Entrepreneur Startup Resources

Business Networking: How to build your personal value.

network.gifBusinesspundit has a post on networking for introverts.

So you're really not much good at networking. You keep a drink in one hand and the other in a pocket. You stand against walls. You avoid direct eye contact. You pretty much suck at it and since you suck at it you hate doing it. You're constantly standing around trying to look pretty and hoping that someone you're interested in meeting will come and talk to you. 

Me too.

It's interesting to watch the dynamics at a networking event. I've attended many but there's often a sense of being disassociated from the main conversations. The worst are the hard sellers.

The Hard Sellers: These guys are there to pitch. For the most part they're talking to themselves. Whenever I'm near a hard seller I'm tuning them right out and trying to scrape them off my shoe asap. The Hard Sellers listen little and talk much. They've done this and that and would appreciate it if you validate their existence by doffing your cap. 

I hate that and respond poorly to it as most people probably do.

Poor networking is usually cause by embarrassment and fear of rejection... hey , it's just like dating. (Here's my eminently readable post on Horizontal Networking)

I have a good friend Chia in NY who's a photographer. She's about 4'8" and 73lbs (I'm 6'3" and 260) Chia used to be an actress before she became a photographer and now she's the most sought after actor photographer in Manhattan.

Chia lives down in the Flat Iron district (The triangle shaped building in Spiderman). A boxing gym opened up next to her building and  Chia thought it would be great exercise to take up boxing. (Here's her boxing photography)

Interestingly, the gym owners thought this was kind of cool so Chia hired a trainer and started hitting a heavy bag. It was a scene straight out of Million Dollar Baby except that Chia was much shorter.

Of course Chia never actually wanted to fight. In fact, the gym ordered her a pair of pink boxing gloves which, I have to say, were really cute.

Anyway, Chia hit like a girl. She'd prance around and make 'hitting' noises while she punched at the air.

Chia wanted to be more serious. She wanted to move and hit like a boxer, not like a girl. When she talked to her trainer he looked at her like she was as stupid as a bag of hammers. "Chia", he said, " Just act like a boxer." That was it... Chia knew how to act and she was a boxer after that.

The point being: It's always something you can act through. If you're not a great networker... act as though you were.

Works for me. 

TechStars: Boulder's not that far.

Boulder Colorado has a new startup program: Techstars 

Techstars (ala Y-Combinator) is a invitation program where your startup team moves to Boulder for the summer, gets 5k per founder, and works your tail off. Evidently boulder has a thriving tech startup community where everyone runs around with their Macbook Pro and meets at Starbucks.(Damn that sounds fun. I'm going to have to talk to my wife and see if she'd let me go. She could just ride the horses all summer.)  I'm not really kidding either.

The program functions along the line of Junto Partners but I actually think there's more upside for the entrepreneur and the team. Techstars is looking for a 5% stake. 

Here's a video of the Techstar instigators making their pitch.

Stanford Entrepreneurial Podcast Series

I've been listening to a number of podcasts the best of which is the Entrepreneurial Thought Leaders lecture series from Stanford University.

Stanford has the access and they've produced the best podcasts for entrepreneures on the net.

Startup Funding: The CRV QuickStart Seed Funding Program

crv_logo_small.gifFrom Charles River Funding: QuickStart Seed Funding

Charles River Funding (Boston & Silicon Valley) is launching a new program looking to move them down the food chain and get into companies while the gettin's good. Read the NY Times article: Venture Firm Is Giving Loans A Try. (registration required)

Here is how the loan works:

  • A standard interest bearing loan will be made to a corporation, which we will help you establish if you do not already have one in place. This arrangement eliminates any personal liability for the loan.

  • It is our intention to convert our debt into equity if and when your company closes its Series A round. If the company successfully raises its Series A, in exchange for sharing the risk with the entrepreneur, CRV receives a discount on the conversion price when the loan is rolled into the Series A. The discount will be a maximum of 25% (determined ratably at five percent per month, depending on how long it takes to create a Series A financing, up to the maximum).

    A simple example: if CRV loans your company $100,000 with a six percent interest rate, and six months later the company closed a Series A round, at that point the loan balance (with interest) would convert at a 25% discount (value = loan dollar amount plus interest / .75) into $137,333.33 worth of Series A stock. Given that seed funding amounts are typically very small compared to the amounts one might expect to raise in a Series A round, as the example illustrates, the aggregate discount amount, in this case $37K, is a tiny fraction of what is likely to be a multimillion dollar Series A financing.

  • In addition, CRV would like the opportunity to support the Series A financing and thus retains an option to contribute up to 50 percent of your Series A funding. For example, if you raise a $3M Series A round, we can contribute up to $1.5M of the round.

Redeye VC thinks the move is to address exit trouble:

It also is a recognition of some of the challenges that larger venture funds face.  Take a hypothetical traditional $400M VC firm.  In order to achieve a 20% IRR, the fund must return 3x their initial capital over a 6 year term -- or $1.2B.  Now say this hypothetical VC firm typically owns 20% of their portfolio companies at exit (an industry average).  That means that at exit their portfolio needs to create $6 Billion dollars worth of market value (ie, $1.2B / 20%).  Assuming that their average investment size is $20M, that means that they invest in 20 companies -- this assumes an average exit valuation of $300M PER COMPANY.  Given the tight IPO Market and an average M&A exit value of less approximately $150M, this math creates some real challenges.

From VentureBeat

The advantage of a seed round is that it done as a “convertible” loan, which means the $250,000 is essentially a no-strings-attached loan to an entrepreneur. There is no equity stake claim by the investor at the time, which is good for the entrepreneur, who can see how good his idea is first. If the idea gains traction, he can raise money in the series A and negotiate a high valuation for his company. If he can command a $5 million valuation, for example, the investor’s $250,000 seed money converts into only 5 percent of the company.

Zachary  says he sees too many entrepreneurs giving away between 10 to 20 percent of their company in the seed round. They have fewer shares to give to employees, and they’re less attractive to venture capitalists.

There is almost no liability for the entrepreneurs, because the loan is made to a corporation formed around the entrepreneur. If the company fails, the company goes away, and the founders aren’t liable. “We’re all big boys,” says Tai, explaining that CRV doesn’t mind when this happens. “We go into this with eyes wide open.”

Fred Wilson of Union Square shares his analysis

I think that's a very fair deal. The loan is structured very similarly to what some angels are doing these days (loans that convert at a discount) and Charles River gets to take up to half of the round on the same terms as the other new investor.

Read the first bullet: There's also no personal liability. Something that Utah investors could take note of

Startups, venture, hiring, tech, geeks, & other smarts.


Paul Graham writes insightful essays on... 

Founder Discount: More on why founders make less than hired guns.

j0127674.gifFrom Canadianbusiness.com: Read the entire article here.

To solve the mystery of the underpaid entrepreneur, Wasserman collected data from 1,200 executives at more than 500 U.S. high-tech companies. After controlling for numerous variables such as experience and company size, his findings were stark: founders earn about $30,000 (U.S.) a year less than hired-gun managers doing pretty much the same job. In fact, 51% of founders earn less or the same as their employees.

The good news: the founder discount isn't forever. It shrinks over time and with the growth of the company. The bad news? Founders' compensation is inversely related to their control over the organization and their own job satisfaction. As I read it, as a company grows and gets more complicated — with more layers of management, boards of directors, outside investors and stricter management-performance metrics — founders get paid more because their jobs get harder.

But why does the gap exist in the first place? In simple terms, it's because founders tend to care too much about their own creations. Outside executives have to be paid market rates or more to join a company, and if their compensation doesn't keep pace with the outside world, they have little incentive to stay. Founders take a longer view. Like Cullen, they often put the company's financial needs ahead of their own. And their boards of directors don't worry that founders will bail out, because they know that founders are emotionally committed to the organization.

And there's this:

Paul Britton, a compensation consultant to businesses big and small, sees this problem again and again. The founding partner of Crossford Consulting in Toronto says there are two stupid reasons why entrepreneurs underpay themselves.

First, he says, some entrepreneurs think they can use their own lousy compensation as a lever when negotiating subordinates' pay. By pointing to their own pay packages, they think they can convince their employees to accept less, too. The problem, of course, is that your best people have lots of job options and know you have an ownership stake; it's generally only less valuable employees who will agree to work for below-market pay.

The other reason entrepreneurs underpay themselves is bad budgeting, says Britton. Instead of factoring in an appropriate salary for themselves ahead of time, founders will wait and see how much money the business makes over the year, and draw from that. When he asks groups of entrepreneurs if they have built a rate of return for themselves into their forecasts, Britton says only about one person in 20 will raise their hand.

RSS Feed List: Business, tech, entrepreneur, angel & VC RSS feeds.

overheardinutah.gifHere is a partial list of the local business, entrepreneur, angel and VC RSS feeds that I subscribe to. Post your own list and link through the comments. Does anyone know how to export a list from Bloglines so that the links work?

Tag Jungle: It finds blogy things.

Phil Burns and the Tag Jungle crew gave me pizza today for lunch. That always makes me feel kindly.

Phil was trotting out Tag Jungle again before he tries to find money for more than pizza. That's always a good idea and especially for Phil. I'm generally geek-i-fied enough to follow discussions about blogging in general by I actually had to listen to follow some of the whatchamacallit goes in the gobblygook and comes out here stuff.

Jungle looks to be a real world solution for relevant search in the blogosphere and I'm anxious to see it in real world action.  I farted around with the alpha site for a little while and it looks promising. I was going to write a list of what TJ can do but I'll leave that to Phil. I will say that 'jungle juice' was first spoken by me. (I'll want some nachos at Fight Club.)

Phil et al are going on a roadshow to get more pizza money. Guy Kawasaki recommends watching this pitch by Majora. (Watch it online here.) Who am I to argue. 

I spoke briefly with Phil about building a pre-pitch dinner where Phil can pitch and receive feedback from investor types. I have a few people in mind. If I call you you'll get to see Phil gesture wildly and probably come away with a free T-shirt.

Founder Frustrations Blog: From Harvard Business Schools Noam Wasserman

From Noam Wassermans "Founders Frustrations" Blog. Noam Wasserman is a professor in the Entrepreneurial Management unit at Harvard Business School.

Noam's blog is a great read for entrepreneurs looking to understand how to structure ownership in a startup or why investors think they're adding more value than the entrepreneurs running the business. Here's nifty chart.

Table 6: Entrepreneur Expectations
(traces the trend between the entrepreneur’s perception and expectation of
the value-add potential of the investor throughout the various funding stages)

Entrepreneur's perception of investor



From Guy Kawasaki's Signal Without Noise Blog: 10 questions with Polly LaBarre

Guy Kawasaki's blog has some excellent '10 Question' interviews with authors. So what if he makes a little money with the Amazon link.

blockquote.gifTen Questions with Polly LaBarre


Barre spent almost two years writing this book. Taylor is a co-founder and founding editor of Fast Company. LaBarre was a senior editor at Fast Company for eight years (and was one of the best reporters on the topic of entrepreneurship and marketing, in my humble opinion). She has made media on Good Morning America, CNN, CNBC, and PBS’s Nightly Business Report. She is also a co-author of The Big Moo: Stop Trying to Be Perfect and Start Being Remarkable. She is a graduate of Yale University.

blockquote.gifTurn that model on its head and you get Pixar’s version of the right way to make movies: a tight-knit company of long-term collaborators who stick together, learn from one another, and strive to improve with every production. A key component of that model is Pixar’s no-contract policy. Famous, talented directors like Brad Bird, Peter Docter, Andrew Stanton and Lee Unkrich all of whom could secure lucrative contracts with any studio—are salaried employees of Pixar who contribute to all of the studio’s projects rather than just their own pet projects.

Start up or go home.

With the economy starting to tick and employment on the rise, what are the effects on startups? Caterina Fake, co-founder of Flickr, says it's a:

bad time to start a company:

  1. Everybody else is starting a company. It's crazy. Every single person who leaves a tech company isn't going to Microsoft or Google or Apple or whatever, they're going to a startup. Trying to operate in this environment is crazy. I'm getting late-onset ADD from trying to keep track of them all, and it's impossible to get attention for your product amidst all the buzz (er, noise).
  2. Your competition just got funded too. You've got $5 million in the bank, and they do too. Their VCs want them to succeed every bit as much as your VCs want you to succeed. This gets you into a horse race, which no one wants: it's exhausting and expensive.
  3. Talent is scarce again. Hell, I want to find someone to write a little bit of PHP for Wench.com and I can't find anyone (Hey if you are a PHP webapp builder and have some spare cycles, email me at caterina-at-gmail). Everyone's gainfully employed, and fielding several offers.
  4. You can't operate in obscurity anymore. We started our company in 2002 when nothing was getting funded anywhere and everyone was still licking their wounds from the big bubble bang. Nobody cared about us except us. We were in Vancouver fer crissakes. But we were able to focus on finding and connecting with the people who mattered most: the customers, the users, the community. You get more done when no one's looking over your shoulder.
  5. Web 2.0 isn't all that. Hello?. I don't think there's a rising tide lifting all boats here. I don't think Web 2.0 is the magic bullet some people seem to think it is either. It ain't the features, it's that AND the business. Tagging was a great feature, no doubt. But Flickr was at break even -- about to tip into the black -- when we were acquired.
  6. There's too much going on. Every night there's a Mashup get together, or a TechCrunch party, or it's Tag Tuesday, or SuperHappyDevHouse or SXSW or this conference or that conference. And this stuff is fun. It's a real community. But all of these things are great by themselves, but terrible in combination. I see some entrepreneurs in photos from *every single event*. Who's talking to the users, writing the code, tweaking and retweaking the UI? It ain't the Chief Party Officer.
David over at 37 Signals counters with: It's a great time to start a company.
  1. You don't need VC diesel to get your motor running. Working nights or putting money aside to run full-time for three months is enough to get off the ground if you have a great idea and enough passion to make it matter.
  2. You can actually charge money for valuable services. People have never been more willing to part with their credit cards to pay for services that improve their business or their life. You don't need to spend aeons and cumbaja meetings pondering HOW TO MONITIZE?! when all you need is a service worth paying for.
  3. You don't need mainstream tech to make a dent. No wonder you have a hard time finding people if you're only looking at the mainstream tech circles. You're competing for talent with all the risk-averse insurance companies of the world. We picked Ruby early and used Rails to get access to the cream of the crop. People bustling with passion to develop using tools they love.
  4. You don't need to live in San Francisco to make it big. Or rather, if you want to make it big, don't live in San Francisco. You'll get sucked in to the myths (you need VC!) and drowned by the parties. Most of the worlds talent does not live in that tiny spot of land. I developed the Basecamp, Backpack, Tada List, and Writeboard from Copenhagen, Denmark. And we have one of the greatest developers I've ever met in Provo, Utah. While the rest of the company is in Chicago and New York. The Rails core team includes people from Germany, Canada, Austria, and all over the US.
  5. You don't need a swarm of worker bees to take off. Of course its hard to find 10 or 20 great people by tomorrow, but you don't have to. We're entering a golden age of small teams capable of doing big things. Just get a band of three together and you're good to go for v1. Using modern tools and simply doing less software means that having more people is likely to slow you down rather than speed you up.

 Who's more in the know? For myself, I'll go with: We're not getting any younger. The only time to start a business is immediately.

Voice transcription service for blogging?

I was introduced yesterday to Copytalk, a transcription service based in India that records up to 4 minutes of voice, transcribes it, and sends it your or any 4 email addresses you want the same day. (It's $50 a month.)

Although I use squarespace to host my blogs, I'm aware and have used email to post remotely to blogs.

This service would allow Paul Allen to forego his cherished blackberry and shrinking thumbs and just speak into his phohe and see a new blog post appear. I'm quite sure that almost anyone can speak faster than they can type.

Business Venture Podcasting

I've discovered podcasting.

A few weeks ago I attended the fundinguniverse.com speed pitching event (see current events here). One of the presenters was a startup, Podango, that plans to aggregate podcasting into vertical channels of specific interest, manage advertising, and split fees with the podcasters. Some podcasters would be managing their own marketplace and recruit new podcasters into their vertical and presumably, receive an overide.