Friday's advice for wannabe MBA entrepreneur

A 25 year old MBA student called me from MIT. I'm always happy to help an alum.  She had already demoonstrated the ability to do a little bit of research and reach out to people and introduce herself.  I told her that's a good skill to have.  My career advice was :

  • Meet with the constituents of the start-up scene in Seattle
    • Entrepreneurs
    • Press
    • Investors
    • Big companies
  • Strive to start your own company before you're 30 -- doing it while your young gives you great exposure, great learning, and you're not encumbered by life's expenses yet.
  • Consider working at a big company for 4 or 5 years -- learn an industry and learn a function. I've never done this before -- so it's a bit of do as I say not as I do. My career has been small company after small company. It's useful to have experience working at one of the big tech companies.  

You're not young forever. Take advantage of it. Now that I'm forty -- I'm learning that I have some perspective of time. Sometimes that's useful....sometime it's an impediment. I'd gladly be 25 again. :-) 

TechStars is in Seattle Nov. 4 -- Seattle angel investors should attend

TechStars is a mentorship-driven investment program in Boulder and Boston. They fund 20 new startups every year from over 600 that apply, and have been operating for 3 years now in Boulder and one year in Boston. TechStars is like a "boot camp" for those companies highlighted by some amazing mentors. Somehow they let me on that list and went to both Boulder and Boston this summer to help these companies, and had a blast doing so. TechStars companies have achieved some notable exists such as Intense Debate (to Automattic/Wordpress), Socialthing (to AOL), and Brightkite (to Limbo).  

Every year, the TechStars companies get together for a reunion in a different city. This year, I'm excited to tell you that it's happening here in Seattle! As part of the reunion, TechStars reserves a part of one afternoon to have some of their companies that are still raising money pitch investors. About 75% of the companies that come out of TechStars have been angel or ventured backed historically, so this is a great chance to see some interesting early stage companies and to check out what TechStars is all about. In addition to the company presentations, there is a panel on angel and venture investment trends that I'm on along with Brad Feld (co-founder of TechStars and Managing Director of The Foundry Group), Greg Gottesman (Madrona), Stephen Hall (Vulcan Capital), David Cohen (co-founder of TechStars and angel investor), and Chris Sheehan (runs CommonAngels in Boston). I'm really looking forward to it and if you're a Seattle area VC or angel investor that is interested in attending, please contact me and I'll get you an invitation.

Reflections on Craigslist, Twitter, and Facebook

I co-teach a class on entrepreneurship at University of Washington. Yesterday's class was on social marketing. I'll make the following anecdotal observations:

  • Craigslist still rules in my opinion -- hands down it's the most impressive company next to google online. 30 employees and over 100MM in revenue from approx 5 cities.
  • Twitter -- has the most potential to change the web.  BUT -- many people don't get it, don't use it, try it and stop. What makes Twitter interesting is despite these things -- it's moved the web into real time and has the potential to really change marketing online.
  • Facebook -- 5 years in and they still don't really have a business model. They spend 150MM per year and are just reaching cash flow break even. I think they're secret sauce should be in the virtual goods area and not in advertising.

The 12 step program for unignited startups

This is a simple program aimed at start up addicts who find themselves in their company that is not meeting up to their expectations. 

  1. Admit you have a problem
  2. Figure out if the problem is you or the market (or both) -- Note: you can't change the market just your approach and behavior in the market
  3. Make a list the things you can control vs the things you can't control
  4. Prioritize the list of things you control and make a 90 day to do plan
  5. Hire a coach to assist you in hitting all your 90 day goals -- buy them dinner for payment
  6. Get out of your comfort zone
  7. Assess what skills and characteristics are preventing your business from succeeding -- acquire those skills 
  8. Buy the 7 habits of highly effective people. Read the book and do all the exercises in it.
  9. Subscribe to Tony Robbins on Twitter.
  10. Get everyone aligned behind hitting your company 90 day goals
  11. Stay positive. One foot in front of the other.
  12. Ignite.

Preparing for a board meeting

My biggest tip for a successful board meeting is preparation. I usually start the process for a board meeting 1 week in advance and write down the one or two questions that if we do nothing else that I want input on from my board members. Board meetings are for investors -- but in an early stage company they're more a way for management to attempt to step out of the day to day details and see the forest for the trees. I usually put the questions I want input on down on the first slide and then build my presentation around those questions. I like to include financial information, a quick cash flow break even (or out of cash forecast) analysis, and a list of items from the last board meeting. Moreover, I always try and sometimes succeed in getting the presentation out to board members two days in advance of the meeting. Try it -- it works for me.

What to do when the hockey stick doesn't happen on your timeline?

It's been almost 2 years since we sold Judy's Book for a loss.  Recently, I've been reflecting upon the experience with the benefit of hindsight and of time. 

In the past, I've already blogged here about mistakes I made at Judy's Book : the failure of aggressive customer acquisition, poor market selection, and too ambitious of scope in categories and geography. All these factors led to a local web site that lacked necessary critical mass.

As a reminder, there were two parts of Judy's Book --
i) as a company we were a local reviews social network for 24 months and then,
ii) we shifted directions and we were a local deals site for 12 months.

As I look back on the business decisions I led during that time, I see a company that was early in a market, executed pretty well, but didn't have the perseverance or patience it needed to succeed.

I remember looking for a hockey stick moment and when it didn't happen on MY timeline, emotions kicked in. I got down on myself, the company and the opportunity.  Emotionally, I became depressed and that led to greater impatience. The daily emotion toll of unmet expectations clouded my business judgment and prevented me from appropriately evaluating the situation  -- it undermined my assessment of the value of assets we had created.  You know when you feel like shit, everything tends to look like shit and reinforce the feeling.

What I should have done

  • Personally:
    I should have taken a minimum 2 week vacation. Yep -- totally counter-intuitive. But I should have gotten out of the storm to gain perspective.
  • Business wise :
    I should have downsized the local reviews site and let it grow organically with at most two developers rather than trying to convert the entire thing into a local deals site. 
    I should have gone back to the original documents and revisited the initial theses of starting the company. I likely would have been re-focused on the social network and viral acquisition strategies that had us excited about the opportunity in the first place.

A business that changes directions is fine -- but comes at a great cost of TIME to a founding team and to investors.

Remember that perseverance is critical to success. Success rarely happens in a straight line and the emotional toll on entrepreneurs is HUGE. Don't underestimate this. Exercise a lot. Take a break and then come back and kick some ass.

The parallels between a start up and a new born baby

I got his update from one of the CEOs we're invested in. I thought I'd share it with all of you. e

It is always funny to me that in the startup world we have a tendency to measure our success and our failure by the minute.  It's a bit like being a parent of a newborn when every smile, coo, and dirty diaper are analyzed, studied, read into and the news of each is distributed to any friend or family member who will pretend to care.  I recall sitting next to my perfectly healthy daughter's crib for hours listening to ensure she was still breathing and then turning around and blogging about it ("Stayed alive through the night!  Success!").  Now that she's twelve all I have to do is log into Facebook to find out what she's up and and to make sure she's still breathing (there's a bit more to this whole parenting thing, but you get the analogy).  

I fully understand that success will be measured by what this company becomes three to five years from now, but that won't stop me from acting the paranoid parent for now and assessing and analyzing everything our little company does in these early stages.  And it is in that spirit that it drives me crazy that we appear to be about a month behind plan.  That "plan" was by no means scientific but it is a benchmark that we have and will continue to hold ourselves up against.  So we will fight like hell to get that month back, but a month behind is where we are at this point.

Entrepreneurs need to find that extra gear

Below is a story I told to 2 aspiring entrepreneurs in the Founder's Co-op portfolio today:

I used to swim in high school. I had a coach, named Mark O'Reilly, who had been my swim coach since I was 7 years old. I swam competitively -- I was a back stroker and used to practice everyday after school from 3 to 5PM. About midway through my Junior year of high school, I went to practice and that day had an awesome practice. I swim every "exercise" as if it were my last. I kicked ass during that practice. When I was done with practice, my coach came up to me and said if you do that everyday, you'll be able to compete nationally. He told me that "that extra gear" is what was required of me. I knew what he was talking about. My commitment that day in practice was extraordinary.

I told the entrepreneurs today that they needed to find their own extra gear if they wanted to make their company a success. I believe they have that extra gear -- but I can't do it for them. 

We'll see how practice goes the next couple months. I'm watching and cheering them on! My tip for all of you aspiring entrpeneurs is the same : find your extra gear. Leave all that you have on the game field (or in the pool).

Pho vs BLT -- battle of the lunches at Founder's Co-op

We have a tradition at Founder's Co-op. Every Tuesday, we have lunch together at our offices. For the past year of existence the predominant lunch offering was Pho. We get the pho from Eastlake Terriyaki on Eastlake Ave East.  The owner of the store is nice and she boxes our lunches up. As the number of pho has increased to around 20 per week, we started asking for a discount on the $7+ soups. We weren't looking for much but we were spending about $600 per month on soup at the same restaurant and at least wanted to be appreciated. Various members of Founder's Co-op asked for a discount. We told her that we liked the soup but the cost of the soup in aggregate was going to force us to look elsewhere. Her response to our repeated requests for some discount was to say, "I give you a good portion".  I'd say, yes, we know but we'd like a discount or a buy 10 get 1 free given the regularity of our business.

Along came Hamlin deli. The high end convenience store next door. It's closer to us. Their sandwiches are great. I told the manager there that we ordered about 20 lunches on Tuesdays and would appreciate a discount. She response was warm, affirming, and decisive. I'll give you 1$ off every sandwich when you order 10 or more sandwiches. That's about a $20 savings per week and $80 per month.

Granted this is small dollars...and tribal to talk about. However, in the land of bootstrap businesses and frugal start up living, $80 per month is $80 dollars per month! And more important than the money is the emotional acknowledgment that our business matters to the business. So for now -- goodbye to pho and hello to BLT. 

My advice to start up companies --pay attention to customers desire to have their business appreciated!  It doesnt' take much to get customers to switch when the competition doesn't show appreciation.

What 3 things would you tell your teen self?

If you could travel back in time and meet yourself as a teenager, what three things would you tell yourself?

Submitted by Digital Scrapbooking.

 This is another "question of the day" from Typepad....and I've left the opening sentence that Typepad submits automatically on your behalf so you all can see it -- simple, smart, and effective!

My answer....I'd tell my teen self the following:

  1. Have more sex....but that likely goes without saying. Most everyone will write that answer.  More specifically, be sure to follow through on potential relationships or opportunities to kiss Diane MacDonald, Judith Goldman, Justin Hodiak, Alice Tasman and probably 20 or more others.  If anyone reads this and wonders why they're not listed in name-- please email me and I'll add you :-)
  2. Finish your computer science degree -- I entered Brown Univ as a CS major and came out a religious studies major. I never finished my cs studies....and then I went to MIT and had a second opportunity to compele the degree and decided just to do an MBA. I would have liked to have finished the degree. 
  3. Buy lots of domain names -- In 1994, there's going to be this thing called the internet -- buy lots of domains. It still blows me away that I started an internet company in 1994 and don't own 1000 or more domains!

Typepad new implementation is very sharp and sexy

I was beginning to wonder what moveable type was doing. It's been a long time since I was impressed as a customer. I have to say that their most recent release is a vast improvement on their core product. It actually may save me from abandoning them for a new platform like wordpress. Features that I have caught my eye after playing with it:

  • The overall user expereince has improved. It's easier to blog and track your blog traffic. Every step of the writing process feels more intuitive than it did before.
  • Integration with twitter and facebook and a whole host of other platforms like dogster and amazon -- effectively they've implemented a feature that we at Judy's Book used to call write once publish many.
  • They've implemented a follow feature very similar to twitter. This makes the prospect of discovering other typepad blogs and other authors much easier.
  • They've introduced a question of the day which gives bloggers who don't know what to write about a suggestion of authoring. These questions of the day are sponsored by a company and include a link ot that sponsor. This is very smart revenue creation and allow them to sell unique content and links to lots of companies. This is powerful and smart -- and is also well done. 

Well done guys.  The changes make me happy to be a customer!

What I would splurge on this year to improve my future?

This question was presented to me by Typepad -- the blog platform that I'm still using even though I know I should switch to wordpress.

I'm playing with the Typepad new user interface and one of the things they offer is a question of the day to inspire a post. These questions are sponsored and have a built in link in them (i've include the exact text below):

"What's something you would splurge on this year to improve your future?

Presented by Intel, Sponsors of Tomorrow."

Pretty crafty SEO and monetization strategy -- nice job guys.  Anyway -- I digress. Back to the question of the day - things I'd splurge on:

  • More time -- If there was a way to buy more time I would buy it.
  • 4 romantic weekends (1 per quarter) with my wife: I'd go to London, Hawaii, Saigon, and Santiago. Oh -- and I'd teleport myself there rather than take the flights.
  • I'd get a personal trainer 3 x per week
  • I'd get a personal chef and shopper too. They would fold laundry when not making me tasty salads for dinner. 
  • I'd go to the magic house outside of LA with my son and I'd go to the best waterpark in the country wth my daughter (I believe it's in AZ).
  • I'd buy a convertible lexus
  • I'd buy health care for the US -- and introduce medical mal practice reform.
  • I'd buy peace of mind.

Tweeting vs. Blogging: you can follow me on twitter at @asackofseattle

I'm wondering if other people are considering tweeting as a viable and attractive alternative to blogging. In the last 30 days I've found the experience of tweeting to be easier and more engaging than blogging. I'm still blogging but the thought of just tweeting is attractive to me. In the end, I think the twitter medium and user experience is just lighter and easier than blogging. 
I suspect I'm not alone in considering a transition to tweeting. In fact, I suspect that there is a significant shift from blogging to tweeting and that this new form of microblogging is likely to far outpace the growth of blogging.
As a friend pointed out, I'm already a fan of the "short" blog post. I generally try to make a point and not belabor it in my blog posts.  If you read this blog, don't worry...I'm not quitting the blog. But I'm interested in my desire to tweet more over blog more and think there's something to the phenomena. I'd also suggest you follow me on twitter #asackofseattle

Where's there business opportunity on twitter?

I met wtih a young entrepreneur this morning who is trying to answer this very question. And he's trying to do it quickly.  The business has about 100K in cash, is burning about 20K per month, and is broadly in the marketing services for twitter space.  He's closed a couple customers that are paying him but he's really trying to fgure out two things:

  1. What can generate short term cash
  2. What is the best business for him to be in in 12 months

He's a smart capable entrepreneur who has already learned a lot about bootstrapping. He's taking immediate action on #1 -- and is both trying to sell services and to run some interesting tests on twitter. I think that's smart -- the challenge of these two competing tensions (above) in a small company is that the entrepreneur will end up going where the market is today and miss the opportunity 12 months from now.  That said, cash is king and doing tasks for the market and collecting payment allows you to be in business in 12 months. It's simple strategy -- but effective :-)
I've seen various forms of the tension of these two directives in our portfolio. The nice thing about focusing in on what generates cash is that it forces the young company to find out where the market is now. The thing to watch out for is getting too scatter by different needs and thus missing real market trends.