“For entrepreneurs, by entrepreneurs” – the startup world’s motto

December 1, 2011

“For entrepreneurs, by entrepreneurs” is actually the slogan of The Entrepreneurial Exchange, a members organisation in Scotland and London for ambitious, growth orientated entrepreneurs from any sector, but it applies very nicely to the world of high-tech startups where I’m now immersed.

In a nutshell it means entrepreneurs helping and sharing with each other, and as we’re entrepreneurs, doing this ourselves, rather than relying on outside support.

According to the Exchange, only around 5% of privately owned businesses have the entrepreneurial drive and desire to grow and scale up, and it’s those kind of entrepreneurs that see the benefit of, and join up as members of organisations like the Entrepreneurial Exchange, and its international equivalents like EO and YPO. By comparison, in the world of tech startups, probably something like 95% of entrepreneurs are seeking to create something of scale, (and to do it in within just a few years).

The interesting thing to me – and why I feel so at home in the startup world – is that there is a pay-it-forward culture, an ethos that winning is not a zero-sum game, and that we can all learn from each other. It’s baked into the whole community.

(An example: Steve Jobs was mentored by Andy Grove of Intel, and then years later – setting aside some grievances over Android – he returned the favour to Larry Page of Google.)

The Entrepreneurial Exchange’s key objectives are to:

“inform, motivate, educate, inspire and support entrepreneurs to realise their full potential.

That manifests itself in Silicon Valley and in other startup hubs around the world, where there’s thousands of free meetups where you can be motivated and inspired by, as well as meet other entrepreneurs; you can  read hundreds (if not thousands) of quality blogs from entrepreneurs, VCs, lawyers and others where they educate us by sharing their advice and insights, for free; and there’s communities like Hacker Dojo or TechHub where entrepreneurs can work together, support each other and inspire each other.

And ultimately I guess that’s why in this environment there’s no equivalent of The Entrepreneurial Exchange, because we’re doing it by default; it’s baked into the whole startup ecosystem, and that’s why I love this industry.


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!


John Frankel, ff Venture Capital talking to London Web meetup

August 28, 2011

John Frankel is a Brit who is a partner at New York based ff Venture Capital and during a visit back home this week he gave a great talk to a mixed audience of developers and entrepreneurs at the regular London Web meetup. John’s fund, which he describes as “a micro VC or super-angel”, helps companies go from “3 to 30 employees”. ff has invested in companies like Voxy, Cornerstone OnDemand, Phone.com, Mogotix, Klout, ShareSquare and many more.

You can watch the entire talk and Q&A below, or just read on:


ff typically invests in 4 – 12 companies in a year, but since December have invested in 15. The reason? John was unequivocal, this is an “interesting time with unbelievable opportunities for both investors and those seeking to change the world”. The reduction in cost of doing business online in the last decade means that mass customisation is now possible and software can create new and immersive experiences.

This disruption has entered every industry, citing Paige Craig, John told us that “every company is a technology company“. The platforms that didn’t exist 10 years ago are now in place: broadband, smartphones, cheap storage, etc.

He told how Jim Cramer of CNBC’s show “Mad Money” spoke at a conference John attended during the previous dot com boom, telling the story of how the media industry has these massive fixed costs through the legacy of newsprint production, by growing trees, waiting till they are mature, chopping them down, transporting them hundreds of miles, turning them into pulp, transporting paper hundreds of miles into cities usually, making newspapers from them, and then finally putting a pile on every street corner; every 24 hours.

Fast forward ten years and we have Amazon’s kindle, Apple’s iPad, and numerous inexpensive smartphones. John is certain that this time round “this is not a bubble“, although he did indicate they may slow down their investment pace if valuations get too high.

Advice for startups

“Solve big problems, they are more satisfying”.

And he used the example of the Winklevoss twins to tell us that “everyone has ideas, but execution is everything”.

Geography

Being in London – with its perennial inferiority complex-  of course the question of geography came up. John said that ecosystems are made by people and infrastructure, and despite the ability to use Skype, meeting “in person is important”. Although he’s prepared to invest almost anywhere it’s harder to justify if that company is off the beaten track. Another crucial geographic factor is big companies being in the vicinity of startups, as is the presence of second-time entrepreneurs.

Talking from his US experience he compared NYC as very individualistic to San Francisco is more team orientated, and collaborative, gaving the example of one of their portfolio companies relocating there for that reason.

What he looks for in investments

“The team”. And “unreasonable and driven people”. He says “pivoting is normal; the start idea is never the same as the end idea”. Specifically he likes companies with low capex model, and those that start charging for their product early, talking of the benefit of “training” your customer to pay.

He cited an example of one company they backed, the enterprise software company Cornerstone OnDemand of whom they were amongst the first outside investors in and since 2002 they invested in all 8 subsequent rounds until it went public in March 2011. Despite that incredibly successful exit, John says he doesn’t “believe in exit strategies”, and puts faith in interesting things happening and valuable things being created if you let smart people do interesting things.

I really enjoyed his talk, and I hope John spends more time in London, we need more of this kind of seed VC in the UK.

If this is your visit time visiting my blog, please feel free to subscribe by email or RSS, which you can do in the right hand column, thanks.


Technology Transfer and New Venture Creation at Stanford University

February 3, 2010
Stanford University Hoover tower

Photo credit: yuyang226

I was fortunate to attend a facinating talk by Katherine Ku, Director of Stanford University’s Office of Technology Licensing (OTL), on her role to commercialise the inventions coming out of an institution at the very heart of Silicon Valley.

Despite the central role that Stanford has played in building Silicon Valley, and alumni who have formed companies such as HP, Sun Microsystems, Yahoo!, Paypal and Google, I was surprised to learn that cumulative earnings from technology developed at the University are just $1.3 billion since 1970, when the technology licensing office was established. I say “just” because Stanford’s total annual budget is $3.7 billion. Donations alone last year were $640 million, ten times the earnings from licensing out inventions in the same period.

But when looking at the total earnings figure you have to be aware that the University does not “own” all inventions, only those in which staff or students have used University resources to produce the invention. (In these cases royalties are split equally three ways between inventor, department and school.)

Pareto in action

65% of licensing earnings came from just 3 of the 8000 inventions which have passed through the doors of the OTL:

  • Google’s improved hypertext searching: $337 million
  • DNA cloning: $255 million
  • Functional antibodies: $229 million

Sadly for the University they struggled to put a value on Larry and Sergey’s invention and opted for 2% of equity, and immediately cashed out post-IPO. For other more obviously monetisable inventions they tend to go for a annual maintainence fee and revenue share instead.

Other notable inventions which have generated decent revenues for Stanford included FM sound synthesis and digital subscriber line technology (DSL).

Highs and lows:

The schools of engineering, physics and medicine are the top contributors to Stanford’s licensed technology; the business and law schools are joint bottom. It seems there’s an opportunity for both schools to get more involved in the commercialisation of the inventions their colleagues are producing.

Warning: here is a business opportunity!

The OTL has a bank of 3000 inventions packaged and ready for you to use! They’ve even put them on their website that can be searched searched using their Techfinder tool.

There’s no geographic bias, whether you are in Cupertino or Canberra you can take a license, and there’s no preference to startups or multinational corporations. In fact, most technologies end up being licensed by small startups. While they don’t have a preference, they do have criteria, and want to do whatever is best for the technology or invention, making it a commercial success.

When licensing to startups the usual criteria applies:

  • Quality management team
  • The investment to commercialise the opportunity
  • Realistic business development plan (just a few pages!)
  • Passion and enthusiasm

Is the Stanford approach the right one?

Stanford’s approach is interesting and successful but is just one way of getting inventions out there. Other Universities take a much more selective approach and pick a few things they consider to be winners and spin out commercial enterprises themselves, (Stanford’s view: “research and education comes first”, and want to avoid any potential conflicts of interest), others choose to put everything out into the public domain. As for Katherine Ku’s own view of what is best, it all depends on the institution; there is no right or wrong approach. She hopes that maybe one day some of the inventions can be passed “down the line” to smaller universities or colleges who are more practically focused and can take something – often still obscure and needing more work done – and make progress on the road to commercialisation.

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Katherine Ku appeared as part of the Silicon Valley speaker series organised by Michael Clouser of the University of Edinburgh Business School and was co-sponsored by The Edinburgh Entrepreneurship Club, the School of Informatics and Informatics Ventures.

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Related posts:


Angel investing in Silicon Valley

November 4, 2009

silicon valley mapAs part of Edinburgh University’s continuing Silicon Valley Speaker Series, supported and organised by Informatics Ventures and the Entrepreneur Club, Jim Papp gave a talk tonight entitled “Angel Investing in Silicon Valley today”. This followed on nicely from last week’s talk by Sean Ellis on how to gauge whether you have product/market fit. Assuming you do then you need to get some angel money to get things moving!

Jim Papp is the CEO of Podaddies, an angel funded online video advertising company, and he is an active angel investor in high tech companies. He is a member of the Band of Angels where he has served on the deal screening committee and has made about a half dozen investments in start-ups in the past several years with a focus on software and internet services, medical devices, and wireless technologies.

Jim started by giving a brief history of Silicon Valley, mentioning that although HP was founded in 1937 in a garage in Palo Alto it wasn’t until 1956 the first “silicon” business started in the valley. In 1968 Intel was founded, and in 1976, the same year I was born, so too was Apple in Steve Jobs’ garage in Los Altos.

The first angel group, the Band of Angels, was formed in 1994. Since then Angel groups have flourished world-wide, including Scotland. Of all the angel groups operating in the USA, 82% of them report making investments into software companies and 48% into telecoms companies. However, they do invest in a range of different industries but the failure rate is consistent, it doesn’t vary from industry-to-industry. More detailed facts and statistics available here.

ROI

  • 52% of angel deals return nothing, or less than the initial amount invested
  • 32% return between 1 and 5 times the original amount invested
  • 15% Return greater than 5 times the amount invested

It’s for that reason that angels and VCs look for outsize returns, usually a minimum of 10 times amount invested; simply put, there are a lot of duds that need to be paid for.

The record year for investments by VCs was, unsurprisingly 2000, when an enormous $100Bn was invested. In a telling sign of that overheated period the average amount invested per deal increased significantly. In most years before or after 2000 the average amount invested has been between $20 or $30Bn. Sadly, 2009 has been significantly lower than this amount and shows there is still some way to go before confidence and level of investment returns to normality.

I asked Jim to explain why Silicon Valley still has an advantage for technology startups and he replied by quoting the famous crook who, when asked, “Why do you rob banks?”, sensibly responded, “Because that’s where the money is”. Out of all the VC money invested in the US, 38% is invested into Silicon Valley. As angels and VCs the world over tend to stick to their local area for investing, mainly out of practicality, startups continue to arrive. The odds are stacked against you though. Out of perhaps 70 pitches a month submitted to the Band of Angels, only 3 will get in front of the entire angel group, and only one of these will get funded.

The talk concluded with a summary of what investors look for in their investees:

  • Something that solves a big or complex problem
  • Something unique; a competitive advantage
  • Large and growing market for your product or service
  • Great team
  • Capital efficient and scalable
  • Exit strategy


Find out about the upcoming events in the Silicon Valley Speaker Series, including Alexis Ohanian, founder, Reddit. (I saw Alexis speaking a few weeks ago at MIT and I can definitely recommend attending to hear him!)


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