presentation notes

Hugh MacLeod at Startup Empire: We’re So F***ed

by Joey deVilla on November 14, 2008

01_were_so_fucked

startup_empireThe second-last speaker at yesterday’s Startup Empire conference was Hugh MacLeod, whom most of us know for his comics drawn on the back of business cards and his blog, Gaping Void. Here are my notes from his presentation:

Intro

  • It’s easy for an advertising career to tank, especially if you live in New York and drink too much
  • I started drawing comics at bars, on the paper that just happened to conveniently be around: the backs of business cards
  • I’m not in the VC business, nor am I in the tech business
  • I’m greedy — who here’s greedy? [Many hands go up]
  • What really drives us? The "C" word: creativity
  • The reason we work in this field is that we want to build stuff — fun stuff
  • If it pays the bills, so much the better
  • The "we’re so fucked" thing is pretty long term
  • What will get us out of the hole? Creativity. People like yourself, doing and building cool things
  • I’m in my 40s — what motivates me now is seeing bright ambitious kids coming out of the colleges
  • When I was a kid, there was no internet — not even computers! I had to write my term papers on typewriters
  • I want to talk about creativity to the young
  • I now present 12 little tips for you people just getting started

02_hugh_macleod

1. Ignore everybody.

  • When you come up with a really great idea and show it, people won’t get it
  • You yourself might not even get it
  • Imagine the early days of search: “Why would you want to do that?”
  • “Good ideas have lonely childhoods”
  • If you’ve had a good idea, you were probably called a fruitcake at the start
  • Good ideas alter power balances in relationships, which is why many people resist them
  • Your boss doesn’t want you to have a good idea that makes you richer than him
  • Good ideas will meet resistance – not because of the idea, but because of power and hierarchy

2. The idea you have doesn’t have to be that big.

  • Jewish proverb: “A rich man is one who can satisfy his wants”
  • I grew up on TV, watching shows about people who had more than us
  • Fast-forward 20 years later, I get to do what I want every day:
    • Haven’t had to set my alarm clock in years
    • Just me and a couple of pens
  • And yeah, I read Fast Company, BusinessWeek — “business porn magazines” – they feed greed
  • Anyone seen No Country for Old Men? I live in that town!
  • One of the locals is Harry, the master brewer, who moved out there and opened his own bar. He makes $500 a day and is the best businessman I know. He does what he wants and everything he does has some meaning to him.
  • Meaning scales!
  • We owe it to the generations to come to find meaning

03_asshole_venn_diagram

3. Put the hours in.

  • Nothing happens overnight
  • People look at what I do "Aren’t you worried about people ripping you off?" or taking my idea and doing the same thing
  • My response: "I’ve already done 10000 cartoons and 7 years blogging"
  • Inertia stops a lot of people. Know anyone in a dead-end job? Ever been in one? They say "One day, I’m going to open that cheese shop. But right now, I have to write a report…"
  • I have a book coming up. Didn’t quit my job to write it; just woke up an hour earlier every day to write it and posted it on my blog. Penguin eventually contacted me. All I did was put the hours in.

04_hugh_macleod

4. If your business plan relies on you being discovered by a big-shot, you will fail.

  • I once got a book contract offer. The terms in the contract were terrible and I turned it down
  • The publisher, it turned out, was in the business of finding people so desperate to have their moment in the spotlight that they would sign anything
  • We now live in an era of cheap, easy, global media — we don’t need middlemen
  • I’m friends with Rick Segal…but probably because I don’t need venture capital!
  • Where I live in Texas, you can live really cheaply. Part of this is because you run out of things to spend on
  • When I hear about people talking about VCs, I think of people looking to have their sorry asses saved
  • Don’t get me wrong: it’s great to have VC, but it’s even easier when you get one because you don’t really need one
  • "If you’re looking for advice, ask for money; if you’re looking for money, ask for advice.”

5. Do it anyway.

  • You don’t know that your idea is the right one at the right time – no one does!
  • Do it anyway — that’s how great ideas start out
  • Seco0nd-rate ideas are all about the immediate "yes!" response because it keeps them alive longer

05_the_pain_whats_your_number

6. Everybody is born creative.

  • “Everybody gets a box of crayons when they’re young .”
  • We turn adolescent and for many of us, somehoe, “our colour gets turned off”
  • Suddenly, it’s not about coloring anymore, but concerns like “Got to get a 3.5 GPA, got to get that job…”
  • Then you get an idea that you can’t turn off
  • It makes you start avoiding your poker buddies
  • Most people get scared off by that idea. Doubt creeps in: "What if I get a bad publisher? What if nobody likes my idea?"
  • That’s not your idea, that’s your grown up boring self fighting that idea
  • Your idea came to you because your soul needs it
  • If you don’t nurture that idea, it dies. It also takes a lot of you with it.

7. The “Sex and Cash” theory.

  • If you have a creative life and you make money doing it: you generally bounce between two kinds of jobs:
    1. The sexy creative job
    2. The one that pays the bills
  • In movie stars’ cases, that means alternating between parts in popular hit movies and critically-acclaimed art films
  • For a photographer, that means alternating between doing work for indie art mages and paying the bills with photo shoots for catalogs
  • Consider Martin Amis: he writes critically acclaimed novels and supplements his income by teaching courses and writing newspaper and magazine articles
  • As for me: I do comics on the back of business cards, and I do work for Microsoft and Dell
  • It’s a balance of artistic sovereignty and making a living
  • “The moment you accept this is when you take off .”

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8. Remain frugal.

  • This particular lesson took me the longest to learn
  • Living in New York City, I was in the top income bracket, for all the good it did. I had so much outgoing cash in rent and other expenses.
  • You can live like a king where I do, in Alpine, Texas quite cheaply
  • I now have “West Texas expenses, New York wages”
  • This is hard to do if you want to be seen in “all the right places”
  • Remember: we become creatives because we want freedom, and that includes freedom from avarice

9. I’m going to skip this one.

  • It’s too corny!
  • [He capitulated later; see the end of this article.]

10. The more talented somebody is, the less they need props.

  • At any advertising agency, it’s always the second-rate art director who’s the first to get the newest model Mac
  • If you go to any magazine office, it’s the second-rate writer keeps an old Remington typewriter on display
  • You see this at startups too: the loft office in the hip neighbourhood with the foosball table
  • Remember: the Gettyburg address was written on borrowed stationery!
  • We use props to hide behind or mask our inadequacies
  • I know a woman who recently IPO’d — she didn’t start in a fancy office, but on her dining room table
  • It’s not the props, it’s the good idea and the effort

11. The best way is not to stand out from the crowd, but avoid the crowd altogether.

  • Bartenders are the great social enablers of New York City
  • No under-50 bartender is really a bartender: they’re actors, musicians, whatever
  • They have plan to become famous photographers, musicians, whatever
  • The thing about the arts to me: what often drives people isn’t just the money or business, but the prestige: “I want to be like that guy, because he’s really privileged”.
  • Ever noticed how few really good writers have blogs? You don’t see literature, you see shit like what I write
  • A lot of authors are enamored of books and the prestige attached to them
  • The worst thing you can do as a creative is fall in love with a privilege model

12. If you can accept the pain, it cannot hurt you.

  • When my sister was born and my mom was in labour, the pain was unbearable — "Why is this happening to me?" she asked
  • The midwife replied: "You’re giving birth to a baby. It’s supposed to be painful."
  • Mom accepted that and got on with the birth
  • Trying to do something worthwhile and creative is really hard
  • As you get older, you realize that pain is part of the process

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9. Okay, here’s point number 9, since you asked: We will fail, but we will be forgiven.

  • Failure is part of the process
  • The important thing really isn’t about reaching the summit, but setting out for it.

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David Cohen at Startup Empire: Boulder and TechStars

by Joey deVilla on November 14, 2008

david_cohen

startup_empireAnother afternoon presenter at yesterday’s Startup Empire was David Cohen, founder and Executive Director of TechStars, which provides a unique opportunity for early-stage startups. Here are my notes from his presentation:

Boulder, Colorado

  • Why did I come here today? Because I’m hearing more about Toronto every day
  • I started out in development
    • Did three startups
    • Then went to the dark side: angel investing
    • Started all kinds of companies in all different ways
  • I’m based in Boulder, Colorado
    • Two of my companies are ZOLL Data Systems, Earfeeder
    • One of my startups failed, but there’s no evidence on the net that it ever existed
    • What’s Boulder known for?
      • Mork and Mindy
      • “4:20”
      • Nearby skiing
      • University of Colorado
    • It’s northwest of Denver and has a population of 125,000 – with students! Denver has about 1 million people

VC in Boulder vs. VC in Toronto

  • VC in boulder
    • $311 million in Q1 2008 in Boulder County
    • Taking into account its population of 125,000, that makes for about $2,500 in venture capital for each person in Boulder
  • VC in Toronto
    • $130 million in Q1 2008
    • Taking into account its population of 5.5 million, that makes for about $23 in venture capital for each person in the Toronto area
  • Toronto has a chicken-and-egg problem
  • We learned in Boulder, VC follows innovation
  • A UFO didn’t land in Boulder and drop off VCs
  • There was a strong telecom industry that grew up there (Colorado is the home of telecom and storage)
  • People who got rich off those industries stayed in Boulder and asked "What can I do with this money?"
  • 2nd- and 3rd-time entrepreneurs decided to become angels
  • Most angels are driven by more than just the money
  • Companies in Boulder: Lijit and Newsgator to name a few
  • The VC followed

The TechStars Concept

  • Along with me, other people mentoring at TechStars are:
  • TechStars is a mentorship-driven seed stage investment fund
  • It’s been referred to as "Incubator 2.0, boot camp for entrepreneurs", but to me it’s mentorship-driven
  • The big benefit for companies in the Techstars program is not small amount of money we provide, but the people we surround you with
  • At Techstars, you share ideas early, get the feedback
  • 10 teams of typically young entrepreneurs come to Boulder for the summer
  • If you get in, you get this incredible mentorship experience
  • Mentors spend time with the 10 companies
  • Atmosphere of camaraderie between the companies
  • Companies get integrated into the tech scene
  • Our “New Tech Meetups” are the 2nd largest in US, after NYC
  • We make our companies uncomfortable – we make them pitch often
  • First month: we ask them not to work on their product so much; it’s laregly about learning
  • At the end of program, they get just enough funding to get them to the next point
  • Techstar’s progress so far:
    • 2 summers = 20 companies
    • Only 1 of the 20 companies is now defunct
    • 2 of the 20 companies experienced positive exits (SocialThing, IntenseDebate)
    • 13 of them have acquired angel or VC funding
    • All told, we’ve invested under $600K in 2 years — positive ROI
  • Benefits
    • 40 jobs in Colorado created (probably 40 more elsewhere)
    • AOL set up an office in Boulder after SocialThing acquisition
    • 9 of the 20 companies have stayed in Boulder

Lessons

  • Try not to focus to much on VC. Focus on product and customers
  • Your community can be more powerful than you imagine if it works together
  • Promote your community when you promote your company
  • Mentorship is the scarce resource that matters

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Rick Segal’s Advice at Startup Empire

by Joey deVilla on November 14, 2008

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“Never ever take the title of CEO,” said Rick Segal between speakers at yesterday’s Startup Empire conference. “We fire CEOs all the time. Be a founder instead.”

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howard_lindzon

startup_empireLater on in the afternoon at yesterday’s Startup Empire conference, Howard Lindzon took the stage. Howard manages a hedge fund and is the creator of the finance news humour site Wallstrip, which he sold to CBS in May 2007. He also has a very popular financial blog at HowardLindzon.com.

I shot some video asking Howard about his idea of “social leverage”; I’ll post it a litter later on. In the meantime, here are my notes from his presentation, Why Now is a Great Time to Start Your Startup.

The Current Situation

  • Capital, which was so plentiful, is now gone
  • Reminiscent of the real estate bubble in Phoenix (where I live half the time)
  • Really important right now to shut out the noise
  • From 2002 – 2006, it was fun to read Valleywag, TechCrunch and make "me too" products. You can’t do that anymore
  • It’s also a bad time to base products on:
  • Sometimes you have to shelf your ideas for when the times are more suitable for them
  • The headlines are all doom and gloom these days:
    • "Financial Ice Age" – BusinessWeek
    • Startup Depression – Calacanis (I’m not a fan)
  • You must remember that even during good times, 80 to 90% of businesses fail
  • The VC model isn’t broken

Social Leverage

  • Financial leverage has come home to roost
  • We’re in a period of deleveraging: there is no bottom, because we don’t know what everyone owns
  • P/E ratios — it’s all about expectation, people expect less
  • You can’t get what you got six months ago
  • Expectations are in "this ratchet-down mode"
  • I also think that "we’re going into a depression" is crazy talk
  • I’m anti-financial leverage
  • Social leverage is all-powerful
    • Nothing you do in social leverage will haunt you
    • It’s a gift from the likes of Facebook, LinkedIn, Twitter
    • Perhaps you shouldn’t start building social leverage with a blog unless your passion is for writing
    • Start small: work with people
    • Be mindful of the etiquette of social networking tools
    • The time to ask people for something is when they’re least expecting it

Too Small to Fail

  • Wall Street was all about "too big to fail"
  • I’m not seeing signs from the presidents about being small – they seem too concerned with conglomerations and unwilling to bust up things
  • Bailouts just prolong the process
  • This is not a headline, it’s a state of being
  • It’s a great time to start a web-based business
  • If you’ve ever played the board game “Risk”, you know:
    • If you’re starting all your armies in Europe, you’re screwed
    • Start off in New Guinea
  • Consider one of my projects, Stocktwits.com
    • I like to stay in businesses I know
    • Started in Twitter — thought it was dumb in the beginning
    • Guys, this should be about ideas
    • Wrote post about how there should be a message board for stocks using the reputation model in Twitter
    • Twitter allows you some sort of reputation — everything you say is there for people to see
    • Stocktwits — one employee, $30K to start
    • Twitter offers possibilities: dating, betting — supports an ecosytem
  • Be careful in whom you trust
  • Embrace social leverage
  • Be too small to fail: do the one thing you do very well
  • Take as little money as you need; things will get better
  • Ignore the people saying that this is “a new Ice Age” – they’re idiots

Fear

  • Zig while others zag
  • Take a look at this graph, in which the pink line is the Vicks index and the blue is RRSPs: 

    fear_zig_while_others_zag

  • From 2003 – 2005:
    • Fear level low
    • Calacanis’s company, TechCrunch and other stupid tech businesses wree founded when fear was low
  • It’s always a good time to start a web business
    • The truth is that it’s never a good time to start any business
    • Successful business can be started anytime
    • 80 – 90% of businesses fail anytime

Why businesses fail

  • It’s important to have structure right from the beginning
  • Mistakes made at start can come back to haunt you
  • Sometimes partners fight, so rules and agreements at made at the the start are valuable
  • The keys: Structure, funding and realistic valuation
  • When it comes to spreadsheets and plans, keep in mind that it’s important to do one thing, do it well and get that customer – this is far more important than the spreadsheets
  • Make sure you’re fishing where the fish are
    • “Swim near the shark”
    • Be around certain ecosystems

My Advice

  • Social leverage: good
  • Financial leverage: bad
  • Be an expert at something
    • For good or bad: mine is finance
    • "I don’t really like the people in my industry"
    • Applications of my expertise:
  • Investing: more art than science

      Q & A

      How do you balance your day?

      • StockTwits is the only thing I run
      • Knightsbridge pays me to be on the road
      • I’m usually up at 5am
      • Private equity: long hours, long weekends

      How do you make use of social leverage?

      • One example: Fred Wilson
      • Two months invested in reading his blog
      • I found out that Fred was a basketball fan and took him to a Phoenix Suns game
      • We talked business
      • Fred just happened to be friends with Jim Cramer
      • Through Fred, I  met everybody else — I counts it as my “real day 1 “
      • “You make your own luck”

      What are you looking for with companies?

      • I’m more of an angel and a scrapper
      • I want to to be early
      • I want to see a finished product
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      Austin Hill at Startup Empire: Slow Down and Speed Up

      by Joey deVilla on November 14, 2008

      austin_hill

      startup_empire The second presenter at yesterday’s Startup Empire conference was Austin Hill. Austin’s one of the founders of the Company Formerly Known as Zero-Knowledge Systems (they’re now Radialpoint), where he served as both Chief Technology Officer, Chief Strategy Officer and Executive Vice President. He’s the co-founder of Montreal-based tech startups Akoha, where he serves as CEO and Standout Jobs, where he is Chairman. Austin’s blog is Billions with Zero Knowledge.

      Here are my notes from his presentation, Slow Down and Speed Up: Handling a Fast-Moving Startup in Turbulent Times.

      Reality Check

      • It’s time for a reality check
      • The general attitude: things are bad out there — there’s a lot of fear
      • Summed up in Sequoia’s presentation, R.I.P. Good Times
      • The collapses of companies are mirrored by collapses of infrastructure in the U.S. (shows picture of bridge in Minnesota)
      • The reality: There is a very rough recession out there

      Business Models

      • Mary Meeker’s take: advertising is get killed, and the upcoming downturn will be worse than the last one
      • I don’t believe advertising is a business model
      • A business model is something that answers the "How can I get customers no one else will get?"
      • Advertising is just a way to get revenue
      • Look at the tech blogs: you’ll see lots of stories on firings and layoffs
      • Blogs like TechCrunch are becoming "Fucked Company 2.0"
      • Most of the companies laying off people have a burn rate of $10,000 per employee per month
      • Companies like Mahalo had a burn rate was $600,000 a month — in many cases, without a business model
      • This is not the model Canada exists in
      • You hear stories saying that the VC model being broken; the truth is that it’s been broken for years
      • The IPO market has been closed for tech since the last downturn
      • The VC model will only get worse, especially in the US — the economics do not hold up
      • "In a tornado, even pigs get to fly"
      • The guys who weren’t serious and didn’t provide real value will start going home
      • Everyone in US is playing "lemming meets ostrich"
      • The myth of tech startups went like this:
        • You have a great idea
        • People throw money at you
        • You flip the company
      • Can’t do that any more
      • Top-tier VCs and investors are looking at these times as an opportunity to create real value

      Canada

      • In Canada, we’ve already washed out the hosers and posers
      • VCs in Canada have funds ranging from $5 to $150 million
      • They’re well-sized and can pay off their entire VC with one fund
      • The remaining funds are solid
      • US VC funds got a reprieve
      • Here in Canada, our entrepreneurs know how to operate lean
      • Back in 1996, my ISP’s customers were estimated to cost $1000 per year
        • Held strategy meeting to find out how to turn away customers — couldn’t afford infrastructure to maintain the customer base
        • Sold the company for less than 1x revenue
        • Company we sold to went on crazy ride: for a $35K investment, they got a $13 million return
      • 2001: Zero-Knowledge
        • Fortunate to raise money at the end
        • $2.5m revenue, but expenses like mad
        • A "crazy, crazy structure"
        • We survived it very well — went back and bought out VCs and sold a minority stake to a large private equity fund — all in the middle of the worst downturn
        • How did we do it? We cut expenses, but cozied up to a few key customers whom the big vendors ignored: Telus and Bell Canada, who’d been dumped by Symantec and McAfee
        • If you can get in good with key customers, they’ll feed you good requirements

      Self-Assessment Test

      • The title of this presentation, Speed Up and Slow Down, is about self-assessment
      • Runway: How much cash do you have?
      • If you’re 2 or 3 people, you can be "Ramen Noodle Profitable" — a handful of founders, mostly programmers, can be profitable this way
      • If you’re a larger company:
        • Know exactly where youre going
        • Be efficient
        • Watch the gauges
        • Don’t go on "sightseeing trips"
      • You need to have a cash flow model and be able to answer the question "What is the minimum amount of cash to take us to the next risk reduction milestone?"
      • You need paying customers
      • If you’re running any type of decent burn rate, your #1 job is to not hit the wall
      • Watch the gauges:
        • How much cash do I have?
        • Are we accomplishing what we’re committed to doing?
      • Keep an eye on the end game too
        • Some businesses may pay you but not scale
        • Think about what the market will look like in 3 – 5 years
        • Can you get a defendable customer acquisition strategy that will be profitable?
      • Think of the company as a motor vehicle:
        • How far will our gas take us?
        • Many people come to me presenting companies based on a "rickshaw" model — a good "lifestyle business", which pays the bills, supports them and their families, but really isn’t set to grow and not really a VC candidate
        • Can’t go with a "Tesla" concept car model for your company either
        • Nor a "Hummer" model where it’s all brute force
        • Go with the "Prius" model for your company: practical, goes easy on the gas
        • The most dangerous model for your company: the "Submersible RV":
          • The car that tries to do everything but as a result accomplishes nothing
          • It show that you don’t know what you are
          • You need to be able to answer the questions:
            • "What kind of company are we running?"
            • "Is it the right size and structure for where we want to go?"

      Where are You Going?

      • Need to paint a picture of what your business will look like in 3 – 6 years
      • This picture needs to be based on the market, not your feature set
      • "You’re pitching a product, not a company!"
      • There are big trends and shifts occurring:
        • Cloud computing
        • Environmentalism
        • Social software
        • Time spent online
      • There are huge demographics that don’t go away just because Wall Street had a hiccup
      • Store metaphor: your business can’t be like a convenience store or bodega — investors don’t go for that
      • Your business has to follow the model of either:
        • The Apple Store: a profitable niche
        • Walmart: a big box
      • Learn to pitch!
        • I’ve seen CEOs who couldn’t pitch their way out of a paper bag
        • Practice your pitch and get good coaching
        • 95% of Canada sucks pitching
        • In the Valley, you see people working on their pitches and honing them
        • You have to get across the idea of why your biz is viable
        • When you step into an investor’s room, make sure you’re ready
        • There are lots of people who can give you coaching on your pitches
      • Analytics
        • You need to know your numbers
        • Go to SlideShare and look up "Pirate Metrics"
        • Go to Startonomics
        • You need to have a waterfall and cash model
        • You need to be able talk about your business in that flexible way: "With x money, we can do this, and with y money we can do this…"
        • Have a risk reduction model
          • You need to talk to investors and existing shareholders about this
          • If you’re in web properties, use Product Planner — it helps map out user flows
          • Shows what you should be tracking every step of the way
          • It’s a YouTube for user flows for the most successful companies
        • "Pirate Metrics": the mnemonic is "AARRR!":
          • Acquisiton
          • Activation
          • Referral
          • Revenue
          • Retention
        • Balsamiq
          • It’s a wireframing tool
          • When you talk to investors about what you will build, you need to be able to show wireframes and sitemaps
          • What part of your app drives acquisition? Investors need to be able to see this

      My Advice

      • Ask "Who is losing the most money? How can I help them?"
        • Cozy up to customers who have needs
        • Standout jobs saw this coming and made money helping HR companies feeling the pain of the current economic/job situation
      • Go talent shopping
        • People say "Fire, fire, fire!", I say "Topgrade!"
        • Ask yourself "Am I getting the best people?"
        • Watch the layoff rolls. We were doing this actively — I watched companies I admired and who were laying off people and talked to their HR departments
        • Build up a "bench" of good people, even if you’re not hiring now
        • Get good at outsourcing. There are a whole bunch of freelancers out there and you can make use of them if you can write small specs — but don’t do at expense of having a tech team
        • Use communities and open source to get leverage
      • Think very wide on your fundraising strategies: build your pitch so you have angels, advisors
      • Fire for culture, not expenses
      • Having "double vision" is critical: you need to have both an immediate and long-term view of your company. It’s like driving a car — you need to look at your dashboard instruments and down the road

      Why am I giddy like a schoolgirl?

      • It’s now a great time to build meaning
      • Over last 4 or 5 years, we’ve been building "hammers for carpenters"
      • Nerd tools like bookmarking, sharing video, vertical social networking: we can now use this stuff for real-world meaning
      • If you have a way to make real-world meaning rather than tools for technologists, you can do well

      Q&A

      What if you have great ideas, mediocre people and no VC contacts?

      • Go join a startup and gain experience
      • Ideas are a dime a dozen
      • I have never seen an idea so time-specific that I leapt on it — the quality of the people in the company are far more important

      How do people show that they an understanding of their market?

      • DO NOT QUOTE GARTNER REPORTS! It’s the surest sign you don’t know what you’re talking about
      • You need to be able to talk intelligently in a 10-minute conversation about your market
      • Most people fall down when it comes to talking about their competitors: "No! They don’t have this feature!" — your end customers don’t care about that
      • You need to be able to talk about:
        • Global trends and shifts
        • Unique ability
      • Come in with customer references — be able to say "We’ve done specs with x customers who’ve agreed to be beta users…"

      What are the red flags for hiring?

      • A lack of passion. Luckily, most programmers can’t fake passion
      • Note: sales and business development people can fake passion — it’s their job!
      • Can’t pass practical exams
        • When hiring a community manager, I gave him five days to answer a set of questions using community tools
      • Bad cultural fit
        • Don’t hire a 9-to-5er for a company that requires lots of dedication outside 9-to-5 hours
        • You can’t afford a culture clash right now
      • Someone who can’t talk about results
        • They need to be able to answer the question: "Can you hit these targets in 30 days, 60 days, 90 days?"
        • Great top performers love having specific requirements like that

      What is meaning?

      • Meaning always translates to money
        • Consider the meaning provided by Youtube: "Explore your world through someone else’s stupid videos"
        • They’re still working on how it’ll make money, but no one who invested in it feels bad
      • My preference is for companies that:
        • Provide entertainment or
        • Promote or assist energy conservation or
        • Have strong social goals

      Austin Hill / Rick Segal discussion

      • The rule about pitching is: "Hearts, minds, wallets". Hearts first!
      • The elevator pitch, where you don’t have very much time, is always about the heart
      • Answer a question and place that question in the person’s mind
      • Don’t talk features; talk about end results. Say "we had a beta customer who saved money and got their info organized thanks to our product/service"
      • The next step is to walk them through the revenue model.
        • An examples: Real-world asset sales for online game — player average revenue per user is in line with teen casual games
        • Used a reference to Webkinz, a point of reference that both customers and investors will understand
      • Need to be able to answer the "Where are you?" question: need to have a specific answer "60 days out of beta"
      • Believability is key when you pitch an investor
        • When you say unbelievable things like "We can do a 10x return", it means I have to retrain you
        • Say "Here’s what we know, here’s what we don’t know"

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      don_dodge

      startup_empire The first speaker at yesterday’s Startup Empire conference was Microsoft’s own Don Dodge, Director of Business Development for Microsoft’s Emerging Business Team and author of the blog Don Dodge on the Next Big Thing.

      Don’s been in the industry for over 20 years. He started with Digital’s database group and went on to work with five startups over the next dozen years: Forte Software, AltaVista, Napster, Bowstreet and Groove Networks. He now works with VCs and startups in my home away from home, the Greater Boston area.

      I got a video interview with Don about BizSpark that I’m currently encoding; in the meantime, here are my notes from his presentation, Starting a Company in Difficult Times.

      It’s a Good Time to Start a Company

      • In spite of the business news out there, it’s a good time to start a company – it’s a tough  time, but a good time
      • Markets are driven by two things:
        1. Fear
        2. Greed
      • Fear is rampant now
      • Even Microsoft is down 40%, Google down 60, maybe 70%
      • When fear takes over, markets get irrational
      • But remember:
        1. Fear is temporary
        2. Greed is permanent
      • Greed will eventually take over and markets will get better

      Why start a company now?

      1. People are the most important determinant of success
        • #1 hurdle is finding great people
        • When the economy is in a shambles, great people are available
        • During the AltaVista/Napster era, it was the boom times, and it was hard to find people
        • In bad times, companies entrench and do just the core things
        • The good people at companies get bored doing just the core things — it’s a hiring opportunity for you
        • Great people get bored during lulls
        • Startups are fun — they’re challenges, but people like challenges
        • Startups create tremendous value that allow great people to make a lot of money
      2. When the economy is bad, customers want to save money
        • If you have a product or service that will save them money, they’ll buy it
        • Tough times make customers willing to try new things if they believe they’ll make times less tough
        • You have to demo to customers how your product/service will save them money
        • Productivity boosts are not enough
        • Ask yourself: "Is your product or service a vitamin (a nice-to-have) or painkiller (a must-have)?"
      3. VCs are sitting on tons of cash right now
        • In Boston, 10 VC firms are sitting on $2.5 bn
      4. Infrastructure is cheap

      It’s Who You Know

      • In the recent past, in Silicon Valley and Boston, even marginal ideas got funding
      • Times are tougher now, and “me too” ideas will no longer get funding
      • Of the 200,000 companies that got VC funding since 2001; only 380 went public
      • That’s a small percentage of successes, but those 380 were enormous hits
      • Venture capital is like the music industry; it’s a hit-based business – just as one hit single or album can pay for dozens of so-so ones, so can one great investment
      • Ad-supported models will be questioned
      • Do the math to figure out what how many hits and what CPM you need to make a million dollars from advertising — it’s shocking, I tell you
      • Experienced people with great ideas will always get funding
      • Investors will fund people they know or ideas they understand
      • The difference between angels and VCs
        • Angels are easier to convince to invest in you:
          • If they know you or know people who vouch for you, or
          • If they understand the business and have an affinity for it
        • If they don’t know you, they’re more difficult to convince
        • VCs are easier to convince in you if your situation isn’t suited for angel investment — they take more risks and are more willing to “think outside the box”
      • Networking is incredibly important
      • In Silicon Valley, "we have events like this [Startup Empire] every week"
      • Investors get comfortable with people they see all the time
      • Take time to do some homework on the investors, know who they are and who they’ve invested in

      Infrastructure

      • Infrastructure is cheap
      • When we were starting Napster, it was the boom times
      • Finding people and getting office space were incredibly difficult
      • Our office’s landlord made us pay 2 years’ worth of rent up front in cash and also demanded stock options
      • In these recessionary times, the tables are turned
      • Several companies have renegotiated their leases — one has cut their lease down to one-quarter of the original
      • You can sublease spaces — many companies have leased too much space and are looking for people to fill it for peanuts
      • Office equipment: you can buy used

      BizSpark

      • Another way to save money: Microsoft’s BizSpark program
      • BizSpark provides software for startups, basically for free
      • Your startup is eligible to participate in the BizSpark program if:
        • Your startup is less than 3 years old
        • and makes less than $1 million per year
      • Program members get full-featured software:
        • Development tools like the full versions of Visual Studio and Expression
        • Platform tech like  Windows Server, SQL Server and Sharepoint
      • You’ll get visibility from being promoted on Microsoft Startup Zone
      • We’ll connect you with a united global community of support resources
      • It’s so easy to start a startup right now — everything is in your favour
      • Cloud computing make things cheaper — you can go with Amazon, Microsoft or other cloud providers
      • For more about BizSpark, contact David Crow, Mark Relph or Don Dodge

      Q&A

      Q: What’s the idea behind BizSpark?

      • Microsoft can’t succeed without lots of companies building on its platform and technologies, using its tools
      • We’re competing with open source
      • When startups are tiny and just getting started out, they take the easy route and go with free software
      • Why not level the playing field and make our software free for startups for the first three years or after they get $1 million in revenue?
      • So we give them free software, support and visibility

      Q: Is Microsoft’s cloud service available through BizSpark?

      • Yes. It’s not just the tools, but the cloud services are also available for free
      • More details on the site

      Q: Are there any particular types of applications that BizSpark is looking for?

      • BizSpark is open to any application
      • If you’re building an application that adds value or fills a gap, we want to talk to you
      • MS acquires about 20 companies a year
      • Those companies are generally filling gaps in our product line, doing things better than us or opening new markets
      • We partner, and if things go well, we acquire

      Q: Do we sign NDAs before going on BizSpark?

      • We don’t get into that
      • Don’t tell us your secrets
      • VCs are the same — most will not sign NDAs
      • In my experience as a VC, not a single NDA was invoked — they’re kind of pointless

      Q: Could you provide some examples of the types of companies you’ve acquired?

      • Powerset
      • Fast
      • aQuantive
      • Currently, the “hot spots” are advertising and online services, but our acquisitions are all over the map

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