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

One question I constantly hear from entrepreneurs is “How do I get into an accelerator?”

My response is along the lines of, “Don’t!” And then give them all the reasons I believe that, in most cases, it’s a bad idea.

Few believe me, so I am hoping this TechCrunch post from Ashwin Ramasamy will convince them/you or at least make you think twice.

So a top accelerator [Y Combinator] states that it is a new form of funding. That begets a question “What are they not?”

If the goal of an accelerator is to get a startup funded, then the irony is telling. The goal of a startup is to grow rapidly from an idea to a sustainable business that solves a problem at scale while making money or building usage base. Funding does help in the “grow” part and/or the “rapidly” part. However many startups don’t grow. Here’s where accelerators could and should play a role and most don’t.

I’m on the advisory board of ZOOMPesa, a Toronto, Canada startup, and was very negative when the founder said we had been invited to join an accelerator called MaRS, assuming it was similar to the accelerators here.

Wow; was I wrong!

MaRS is a non-profit, NGO that provides resources beyond anything I’ve seen.

By supporting entrepreneurs and their new ventures, adapting their products & services to larger organizations, and working to make systems more receptive to innovation, MaRS performs a key role in generating positive economic and societal impact, helping improve our daily lives and allowing us to compete as a city, province and nation.

As far as I know, US accelerators have a (typically American) short-term focus of three months, while MaRS is in for the long haul.

• It recognizes that a startup has little chance of becoming a full-blown enterprise, even if it receives seed funding (only around 27% do).
• MaRS mentors have solid backgrounds in various areas, including law and finance, and are available to do more than pass out advice; that’s in addition to the mentors assigned permanently to each startup to provide coaching and a sounding board as needed, as opposed to the “hazy cloud of mentors” that US accelerators offer.

Read the post and compare it to the MaRS website to see the overall differences.

US accelerators seem to deal mostly with startups that are pumping out consumer-focused apps; not exactly things that will bring great benefits to society.

Sadly, I know of no US accelerators comparable to MaRS—if you do please enlighten me.

I ask you, why not here?

Image credit: HikingArtist

Entrepreneurs are notorious for their 80 to 100 hour weeks.

In fact, many of them see that work schedule as a badge of honor; an initiation by fire to an exclusive club.

What they ignore is that as time goes by each week, the quality of the work produced goes down.

Because, much as they want to be superman, entrepreneurs are human and humans require food and their brains require rest to function at their best.

Many have tried napping, but often feel worse afterwards.

The good news is that there is a scientific reason why naps that exceed 30 minutes have the opposite effect as desired.

The secret to revitalizing a tired brain and juicing creativity is not found in grabbing an hour’s sleep here and there.

It’s found in the practice of Power Napping.

Try it; it works!

YouTube credit: AsapSCIENCE

What a joke.

The US startup ecosystem is complaining (more like ranting) that Rocket Internet is a copycat/cloner/, even scamster, because they are successfully creating new businesses in various parts of the world mimicking the business process of successful US companies.

But, as the Inc article and Rocket Internet’s CEO Oliver Samwer point out, copying is as old as business.

Samwer says he doesn’t mind being called a copycat. “Most innovations come on top of other innovations, if you really look at it,” he says. To Samwer, Airbnb’s suggestion that Wimdu is a “scam” is as silly as the idea of Samsung’s alerting customers about a Vizio scam of developing a similar flat-screen television and selling it for less money. “There’s always competition,” he says. “We win because we take our work very seriously.”

Let’s get serious, folks.

• Ford didn’t invent automobiles.
• Boeing didn’t invent airplanes.
• Apple didn’t invent computers, MP3 players or mobile phones.
• Google didn’t invent the search engine.

The idea that most Silicon Valley startups are original is hilarious.

In fact, many of the current service darlings were done on Craig’s List long before they were a twinkle in their founder’s eye.

There’s also a small company started by Jack Ma called Alibaba.com, which has many parts that mimic the same companies that Rocket does.

Not only that, but many of Rocket Internet startups are tailored for developing countries.

What I think has infuriates entrepreneurs is three-fold.

1. They didn’t think of doing it first;
2. even if they did funding wasn’t available in the US and finally,
3. Rocket Internet is a German startup and Germany, as we all know, is highly risk adverse.

It’s also incredibly successful.

Since its founding in 2007 by Oliver Samwer, and his two younger brothers, Marc and Alex, Rocket Internet has helped launch over 70 companies across 50 countries, generating a combined revenue of $4 billion.

Note that the $4 billion is revenue, not valuation.

It’s called success—whether you approve of it or not.

Image credit: Andrew Parker/The Gong Show

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

From Napster to Uber and Airbnb, I’ve never been partial to startups whose success was based on cheating, AKA, breaking laws.

And the explanation that the law(s) are outmoded, even if true, doesn’t change my opinion.

Airbnb just introduced a new logo that was jumped on in the Twitterscape for its blatant sexual innuendo.

But that pales in comparison to its apparent theft.

 Airbnb’s new logo is an exact copy of the Automation Anywhere logo, as Jay Yarow pointed out on Twitter

Automation Anywhere started life as Tethys Solutions, LLC in 2003 and rebranded as Automation Anywhere in 2012.

Perhaps Airbnb sees appropriating a logo in the same light as moving into a community and ignoring its laws.

It should be interesting.

And with a client list that includes Cisco, Harley, MasterCard, Coach, Boeing, Oracle, Intel, Virgin and dozens of others, I doubt Automation Anywhere is going to roll over any time soon.

Image credit: HikingArtist

KG sent me a link to a post in the WSJ by Jason Nazar, co-founder/CEO of Docstoc, which was just acquired by Intuit.

It should be mandatory reading for every budding entrepreneur.

Why?

Because it tells the other side of what’s involved building something with just a four million dollar investment.

The “other side” is about the long days (and nights), the stress and the negative effects on family and friends.

All the stuff that is rarely mentioned and when it is discussed it’s either glossed over and minimized or rationalize to the point that most entrepreneurs shrug it off.

KG understands this well, because he is traveling the same road.

And while you may not be able to ask Jason Nazar questions you can ask KG in the comments and he’ll respond.

Spending time with entrepreneurs is always enlightening.

I was at lunch with a group of them when talk turned to the current “media bashing,” as one person called it, tech was getting over the lack of diversity.

“Jason” said focus was critical in a startup and it was achieved best when the founders hired their friends and friends of friends.

He went on to say that while he understood the importance of diversity in a large company, focus was rarely a byproduct of diversity.

I asked if he considered focus to be as important for investors.

He said of course and went on (and on) explaining why it was even more important with investors, since they usually comprise the startup’s board.

Most hung on his words, since Jason was the big name that day (personally, I found him arrogant and patronizing).

I asked Jason if he would be surprised that research showed the greater the similarities between investors the less likely the success of their portfolio companies—success being an IPO.

They found that the probability of success decreased by 17 percent if two co-investors had previously worked at the same company—even if they hadn’t worked there at the same time. In cases where investors had attended the same undergraduate school, the success rate dropped by 19 percent. And, overall, investors who were members of the same ethnic minority were 20 percent less successful than investors with different ethnic backgrounds.

Conversation more or less died after I shared the URL with them.

They were too busy reading and then we were out of time.

Flickr image credit: Steve Voght

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

In the dim past (1980s on) when I started working with startups they were carefully thought out, market sensitive/smart, with much of the effort focused on being able to sell the product, AKA, generate revenue, whether hardware or software.

They rarely needed to pivot.

The rise of the Internet/web/cloud/mobile and the falling cost of software development, with a focus on iterations and eyeballs, created a different approach and pivoting became the name of the game.

While ‘pivot’ has many definitions, the one that seems most accurate in many cases is “throw it up and see what sticks.”

According to Dilbert’s Scott Adams, this is how to do a startup today.

Here’s the system:
1. Form a team
2. Slap together an idea and put it on the Internet.
3. Collect data on user behavior.
4. Adjust, pivot, and try again.

Thanks to Google Analytics, Optimizely, Bitly, and other tools for measuring customer behavior in real time, a smart team can try different approaches and different products until something works out. A start-up in 2014 is a guess-testing machine.

Adams says this is why good founders have to be good psychologists.

Every entrepreneur is now a psychologist by trade. The ONLY thing that matters to success in our anything-is-buildable Internet world is psychology. How does the customer perceive this product? What causes someone to share? What makes virality happen? What makes something sticky?

Much of what Adams says makes sense, but are these the ideas or solutions that can recharge our economy, juice the job market or solve humanities ills?

Image credit: HikingArtist

As the CEO of a startup, I’m really nothing more than the Chief Hustler. 

I hustle to attract team members, capital, advisors, etc.  I also hustle to ensure that we’re moving along quickly enough to be ahead of the market, though resource constraints and ambiguous choices always want to slow us down. 

The ability to attract resources (team, capital, etc.) is probably the most important job that I have – most people who write about the startup CEOs job mention the visionary, cultural or managerial aspects of the job.  For me it’s the constant hustling.

My hustle starts as soon as I wake up in the morning – pick up my iPhone and start reading and replying to emails at around 04:30.  Then I move on to reading articles from news sources, keeping an ever vigilant eye out for potential competitors (especially ones with abundant funding or interesting technologies).  There is an element of a negative flutter in the stomach whenever I come up on one of these – how will they affect the market, will they try to poach my carefully developed team, what is their technology basis, how do I find out more about them…

As a hustler, I’m basically a sales person. 

I’m selling investors, potential team members and anyone who wants to listen or who can potentially affect the development of what we’re building in a positive manner.  And as a hustler, there has to be a little of the “confidence man” in me – providing security where none can be had.  Making people believe that the impossible is possible, not because I’m trying to cheat someone out of hard earned cash or time, but because I truly believe it myself, and with their help it will come closer to being reality.  Hustling to create something out of nothing.

This hustler is very grateful for the people he’s getting the pleasure to work with to create something that is slated to be industry changing.  I just got a sneak peak of the UI/UX and I’m really happy with the initial cut.  Of course, it will have to be completely redone after our beta trials, but it’s so revolutionary that I’m now getting positive flutters in my belly – the kind of excitement that makes me want to shout from the roof-tops, “We’re coming!” 

But I have to temper my excitement – we still have a long way to go.  Months of hard work with the team, more delays and disappointments, and more insecurity about whether we’ll succeed or not.  Every day, however, is a joy because of the people I have around me; my woman, my friends, my family, my team.   To say “my” doesn’t clearly denote how I feel – not ownership, but privilege in being able to be part of their lives and have them in mine.

This is the essence of entrepreneurship at its best – good people, good goals, good development and good prospects.  It’s a pity that it isn’t always like this.  It does, however, make me appreciate the good times when they are here.

Thank you all.

Innovation isn’t nearly as mind-boggling today when compared to what startups were doing in the late Seventies/early Eighties when I started working with them.

That’s not surprising when you consider who gets funded these days.

A recent Reuters report found that the majority of Silicon Valley startup founders that receive Series A funding come from the same pedigreed cohort: either they previously worked at a large, well-known tech firm, a well-connected smaller tech company, they previously created a successful startup, or they come from one of three universities—Stanford, Harvard, or MIT.

Not surprising when you consider the attitude of Valley stalwarts like Paul Graham of Y Combinator, who publically stated that he would be unlikely to fund someone with a strong accent or a woman.

It’s been 15 years since I first wrote about the proclivity of managers to hire people like themselves and more over the years showing it leads to homophily and the negative impact that has on a company.

It seems it’s no different for investors.

They are funding people like themselves who were raised, educated and worked along paths similar to their own who they either know or are introduced to them by a friend.

“Like a lot of the investments [Instacart] that have come our way, a friend of a friend talked to us about it, and told us about it, and encouraged the founder and the CEO to come and chat with us. One thing led to another.” –Sequoia partner Mike Moritz

When you fund from a homogenous group, no matter where they are, creativity and innovation are watered down, because those groups tend to be insular and badly interbred talking mostly to each other.

If you’re fishing from a pond of rich white guys, you’re only going to get ideas that address the needs of rich white guys.

AKA, people like themselves.

Flickr image credit: HikingArtist

One of the biggest problems I run into when I work with startups is what I call “familiarity blindness.”

I see it most frequently in the content I am asked to revamp, but also occasionally in the products/services themselves.

Familiarity blindness is the result of being immersed in an idea at its most basic level from conception on and the result is often a version of not seeing the forest for the trees.

Typically, tech entrepreneurs are in love with their tech. They love to talk about it and it often forms the basis for discussion with their peers.

What tech entrepreneurs often have trouble accepting is that most customers don’t care.

That’s why it’s so important to know how your product/service is actually viewed by your market and that means getting out of the incubator or coffee house into the real world and talking to your target audience—not just talking, but really listening to what they say. (See yesterday’s post for help identifying and understanding your value proposition.)

When it comes to content, for your website, ads, articles, etc., “less is definitely more.”

Skip the technology, no matter how cool or groundbreaking, or even what it does, unless you are talking about what it does for your users/customers.

The exceptions are articles and interviews with technical media and even then what it does is usually more important than the technical description of how it does it.

Generally speaking, the only thing your potential users/customers care about is how your product/service will benefit them.

And they want to know quickly and painlessly and to understand with little mental effort on their part required.

Join me tomorrow for a look at familiarity blindness when pitching.

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