.e., if your company fails are you a failure, too? She puts it like this.

If Alex = Artsicle
& Artsicle = Failure
then Alex = Failure

I saw this happen decades ago during every downturn and each resulting layoff. It happened to many people at Enron and other corporate debacles.

Not just to founders/executives/managers, but to workers at all levels.

And I spent enough time coaching, encouraging and working with them that I coined a term for it.

I called it ego-merge.

I’ve written about it several times, how to avoid it in 2010, not making your company or position your identity (which is what Alexis did), along with a way to combat it in 2013.

As bad as ego-merge is for “regular” people, it is much worse for entrepreneurs.

That said, they also have a psychological advantage in dealing with it, since if they didn’t have more-than-normal grit to start with they wouldn’t have become entrepreneurs in the first place.

Also, real failure isn’t about getting knocked down.

It’s only real if you don’t get up.

Hat tip to CB Insights for pointing me to Alexis’ post.)

Image credit: HikingArtist

Back in June, when money got tight and investors started focusing on profits, instead of the emperor’s clothes, we considered why freemium isn’t an enterprise play.

Cheap doesn’t work, either.

Competing on price means keeping costs down.

Keeping costs down typically means skimping on headcount.

That skimping often happens in customer service/support.

Cheaper customer service frequently means online help or offshore outsourcing.

Neither option is known to keep enterprise users happy.

And while inertia may retain consumers, enterprise is quick to walk.

Like the man said, good ain’t cheap and cheap ain’t good.

Image credit: CB Insights

Over the years, founders have asked my for my opinion and ideas on naming their company and/or product.

They ask, but they rarely listen.

Especially if they already have an idea — which they are usually in love with.

They aren’t looking for ideas, let alone an opinion that differs from what  they already think.

They are looking for agreement and validation.

Of course, I’m not an expert and don’t present myself as such.

That said, common sense and past flubs say that product names need to be relevant — to the product, the market and especially to the target country/language/culture.

Additionally, they need to be easy to remember and spell — particularly “created” words.

Lean methodology recommends MVPs for market validation and the same should apply to naming.

Proof of the importance of listening to market input is demonstrated by CB Insights’ CEO/Co-Founder Anand Sanwal, who recently told the story not only of how the company got its name, but also its logo.

When we started the company, we called ourselves ChubbyBrain.  We were always focused on private company data but we were trying to be hip and startup’y (or that is what we’d like to believe)

Anand says their wake-up call came from a potential client.

We love the product and the data and what you guys are doing.  But we can’t buy a product called ChubbyBrain.

Wow. Talk about wake-up call; more like revelry played five inches from your ear.

You can see how the logo changed, too, from this

To its current incarnation.

Amazing what you happens when you listen to the people who will actually pay you.

Image credit: CB Insights

A few weeks ago we looked at the fact that all VCs aren’t created equal and the importance of seriously checking them out, instead of being blinded by the money.

And last week we considered how VCs invest in similar companies and then play favorites.

With that in mind I found a conversation that CB Insights’ Anand Sanwal related in his most recent blog post (you really should subscribe) hilarious.

Our team issues rankings of the most active investors in an industry or geography pretty regularly and occasionally, an investor reaches out and the conversation goes a bit like this.

Investor – “We should be on your ranking.”

Me – “Ok cool. Let’s ensure your data is updated and we’ll edit the rankings as need be.”

Investor – “I can’t tell you the deals. They’re stealth.”

Me – “We can’t put you on the ranking unless we know the deals. We’re a data company so the rankings are based on data.”

Investor – “I can’t tell you the deals. They’re stealth. But we should be on that ranking.”

Me – silence

If a VC won’t answer a valid question from an impeccable source, one that’s privy to more business secrets than any five (ten?) Wall Street firms combined, why would they answer yours — or be truthful if they do?

And thanks, Anand, it’s nice to see a VC on the receiving end for a change.

Image credit: CB Insights

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

As most of you know, I subscribe to CB Insights (you should, too). It’s written by co-founder Anand Sanwal — good info and he has a great sense of humor.

Yesterday, I learned that founders are sometimes described as “blue flame.” I’ve never heard this term since we founded CB Insights so it could be that (1) It’s not really a thing or (2) I’m not blue flame.

Basically, blue flame is defined as below:
It refers to young people, preferably in their 20s, with lots of energy and no kids.

A blue flame is a fire that is burning at its brightest. A blue flame founder is willing to do nothing but work, forgoing all else but the company.

Per Twitter, no VCs seem to have ever heard this phrase (or won’t admit it –Miki).

Hilariously, it also refers to people who are too old to invest in.  I wonder how they know the difference without seeing them.

While a founder may be “willing to do nothing but work, forgoing all else but the company” it is the height of either lunacy or stupidity for founders to expect their people to do the same.

Especially in light of recent comments from the likes of Mark Cuban.

“For employees and investors they are SOL [s— out of luck]. That is, unless these companies wise up and start going public … The VC attitude of not going public is crushing the dreams of tens of thousands of employees with options.”

It was different in the first boom, when it was investors who got the shaft.

“In ’01/’02 most of these companies were public, so it played out in the public market. You had companies that went public and then lost 90% of their value or went bankrupt. But in the interim, the employees got something out in the public markets. … Here, there’s no liquidity.” —Alfred Lin, Sequoia

It’s called liquidity and it’s what unicorns like Uber not only don’t offer, but can’t because the public markets won’t support their valuation — public markets have an old-fashioned focus on sustainable business models and profit. (For a detailed look read this from Mckinsey.)

All this just goes to show that whether you’re a six-figure knowledge worker or minimum wage slave, you are cannon fodder to your bosses and the money men.

Flickr image credit: s_p_a_c_e_m_a_n

Founders, closely follow those they wish to emulate, “names” they trust, peers, competitors, etc., mostly from the viewpoint of the media or their own self-generated content (blogs, articles, etc.)

In other words, content developed for either the entrepreneurial community or general public.

Whereas CB Insights was created to provide information to industry.

So in 2010, they launched CB Insights to use data, algorithms and predictive analytics to help customers answer questions about “what’s next?”

• What company is our next customer? Investment? Acquisition?
• What’s the next big industry we should position ourselves in?
• What are our competitors up to and what is likely their next move?

And while it’s doubtful you could afford a subscription, or that it even would pay to have one, its newsletter is a goldmine of information — plus it’s well-written and an enjoyable read.

I reached out to Anand Sanwal, CB Insights’ CEO / Co-Founder / Customer Service with the following questions.

Your About page states that CB is revenue-funded. Why did you make the decision not to seek funding?

We were revenue-funded for our first 5.75 years but did take $10M of funding in November 2015. More on that here. 

What special challenges did you find and how did you overcome them?

In the beginning, it was figuring out how to get our name out there since nobody had ever heard of us.  We started doing data-driven content to stand out and this worked.  It’s been our secret weapon.

Other than that, there are the perennial challenges of recruiting, building a great product and selling. These challenges are not unique to us. They just keep changing as the organization grows.

Regarding Lesson 1 of the CB Insights Quantitative Venture Capital Class, are there more lessons? If yes, are they also free and is there a tag/link that accesses them all?

There are several. They are here, here and here. (Be sure to use these links! Ed.)

How useful is your content to entrepreneurs?

Entrepreneurs waste inordinate amounts of time doing diligence on investors and markets, and so it’s very useful to them. Knowing who the most active investors are in a space or who has the highest follow-on rate saves them a lot of time.  

The alternative is Googling around doing lots of data janitor work.  Based on feedback/emails we get in response to our newsletter, founders have been very appreciate of us cutting through the noise with data.

Is there a best way for them to utilize it?

We’re an institutionally oriented product with a nearly $40,000 per year average price so the best way for them to use us is to subscribe to our free newsletter, follow us on Twitter (@asanwal)  and read our research blog. 

Our target customer is not founders/entrepreneurs.

Any other comments or advice that you think would be useful to founders?

I read a great quote (not sure who said this) to “never take advice from someone who doesn’t have to live with the consequences” so take this as my disclaimer.  

Everyone’s situation is different and so there are no absolutes.

But if I had to offer any advice to founders, it is to sell, sell, sell. We did it to some extent, but I wish we’d done it more aggressively because the best type of funding is from customers.  It shows your product is something they want and is the ultimate validation of what you’re doing.  Too many folks mistake raising money from investors and giving away equity as validation. It may not be.

I highly recommend CB Insights; what you’ll learn will provide high ROI for the time you spend. –Miki

I do brand outreach for my long-term associate NTR Lab, which includes working with Yana (always a pleasure) on its blog. Today’s post originally appeared there on January 28.

Salesforce CEO Marc Benioff and investor Bill Gurley, among many others, believe that 2016 is the year that many unicorns will morph into unicorpses as valuations tumble amidst tightening money.

So does that make 2016 a bad year to start your company? No, in fact, just the opposite.

According to Jason Calacanis, angel investor and founder of Inside.com “Great companies are like great captains; they make take advantage of smooth sailing times like now, but are not afraid of rough seas that eventually show up.”

Jeff Grabow, EY Americas venture capital leader says, “If you talk to venture capitalists, they’ll all tell you the best time to start a company is in a downturn.”

And Mike Abbott, general partner at Kleiner Perkins Caufield & Byers, made a great point when he said, “We’ll stop seeing particular folks starting a company for the sake of starting a company, because they see it as this romantic endeavor.”

But it was CB Insights CEO Anand Sanwal who said it best, “While it’s ‘fun’ in a schadenfreud’y way to claim some absurd number of unicorns will falter in 2016, it misses out on the fact that 2016’s climate may force many of these unicorns to become RABBITs.”

Rabbit? Who wants to be a rabbit? You should. Being a rabbit is much like Andrew Wilkinson’s horse that we mentioned last week.

Image credit CB Insights via Business Insider

 The biggest difference going forward means that your valuation will be based on real revenue as opposed to funding rounds — more like Apple / less like Uber.

You’ll learn to do more with less and will stretch not only your dollars, but also your pennies. And your team will learn along with you.

For those of you who haven’t experienced a tighter economy or worked through a real downturn the actual experience can be off-putting, if not downright frightening.

Click for a cornucopia of ideas and resources to do more with less.

Image credit CB Insights via Business Insider