TechStars Seattle 2011 – Kicking Off and Ramping Up!

 It's that time of year again! TechStars Seattle applications for the 2011 program opened yesterday.  Judging by the number of applications already received, the response is huge!! 2010 was a great success for the entrepreneurs and the entire Seattle community.  We’re really excited about making 2011 even better. 

We are on a mission to make the Seattle startup scene kick ass ASAP by:

1. Recruiting even better quality founding teams (which will be hard given how well the teams in year one did)

2. Improving mentor engagement and 

3. Increasing investor engagement post Demo Day 

Reviewing the Results from 2010…they look great to me…how about you?

TechStars Seattle had a really impressive inaugural year.  We took the top 2% of applications and 8 of those 10 companies are still active (7 funded, 1 bootstrapped).  I’m really proud of all the hard work that went into that ratio and the sheer talent that graduated out of TechStars Seattle.  

Kicking off 2011: How to Apply? 

This year we’re expecting even more applications – making competition for those 10 spots even more fierce.  We’re looking for smart, cohesive teams that can iterate quickly and execute.  If you are one of these people then join forces with TechStars Seattle and see what three months of top-notch mentorship could mean to your startup.

Want to play the TechStars Game?

We’re laying an element of fun onto recruiting for Techstars.  To play the TechStars Game, login with Facebook Connect at the bottom of this page then start broadcasting applications and sharing from the toolbar. You'll automatically start accumulating Influence points!  Check back often at www.techstars.org/seattle to track your points, badges, and rank.

 

FirstMark Capital is spamming our companies with this email

Everyone one of the CEO's in our portfolio got an email like this.

Hi [CEO NAME],

Hope this note finds you well.  I’m with FirstMark Capital, a $2B venture firm based in New York City.  A friend of mine who runs a startup here in Manhattan shot me a note to check out [COMPANY NAME] over the weekend, and I had chance to spend some time on your site last night.  I found your [SITE DESCRIPTION] to be really interesting, and thought that your company seemed to mesh well with several of the investment verticals that we focus on as a firm.  I’m not sure if you’re familiar with FirstMark or not, but we invest in early-stage tech companies in a number of sectors like emerging media, retail/commerce, vertical apps & services, and infrastructure software, among others, and count a number of awesome companies like SecondMarket, Shopify, Clickable, Knewton, and Riot Games as current investments.

If you’ve got a few minutes sometime this week or next, I’d love to connect and learn more about your company as well as introduce you to FirstMark and tell you more about some of the ventures and initiatives that we’ve been involved with recently.  I look forward to hearing back on if and when you might be available.

Best,

Paul

No harm in this really....just kind of funny.  And thought I'd call it out. Sincere inquiries like this are always welcome and it's hard as a CEO to sort out the wheat from the chaffe. It might be worth a follow-up call if you see a fit but be aware that it's not all about their love for your unique business ;)

 

Try scrubly and clean your contacts TODAY!

At launch party for scrubly -- my friend Bob Thordarson new company.  Interesting story. Single business guy started out with the observation 3 years ago that "contacts" -- i.e. info on people like phone, cell, and email are something that you want to synchronize across multiple devices.  Good insight. He then went about trying to build a product with a development group in India. It's taken him and them longer than they'd like but I have to say that the result is a very nice designed first step toward the original vision. I recommend that you try it out here and give him feedback @bobthordarson 

Our Founder's Co-op office supply list

 

little yellow lined pads (3 dozen)
post it notes
pens blue generic (4 dozen)
pens (blue) 1 dozen better ones
staples
coffee cups 
plastic cups 
paper 2 boxes
some kind of snack
Nuts(almonds) sea salt & vin
white board markers 
paper clips 1 box
eraser
paper towels (lots)
clorax wipes for white boards
cream (for coffee)
dishwasher soap (cascade)
scrubber brush for sink
dishwasher liquid for sink (i.e. joy)
sponges
And of course Makers Mark

 

When money = relationship

I had an entrepreneur in my office that I've been working with for a few years. He's took a small angel round that I'm an investor in. The business has taken longer to get off the ground and in the last 6 months they're really starting to make strides. That said, the company is running out of cash and is about 10 to 15K per month from breakeven. Yesterday, he was in my office talking about raising 50K to get him to breakeven. I told him he should try to raise 200K so he can play for success. The terms of the 200K are going to be tough to the company and existing investors. The entrepreneur is doing all the right emotional things to make the company a success. He could easily throw in the towel and call it a "lesson learned". Instead, he wants to plow ahead. In the meeting, he told me he was committed to seeing this company through to success. In that moment, without knowing the terms of the deal, I told him that if he was in -- then I am committed to participating in this next round (personally and not as a fund). It was the right thing to do. And fortunately, I'm in a position to be able to do that.  In that moment -- money equaled relationship and support.  And fortunately for me -- I didn't miss the moment. There have been plenty of times where other friends I've worked with in the past have asked me to invest and support their ventures financially and for whatever reason -- I missed the moment when money equals relationship. This is a rare and important moment when even a little money gives the right emotional support and solidarity to help an entrepreneur. I suspect that this applies to famliy matters as well -- but tomorrow -- time willing, I'll write about instances where I have missed this opportunity...and how it bums out the asker as well as me. 

Definition of a hot startup

The following is from the WSJ
"Tableau defines “rocket ships” as companies that reach $50 million in annual sales in six years or less. Only 28% of the nation’s top software companies met this mark. Novell Inc., which pulled in nearly $1 billion in revenue in 2008, touched the $50 million mark the quickest, just three years after it was founded in 1983…A “hot company,” in this analysis, is one with $50 million in revenue in the first seven to 12 years." 
Number of years it took for publicly-traded software companies to break the $50m in revenue barrier:
Adobe: 6 yrs
SuccessFactors: 7 yrs
Microsoft: 8 yrs
Red Hat: 9 yrs
Concur: 10 yrs
Omniture: 11 yrs

How entrepreneurship is like dieting?

I'm on a diet and have lost about 10 pounds. It's been a gradual weight loss. The diet is simple. 

  • No pasta
  • No bread
  • No snacks after 7PM

Superbowl weekend was a bad diet weekend. I had all three of the above. Ate some pizza, spaghetti, corn chips with salsa, and some chocolate at 9PM. Both days were lost. 

Then it occured to me -- dieting is about the present and future, not the past. Woke up yesterday and got back on the routine. Feel on it today. 

And that's where the metaphor of entrepreneurship begins. Entrepreneurship starts with 3 simple rules. You make them. Stick to them. When you fall down and feel like shit -- start over. It's that easy. That's an Andy Sack line :-) 

Why is dieting so hard? 

Randall Lucas hard at work at RevenueLoan

Randall lucas photo

If you can't tell, I'm posting a lot of pictures a test of the saying -- a photo is worth a thousand words. Here's a photo of Randall with a Cheshire grin -- working hard at RevenueLoan. The last few months both Randall, John Roper, (whose photo I'll try and post this week because he looks like such a hippie developer) Christian Jacobsen and I have been working to make this business really move. Stay tuned for some interesting developments. 

You should check out Simply Measured

Simply Measured is a great story. The company started just over a year ago and was known as Untitled Startup (truly www.untitledstartup.com was the URL).  Damon Cortesi and Aviel Ginzburg were the original co-founders.  The company attempted to crowdsource their way to a business in the social media space. In the process of doing so, they created row feeder over a weekend. RowFeeder gained instant traction because of it's simple message and implementation -- the site was known for tracking tweets in a spreadsheet.  But it wasn't until Adam Schoenfeld, the third co-founder, joined the company in April that the company really started to make sales and realize that it was in the business of taking data and giving the data back to customers so that they can manipulate it, play with it, and analyze it -- usually in a spreadsheet. Their customer list is friggin impressive -- Major PR companies, Fortune 500 companies, and social media elite all use the product.  They have over thousands of customers relationships in less than a year! Check out the products rowfeeder and exportly. Guess what -- simplicity sells -- when executed well. This is going to be a big company one day soon -- you should check them out now!  

 

 

Yes. I am back on my blog. And for those of you who are wondering, yes, I will write posts that actually contain a thought or two. I want to provide you all with a bit of context to my last few photo posts:
i) I purchased an iphone and am discovering the wonders of mobile photography
ii) I want to make my blog more visual
iii) I meet with lots of investors and entrepreneurs in Seattle and thought that having their photos on a blog would be helpful and fun
iv) I struggled with coming back from 3 months of not blogging and found the act of photoblogging a nice incremental step.

Make sense? Does that help?

TechStars, StartUp America and David Cohen ....job well done!

Sometimes you work with great people and you know they're great. Those people have a harder time surprising and impressing you because of the high expectations you already have.

Well, I want you all to know that I am blown away by the work David Cohen (and to a lesser extent Brad Feld) have been doing with TechStars. In the past six months, they published a great book (that I wrote a chapter in) -- Do More Faster. And today, David Cohen and TechStars were part of the launch of StartupAmerica.  What's so awesome about TechStars -- and fundamentally different than Y-Combinator is that TechStars isn't about David Cohen or Brad Feld -- it's about supporting innovation in the cities across America. It's about job creation. It's specifically not about Silicon Valley.  TechStars focuses relentlessly on getting great entrepreneurs to help other aspiring entrepreneurs to reach for their dreams and in so doing, to get funded, build great companies and create jobs. TechStar's community approach is super effective! I say all this...and I say it as a point of differentiation but in no way is it intended to detract from the power of what Paul Graham is doing with Y-Combinator. They're great and Paul is doing a great job.  In fact, Y combinator had some super interesting news this past week too and I hope to comment on that in a post later this week. The purpose of this post is to acknowledge that David Cohen has been kicking some serious ass and making great stuff happen. I want him and others to know how impressed and proud I am of him.  Well done Cohen!

If you want to learn more and understand why I am so impressed....read on.... below is David Cohen's post today --worth reading if you want to know about StartUp America...and why I think David is so impressive. 

I'm at the White House today and we're just kicking off the announcement event for Startup America, a White House campaign to celebrate, inspire, and accelerate high-growth entrepreneurship throughout the nation. This coordinated public/private effort brings together an alliance of the country’s most innovative entrepreneurs, corporations, universities, foundations, and other leaders, working in concert with a wide range of federal agencies to dramatically increase the prevalence and success of America’s entrepreneurs. One of the key factors is access to mentorship.

We are incredibly honored to be launching the TechStars Network today as a featured partner of the White House Startup America campaign. We've had tremendous results with TechStars, and now we're formally helping other programs to have the same impact.

The new TechStars Network launches with 17 independently owned and operated seed accelerators that replicate the mentorship-driven startup acceleration model pioneered by TechStars. The TechStars Network provides opportunities for networking, sharing best practices, training and ongoing support for members of this regionally diverse network, and includes members from Miami to Seattle and from Nashville to New Orleans, and beyond.

We've been contacted by around one hundred organizations from around the world that wanted to replicate our mentorship-driven model. It would have been easy to shut them out, and not speak to them. Instead, we asked: "How can we help?" We've spent countless hours actively helping these other communities to replicate our model. The reason is simple: It's good for entrepreneurs and entrepreneurial communities. We don't need any other reason to help.

Through our experiences with TechStars, we have seen what happens when an entire community comes together to support entrepreneurs. We're more than flattered by the activity of other programs that have leveraged our mentorship-driven model and have improved or tweaked the design. In the end, we believe that developing strong relationships and strong communities creates amazing results. Taking this up a level and building a global network of like-minded accelerator programs is what the TechStars Network is all about. To say the least, we’re full of excitement to see what we’re able to build together as a connected community of credible accelerator programs around the world.

Over the last 6 months, we've fully documented our process and are now making it available to members of the TechStars Network. We're taking the lead on making sure we're driving best practices into the seed accelerator model so that it best serves entrepreneurs everywhere. We'll be organizing an annual conference both for the innovative leaders of these programs and also for the founders who attend these programs. Through the TechStars Network, we're sharing our legal documents, ensuring that mentors who contribute their time are recognized and rewarded, streamlining access to investors, ensuring that entrepreneurs have easier access to these programs, sharing deals and resources, and more. What this means for aspiring entrepreneurs is that there will be more high quality seed accelerators in more places, with more mentors, and more support for them.

At TechStars, we've always been focused on quality over quantity. We've vetted all of the members of the TechStars Network, and will make sure that the bar remains high for future members of the network. We're thrilled to be working in partnership with these other great programs and expect the TechStars Network to grow over the coming years.

We are very excited to announce that Jenny Boyd, who helped build the Kiva organization, will manage the TechStars Network.

Here's a video introducing the TechStars Network that is currently being featured on the White House site for Startup America.

 

 

Breakfast with Bill McAleer of Voyager Capital

Bill McAleer photo

On Friday, I had a long planned breakfast with Bill McAleer. I've known Bill for a number of years in Seattle. We talked about TechStars, RevenueLoan, fund raising for a venture firm (i.e. Voyager and Founder's Co-op) amongst other things. There wasn't a particular agenda, point or lesson to the breakfast -- really just a desire to stay in touch and break bread in person. This informal get together over food is something that I've found a very important element to my job and to accomplishing my professional objectives. 

I had my standard goto breakfast -- egg whites with bacon and he had their gluten free pancakes. Gotta love Portage Bay Cafe....and breakfast with Bill McAleer. :-)   

Should more angel investors consider a royalty based investment model?

I just answered this question on quora -- please vote it up here.

I absolutely think that royalty and revenue based finance should be considered by angels and funds. Ok -- I'm biased. I'm so convinced that revenue based finance is important that I started a company called RevenueLoan in addition to my equity orient Seattle based angel fund Founder's Co-op to pursue this model. Why? Because I think that there are lots of instances and lots of companies where this model is preferable for the entrepreneur than straight equity. Let me explain, revenue based investments have the following benefits when compared to straight equity:

  1. Generally, revenue based investments are cheaper for the entrepreneur than straight equity. Often, significantly cheaper. If you think about selling equity -- often that's for 20% of the company. One can think of that equity sale as a 20% perpetual royalty.
  2. Revenue based investments don't involve significant control provisions. Entrepreneurs who don't want the hassle of dealing with investors on the board of directors are attracted to royalty based finance.
  3. Revenue based investment align entrepreneur and investor incentives in growing revenues and growing the revenue line and thus, growing the business. This is GOOD! And the right focus. When the entrepreneur and business increase sales, the entrepreneur wins and the investor wins. When growing sales takes longer, the entrepreneur isn't punished. This is GOOD!
  4. The main objection to revenue based investments in my opinion revolve around the precious commodity of cash and not profit. It's true, revenue based investment require the company to have sufficient margin to pay them off and they take precious cash out of the company. That said, no investment is free and the benefits of revenue based investments far out weigh the costs.

In short, in my opinion, royalty and revenue based investments are a great tool for angels to have in their tool chest.  

Just my -- albeit biased -- $0.02.