The opportunity cost of thinking about opportunity cost -- is real

I spoke to an entrepreneur today who asked me about the opportunity cost of his startup. His company was 2.5 years old and doing about 30K per month.  They weren't growing fast or getting rich and had enough money each month to pay the principals. He told me that he was starting to think about opportunity cost of his time.  

I told him he was 1/3 of the way through a marathon and that I thought we (as entrepreneurs)  were spoiled by the 1990's internet bubble.  The days of quick exits and instant millions are gone.  In my opinion, it takes at least 5 years to build value into a company -- sure there are exceptions and it's wise to look for them. But don't be deluded by the green pastures of an easy path to profits.  Doing a start up is hard and the line between success and failure is all too thin.  It's a CEO's job to quiet the conversations about greener pastures and opportunity cost in his mind -- and to focus on leading his company to a market where margins are good and money can be made.  Getting to break-even so that you can play again another day is a major accomplishment. Don't under appreciate it. 

When I told this to the entrepreneur, he looked at me as if I told him something he already knew. He was relieved (I think) and disappointed because it was still hard work ahead. 

As I've been known to say -- "chop wood, carry water" and "be careful out there" .  

Want to learn more about TechStars in Seattle? Come get free coffee at louisa's cafe on 4/6/10 at 8:30AM

If you want to learn more about TechStars in Seattle you should attend Open Coffee on Tuesday 4/6 at 8:30AM at Louisa's Cafe on 2379 Eastlake Ave E in Seattle. Brad Feld will be attending and the two of us will be answering questions in an informal way about the program. If you come, there will be good free coffee provided by TechStars. Sorry, you'll have to pay for your blueberry scones. Please help spread the word. 

I'm looking to hire a part time marketing assistant for TechStars Seattle

I haven't even fully crafted the job description yet but I know I need some help getting the word out. If you know someone or are interested in helping on the marketing and administrative side of TechStars in Seattle I'd appreciate it. When I get the job description written -- I'll be sure to post it. Should be in the next 24 hours. 

Help me spread the word on TechStars Seattle applications

TechStars is not about me, it's not about Founder's Co-op, it's not about the list of investors. TechStars is about making Seattle an awesome and supportive place to build very successful technology companies. 

TechStars is about creating community and supporting technology entrepreneurship in Seattle.  We hope you will join the effort in whatever way you can. Please blog, email, retweet and generally help spread the word that TechStars Seattle applications are open.

To apply to TechStars, click To apply to TechStars, click here.

How TechStars came to Seattle?

Below is the somewhat long story behind TechStars Seattle. I usually don't write long blog posts but I'm super excited about TechStars and applications for the Seattle program open today. A number of people have asked me the story behind TechStars coming to Seattle -- so here it is in its full detail.  You can apply for TechStars Seattle here and theschedule of important dates for the program are here.

I first contacted David Cohen in January 2008. At the time, I had just started working on Founder’s Co-op and wanted to speak with David about his experience with TechStars. I thought that TechStars was onto something and I wanted to learn from what David was doing and consider doing something similar in Seattle.

Chris DeVore, my partner at Founder's Co-op and I decided we didn't want to mimic a 3 month incubator in Seattle – in our opinion, TechStars and Y-combinator were both occupying that market space pretty well.  I opted to start Founder’s Co-op, a mentor driven seed fund.  When I spoke to David on the phone, he was kind enough to share some legal documents with me. Shortly after that call, I became a mentor of TechStars Boulder.

In January 2009, I learned that TechStars was expanding to Boston. I emailed David Cohen and Brad Feld and said that if they ever considered expanding to Seattle I would be interested in working with them.   David and Brad both encouraged me to spend more time in the summer at TechStars to get to know the program. They said that they were interested in exploring the possibility of working together.

In May 2009, I went to my 20th college reunion at Brown University in Providence RI. While I was back east, I stopped by at the Boston TechStars 2009 orientation. Turns out that Shawn Broderick, an old friend of mine from the 1990’s Boston technology scene, was the executive director.  Shawn asked me to speak to the incoming class of TechStar companies.  I did – and I’m not sure exactly what I said – but as I spoke I choked with emotion.  The weekend had already been a trip down memory lane for me – walking the campus at Brown already pre-disposed me to feeling nostalgic. But I wasn’t prepared for the raw energy emanating from the founders of the 10 Boston TechStars companies. I spoke to the founders of the 10 companies. I told them what it was like for me to start abuzz in 1996. I shed a few tears. I got into my car and called Brad Feld and Jerry Colonna – the venture capitalists who invest and bet on me in, abuzz technologies, my first company.  I decided then – that Seattle needed a program like this and that I wanted to run TechStars Seattle. Now, I just needed David Cohen to be willing to open TechStars in Seattle.

In the summer of 2009, I made another two trips to Boulder in an effort to get to know the TechStars program and David Cohen better. After the second trip, David said that he was very interested in opening TechStars Seattle but didn’t want to make a decision until October 2009.   He also wanted to get to know the early stage technology scene in Seattle better.  He went about meeting entrepreneurs and investors in Seattle and even came to a Founder's Co-op LP meeting.

By September 2009, David told me that he had pretty much decided to expand to Seattle but he wanted the community of entrepreneurs to drive the expansion of the program.

In early November 2009, there were a series of dinners in Seattle between Matt McIlwain, Greg Gottesman, Brad Feld, David Cohen, and myself. 

The next thing I knew --  in a 24 hour period Greg Gottesman and David Cohen both called and asked me if I’d be willing to run TechStars in Seattle alongside Founder’s Co-op, the seed stage fund I run with Chris DeVore… and I agreed. 

With the help of Greg Gottesman, I then approached the entrepreneur and venture capital community in Seattle and asked them to collaborate with us in supporting the launch of TechStars Seattle in August 2010. What happened was amazing! We received huge support from an amazing list of experienced entrepreneurs willing to act as mentors. In addition, nearly all the venture capitalists in the city elected to materially support Techstars Seattle !

The list of investors includes:

  • Jeff Bezos Investment Group
  • Divergent Venture Partners
  • Draper Associates
  • Founders Co-op
  • Foundry Group
  • Ignition Partners
  • Linden Rhoads (UW, center for technology commercialization
  • Madrona Venture Fund
  • Maveron Venture Capital
  • Montlake Capital
  • OVP
  • Rolling Bay Ventures (Geoff Entress)
  • Second Ave Partners
  • TechStars Central
  • Trilogy Equity Partners, LLC
  • Voyager Capital, LLC
  • Vulcan Capital(Paul Allen's group)
  • WRF Capital

Turns out, the Seattle startup scene has totally embraced TechStars….and I think that Seattle entrepreneur community is the big winner.  

That’s how TechStars came to Seattle.

Applications open for TechStars Seattle today :  March 23, 2010 and the program starts in Aug 2010. 

If you’re an early stage entrepreneur, you should consider applying here.

 




TechStars Seattle Applications Open Today

Just wanted to remind everyone that Techstars Seattle applications officially open today. if you're interested in applying to the program, I'd encourage you to do so here. 

I think this is going to be a blast -- if you've got a hot new idea for a technology business -- and you want to have the biggest success possible, applying to TechStars is likely for you!

Business tip of the day: interview 10 target customers before building products

The most common mistake I see technical entrepreneurs make is when the entrepreneur pushes solutions onto a market without talking to real customers in that market.  Getting feedback and input is the life blood of an entrepreneur. More is better than less because it lowers the likelihood that you get steered in the wrong direction. 

I know this because I made this mistake in the past -- and spending years pounding one's head against a market wall pushing is not fun (take my word for it). I now am increasingly obsessed with the amount and type of market research that entrepreneurs do before building product. 

Before talking to me about investing in your company, make sure you've really interviewed and understood at least 10 potential target customers. 

Why is passion so important to a startup?

You hear investors and start up gurus talk all the time about the importance of entrepreneurial passion but I haven't seen anyone talk about why it's so important. It's almost as if everyone thinks the answer is self-evident. In my role at Founder's Co-op, I'm seeing multiple companies at the same stage struggle and think I have identified some (by no means all) of the reasons passion is so critical to a startup founding team. Passion gives founders :

  1. The ability to continually motivate and re-invent: By definition, founder's don't have all the answers. They are in a learning mode. They are learning what customers wants, how they're going to charge, how they'll scale, etc.  They are often crude implementations of what they aspire to be and as such, founders inevitably will have to overcome rough patches and patches where they don't know what the right answer is. Enter passion. Passion makes overcoming this lack of answers possible and fun. 
  2. The willingness to work longer hours than the average person. 
  3. The energy to sell customers, employees, and investors possible. It allows you to overcome all the "no's" you'll hear day in and day out. 
  4. The will to take feedback on limitations of yourself and your corporation and actually do something about it. 
  5. The desire to persevere and persist when the going gets tough.  

In a nutshell, passion is the word people use to attach to all the emotional aspects of founding a team that require energy, inventiveness, fun to overcome.

Why Founder's Co-op made a seed investment in Untitled Startup?

Tc-mash

 

There's a simple thesis at play in this investment.   UntitledStartup is a great example of the following investment thesis:

i) People First

ii) Market Second

iii) Product Third

Oh and above all -- while you're doing all the above -- has a sense of lightness and fun.  I've spent the last 60+ days co-officing, contributing and collaborating with Damon Cortesi and Aviel Ginzburg (the "gentlemen" and I use the term loosely depicted in the photo below) as they've figured out what their startup was going to do.  The funny thing is -- I made the decision to invest and have invested and I still don't know exactly what it is they're going to do -- and neither do they. Now that may sound crazy -- stupid even. I don't think so.

Damon and Aviel currently embody the new way to build a startup. They are working hard to invite their early adopters into every aspect of the business -- in a kind of continuous collaborative innovation.  When you go to their site -- be sure to go to the backstage  tab. Why is this important? Well -- hopefully, it's going to accomplish the following:

i) Product Market Fit -- Getting feedback and dialogue from the marketplace in every aspect of the product development process increases the likelihood that what they build will serve people's needs

ii) Ensure early customer enthusiasm -- the first 10 and the first hundred customers of any product are always the hardest to attract and engage. The manner in which Untitled is conducting business,  hopefully brings UntitledStartup these first early critical customers.  Moreover,The customers of the US will view the product development as a process and thus will roll through the necessary bugs etc that inevitably occur in the release of a new product. Well that's the theory anyway. 

iii) PR and Buzz -- rising above the noise of all the other startups out there is HARD. Having a story and an angle and a sense of fun make accomplishing buzz a little bit easier. It doesn't guarantee it -- but it certainly doesn't hurt.  

I'm super excited to have made this investment and look forward to the unfolding story that all of you help write at UntitledStatup!

Important life ritual - the college ski trip

Spent last weekend with 3 guys from college. We all attended Brown University and graduated in 1990. Starting in 2002, we began an annual weekend ski trip. This photo below is from our 8th annual get together last weekend. This simple ritual has become an increasing important and amazing marker in time in my own life and in the life of our collective friendship.  When we started getting together, I believe I was the only one married and had one child. Today, we're all married and have 10 kids in aggregate. It's the regular check in as life progresses and the accumulated history that makes the ritual so rich.  

All this is to say -- I had a great weekend this past weekend. We skied at Snow Basin for 3 days. The weekend was filled with skiing, competitive bowling on the wii, alcohol, food, massages, hot tubs, and good conversation. Thanks to my friends for making this ritual a priority -- I love you man.  

SLC ski weekend
 

Maker's Mark vs. Patron: Founder's Co-op defining drink dilemma

Yesterday, we had our now regular all monthly Founder's Meeting at the Founder's Co-op offices. It. was a really good meeting!  At the start of the two hour meeting, I declared that Founder's Co-op and the Founder's meeting were different -- we're different than other "investors" and "venture capitalists" and one way to signify the difference is by making drinking bourbon as a part of the investor-founder meeting. 

The only problem was -- yesterday afternoon before the meeting when we went out looking for bourbon nearby -- all we could find was bourbon. So I took a shot of Patron....and liked it. So, now -- big decision for next meeting is to stick with Maker's Mark or switch to Patron? Decisions!

Why is having a defining drink important to Founder's Co-op?  I'm reminded of my first start-up in Cambridge -- we were called abuzz technologies. We used to work all hours of the day and night in the mid 90's and then climb on top of our building and sit on the roof top and drink whiskey. I'll never forget the freedom and fun and bonding of the founding team that occurred on those nights. Having a defining drink at Founder's Co-op is an homage to that memory. I also think it sets the right tone for sharing at the founder's event -- not everything that is shared is glory and victory... and it's important to have a forum for those conversations. Even if you don't drink -- Chris and I do and will start the meetings off with a toast to that kind of meeting. And --No -- you don't have to drink to be part of Founder's Co-op....but you do have to understand the spirit of having a defining spirit (pun intended). 

Vacation value

I returned this week from a week long vacation to Whitefish, MT.  We went with 2 other families and spent the week snowboarding and skiing.  I didn't check voice mails or emails very much if at all. We'd ski all day until three or four o'clock, go home sit in the hot tub, have dinner, watch Olympics and go to bed.   

It was a relatively simple holiday -- but I found my head clear up and was able to think with perspective after a few mad rushes down the mountain.  Much of the perspective came from just doing something other than regular routine of work. 

I'm excited to be back at work and feel like I'm going to have a busy year. TechStars is going to be ramping up next month.  We're closing a number of deals at Founder's Co-op.  More to come -- I need to ramp my blogging back up too!

Focus is hard work

Just had a meeting with one of our portfolio companies. During the meeting, we decided again to stay focussed on the current market and improving all the foundations of the business. It's not sexy -- and at times -- not exciting but it's the hard work that's required to build a business that is worthwhile.  After the meeting, I said to the CEO -- the problem with business is that once success and profits come, we'll forget days like today when success wasn't so clear and it was actually hard to decide to stay focussed. 

Funny email miscommunication between Tony Wright and I

Tony Wright of Rescue Time and I had a major miscommunication over the past year.  Tony used to come to the Seattle Open Coffee's regularly at Louisa's Cafe on Eastlake on Tuesdays at 8:30AM -- yes, the open coffee's are still going on.  For about 6 months straight, we'd have coffee every Tuesday. We became quite friendly.  

At an Open Coffee about a year and a half ago, Tony asked me to invest in RescueTime. I can't remember exactly why -- but I chose not to invest. Shortly thereafter, he stopped attending Open Coffee.  At first, I didn't think anything of it -- I thought he was just busy. But as time wore on, I began to wonder if it was personal.  I emailed him. 

In April 09, I wrote Tony at his gmail address:

I've pinged you a  couple times without a response....thought I'd try again. 
Not sure how to interpret your lack of response....would welcome the opportunity to talk to you. 

The only reason I'm making this effort is because I liked you and your sudden absence strikes me as odd. Perhaps I'm just misreading the whole thing ....just let me know. 

In July 09, I wrote Tony again at his gmail address (You can tell I'm starting to get annoyed):

Tony,
I found myself talking about you the other day to a mutual friend. This is what I said -- "he (i.e. you) used to come to open coffee all the time and I thought we were friends. I'm sure I must have done something wrong -- probably around YC or his fund raising. I've pinged him a couple times to talk to him and get feedback....because I actually really liked him (i.e. you).  It's one thing to have the sense that you've hurt or bothered someone or done something wrong ....it's another, to ask and to get no feedback.  "

I prefer to deal directly with disconnects and miscommunications among people....your lack of response is discouraging. I thought higher of you.

If I did do something wrong -- I'd like to apologize for it.  

If you want to not respond, that's your prerogative. 

On Jan 5, 2010, Tony wrote me an email congratulating me on TechStars Seattle and said how great he thought it was.

Turns out, Tony had created a Gmail filter on my name to filter out my weekly reminder emails about Open Coffee -- he didn't want his inbox crowded with regular annoying emails. But the filter (accidentally) filtered out all emails I sent him. Thus, he never got any of my emails asking him what was going on. 

Kind of funny. Kind of sad. Be careful about modern day email miscommunication -- happens all the time!

Tony is now a regular again at Open Coffee -- Glad to see you there.