Seattle 2.0 awards should be fun...Marcelo Calbucci deserves his own award!

Below is a portion of an email I got from Marcelo Calbucci today. It's basically a primer on buzz building using social media and SEO.  I've been totally impressed with Marcelo's efforts as he has created Seattle 2.0.

No -- this post isn't me paying Marcelo accolades because I'm a finalist in the angel award category. Simply put, Marcelo has done an awesome job and I'm impressed as you all should be in what he's been able to do "part time" and on weekends with Seattle 2.0. Nice job - Marcelo! Truly Kudos to you!

Twitter, Pictures, Blogging & Facebook

You can make a huge impact for Seattle. We want to achieve enough buzz to get picked up on Twitter trends, TechMeme and for all of our friends to find out about how great Seattle is for startups. We invite you to:

·         Tweet (or update your FB status) on the afternoon that you’ll be attending the awards. Use hashtag #seattleawards (on Twitter) and feel free to link to http://www.seattle20.com/awards/

·         Blog if you can before the award and on the next day about your experience.

·         Feel free to bring digital camera and camcorders. If possible, tag them “seattleawards”.

·         Tweet throughout the evening with hashtag #seattleawards.

Tell Your Friends to Watch Live

We’ll be live streaming the event on http://www.seattle20.com/awards/live/

Send email to your friends, share on Facebook, Tweet it and blog about it. Jason Calacanis from Mahalo, which is a huge personality in startup-world, bragged about getting 600 viewers on his live show. Help us get to 1,000! Live Stream will start around 5:30pm.

Seattle Start Up Shout out: GIst

Gist announced it raised 6.75 MM from Foundry Group yesterday.  TA has done a great job of moving this companny from its origins of 1.5 years ago.  I helped Gist and Vulcan Partners for a short bit around the founding of the company and have tracked its progress till now.  I think the company has a lot of potential and an exciting potential as it re-invents the inbox from what it is now into a great tool for sales people (and everyone else). You should check the company out -- I expect good things to come from them!

Entrepreneurial Huevos and Steel Underwear Moments

The following was written by a good friend  -- it is good advice (author to remain nameless).

What makes entrepreneurs special and successful is how they navigate tough situations.  It’s the hidden “barrier to entry” for many start-ups and entrepreneurs:  not everyone has what it takes to take the real risks necessary to be innovative in building a company (risking your investors’ money, risking your income, risking pissing people off, risking other people’s livelihoods (ie, your staff, etc)).

You have to have the “huevos” to be able to wade into the tough moments with just the right BALANCE of strength and humility, courage without cockiness….and most importantly vision.  Vision is what allows you to realize that you cannot build any business when you are beholden to third parties (your company and your customers being the first two parties) – in other words, if an agency could/would be able to prevent its contributors from using your product (by preventing your access), then you never had the right strategy/vision in the first place.  Take strength and comfort from that last sentence, and let it guide your emotions – you will be successful so these kinds of moments are like “tests” of the strategy.  Kind of confusing, but hopefully, you know what I mean.

I had many moments like this at my previous company – and I always got through the “steel underwear” moments just fine by being honest, transparent, enthusiastic, humble and strong all at the same time.

A vc blew and an entrepreneur jizzed his pants

Forgive me for the suggestive nature of the title of this post. It's a play on the song which I've become a huge fan of ...if you haven't heard the song you should go here and listen to it. 
I was recently reminded of the time (1996) when Ted DIntersmith of Charles River Ventures came to our offices at abuzz and expressed interest in what we were doing. I was SO excited -- it was exciting to have someone acknowledge what we were doing with the potenital of investing a few million dollars to make our dream real. Well, when he came to our offices on Galen St. in Watertown, MA I think I jizzed my professional pants. I smile just thinking about that time. I never did a deal with CRV -- Ted was just doing his job and checking out "neat"technology companies in the Boston area. I share this story because entrepreneurs shouldn't get too excited when a VC calls on them - don't jizz your pants - there can be lots of reasons for the call....and a vc call doesn't make a deal or a company. That said, it's natural to be excited -- and by all means take the call and see where it leads.

Ask dumb questions....remind yourself of important answers

I recently was talking to a friend of mine about Cooler Planet and he asked me some very simple questions about the business like:

  • Who is your customer?
  • What's their buying process like?
  • What's the market size and your market penetration?
  • What's your renewal rate?

The questions were simple and the answers -- and the conversation with him reminded me of the core components of this business. Very, very useful exercise to do for each one of our companies!  If you (or someone you know) asks simple questions, the answers may surprise you and result in re-thinking priorities.  

One of the things that became particularly obvious was that it had been some time since we had looked and analyzed our own business data. My friend reminded me that this data often is easily obtained and is critical in terms of driving decision making. I know this -- it's like business 101 -- but it took his dumb questions to remind me!  Maybe they weren't such dumb questions!

Leadership and experience win more in this market

Given the downturn in the economy, experience and leadership win more.  Given that every company I know is tightening their belt and trying to do the same with less -- experience in prioritization and in belt tightening is more important than in growing markets. The danger of entrepreneurial missteps is higher in this market because there is less financial cushion available (i.e. next rounds are harder to come by).

What's the deal with NDA's?

I've had three entrepreneurs ask me to sign NDA's recently. As an entrepreneur, everyone knows that NDAs really aren't worth the paper they're printed on.  I occasionally used them with big companies, as a means of communicating to the big company that I cared about the value of our intellectual property. But, they generally just slowed things down and became an item that future acquirers asked about why I was inconsistent in the use of them. So, I stopped using them. Now, as an investor, entrepreneurs should know that most knowledgeable investors won't sign NDAs. As an investor, I see lots of deals -- some of which are similar to others and I don't want to have an entrepreneur :

  1. Feel like they gave me an idea that is theirs and to have a piece of paper that leads to some legal letter. That's lots of unnecesary brain damage for me.
  2. Angst about their intellectual property so much that they won't talk about it without legal paperwork.
  3. Believe their intellectual property is so unique that they're afraid to talk about it. I think ideas are only good when feedback is provided and the whole NDA process seems to limit the entrepreneur's ability to get lots of feedback

Pigs get slaughtered: take the money when it's offered

Knowing when to sell and at what price is one of those questions that doesn't get talked about very much. In the game of business, success is measured by dollars. It makes sense that people are motivated by selfishness and "greed" and the general desire to improve one's financial standing. This isn't a bad thing -- it's what capitalism is based upon.  The danger for an entrepreneur comes when it comes time to sell part or all of their company.  The danger comes when an entrepreneur tries to over-optimize the value of its asset and thereby doesn't take a critical offer of money when it's offered.  In my mind, Friendster is the poster child of pigs getting slaughtered. This company had the opportunity to sell for 30MM in pre-IPO stock to Google but turned down the offer.  I bet the entrepreneur regrets that decision!
Recently, I've seen a case of an entrepreneur doing a great job tkaing the money to grow his business (I can't talk about the fiancing publicly because it's not announced yet). The entrepreneur realized in the rpocess of fund raising that they had probably under-priced the round by 20% but rather than go back and redraw the deal and screw it all up, he opted to plow ahead an dnow has the necessary (critical) cash to grow the business. And I have another friend who is selling his business for a price he knows isn't the best, but it will give him a really valuable win at a critical time in the market. Remember when the deal comes, the bird in hand is really valuable ....and pigs get slaughtered.

Learning to walk: Spend time on deals with high likelihood to close

As an entrepreneur -- and now as an investor, I've been reminded lately about filtering one's deals with a heavy emphasis on likelihood to close.  Why?  We all have big deals that might move our company and fund(s) into the neon lights of prime time -- but I've learned that sometimes taking a bunch of baby steps helps build momentum to actually being able to walk toward the big deals. If you start out to walk right away, the likelihood that you'll fall or take longer to learn to walk is higher. In other words, focusing on likelihood to close as an important screening mechanism prevents you from wasting time and ensures that you're moving forward even if it's not as fast you'd like (it never is - is it? )

Value of vision is enormous

To simplify things, there's two parts to making a business -- or more accurately two sides to the same "business" coin. One part is vision and the other part is execution.  You need both. At times in my career, I've been struck by the value and beauty of one side over the other.  Today, I'm marveling at the value of vision. The value of knowing where you want to take a company is critical.  It's particularly critical in early stage companies where one misstep can kill a company.  At each of the Founder's co-op companies, we're going through a process of reviewing our 2009 operating plans and adjusting when necessary.  Figuring out what direction to go -- how to grow -- is not easy. In the land of limitless possibilities (theoretically speaking) and very limited cash -- choosing a good direction is not easy and choosing a great direction is really hard.  Ultimately, the CEO needs to take all the inputs of the market into their brain and spit out a direction gut choice -- and then go execute on it.  One note I might add to this is that the amount of cash actually makes the need for vision greater. The fact that each of our companies is cash constrained limits the degrees of freedom and has the company focus on what can increase short term cash flow while advancing the business.

The dinner after the meeting is the meeting

Last night, we had a founder's co-op LP meeting. The meeting itself was good. There's been good progress in the portfolio. After the meeting, about half of the LPs went out to dinner and that's where the real meeting occurred.  It's amazing what a little food and wine does for conversation both personal and business. I encourage everyone to let informal conversation take place over dinner -- they're highly productive meetings.

Revenue is the only milestone that counts now

It used to be that release of beta, hire of a VP, or first 100K eyeballs were milestones in the life of a high tech company and in the eye of investors. They showed progress. Today -- these events are just that events. They are not events on the way to revenues. Revenues show progress -- and if you want to be more specific, revenues are milestones on the way to cash flows and profits. 

John Stewart v Jim Cramer is so worth watching

This interview made me so impressed with John Stewart.  I was mildly impressed that Jim Cramer didn't get totally defensive and seemed to handle the interveiw better than most.

If you haven't seen the John Stewart v. Jim Cramer video -- it's a must see.  Here's a little vintage Stewart here (the full episode -- must watch!! The first 5 to 7 minutes are a bit boring but it's worth waiting for the full interveiw ) here, and here  -- it's so worth watching!!