Silicon Valley – Week 1

October 31, 2011

One week after moving to Silicon Valley and I’m very pleased and relieved to say that I’ve found somewhere to stay! It’s in downtown Palo Alto, just a 5 minute walk from University Avenue, and even closer to Whole Foods (which takes food shopping to a whole new bewildering level of choice and healthiness). My new pad is also just a few blocks away on the same street from the HP Garage – pictured right – where Silicon Valley was born. Final cool thing about my “in-law” flat is that the previous tenant raised $27M from a well-known VC last month for his startup. Who knows, maybe that good fortune will rub off.

Finding a place to live

Finding accommodation in Silicon Valley or San Francisco is not easy. Like London, competition for rental properties and house-shares is intense. Trawling Craigslist 3 times a day, for hours at a time is not fun. In total I sent around 50 emails, viewed 8 places and was frankly extremely lucky to get the place I did; I saw the ad within an hour of it being posted and was the first to view the following morning – when I immediately took it. [As a side note this is my first time using Craigslist – what a terrible site – now I know why people wish it was for-profit instead!]

Work stuff

Apart from the joy’s of flathunting I managed to take in FailCon, which was awesome because it was people talking much more honestly than is usually the case at conferences; a couple of events as part of the UK Trade and Industry’s Cloud Mission to Silicon Valley, including an evening reception at the stunning Consul General’s Residence near The Presidio; an event with Vinod Khosla doing live office hours on stage (brilliant) and visits to both 500 Startups and Hacker Dojo in Mountain View.

Fun in the Palo Alto sunshine

Today I caught up with Finbarr Taylor, a fellow Scot, and after a nice brunch in University Cafe we visited four YC companies which were having open offices this afternoon. At Comprehend Systems we even ran into Paul Graham and we chatted briefly, where he did his best to encourage both of us to work for Comprehend. Good for Paul to at least try… he’s always supporting his startups!

Great first week, but next week the real work begins!


Bye bye London, hello Silicon Valley!

October 23, 2011

Silicon Valley

After two years thinking about it, today I finally arrived for good in Silicon Valley! When I moved to London 18 months ago I always knew it was going to be a stepping-stone to the Valley, but it’s taken me a while to make that next move.

I’ve moved for all the obvious reasons that you might think of, but above all I’m here because I love this place. The atmosphere, the energy and the buzz is like nowhere else I’ve been, and I’m looking forward to soaking it all up. (And also the weather).

I blogged just last week about why I believe location matters to any startup, and while I still think London is a good place to be for many, for me, Silicon Valley is where I need to be now. People often ask me if it’s really better in the valley, but unless you’ve been it’s difficult to appreciate it. The technology and startup ecosystem here stretches back almost a hundred years, although most people think of 1938 as the key moment when Bill Hewlett and Dave Packard started working on HP in a Palo Alto garage. Post-war, the “silicon” was put into the valley, when Fairchild Semiconductor pioneered mass-production of transistors, and this company later gave birth to Intel in the 60s. The Venture Capital industry started here as well, decades ago and remains the world’s largest concentration of risk capital, in fact most of them all work on the same street. Palo Alto is also home to Stanford Universty whose graduates have spawned tech giants such as Google, Yahoo, eBay, Cisco, Intuit, PayPal, Sun Microsystems, Electronic Arts and VMWare, to name just a few.

The main business drivers for my move are better access to that experienced tech talent and access to more funding, on better terms. There is a real shortage of both in London.

Why now?

I spent two weeks in the valley last month, my longest and best trip there so far. Lots of interesting things happened as a result, such as meeting SaaS experts, which will really help me accelerate Teamly, as well as seeing strong investor interest.

On my return to London two pivotal things happened, within 24 hours of each other:

1. I had lunch with another startup founder, who – speaking from his own experience – said, “there is never a perfect time to make the move; there will always be a better time just around the corner.”

2. Following Steve Jobs death, I re-read the text of his Stanford commencement address, and it just moved me to make this decision NOW.

Remembering that I’ll be dead soon is the most important tool I’ve ever encountered to help me make the big choices in life. Because almost everything — all external expectations, all pride, all fear of embarrassment or failure – these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.

I realised the only thing stopping me from moving was me.

What are YOU holding back from doing now?

P.S. I’ll be back home for Christmas and New Year – hope to see you then!


Location matters for your startup

October 21, 2011

Signpost

18 months ago I relocated from my home town of Glasgow, to London, just 400 miles away. An important reason for the move was because I had just started working on my new startup, Teamly, and I know that location matters, even when running an internet business. Don’t kid yourself otherwise, your chance of success is seriously improved when you’re in a startup hub.

18 months later and moving to London has proved to be a smart move, for all the expected reasons, as well as  the unexpected recognition by the UK Government of London’s startups with the launch a year ago of “TechCity“.

Y-Combinator partner Paul Graham recently wrote an essay, “Why startup hubs work“:

If you’re in a startup hub, unexpected good things will probably happen to you, especially if you deserve them.  

And it’s not just the increased likelihood of serendipity, but to do your best work, who you hang around with matters.

Jim Rohn said:

“You are the average of the five people you spend the most time with.”

London VC Nic Brisbourne blogged about the need to be around the right people:
-
All creatives, including entrepreneurs, need to hang out with others in order to do the best work, and so creatives of different types congregate in hot spots for their activity.  For tech entrepreneurs that is Silicon Valley and to a lesser (but increasing) extent London, New York, Berlin and Tel Aviv.

Hanging out with likeminded people is only possible when they are nearby and accessible.

What better way to get to know people than to have coffee with them? VC Mark Suster blogged onWhy you need to take 50 coffee meetings. He says whether hiring (or being hired), building rapport with journalists, raising money or understanding customer needs, you need to get out of the building and meet people face-to-face. If you’re not in the right location you could probably still have your 50 meetings, but would you be meeting the right people?

The quantity and quality of meetings – whether planned or by chance – will be influenced by what Brad Feld callsEntrepreneurial Density.

Following his formula, I’ve calculated the entrepreneurial density of some of the top startup cities, using Startup Digest subscriber numbers as an inexact, but best guess at the size of the startup community, divided by the general population in the metro area, using figures from Wikipedia . (Then I’ve multiplied by 10,000 to get an integer).

  • Boulder: 52
  • San Francisco: 30
  • Austin: 15
  • Boston: 10
  • Seattle: 8
  • New York: 6
  • Washington DC: 6
  • Berlin: 5
  • London: 4
  • Chicago: 3
  • Los Angeles: 3
  • Paris: 2
Paul Graham again:

The problem is not that most towns kill startups. It’s that death is the default for startups, and most towns don’t save them. Instead of thinking of most places as being sprayed with startupicide, it’s more accurate to think of startups as all being poisoned, and a few places being sprayed with the antidote.

Finally, here’s a few examples from my last trip to Silicon Valley:

1. At TechCrunch Disrupt I (literally) bumped into the founder of a long-established and very successful enterprise software startup, and ended up talking to him for an hour, and getting some great advice. He wasn’t even attending Disrupt, he’d come along for his buddy’s book launch. (His buddy was Eric Ries!).

2. I got an intro from a Scottish ex-pat, to a Palo Alto VC, who in turn connected me with one of Google’s Mountain View engineers responsible who worked on Google Apps from the start. Again, a long conversation and great advice followed.

3. Another entrepreneur friend tweeted an entrepreneur, and suggested coffee. That coffee meeting resulted in an introduction to Matt Mullenweg of WordPress, a really great intro for my friend given what his start is doing.

4. I was parking my rental car on University Avenue, Palo Alto when I looked up and saw an entrepreneur I know from London walking down the street. So I quickly jumped out the car and ran over to say hi. The guy he was with turned out to be James Hong, founder of Hot or Not.

Thanks for reading, I’d love to know your thoughts. Have you relocated, if so why? Would you NOT relocate, if so, why not? 


EIS for angel investors – what UK startups need to know

October 17, 2011

In the UK angel investment may lag significantly behind the US, but it’s not for lack of incentives. If you’re raising money in the UK from angels, you need to know about the Enterprise Investment Scheme (EIS), and make sure your startup qualifies.

EIS is a very attractive HMRC tax incentive scheme that provides three great benefits for angel investors:

  • An upfront bonus in the year of the investment of 30% relief against income tax. So, for example, your angel can invest £100,000, but in return he’ll get a £30,000 discount on his next tax return. So he’s only out of pocket for £70,000!
  • Partial protection of financial losses: investments that fail get a further relief against income tax. A 50% tax payer would only lose £35,000 on a failed £100,000 investment.
  • Successful exits are tax-free: gains are exempt from Capital Gains Tax, which currently saves 18%.
So for these three reasons most UK angels really care about making EIS approved investments. For your investors to get EIS relief there are some qualifications, here are the most important ones:
  • Your investors make an equity investment (not a convertible loan)
  • Your investors get common shares (not preferential)
  • Your company has less than 50 staff and assets of less than £7M
  • Your company is raising less than £2M
  • Your company must be a UK limited company

To make things easy, you can apply now for EIS Advance Approval with HMRC, and I really recommend you do so as it makes your startup more attractive than one without advance approval, (and loads more attractive than an investment which doesn’t qualify). As it takes a few weeks to get the approval, do it before you start talking to investors.

What you need to do to get EIS Advance Approval for your startup:

It’s actually very simple – you don’t need to pay an accountant or anyone else to do this for you – I sent a one page letter, and some  of the following info to HMRC:

  • Company accounts (management accounts are sufficient)
  • Business plan
  • Memorandum and Articles of Association
  • Any agreements between you and potential shareholders

Within a short time I had a phone call from them asking me one quick question, and then shortly after that a letter confirming that my company, Teamly Ltd, was given advance approval.Read more about EIS on the HMRC website, and download the Advance Approval form here.

Please note I’m neither a lawyer or an accountant, so you should read the HMRC advice yourself but the main point I want to make is you can take the initial step yourself; don’t pay anyone to do it for you.


Google offers citizens advice on internet safety

October 16, 2011

Congratulations to Google UK for being a good corporate citizen; I spotted this advert – one of a series – on the London Underground this week. The campaign’s goal is to educate consumers on internet safety and is being done in partnership with the Citizens Advice Bureau, a network of help centres around the UK staffed by tens of thousands of volunteers.

This particular advert is about password strength, a subject I wrote about in some depth previously: You might care about security online but do you understand it? This ad goes into what makes a good password but doesn’t recommend password plurality. It’s kinda misleading to give people the impression they’re safe if only they have one strong password. Anyway, it’s still a good effort on educating joe public.

Of the other three adverts I’ve spotted, one recommends logging out of sites once you are done and closing your browser (comparing not doing so to leaving the door to your house), another was about Google’s SafeSearch feature keeping kids away from inappropriate material and another was about two-factor authentication.

The website for the “good to know” campaign is still “coming soon” and I can’t find anything else about it online… think someone forgot to instruct the PR people on this one!


“Early stage VC funding is a myth in the UK”

October 11, 2011

Plugg 2009: Anil Hansjee
Those were the words spoken last night at a Taylor Wessing / Tech City event by Anil Hansjee, who used to do M&A at Google in Europe, and is now setting up a seed stage fund here. He did clarify by saying that yes, there have been some deals but “you can count those on a few hands”. Anil is just confirming what us entrepreneurs already know, but here it is coming from a soon-to-be VC and one that knows the market really well.

Anil backed it up by saying that of the 80 inbound pitches he’s received since an article appeared on TechCrunch about his new fund in June, 75% merited a closer look, confirming that the quality of opportunities in Europe appears high. (And a majority of those were from UK based startups). I imagine that’s just scratching the surface of what startups are out there chasing funding.

When Anil’s fund is ready to start investing you should be aware that if your startup is not located in a cluster with a functioning ecosystem, then he won’t be investing and will give you the advice that you should be relocating to the best ecosystem for your industry. He specifically cited SaaS or cloud infrastructure startups where in most cases the best place to be is the Valley; to stay in London would damage your chances of success and funding. But there is some good news, there are plenty of areas where London is the right choice to be if your focus is on fashion, music, finance, advertising, retail, etc.


Think Different

October 6, 2011

 

 


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