The emotional rollercoaster of entrepreneurship

August 26, 2011

This is one of the must-read pieces of advice about being a startup entrepreneur, and something I share frequently with friends and people I’m advising. Being an entrepreneur is hard, you won’t always feel like you can conquer the world, but don’t worry, you’re not alone:

Marc Andreessen wrote:

First and foremost, a start-up puts you on an emotional rollercoaster unlike anything you have ever experienced. You flip rapidly from day-to-day – one where you are euphorically convinced you are going to own the world, to a day in which doom seems only weeks away and you feel completely ruined, and back again. Over and over and over. And I’m talking about what happens to stable entrepreneurs. There is so much uncertainty and so much risk around practically everything you are doing. The level of stress that you’re under generally will magnify things to incredible highs and unbelievable lows at whiplash speed and huge magnitude. Sound like fun?

Here entrepreneur and Teamly advisor, Cameron Herold talks about how you get through it and crucially, what to do, and what not to do at each stage of the rollercoaster. Take the time to watch the videos to hear what he has to say, it will help.

Or, if you’d prefer to read, take a look at this blog by Cameron about entrepreneurial manic-depression and how to ride the curve.

Part 1:

Part 2:

 


Loic Le Meur at Microsoft Bizspark UK 2010

September 25, 2010

Loic Le Meur at Microsoft BizsparkI love Loic Le Meur; I suspect everyone who’s ever heard him speak does too. Yes, he’s a successful entrepreneur with a track-record, but I guess it’s more his mix of beaming smiles, Gallic charm and accent and his positive, upbeat and enthusiastic manner which combined has contributed to making Loic one of the influential people in tech world-wide.  He talks of his passion for what he does, and it’s that which motivates him and not money. The passion comes across clearly.

Loic is the founder and CEO at Seesmic, which provides a multi-platform way to communicate and “manage your brand online” (an “obsession” of his). Along with his wife Geraldine, he founded one of the World’s major web conferences, Le Web, which takes place every December in Paris. (It’s well worth going for the 2 day event, it brings the best of Europe and Silicon Valley together. Here are some of my blogs from Le Web 09).

But as a significant figure in Europe why did he relocate himself and family to Silicon Valley three years ago?

“It’s more difficult in Europe, but in the bay area there is easy access to everyone within a short drive. Everything is central, Silicon Valley feels like one big campus and it’s full of energy.” Settling in was easy as “most people in Silicon Valley are not from Silicon Valley and [unlike in Europe] they are genuinely willing to help”.

In Europe are we just not willing to pay it forward? Later on, during a discussion about funding, someone elegantly illustrated the difference between US and Europe; in the US there is a “virtuous circle” of US entrepreneurs who later become investors, and keep going through this process again and again. In Europe – for whatever reason – after succeeding and exiting, entrepreneurs seem to retire with their money and the cycle is broken.

Investors and Pivots

Getting under the hood a bit more of Seesmic, Loic explained that it started out as a video chat platform – a medium he still firmly believes in – but there was a problem scaling it beyond their initial hard core of 100,000 users. Quite simply, a lot of people are not very comfortable with video as a communications medium. So despite the initial success, Seesmic made the move to another product.

He explained, “Good investors know its not what you start with that matters but where you end up”, and added, “The crucial element is the trust and relationship that you have with your investors.” He also acknowledged that he was in a fortunate position in being well-funded which allowed him to do that, build the platform and grow the community ahead of monitising.

In his closing remarks he asked us all simply to think, “What can you be the best in the world at?” and to build a community around that.

- – -

Thanks to Bindi Karia and the Microsoft Bizspark programme for the opportunity to attend. If you are a startup, make sure you register with Bizspark.


Seed accelerators: a launch pad for start-up success

March 18, 2010

Here are my notes from the ‘Seed Combinators': Startup Incubators 2.0 panel at SXSWi. The panelists were Paul Graham, Naval Ravikant, Marc Nathan, David Cohen and Joshua Baer.

Definition: Accelerator programmes seek to nurture a seed of an idea and act as a launchpad for a start-up in its earliest stages.

What do they typically consist of?

  • a small amount of money
  • advice from real experts
  • help pitching at a demo day for further funding
  • access to an amazing network of advisors, angels, and VCs

Perhaps the most famous of all is Y Combinator, founded by Paul Graham and they have helped over 100 start-ups. Their method insists that you move to the bay area for the duration of their 3 month program, a very worthwhile commitment as you will end up building fantastic relationships with the other 19 startups going through the same experience.

How do you choose which one to apply to?

Either pick the one geographically closest to you or pick the one best if you can.

“It’s like picking a surgeon, you want the best you can get,” Paul Graham.

Myths about accelerators:

It’s only for young founders. Not the case. YC’s average age is 27 years old, but they have funded some in their 30s and 40s. (These are less frequent though probably because of the stage of life, family commitments, etc).

It’s all about the idea. Mainly it’s about the character of the founders, the quality of the people, specifically integrity and intelligence. “We pick people we like to be around”, Paul Graham.

In terms of ideas though what are they looking for?

An idea that solves a valuable problem. i.e. something people will pay for.

Stay local or go to the US?

If you are going global, come to the US. Many business ideas are “winner takes all”, and the US has the largest market and Silicon Valley is the best place to take advantage of it. But if your focus is on another region, stay in that area and apply to a local programme.

Don’t give up

Drew Houston was initially rejected first time round, later re-applied and is now going great guns with Dropbox.

Some accelerator programs:

Y Combinator (Silicon Valley)

Capital Factory (Austin)

Techstars (Boston, Boulder & Seattle)

Seedcamp (Europe)

HTC (Houston)

The Founder Institute (San Diego, Denver, Singapore, Paris, LA, SiliconValley, Washington DC, Seattle, New York)

Other reading:

My notes from the panel on getting your company funded is relevant to start-ups at a later stage of development.


Lean Startups – a live discussion with Eric Ries and Dave McClure

March 18, 2010

This week at SXSWi I attended a side event, the “Lean startup smackdown” with Eric Ries and Dave McClure, organised by Ash Maurya of the Austin Lean Startup group. Here is a summary of my notes.

The idea of a lean startup is something which enhances the chance of success and comes from the idea of lean manufacturing, made famous of course by Toyota. Ironically one of the main tenents of the lean startup philosophy is listening to the customer, something that Toyota should probably be embracing now.

Lean startups are trying to create something new while acknowledge they operate in conditions of extreme uncertainty. The key is getting to a product which your customer values, as quickly as possible, maximising value creation while minimising irrelevant time-wasting and resourceconsuming activities. Fundamentally lean is about the speed of iterations. Let’s say you start your business with some funding, how much runway do you have left before you run out of money, and in that time how many iterations of your product do you have left?

It’s a cyclical processs which follows and then repeats:

Build Measure Learn

You can develop faster without waiting for feedback, but overall it is not more effective. You start with the minimum viable product and go through the iteration loop until you have a clear understanding of the core product. Question all your assumptions. You do not optimise at this stage. Micro-optimising and seeking incremental improvements is something which you concentrate on when you have solved the macro problem and have a core product that people want, as defined by product/market fit. You also don’t add features as adding features at this stage can actually inhibit conversion as it can lead to lower conversion.

Measurement:

Take 3 to 5 conversion metrics and measure that data to provide a feedback loop. As a result of the data, change the product, or the marketing and see if that makes things better or worse. You are seeking Validated learning about your customers, rather than guessing.

How often do you make the changes? The aim is to reduce the batch size, which makes for a faster feedback loop and means you are continuously developing.

Lean startups are not cheap startups; when you get to the point where you understand your business model – product/market fit is one definition of this – you want to accelerate as quickly as possible and if that necessitates spending money, do it. Lean does not imply how much funding you raise as this varies for each type of product that a startup tries to build. VCs have rules of thumb which serve them well at a portfolio level, but poorly at a company-level. VCs demand plans, and milestones, but being on time and on budget is irrelevant if you are not managing to buidl something that the customer wants. So rather than focusing on getting to the next round of funding, remember the VC is not your customer, and focus on real success with customers, in the leanest way possible. (Two VCs were specifically mentioned though for their support of the Lean Startup philosophy: Polaris Ventures and Mike Maples.

Examples of recent successful startups which have followed the lean methodology include Dropbox and Xobni, both advised by Sean Ellis, who I recently wrote about after a talk on the subject of product/market fit and what that means for funding at Edinburgh University. Xobni started out building email analytics to enterprise customers but discovered there was just not enough value in this. In their search for developing something with recurring value to users they reinvented the product as an Outlook plugin for individuals to help analyse and search their email.

Finally, McClure and Ries pointed out there is a lack of empirical evidence or research on this area, so don’t assume that this philosophy is necessarily “correct”, and use what aspects of it most make sense to you. I am sure both would welcome any examples of your success or otherwise following the lean startup philosophy.

[Update: within hours of writing this blog I found the following article, "The Case for Fat Startups" by Ben Horowitz. Despite the name I am not convinced the two philosophies necessarily disagree with one another, it seems more like Horowitx is arguing against cheap start-ups.]

Hungry for more? There’s a Lean Startup Conference coming in San Francisco in April.

Further Resources:


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!)


Startup Bootcamp at MIT

October 19, 2009


Photo: Dan Bricklin, founder: Visicalc

Photo credit: uploaded by rhizop

I attended an amazing event in Cambridge, Massachusetts last week designed to educate and encourage new startup ventures. It took place on Columbus Day, a national holiday but that did not discourage hundreds of keen attendees who turned up for this all day event.

The photo on the right is of arguably the most famous of the speakers, the man who invented the “first killer app“, the electronic spreadsheet Visicalc. This helped establish Apple who sold millions of their Apple II on the back of that one  software title alone.

The speakers:

1. Adam Smith, Founder, Xobni
2. Alexis Ohanian, Co-Founder, Reddit
3. Ken Zolot, Founder, MIT Innovations Teams & Heartland Robotics
4. Dan Theobald, Founder, Vecna
5. Kyle, Vogt, Founder, Justin.TV
6. Angus Davis, Founder, Tellme
7. Hemant Taneja, Founder, Sunborne Energy, Managing Director, General Catalyst Partners
8. Dharmesh Shah, Founder, HubSpot
9. Robin Chase, Founder, Zipcar
10. Dan Bricklin, Creator, VisiCalc
11. Aaron Swartz, Founder Infogami
12. Drew Houston, Founder, Dropbox

There’s a number of very good notes about this elsewhere on the web, so I will simply provide links to those:

My key take away was how impressive the enthusiasm and passion exhibited here was; nothing like I have seen at home. The US leads the way for technology ventures for a reason!

For more history and lessons about technology startups I can endorse the recommendation made by a couple of the speakers of the book “Founders at work” which details the struggles and eventual success of companies like Hotmail, Apple, Adobe, Tivo, RIM and others.


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