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

Have you heard about Juicero?

A Silicon Valley-style solution for eating healthier.

“Today over 90% of Americans fail to consume the recommended servings per day,” founder and CEO Doug Evans wrote in a Medium post to unveil Juicero. “We call this the Produce Gap, and though there are many causes for it — from how food is marketed and subsidized to where it’s distributed — one of the primary reasons people don’t eat enough fruits and vegetables is that they see it as inconvenient. … And that’s what Juicero is all about. We’ve made it our mission to help people attain optimal health by making it easier for them to consume fresh raw foods in the most convenient way possible.”

And it does for a mere $700, plus whatever each juice packet costs (one packet = one glass of juice).

Entrepreneurs love to talk about changing the world and some actually do make a difference, but this isn’t going to help those in need — it’s a product for the haves.

The goal is to bring the cost down to $200, plus packets, which still requires a considerable amount of disposable income.

Those involved are a who’s who in the Valley.

He had a lot of help though from some Silicon Valley greats who weighed in on the design, including Apple’s Jony Ive along and famed tech designer Yves Béhar. The years spent perfecting it have been supported by venture capital that’s approaching $100 million from top tier investors like Artis Ventures, Kleiner Perkins Caufield & Byers, GV (formerly Google Ventures), Thrive Capital and Campbell Soup Company, among others. The co-founder of smart thermostat Nest, Matt Rogers, is a Juicero investor and board member.

The ultimate juicer for the 1%, in other words, for themselves.

Talk about self-indulgent masquerading as public interest.

Maybe someday a model will emerge for the next 25%, but products like these will never change the real world or the health of the rest of us.

Image credit: Juicero

I’ve been around startups since the late 1970s; long before dot com and software took over the spotlight.

And what I learned about VCs back then was different from VCs now.

Back them, most VCs were guys who had started or helped start companies, with strong operational, not just technical, and strategic background.

Sad to say, most VCs with under 25 years experience often don’t know what they’re doing, because they have never created/built a company, while the rest are just bankers masquerading as VCs following “sure bets.”  

Granted, VCs have always had much in common with lemmings, preferring to fund “me, too,” companies, as opposed to earth-shattering, high risk products/services that actually moved society in new directions.

From my perch back then on the edge of the VC ecosystem I watched as the “names on the door” retired and were replaced by Wall Street wunderkinds, whose only skill was manipulating money.

What didn’t change was their lemming-like, follow-the-leader investment strategy.

Things haven’t improved much.

While more partners and  “names on the door” have operational experience, the investment ecosystem is more closed-door incestuous than ever before.

So unless you are one of the mostly white, mostly male, right school, strongly connected, entitled few, start your company with a bootstrap mentality from the beginning — not as a fallback contingency.

Waiting for funding is like asking for permission.

Flickr image credit: billsoPHOTO

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

I thought a lot about what I wanted to say today, but realized I’d already said it more than once.

And I didn’t feel like spending my energy on a rant that would most likely just be preaching to the choir and, if not, wouldn’t change anyone’s mind.

So this will be short, direct and honest and I’ll let you fill in the blanks.

 First up, a comment from Michael Moritz, the chairman of Sequoia Capital and one of the most successful investors in Silicon Valley history, on why there are no women VCs at Sequoia.

“We look very hard. What we’re not prepared to do is to lower our standards. But if there are fabulously bright, driven women who are really interested in technology, very hungry to succeed, and can meet our performance standards, we’d hire them all day and night.”

Lots of backlash on social media, so all I’ll add is what a crock.

Hard to believe that anybody with half a brain or awareness would say something so stupid — not to mention that it’s a blatant lie.

The “not prepared to lower our standards” has been the reason to exclude women, people of color, Jews and whomever else is out-of-favor at the time.

Makes you wonder why a guy who makes his money looking at the future can’t at least come up with a modern reason for the bias.

Flickr image credit: TechCrunch

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

As you know I don’t follow Twitter, but I don’t really have to, since sooner or later, tweet threads that would interest me become the basis of something I read.

A few weeks ago an article in Business Insider cited a series of tweets from VCs moaning about their stressful existence and that saying they needed a support group.

Support group? Really? I haven’t heard of any VC suicides, which isn’t the case with a number of other demographics.

Ron Conway was quick to shoot the need down.

“I’m embarrassed that a VC would think their job is stressful when starting a company is the most stressful thing ever.”

(And while I agree that starting a company is extremely stressful, I don’t think it qualifies for the “most” slot, since doing so is voluntary.)

However, it did give me an idea as follows.

1. Recruit two or more star shrinks and/or get Stanford involved.
2. Create a private online community for VCs (using their company address and fully verified)
3. The site should be heavy on security and use biometrics instead of passwords for logins.
4. The community should be either SaaS or membership dues.
5. Groups should be created for various problems, such as business-related stress, internal politics, family-related stress, etc.
6. Each group session would be moderated by the appropriate shrink.
7. Private sessions would be available by appointment.

Here is the most important part.

1. Incorporate the entity as a non-profit.
2. Pricing should be similar to an exclusive country club.

Here is my reasoning.

• It needs to be expensive to prove its value to its market.
• VCs are competitive and will join for bragging rights.
• It should be non-profit so the money could go towards paying mental health costs for tech community members who can’t afford it and have no insurance.

So, if someone out there wants to take this and run with it as a non-profit, I’ll be happy to help. My contact information is on the right.

Image credit: HikingArtist

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.

It’s funny how things we read decades after a minor happening will bring that memory to the fore.

In the 1990s, when I was a tech recruiter and the original net was booming with startups, a young man asked me if I worked with startups, because he wanted to join one. I told him that startups had been my main market since the late Seventies (when I went to work for MRI).

He scornfully informed me that was impossible, since there weren’t any startups before the Internet and he wanted a recruiter who understood what he was looking for.

I was grateful, since I didn’t have any clients interested in his combination of arrogance and ignorance.

That memory was triggered when I read The VCs of BC and learned just how wrong he was — entrepreneurs were alive and well 4000 years ago; I think anyone who toils anywhere in the startup ecosystem will also enjoy reading it.

These letters survive as part of a stunning, nearly miraculous window into ancient economics. (…)  during one 30-year period — between 1890 and 1860 B.C. — for one community in the town of Kanesh, we know a great deal.

And the parallels of today, including a vibrant entrepreneurial approach complete with venture capital, Wall Street-style players, esoteric financial instruments and risky deals.

The traders of Kanesh used financial tools that were remarkably similar to checks, bonds and joint-stock companies. They had something like venture-capital firms that created diversified portfolios of risky trades. And they even had structured financial products: People would buy outstanding debt, sell it to others and use it as collateral to finance new businesses.

There are a lot more fun details and interesting stories — the kind that are great to share over a few beers or a bottle of wine.

Hopefully it will encourage you to enjoy a bit of downtime — you’ll be more creative and productive for doing it.

Guaranteed!

Flickr image credit: Carole Raddato

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

If you’ve been around long enough you find déjà vu connections everywhere.

I had a strong sense of it reading that security has become a priority with VCs.

According to The Information, computer security companies are being brought on to advise other companies about startups they are thinking of acquiring, and VCs are including cybersecurity experts as part of their due diligence when they look to invest in companies.

Security has been an after thought, if that; a feature that the company would get to as soon as [whatever] happened.

The déjà vu hit because that is the same attitude companies had towards quality once-upon-a-time (some still do).

After conception, architecture, design and manufacturing were done the product was sent to QC (quality control) and back up the line if there were problems.

In many cases the quality flaws were actually designed into the product or the manufacturing process itself, which made fixing them very expensive or impossible.

The same problem happens when security is the afterthought.

Any fool knows that if the wrong grade of steel is specified for a bridge or the spec is changed to facilitate speed or budgetary concerns the bridge is likely to fail sooner rather than later.

Zukerberg’s oft repeated “move fast and break it” is proving to be a deal breaker in a more ways than one.

Image credit: HikingArtist

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-a–dozen 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