This One Leadership Quality Will Make or Break You
Mr. Myatt writes an interesting article on the importance of ‘pursuit’ as an attribute for successful leaders. I would argue that this holds for successful entrepreneurs too. Without relentless pursuit to attain something; be it excellence in service, valuable new relationships or a viable product, both corporate leaders and entrepreneurs will fall victim to complacency and/or be surpassed by competitors. I believe Mr. Myatt’s hypothesis echoes the same underlying theme of Do More Faster. To attain a thing, you must pursue it, you must work towards it, you must Do.
What We Look For
This post by David Lee really resonated with me. Not the broad theme of founder/market fit as a means for investment, but the value behind entrepreneurs solving problems for themselves. I’ve encountered this same situation many times throughout my career. When trying to solve a problem, market a product, or launch a company, success largely depends on how well you understand the problem/product/market. If you are solving a problem that you have experienced, you understand it well and can evaluate multiple solutions for viability. If you are trying to solve a problem for someone else, or for the concept you have developed to represent a group of potential users, you may struggle to identify the true solution or overestimate the value of your offering.
I’ve probably read a dozen different articles on the benefits of dedicating distraction free time to thinking about a subject. I agree with this, but would add that finding the right environment to accomplish deep level thinking will depend largely on the person. For the author of this article, it was a walk down the street. For me, some of my best thinking time occurs at 38,000 feet. An airplane (at least for now) is one of the last places where most of us are really and truly disconnected from communicating with the outside world. No text message notifications, no twitter updates, and no new email. In that type of digital distraction-free environment, and usually right after the drink service, I like to take out a notepad and sketch out my latest ideas and business strategies.
Status Update 12/20/2011
It has been a few weeks since my last update, and I feel a bit guilty about that. However, during the last two weeks I have travelled to Shanghai and Shenzhen, China and made my first trip to Seoul, Korea. I have also helped lead my company’s bi-annual, weeklong sales conference, so it’s safe to say I’ve been busy.
Despite my crazy schedule (and helped by too much time on a plane), I have been voracious in reading material on the fields of start-ups and venture capital. I breezed through the excellent book Do More Faster by Brad Feld and David Cohen, and have read pretty much every post on the baker’s dozen of VC/start-up blogs I have in my RSS feed. Next up, Venture Deals, a book by Feld, Mendelson, and Costello.
While my work schedule conflicted with several networking events I really wanted to attend this past month, my stated plan is still on track. Following two and a half months of daily reading and research on VC, I feel much more knowledgeable on the subject, and therefore believe that I am in a good position to begin networking with local VCs. In fact, I have recently been in contact with the CEO of my former company who is now working as an angel investor / VC, and we are scheduled to meet for coffee over Christmas break. I will also reach out to the local VC I met two months ago at the Innovation Works / Alpha Lab demo day, with the goal of scheduling a catch-up meeting early next year.
So, all-in-all, despite a few schedule based setbacks, I’m pretty happy with my progress to date. Looking forward to learning more and engaging with VC’s in the coming months.
Crowd-Funding Brings Unease
Overall, I'm a fan of crowd funding services such as Kickstarter, and I think there could be a real social benefit to expanding equity investment opportunities in startups. However, completely opening the gates for any company to raise funds online would almost certainly end in fraud, with the ones most likely to get hurt also being the ones who can least afford to.
Peter Thiel will give you $100K not to go to college, opens 2012 Thiel Fellowship class
There are many paths to success and not all travel through a traditional University degree program. I truly enjoyed my undergraduate and graduate time at Purdue, and I credit the school and faculty with developing my independent problem solving ability to a high level which has been instrumental in my career success to date. That being said, I would jump at the opportunity to work with and learn from the creative, entrepreneurial minded team at the Thiel Foundation. I believe this is a fantastic program, which will hopefully be duplicated by other successful entrepreneurs (Elon Musk or Jack Dorsey?).
How to Pitch Angel and VC Investors: 10 Tips on Communicating Traction
Investors like to mitigate risk. Risk mitigation can be accomplished by demonstrating traction. Traction is defined as quantifiable measurements which illustrate the current health, progress to date, and growth potential of your business.
The Way Companies Are Getting Financed Is Completely Changing
Like the technologies they are developing, Startup funding is evolving rapidly. While the traditional VC path is still available, so too is crowd funding, startup accelerators, and super angels.
What being hopelessly single taught me about pitching
You can't expect to get what you want without asking for it. Do not let fear of rejection stop you from acting.
How to Think Creatively
Creativity is not a genetic trait, but rather a process that can be learned and improved upon with practice. Understanding how creativity works is paramount to unlocking creative thinking.
Most VCs Are Investing All Wrong
Trying to quickly flip Me-Too technology companies is slowing real technical innovation. The biggest rewards (returns) will go to those that back companies solving the biggest, and hardest, technical problems. A great interview with the Founders Fund.
Get the Mentoring Equation Right
A Successful mentor-ship requires objective forethought by both parties. The mentee must clearly understand and articulate what they want to learn from the mentor, and why they believe the mentor is suited to provide that knowledge. While the mentor must honestly assess if they have the necessary time and experience to satisfy the mentee's needs.
Bank of America Retreats, Tail Fully Tucked
Corporate jargon provides no value to customers, and in some cases, can damage a company's reputation. Communicate honestly and authentically to customers, they aren't stupid, and they can see right through corporate BS.
Steve Jobs Solved the Innovator's Dilemma
Great Products > Great Profits. Reversing that order can lead to dire consequences due to subtle differences in motivation.
SayAhh’s Revenue Projections
Financial forecasts for startups are detailed fabrications at best, but a thorough analysis of the the drivers and assumptions used in a startup's projections provide real insight on how well the startup understands its business. This post is also a good refresher for Accounting 201.
Ready to pop? 10/31/2011
If the startup investment space is indeed in the midst of bubble economics, it must surely be ready to POP.
Why do I believe that? While I'm not an investor or founder in any current startup, I think I've learned a few things from the last two bubbles our economy has experienced. The biggest red flag, in my opinion, is the trend of 'dumb money' jumping aboard the ship right before it sinks. It happened in both the tech bubble of the late 90's and the housing bubble of the mid 2000's.
So, who is the 'dumb money' in venture capital? Inexperienced and/or out of place angel investors. For instance, just because Justin Timberlake played the role of a successful entrepreneur/angel investor does that mean he now has the prerequisite knowledge to be a successful angel investor in MySpace? Double that for Leonardo DiCaprio who just invested in Mobli. And here are a few more for good measure. These are no doubt talented individuals, but how far does individual talent in sports, music, or acting carry over to providing real world value to a startup technology company? Only time will tell...
If the above shows that dumb money is entering the game, has the smart money really left? Here is an excerpt from Bloomberg's Oct. 21 article on Q3 VC investments [emphasis mine];
An increase in deals, with 42 percent going to early stage companies, shows venture capitalists are optimistic they will be able to support future growth even as they struggle to raise money themselves, Canning said. Such investors raised $1.72 billion in the quarter, a drop of 53 percent from a year earlier, according to the National Venture Capital Association.
To summarize - celebrity investors are jumping in with both feet, yet fundraising from experienced capital sources has dropped by 50%+. Yeah, this should end well.
5 years from now, the overall VC industry should be in a much better place after the dumb money gets shaken out.
Demo Day and Solid Progress 10/27/2011
Yesterday I attended what I'm sure will be the first of many Demo Days along my path towards venture capital. The event itself was fantastic. Well organized, very well attended, and with over a dozen entrepreneurs pitching an assortment of very impressive young companies. Kudos to the folks at AlphaLab and Innovation Works for both orchestrating this Demo Day, and for their involvement in funding and providing guidance to the demoing entrepreneurs. Business accelerators like these are exceptional organizations. The companies they help spawn, even if only a few succeed in the long term, are a key ingredient towards stimulating job growth, revitalizing our economy, and keeping America competitive.
Back to my time at Demo Day... In addition to learning about some cool new tech, Demo Day provided an opportunity to meet a local VC that I had been introduced to via email. That introduction came from a connection I made only a few days earlier at PTC's Venture In breakfast. Amazing how effective proper networking can be!
I met with Ned (I didn't ask permission to use his full name on this site, so playing it safe), a partner with a small but highly regarded venture firm specializing in engineering driven startups in the cleantech, medical and technology markets. Upon hearing my interest in the VC industry as a career path, Ned immediately discouraged me from any such notion. I found that funny, because it seems to be the immediate response from every VC I've ever met, despite the fact that they will go on to tell you how much they love working in venture capital and that it's the best job in the world.
Anyways, following his obligatory discouragement, Ned said he would be happy to help me learn more about the VC industry. We only had a few minutes to chat (the event was on a coffee break from presentations), so following brief introductions, I cut to the point and asked about the potential to do volunteer work for his firm, per my plan. Apparently, volunteering to work for free is not an uncommon request in the VC world, as Ned's firm has received similar requests from local grad students also hoping to gain exposure to the field. Due to the small number of deals his firm does per quarter,Ned couldn't promise a steady stream of work, but occasionally helping their firm with market research and diligence was a possibility.
Following our meeting, I sent Ned an outline of the fields in which I had operational experience. We traded a few additional emails, and while the opportunity to help research deals for his firm may be limited to a few times a year, I now have an open channel to an industry expert. A truly valuable connection in an industry which guards is privacy very carefully.
VC Networking & the Ellsberg Method 10/20/2011
No one ever really teaches you how to network, or at least I never received much formal instruction about it in the 6 years I spent in undergrad and B-school. Funny that in a world where Who You Know is just as important as What You Know, we overlook the education of How you can effectively get to know the Who. Fortunately there are people who have spent considerable time and effort to define the How of effective networking.
Cue efficiency guru Tim Ferris, whose blog has a very informative piece on effective networking, written by Forbes contributor Michael Ellsberg, which I recommend everyone check out.
While I hadn't planned to actively network within the VC community for another few months, an opportunity arose today which I couldn't pass up. The Pittsburgh Technology Council, which is a very proactive organization helping the local startup community, hosts regular "Venture In" meetings over breakfast. Today's meeting was headlined by a member from Robert Bosch Venture Capital. RBVC is the venture arm for the Bosch Group, which just happens to be the parent company for my organization. Since I felt we were all in the same family, I attended this Venture meeting to try out Mr. Ellsberg's networking recommendations.
I have been to many networking events before, but rarely did I feel like I really made connections with the people I met. Today was completely different. I opened myself to the room, and within a minute of getting coffee, was engaged in an energetic conversation with the VP from a local app development company. That conversation quickly turned into a larger group discussion of about 6 others, and subsequent conversations continued through breakfast and after the meeting. My openness and genuine interest in others, their business, and their challenges led to a much deeper level of conversation than I had experienced in any previous networking event.
Following this mornings event, I was offered an introduction to the principal of a well known VC firm in Pittsburgh, and I shared several ideas on how to validate the market for an entrepreneur who has a very cool technology, but was struggling to prove its market viability to investors.
I've already followed up with two new connections, and plan to touch base with three more tomorrow.