Startupville: The hot new social game you play with your future

Posted: September 21st, 2012 | Author: | Filed under: Startups | 4 Comments »

Welcome to StartupVille!

It was a few mint juleps in to the evening when Joe Heitzeberg and I started talking about the common experiences of startuphood.  “I just maxed out one of my credit cards”, Joe told me, consulting his iphone nonchalantly at 1 in the morning.  “I should get a badge for that.”

We both looked at each other, and the idea for StartupVille was born.

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A cap is not a valuation

Posted: September 12th, 2012 | Author: | Filed under: Startups | 10 Comments »

(apologies in advance: the content of this blog post is for startup financing geeks)

I was having drinks with a dozen founders who should know better.

“So YC company valuations are up around $10mm.  And some are $20mm+.”

“What!?” I exclaim.  “That’s crazy!  It’s insanely high.  And, wait… I thought YC was using convertible debt for most of their rounds?”

“Yes, they are.  They’re doing convertible debt with a $10mm-$20mm cap.”

AARGH.  Come on.  This is bananas.

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How to be half as effective

Posted: September 11th, 2012 | Author: | Filed under: Startups | 8 Comments »

When I founded Ontela with my friends Charles and Brian, we were all sick of big companies.  There were a lot of things we wanted to do differently, but one of the big ones was to build a company that wasn’t a faceless bureaucracy.  (Hindsight: good goal)

A company where everyone was impactful.  (Absolutely!)

A company where nobody felt disempowered. (Everyone should be empowered to do their job, for sure!)

A company where everyone was a part of the decision making process.  (Wait… everyone should be a part of every decision making process?)

A company where nobody was left out! (Now something has gone dreadfully awry.)

We made one of the classic startup blunders.  We confused individual empowerment, which we all wanted, with its precise inverse: decision by committee.

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Pyramid Pitching

Posted: September 9th, 2012 | Author: | Filed under: Startups | 8 Comments »

Everyone knows of the mythical elevator pitch. You find yourself in an elevator, rocketing towards the penthouse suite of a downtown office edifice, when you realize that the person standing next to you is a powerful and influential investor. She asks what you do, and you calmly deliver your pitch. Just a sentence or two, properly chosen.  The doors open, the conversation continues, the IPO is near at hand.

I’m here to tell you that the elevator is real. While you may not be trapped in a small ascending room, the potent entrepreneur’s life is full of inflection moments: brief opportunities to shift the destiny of your company. And a proper pitch is essential to take advantage of them. But contrary to what you might have heard, the solution isn’t the 60-second elevator pitch.  In fact, the elevator pitch is only a simple, basic example of a much more powerful tool: the Pyramid Pitch.

The Pyramid Pitch is based off of a simple and fundamental principle: startups are dictated by randomness and chaos.  Sometimes this is obvious, as in the elevator case.  Other times the situation appears controlled, for example when you have 5 minutes allocated to speak at a pitch event.  But minds wander, distractions beckon, bladders fill… if you don’t grab your audience immediately, you may never get them back.

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Tacocopter Basics

Posted: September 1st, 2012 | Author: | Filed under: RC | 17 Comments »

The Tacocopters are coming. Sure, the original pitch was a clever troll aimed at credulous and impatient fast-food junkies. But the numbers don’t lie – a typical taco weighs less than a pound, and aircraft that can autonomously fly a few dozen ounces of payload to your doorstep are already available for around a thousand bucks. Amazon Prime is cool, and I can’t wait for self-driving delivery cars – but there’s a reason they call a beeline a beeline. Flying autonomous deliverybots are coming.  Fast.

Lest you doubt the logistics, the Hong Kong based hobbyshop of wonderment, Hobbyking, recently sponsored a contest called Tacocopter T-shirt design“Beerlift 2012″. While the contestants mostly used water as a standin for the bubbly, the winner, Romanian pilot Muresan Alexandru Camil, lifted over a hundred pounds of liquid – meaning that deliveries of entire beer kegs are not out of the question.  While his massive octocopter looks like quite an endeavor, American David Ditch lifted a respectable 50 lbs with a 2-foot-square quadcopter – enough for quite a few Taco Bell Doritos Locos to your door.  279 of them, if you’re counting.

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Livesheeting YCombinator Demo Day

Posted: August 22nd, 2012 | Author: | Filed under: Uncategorized | 1 Comment »

I was fortunate enough to be invited to check out the 70+ companies of the current YCombinator batch. With that many companies to keep track of, it helps to take notes! I did this in a public Google Docs spreadsheet, and it turned out to be a lot of fun. A few hundred (at least) people joined in, and there were questions and additions from all over (including some of the YC partners and the companies themselves).

If you want to see what YC was like this year, here’s the spreadsheet (still editable, if you have questions or thoughts). Here’s the original spreadsheet of Ycombinator demo day pitches.

 

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Why Investors Won’t Talk to Competitors

Posted: August 1st, 2012 | Author: | Filed under: Startups | 8 Comments »

Whenever I’ve been involved in fundraising, I’ve hit a frustrating rejection: “Sorry, but I have an investment that could be competitive.”

As an entrepreneur, this drives me nuts. I always marshal the same counterarguments:

  1. I know what they’re doing, and we’re COMPLETELY DIFFERENT!
  2. Let’s have an initial conversation.  I won’t disclose any ‘secret sauce’, and you can be better informed and decide whether or not there’s a real conflict.
  3. I don’t mind if you invest in both companies.  I trust you to keep information confidential.

I didn’t actually grok what was going on until I sat on the other side, looking at investments.  Now I understand the problems with each of these, and the real, underlying problem that I missed completely.

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How to Help Startups

Posted: July 9th, 2012 | Author: | Filed under: Startups | 9 Comments »

It’s been seven years since I started my first company.  My successes over that course have had a great deal to do with the generosity and wisdom of the startup community, particularly in Seattle – countless meetings, meetups, blog posts, backchannels, and a mind boggling number of cups of coffee.  Since the very beginning, I’ve been thinking about the question in the title – what’s the best way for me to pay it forward, and really help the startup community?

I’ve always known that the greatest way to help startups is by building a great startup.  Success breeds success, injecting talent and cash in to the ecosystem.  It rejuvenates the optimism and bank accounts of investors and startup employees alike.  It begets positive press, which begets optimism.  It demonstrates to people that success is possible, and shows them a way to achieve it.

But I wanted to help more.  For karmic reasons – to pay back the people who helped me – and for selfish reasons, in that I love helping companies succeed.  It’s just incredibly, deeply, personally rewarding.  So each week I average about five to ten meetings with startup founders or executives, and usually do one speaking engagement for a large group as well.  But how to make the most of that time?

Here are the principles I’ve found so far when trying to help startups.

Lots of People

Try to find opportunities to help as many companies as possible, at once.  Like mentoring for great organizations (I love Techstars and Founders’ Institute).  There’s an opportunity to help a lot of companies at once.  Further, you get to have a bunch of short conversations to get an idea of what they’re up to, and dive deep with a few companies that are a great fit.

Help Companies That Help Themselves

The greatest impact on the startup ecosystem is helping companies that have already demonstrated commitment and traction.  If someone’s working a day job and wants advice “about startups”, that conversation is less likely to result in a successful company. By comparison, in a conversation with someone who’s committed fulltime and trying to add a cofounder, or negotiating terms with an angel, or stuck on their B-round financing there’s a real opportunity to make a difference at a powerful inflection point.  The further down the funnel the startup is, the lower the chance that good advice will be rendered moot by one of the many random quirks that strike down entrepreneurs, sending them back to the clutches of Big Companies.

Time Management

Being short and blunt sucks.  It’s uncomfortable to skip small talk.  But when a startup needs help and time is constrained, talking about a founders’ kids or hobbies is time that either comes out of their help, or out of helping someone else.  For me, the former is better than the latter, and I schedule most startups for 30 minute meetings.  I personally hate the rushed agenda, but it’s usually enough time for me to be able to try to provide some help.

If You’re Not An Expert, Shut Up

I sat next to a guy on a panel who was pontificating to startup founders about qualities to look for in a cofounder.  The speaker was a former consultant who mostly invests in real estate and restaurants. WTF.  It’s easy to have an opinion, but if there’s no experience behind it, just explain that it’s not an area of expertise and move on to a new topic.  I’ve sometimes had to drive this home. “Why are you asking me how to marketing your social network when I’ve never done it before either?  Let’s focus on questions I’m actually qualified to answer for you.”

Directness

It’s hard to be direct with people you don’t know very well – at least, I find it so.  And being direct is just a thin grey line away from being an asshole.  But nobody wins if the conversation just goose-steps around, and 30 minutes isn’t enough time to be soft and circumspect.  These my three favorite phrases when time is short:

  • “How can I help?”  This is my favorite phrase.  If there’s a succinct answer, everyone benefits.
  • “Sorry, but I can’t.” At least one of the things a company asks for are probably not possible.  But if the requests are out on the table up front, everyone can focus on the “yes”es instead of the “no”s.
  • “Here’s my reaction to what you just said.”  Sharing a quick gut-take reaction is crucial to companies that are trying to polish their presentation – after the 25th pitch, details and nuance get ground down.  The pitch is an art form, and a tight feedback loop is crucial to improvement.

Help People Help Others

This is the last principle, and a new one.  It may not be popular.  We’ll see.

As a part of my effort to make a difference in the broadest way possible, I’ve signed a contract with O’Reilly to publish a book about startups.  I’m ridiculously excited about this because it’s the ultimate application of the “Lots of people” principle. Part of this book is going to be illustrating problems with stories from real startups.  And that’s hard, because most entrepreneurs are pretty tight lipped about what they’re up to.

So from here on out, I’m going to be asking one important thing from companies that want to meet with me to get advice: let me use the contents of our conversations and emails to help other startups by writing about them.  If there’s something that must remain confidential – for example, a trade secret, or the name of a sensitive party in a negotiation – that’s fine.  But I think the startup community suffers from a little too much secrecy, so I’m going to prioritize helping companies that are willing to ‘pay it forward’ over companies that are not.

So that’s my new thing.  Continue to help people, and ask that they allow me to use their situation for my book, so together we can help even more people.

What Do You Think?

I don’t normally solicit comments, but I’d really like to hear reactions to this in the comments below.  Am I asking too much, that startups be willing to share with the world?  Is there a principle missing? Are there better ways to help?

 

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Of course this company is for sale

Posted: June 16th, 2012 | Author: | Filed under: Startups | 19 Comments »

I had recently left Microsoft after five years of slaving away as a program manager on various facets of Windows.  I’d departed to take a job at Wildseed, a company producing an over-the-top funky handset running Linux, targeted at the teenage market.  Yeah, that’s it on the right.

If the bizarre appearance and strange feature set doesn’t sound odd enough to you, I should mention that it was 2002.  The state of the art was the RAZR handset from Motorola, and Andy Rubin wouldn’t found Android for another year.  We were actually forking Red Hat, writing our own drivers, and all sorts of other flavors of insanity.  That was part of the fun.

But I digress. There was a rumor floating around the company, and in my very self-important 26 year old mind, I believed it was up to me to get to the bottom of it.  I took a deep breath and stepped up to the porthole of Eric’s office.

Eric Engstrom was our CEO.  He had a peculiar office.  It was big, but it was in an inner corner of the building, without much of a view.  It was kitted out with tall, spring loaded, bouncy stools for guests.  He told me once that he bought them so guests would get annoyed and not stay long.  He was dismayed when a few of his VPs found them comfortable and ordered them to sit on as their primary chairs.

Eric was (and is) a mad genius. I could fill an article with Eric anecdotes: The fascinating book about his time at Microsoft. The $40,000 bet that I could find an entire sealed barrel of St. Magdalene scotch two decades after the distillery closed (I won; he bought the barrel; I got a bottle).  His desire to create a film in which I would have a cameo as Evil Spock. But I digress, again.

On that day, I marched in to his office to get to the bottom of a strange rumbling I heard, and have him set things straight once and for all.  There was a rumor afoot that we might be looking to sell the company, and I was going to confront him about it.

I sat down, bounced a few times, and met his gaze.  He gave me a trademark Eric smile.  You’ll be familiar with it if you’ve ever seen a Nature channel documentary on alligators.  I steeled my nerve and asked him point blank: “Eric, I heard a rumor.  Is this company for sale?” Eric’s smile disappeared for a second.  He pursed his lips and laced his fingers, staring at the floor.  Then he looked directly at me and said, very slowly: “Dan, we’re a startup.  Of course we’re for sale.  This fucking plant on my desk here is for sale, if the price is right.  What do you think we’re doing here?”

Not everyone thinks about their company this way.  I have a good friend who is running a very successful startup with a fantastic future ahead.  He told me – and I quite believe him – that he would sell the company for a billion dollars over his dead body.  He was extremely clear that anything less than a multibillion dollar IPO was a pathetic failure, and he’d resign before he’d let such an abomination happen.  So his startup is not actually for sale.

But the rest of us startup types, the story is simple: just about every startup is for sale.

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What if you could only speak once a year?

Posted: May 27th, 2012 | Author: | Filed under: Uncategorized | 4 Comments »

Who’s been a part of a mailing list that’s suffered from poor-quality posts drowning out an otherwise-useful conversation?

OK, hands down.  It seems like it happens to just about every worthwhile mailing list I’ve ever been on: the quality of the posts goes to hell.  And in fact there are a few sub-problems:

  • A small number of posters, who may or may not have anything useful to say, that monopolize the conversation;
  • A series of arguments whose rapid back-and-forths make up the bulk of the list content;
  • The list drifting from a narrow purpose to a wide ranging discussion of everything from the Greek debt crisis to ‘what I had for dinner last night’.

I was watching this happen yet again, to yet another list, and it got me to thinking.  The classic solution is moderation, but that tends to turn in to a dull dictatorship, not to mention cause a lot of work for the moderator.  What if there was some sort of “game mechanic” that could cause people to self-regulate the quality of their posts in a simple mailing list?

As with many ideas, I started complicated.  The idea revolved around a points system, where people could up- and down-vote participants.  Submissions that got more upvotes would be disseminated to more people – the most popular posts would go to everyone; the lousy stuff would just go to a dozen random subscribers and die out.   If you liked something you read, you could reply, and it would go to the author, plus everyone else who had replied or “liked” the post, so you could have a more in-depth conversation about topics.  And as an afterthought, there would be some sort of cool-down period so that people couldn’t get in to flame wars – once you replied, it would take a while before you could post again.

At that point, I realized that:

a) There was no way I was ever going to implement something this complicated, and

b) I had pretty much just reinvented Hacker News.

I was about to shrug and abandon the idea, but one tiny bit stuck in my head – the cool-off period.  What if mailing lists had a limit to how frequently you could post?  This seemed like an interesting idea.  It would let arguments cool down between replies, plus – if it was a little longer – it might make you think twice about if your writing was good enough to warrant a period of enforced silence.  Self-moderate, that is.

And what if you took it to an extreme?  What if every utterance contained within a vow of monastic silence, digitally enforced?  Wouldn’t you think twice before invoking Goodwin’s Law over a comic book?  Hypothetically speaking, of course, not that I would be involved in any such argument.

And so I created “The Best Thing This Year” around the idea of a mailing list with an enforced 1-year quiet period after every post.  Created is a bit generous, actually – I threw up a launchrock page  and waited to see what would happen.

And what happened was  surprising.  First, a lot of people signed up.   It started when I shared the idea (still just a launchrock page) with John Cook over late night karaoke, and he wrote up a quick article. That got my butt in gear to actually build something to, you know, deliver emails.  The result was a terrible hybrid of Amazon SES, PHPlist running on an EC2 micro instance, and some custom PHP courtesy vworker.com to replace the signup page and pump directly in to the mailing list.  I also threw up a phpBB discussion board on my Dreamhost account for good measure.

My friend Elan kicked things off with the first piece about his new, augmented-reality sitcom (!) at rides.tv, and Pando Daily and Mother Jones Magazine jumped in, talking about the post and the list.  And here we are, two weeks later, and the list has nearly 2,000 subscribers… and a surprising lack of submissions.

Not a total absence, mind you.  There’s been an epic piece about parenthood that came out for Mothers’ Day.  Yesterday was a unbelievable story about the first man to do a commercial bungee jump off of Corona arch in Moab, Utah.  But the pace has been slow.

And I’m afraid not all submissions represented the best thing a year had to offer.  The first submission was mostly shit – not metaphorically, but literally; the primary topic of the post was human feces.  While I hope to keep a light touch, I decided that did not need to wind up in a few thousand inboxes, and did not allow that submission to post.

But in general, there have been few submissions to this rather incredible audience.  I won’t out list members, but I’ve looked through the email signups and there are a lot of awesome people listening to what gets said.

So the rules continue as before.  You can sign up at thebestthingthisyear.com and you will get new posts immediately.  Over at discuss.thebestthingthisyear.com you can read previous posts and chat about new ones when they come up.  New signups have a cool-down period before they can submit, to ensure everyone doesn’t post at once – in retrospect, probably not solving for the right decision, but the policy is two weeks old and this is the internet so that makes it a tradition.

The posts will be, it seems, mostly excellent.  And if current trends hold up, fairly rare.

And I have the answer to my original question.  What would people do on a mailing list if they could only speak once a year?

Mostly just shut up and listen.

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