Startups Archives - Page 19 of 29

SVASE Breakfast Club with Granite Ventures in San Francisco

Posted on August 8, 2006 ·

(Updated – see podcast links at the bottom)

I’ll be moderating another SVASE VC Breakfast Club meeting on Thursday, Aug 10th in San Francisco, at the Embarcadero Center. As usual, it’s an informal round-table where up to 10 entrepreneurs get to deliver a pitch, then answer questions and get critiqued by a VC Partner. We’ve had VC’s from Draper Fisher, Hummer Winblad, Kleiner Perkins, Mayfield, Mohr Davidow, Emergence Capital …etc.

Thursday’s featured VC is Chris Hollenbeck, Managing Director, Granite Ventures. The Zvents post has all the info and a map, and if you plan to attend, please register here.

These sessions are a valuable opportunity for Entrepreneurs, most of whom would probably have a hard time getting through the door to VC Partners. Since I’ve been through quite a few of these sessions, both as Entrepreneur and Moderator, let me share a few thoughts:

It’s a pressure-free environment, with no Powerpoint presentations, Business Plans…etc, just casual conversation, but it does not mean you should come unprepared!
Bring an Executive Summary, some VC’s like it, others don’t.
Follow a structure, don’t just talk freely about what you would like to do, or even worse, spend all your time describing the problem, without addressing what your solution is.
Don’t forget “small things” like the Team, Product, Market..etc.
It would not hurt to mention how much you are looking for, and how you would use the funds…
Write down and practice your pitch, and prepare to deliver a compelling story in 3 minutes. You will have about 5, but believe me, whatever your practice time was, when you are on the spot, you will likely take twice as long to deliver your story. The second half of your time-slot is Q&A with the VC.
Last, but not least, please be on time! I am not kidding… some of you know why I even have to bring this up.

Here’s a participating Entrepreneur’s feedback about a previous event.

See you in San Francisco!

Update (8/13): Listen to these podcasts recorded at the VC Breakfast by Vic at HotfromSiliconValley:

Click here to listen to the conversation with Chris Hollenbeck

Click here to listen to the conversation with Ben Casnocha

Tags: Venture Capital, VC Breakfast, Funding, VC Funding, Startups, Entrepreneurship, SVASE

Filed Under: Bay Area, Business, Social Networking, Startups ·

Venture Zine

Posted on July 29, 2006 ·

Hummer Winblad was the #1 search term on Technorati most of last Saturday and Sunday. I couldn’t find anything significant. Go figure …

Rick Segal is trying to place a half-a-million order but the company, a six-month-old startup is hiding:

“Click on contact us.

Web form. We’ll get back to you with 2 -3 business days. WTF?

Hmm. Click on about us. Long dribble about why they exist, a founders message and nothing about the people.

Okay, let’s re-cap. We have a 6 month old start up making it as hard and as impersonal as possible to take an order while the founder drones on about Web 2.0, being innovative, blaah blaah blaah.”

You want to be successful in business? You need to be available.

Jason Wood raises his eyebrows on Jobster’s recent $18M funding, which he considers a sign of access Venture Capital:

“I don’t know if Jobster will end up a winning company or not, but I do know enough to raise a skeptical eyebrow when I read that they’ve now raised $50 million and carry a $100mm post-money valuation. This in a market that is CROWDED with startups (Simply Hired, Indeed), established online companies (Monster, CareerBuilders) and plenty of adjunct job-related resources (e.g., craigslist, LinkedIn).”

Calling in rich … well, this one certainly isn’t about me

“One of the best lines I have heard in a long time was uttered by an entrepreneur we know. He was talking about one of his co-founders who one day decided he didn’t want to work anymore. He said about his co-founder, “he called in rich“. I laughed so hard I almost cried.”

Funny as it sounds, it’s a potentially serious situation for a startup, says Fred Wilson, proposing a way to handle the situation when you just ost your motivation and are too wealthy to work. My personal experience is from the other side: when I interviewed for a VP position in a startup, the Founder/CEO was releived that my previous startup had not been financially successful – he only wanted team-mates who were still “hungry”.

The Business Model diagram below by Peter Rip reminds me of my previous life in Big 6 consulting 🙂

Of course the analytical approach helps understand a business, but clearly there are times when the entrepreneur still needs the 30-second summary… like those in our SVASE VC Breakfast sessions. Or the Office 2.0 Under the Radar event by IBDNetwork, where Peter will be a panelist.

Talk about Panel Discussions, here are a few more, all of them next week, in the SF Bay Area:

Jeff Clavier will moderate a discussion on Web 2.0 in the Enterprise by IBDNetwork. I heard Jeff and fellow “Irregular” Jeff Nolan discuss this meme a few times, it will be interesting to see/hear how it evolves. (I wrote about related issues here and here).

Web 2.0 Forum and Amidzad Summer Party. VC Panelists: Accel’s Kevin Efrusy, Opus Capital’s Ken Elefant, Partech’s David Welsh and David Lane from Diamondhead.

Raising Capital For Early Stage Tech Companies – The Definitive Crash Course by SVASE, with Lightspeed’s Jake Seid, DFJ’s Warren Packard, Garage’s Bill Reichert and former SVASE President Laura Roden from The Angels Forum.

Rick Segal always points to interesting stories, so I wanted to click throgh this post:

“And I thought the US was getting conservative
Check out this commercial that got pulled in New Zealand for being a bit much. This is racy? Hmm…”

… but this is what I got:

To use this product, you need to install free software

This product requires Microsoft© Internet Explorer 6, Microsoft© Media Player 10, and Macromedia Flash 6. To download these free software applications, click the links below and follow the on-screen instructions.

Step 1: Download Microsoft© Internet Explorer 6

Microsoft Internet Explorer 6 is free to download.

Damn, Microsoft, I have all the stuff you want on my PC, I just happen to browse in Firefox And no, I don’t care to switch browsers….

Technorati : business model, entrepreneurship, management, startups, vc blogs, vc zine, venture capital, venture zine

Filed Under: Startups ·

What is He Smoking? “Military Management: The New Trend for Small Business”

Posted on July 20, 2006 ·

I generally like Small Business Trends , sometimes even quote their material, but I can’t help but wonder what Jack Yoest (second from left on this 1978 photo) is doing there.

He seems to think that there is a new trend in small businesses, the desire to run a company like a military unit. Wow… I don’t know where he observes this “trend” – I for one tend to believe (small) businesses are better off with a team of partners and collaborators than a military organization. In fact not only smalls ones, but reality is that the collaborative model is a lot more difficult to maintain in a large organization. In fact it’s no wonder that several army commanders make it to the management ranks of the Fortune 1000. (On a personal note, I had the misfortune to “serve” under a Navy Captain turned into Corporate VP who resorted to shuffling around his management team every 6 months or so, and was a master of alienating customers…)

This is not the first time Jack mixes the corporate world with small businesses: 10 Reminders for Effective Management is supposed to be advice to small business owners, but it sounds to me like the typical 80’s corporate mid-manager’s survival guide, as in “how to BS your way through your career, looking busy while doing nothing“. Back then I was wondering if it was a serious article or a satirical piece. Apparently not. Too bad for small businesses. At least for those that buy his teaching.

Technorati : bs, corporate management, corporate survival, effective management, entrepreneuship, management advice, military discipline, military management, small business, small business trends, startups

Filed Under: Business, SMB / SME, Startups ·

Venture Zine

Posted on July 19, 2006 ·

David Hornik talks about building a company on a shoestring – or “One Red Paperclip and Some Worm Poop“. Now, that’s an interesting combination.
I understand the “poop part” – it refers to TerraCycle, a company making plant food and pesticides out of waste, packaging it in recycled material at a plant largely equipped with donated machines and furniture. Even their PR coverage is largely free, thanks to the charismatic founder and some marketing tricks – they make good story. So TerraCycle is a showcase of how to build something out of nothing, be profitable and help the environment.
It’s the red paperclip part that I have trouble with – it’s the story of a guy who started with one paperclip, and through only 14 consecutive deals he traded it up to a house. Sure, it’s a story of creativity and a good dose of luck, but as far as the trading partners are concerned… well, insanity is the first word that comes to my mind. I’m not sure I’d consider this an entrepreneurial model.

What happens when you combine MySpace with Second Life? You get SecondSpace. Well, not really, but I am not any closer to knowing what SecondSpace really is than Charlie O’Donnell is, who launched a contest to guess their business model. The award for the best guess is a Jamba Juice. The award for SecondSpace is $6.5M in VC funding. Oh, well, I am ready to launch ThirdSpace, the bidding starts at $10M … do I hear 11?

Talk about contests, Rhapsody has put together a contest to develop the best web service integration with Rhapsody. The winner gets a road trip for 2 to see their favorite band anywhere in the world. – Hey, that beats a Jamba Juice! Fred Wilson, who pointed us to the news is one of the four judges.

Peter Rip’s VC Binds that Tie is a must-read, providing the insider view of the motivations of VC#1 bringing another VC into the syndication whether the startup founder is comfortable with it or not. It is based on an actual story where the Founder came back to him for advice, even though he had previously turned his funding quest down – I guess it tells volumes about Peter, the Founder must have really been impressed.

Still on the subjects of how to know which VC is right for your startup, avoid “cheap” ones, like “Valley VC” in Rick Segal’s post. How does Rick always come up with good stories? His posts are always entertaining, I’d read them just for his metaphors. This time it’s the toilet seat experiment and managing developer’s understanding of customers’ comfort zone. As Scoble says: “Always thinking outside the box. Or, in this case, off the throne. ”
As for the Home Depot mission, Rick, in the true spirit of supporting startups, I suggest you check out Brondell. 🙂

“Venture capitalists awash with cash — may soon beg you to take some” – reports Matt Marshall at the SiliconBeat. he goes on: “So it’s a great time to be a small or even large company looking to snag cash from these firms. Disclosure: You may have to certify that you are alive and breathing to get some of this dough, but that may be about all.”

Buying Time is often justifiable, but it’s costly, and don’t just think of direct cost (your burn rate), but the opportunity cost of nor being on the market, and the breathing time you just gave your competitors. Fred Wilson is clearly suspect of buying time when it’s to make a decision, especially employee-related ones: chances are you really only bought time, not any more information….

Will Price announces Hummer Winblad’s funding of Krillion, a “brand new service that makes it easy to find key products in the best stores in your local neighborhood.” I’ve always thought the Venture Community pretty much agrees on not having top-heavy startup teams -see recent posts on the subject by Ed Sim, Dharmesh Shah and yours truly, and also a quote from Mayfield’s Allen Morgan:

“Almost no early-stage startup seeking VC funding should ever have one founder as the “CEO” and another as “President” or “Chief Operating Officer”. This is almost always a sign of title inflation (usually to assuage someone’s ego). Almost guaranteed, any startup that has both a CEO and a President/COO has the wrong person in one or the other (or both) of those roles. This sort of title inflation and proliferation is almost always – like most other “contortions” of the standard org chart – a red flag to VC’s. Can easily be taken to indicate that some of the co-founders are more worried about titles (and ego’s) than success.”

Apparently Hummer Winblad did not consider Krillion having a CEO and a COO before they even launch – or perhaps there were way too many green flags to counter the red one:-) I’d love to hear Will on this.

Filed Under: Startups ·

Crowdsourced Software = Your Second Best Idea + Digg + Open Source Community + Incentives + … ?

Posted on July 17, 2006 ·

Recently my friend, Chris Yeh organized a special SDForum event, “Your Second Best Idea“, where he brought together:

Creative thinkers who have a killer idea to build a company – if only they had the time
Entrepreneurial types who’d love to make it happen, but lack the “big idea”
Venture Capitalists, Angels who would fund it all (?)

Chris’s concept was that after brief idea-presentations the participants would “bid” to team up with the idea owner based on their initial plans to execute and an equity offer to the owner. And if all runs well, perhaps a VC will jump in, too. I had some doubts on how far the process can go in one short event, but it was certainly an interesting experiment. We heard ideas, the crowd discussed them, but we never got to the point of entrepreneurs bidding for the ideas – which somewheat masked the underlying big question:

What’s the value of an idea? In a different context, as part of the NDA discussion I’ve previously stated tha ideas by themselves were not that valuable, it’s the entrepreneur behind the idea that makes or breaks the startup. Well, if that’s true, than how much equity is an idea presented in 5 minutes worth? And if that’s all the idea-owner had, hasn’t he/she just given it away for free?

While the inaugural session did not answer these questions, I’ve recently heard about Canada-based Cambrian House whose entire business model is based on Chris’s concept .. and more. Here’s how they explain it:

So the creative types submit an idea, the community votes (here’s the digg-effect), others will develop it, Cambrina House markets the product. All contributors to this “supply chain” will share the profit, according to a Royalty Point system. All projects start with 1500 Royalty Points, and submitting an idea is worth 75 out of the 1500, so if my math is correct, that’s a 5% equity for the raw idea – pretty high, if you ask me.

What noone can predict for now is whether those Royalty Points will ever get converted to real money, and at what rate.

Does Cambrian House have a sustainable business? I have no clue… and I suspect nor do the contributors, or even the Founders of Cambrian. In todays heated entrepreneurial environment apparently being radically different is good enough (and being a serial entrepreneur doesn’t hurt, either), so they landed $2.5M in funding from aptly named Adventure Capital in Alberta, Canada. This funding will go a long way, as they essentially outsourced everything, not paying contributors until profits roll in. I guess we can say their currency is hope:-)

The Cambrians certainly know how to create awareness: in 16 days of existence they had 100K site visitors, there daily reach per Alexa is in the top 100 in Canada. They are not afraid of unusual publicity stunts, although frankly Feeding Google was more about noise than being smart: followed by cameras, completely unannounced, they descended on the Google campus with 1000 pizzas at 3pm. Did you get that? Google, as in Google the company famous for it’s free g ourmet food, at 3pm, as in just after luch, before dinner – no wonder they were soon escorted off campus. Cambrian guys, I have a free idea for you: next time set up camp with your 1000 pizzaz at Stanford, you’ll be heroes and won’t leave without 100’s of new ideas…and I don’t even want 75 points, just invite me for the pizza-fest.

Update (3/23/07): Read/WriteWeb just published an excellent overview of crowdsourcing.

Technorati : business model, cambrian house, canadian startups, crowdsourcing, digg, google, outsourcing, royalty points, second best idea, startups

Filed Under: Business, Collaboration, Marketing / PR, Open Source, Software, Startups ·

Venture Zine

Posted on July 14, 2006 ·

This is the week of foodie topics. Tom Cole launched his culinary blog, Consuming Ambitions, covering Palo Alto restaurants, San Francisco Wine and Chocolate tasting, Grandma’s recipes as well as the Palo Alto Farmer market.

Fred Wilson has his business lunches at the Shake Shack, where you stand in line 20 minutes to place your order, then eat outdors in the park.

Christine Herron presents her favorites of the 25 or so mashups at Mashup Camp 2. She wrote a bunch of other articles on mashups. The title of one is quite telling: Monetizing Mashups – Still a Black Art. While the session discussed monetization plans like:

Ad-generated revenue
Sponsorships or vertical ads
Affiliate links
Premium services
Data analysis services…

… these were just thrown out without getting into details. And she also heard:

Better-paying job offers
Selling out to an acquirer

That the above is quite a reality is shown by Zooomr being courted, reports TechCrunch. The asking price is reported to be under $1M, so Mike concludes this is basically “employment by acquisition”

Josh Kopelman ponders about the difficulty of sizing up entrepreneur in a few meetings. Comparing his striving vs. struggling investments, he finds few things stand out:

There is greater risk (and variability) in first-time CEOs than in serial entrepreneurs.
Just say no.
It’s all about the team.
A culture of accountability.

I buy it (almost) all but I’ve seen second, third-time CEO’s fail; on the other hand the true nature of being entrepreneurs is to go to unchartered territories… we’d all lose out big time not giving first-time CEO’s a chance.

Will Price discusses Age and Entrepreneurship. Quoting GSB’s Chuck Holloway: “There are two natural age peaks correlated to entrepreneurship – late twenties and mid-forties.” I’m relieved, all is not lost for me (hm, I guess I can’t hide I don’t belong in the first group)

Technorati : entrepreneurship, mashups, monetization, startups, vc blogs, vc daily, vc zine, venture capital, venture zine

Filed Under: Misc, Startups ·

New VC Blog with a Culinary Focus

Posted on July 13, 2006 ·

Tom Cole of Trinity Ventures is an active networker; I bumped into him at sveral events recently. But if you think he only attends the fancy $3K events, “VC Partner-style”, you couldn’t be more wrong: he was an active participant, note-taker and presenter of our workgroup sessions at the second Techdirt Greenhouse. (a lot of the content at the wiki would not exist without him).

Now he is showing us his gourmet side: his new blog, Consuming Ambitions has a decidedly “foodie” focus, talking about restaurants in Palo Alto, sharing recipes, wine & chocolate tasting in San Francisco and just about anything else food related in the Bay Area.

He finds ways of weaving startup business into food topics though: here’s a little push for Kaboodle, and a story of guerilla marketing by Josh Kopelman‘s Half.com: they stuffed coupons in fortune cookies.

I have to go, all this food-talk made me hungry

Technorati : culinary, food blog, foodie, fortune cookies, guerilla marketing, palo alto, techdirt greenhouse, tom cole, vc blogging, vc blogs, venture blog, wetpaint

Filed Under: Bay Area, Blogging, Business, Startups ·

Venture Zine

Posted on July 7, 2006 ·

Will Price comments on the recently released Venture Capital Performance data.

In a sepearate post he discussess how startup Board Meetings are often nothing more than status updates. These meetings should focus on decision making, which of course would require previous analysis and presentation of options by the CEO. Will concludes the CEO’s credibility, the Board’s trust in the Management team largely depends on this more proactive approach. My 2cents: Board Members should not hear about major issues/problems at the meeting for the first time, they should be informed prior to the meeting, on an ongong basis. Every board should have a wiki which should become the continuous communication channel between the CEO and the Board, and a way to collaboratively prepar decisions prior to the meeting.

Talk about investment performance and Board participation, this chart by Paul Kedrosky of Vinod Khosla’s seed investments is quite amazing. His very early investments under $1M (an amount most VC’s won’t even consider) yielded far better returns than larger investments – and as for 100% success rate??? Wow!

As if to illustrate the above case, Fred Wilson discusses why smaller upside deals often don’t get funded as they wouldn’t “move the needle” for larger VC funds. He doesn’t like making decisions on this basis, since “it can cause you to leave good opportunities on the table for others if you aren’t careful.” “We prefer to think about the end markets we want to be involved in, the people we want to work with, and efficient market entry strategies and let the needle moving problem take care of itself for the most part.” Small is beautiful, after all.

Angels tradtionally do both – small and very early stage. Jeff Clavier quotes a VC Experts newletter, that classifies angel investors according to several criteria, but largely based on their operational experience and level of participation. “Based on these definitions, I guess that I am between the Serial and the Trailblazer”

Ed Sim writes about how hiring a VP of Sales too early can be a fatal mistake for a startup – I have some fairly srong opinion and a case study on the subject, which I hope to be able to post soon. In the meantime, Ed’s previous piece on Top-heavy Teams and Dharmesh Shah’s piece on why sartups Don’t Need A World-Class Management Team are must-reads.

Rick Segal looks at another typical trap startup Founders find themselves in: not getting truly critical feedback, if they mostly ask their friends, telling about their own idea. He set up an experiment at Gnomodex, asking people about a fairly lame idea. When he presented it as his own, “the worst feedback I got was “a bit narrow of a solution, don’t you think”.” He then asked another group of people, presenting it as someone else’s idea, and the feedback was honest and brutal. “Same idea, same basic pitch, same request. The difference being that I set up an environment where it wasn’t personal and the feedback could flow without the perceived or real fear of offending me. It didn’t matter if these were friends or people I had never met before.” So apply the Kool-Aid Test, present the idea as one you heard about.

Oh, No! David Hornik promises to write shorter posts. David, you really shouldn’t. You write less frequently, but always have good original thoughts, that are mor like essays – don’t cut it down!.

Technorati : Board Meetings, CEO, Comunication, Startup Boards, Startup Management, VC Performance, Venture Capital, Venture Capital Returns, Vinod Khosla, wiki

Filed Under: Startups ·

Venture Zine

What is He Smoking? “Military Management: The New Trend for Small Business”

Venture Zine

Crowdsourced Software = Your Second Best Idea + Digg + Open Source Community + Incentives + … ?

Venture Zine

New VC Blog with a Culinary Focus

Venture Zine

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