Bootstrapping Christmas - an entrepreneur's tale

So, when you start a company and you’re trying to build something really special but in a disciplined Lean-Startup/MVP/CustomerDevelopment kind of way, you spend long periods unpaid.  Perhaps another post for another time is to discuss financial planning for an entrepreneurial career, including strategies for periods of both feast and famine.

What's the future for digital content, creators and media companies? Part 1

“If your content cannot command more attention than it takes to consume that content, then your content has no economic value.”

I don’t think that’s a particularly aggressive statement, though some will think it such.  I think it’s a statement of self-evident facts.

For now, I am going to use a few catch-all terms and try to be consistent.  I am going to use the word “content” as a placeholder for music, movies, tv, articles… the work of content “creators”.  I’ll use “creators” as shorthand for artists, writers, filmmakers, those who are the source of content.  Finally I am going to talk about “consumers” of the content, as a general term rather than more specific words like customers, readers etc.  I am also going to try to avoid terms from economics, like marginal utility and the like, because the purpose of this series of posts isn’t to be an essay on economics, it’s trying to establish in a practical sense where the industry is going - and more importantly, because I am not an economist.

Three common startup business types (that you need to avoid)

I promised a series of postings on media trends this week yet it’s Friday and I haven’t got them posted yet… oh well… I’ll get them out next week instead.

Instead I want to write a short note on three business types I see from startups.  Like most entrepreneurs I mix with my peers a lot, get asked for advice regularly and see an awful lot of startup pitches and plans.  I try not to clutter myself with “advisory board” roles or anything like that but I am always happy to help and give advice whenever it’s relevant.  So, free advice:

If your as an entity your startup looks like one of these you have problems

VC blogs for entrepreneurs

I wish more VCs blogged often and in detail.  There’s already a critical mass of VC bloggers, sufficient that smart entrepreneurs have plenty of data points giving insight into the VC process like never before, so it’s not that.

It’s that there’s a disproportionately small amount of VC blogging coming out of Silicon Valley based VCs.  I have a pretty comprehensive list of RSS feeds from VC blogs and the regulars are mainly (though not exclusively) non-valley.  That’s a shame, as I think you gain a real insight into the individual when a VC blogs regularly.

Is this the most exciting time for technology & startups in at least ten years, or what?

Just chatting with good friend and AdSemble CEO Matthew Olivieri, a smart scrappy entrepreneur who’s boostrapped his startup in the Digital Out Of Home (DOOH) signage advertising space.  They’ve got a great business model and have carefully taken the time to nail down the product/market fit before they look to ramp.

We were talking about some of the interesting developments in the startup world.  I couldn’t help but think, yet again, how lucky we are as entrepreneurs to be doing what we’re doing now.  Right now.  I don’t think there’s been a more exciting time in the technology industry for at least ten years.  Further, when you factor in the dramatic lowering of the barriers to starting up a company in many very large markets, indeed often creating new very large markets,  it is possibly the best time ever for an entrepreneurs and their emerging young startups.

In a nutshell how does your startup win?

Just reposting a comment I made on the Lean Startup Circle. In a nutshell the writer was asking how you you build a solid startup that can come out on top when barriers to starting companies are so low, leading to increased competition. The context being assuming one is following a Lean Startup / Customer Development / Agile Development methodology, or similar. My thoughts:

I think what you’re asking about comes down to execution. There are very rarely truly unique start-up ideas. One always has competitors. 

You win by… 

…not having a team that flames out due to internal squabbles (big
…having a specific well-seeded route-to-market (“something viral” doesn’t cut it)
…building a corporate culture that attracts the best talent for above 

Note - I don’t mention features and functionality because that’s
something I think you learn from your customers as you nail down your product/market fit.

Price Discovery ...in acting

A simple principle that is surprisingly poorly understood by the public at large is the basic concept of Price Discovery.

It’s a favourite lens of mine when it comes to viewing trends and understanding what’s going on in markets undergoing disruption.  It’s not always clear that Price Discovery is the dynamic in play, but not considering it is a mistake as it leads to what I call “the frustration of unexplained events” - where those affected by change are unable to detect the pattern of cause and effect with regards to that change, and therefore feel powerless, frustrated, angry.

I heard an actor on NPR bleating about how terrible the industry is today, as just a few years ago bit-part, middle-of-the-road guest stars on everyday TV shows could make incomes of $600-700k per yearr but now make just a fraction of that nowadays.

Do reputation dynamics really lead to good behaviour?

Just writing what started out as a long post on the direction of media and has become a series that I’ll start posting in the next few days.  In the mean time, one thought that doesn’t fit there but that kept popping up when I was writing is about another trend I wonder about with regards to where it’ll go…

I noticed this article in New Scientist about how the Internet will push some sort of “reputation” economics which will push people towards being nicer, better citizens of the planets, and ultimately saving the world - all because they’ll want to avoid the stigma of not being those things.

I see something different happening.

Failure is an option

I am popping out in a little while to go talk to a bunch of international students about Silicon Valley, about start-ups.  It’s the second opportunity in a few days for me to think a bit about students and Silicon Valley.

In the early years of the decade I ran a program with a former college professor of mine called the White Rose Entrepreneurship Program.  We brought undergraduates studying science or engineering out to Silicon Valley during the summer break prior to their last year of studies.  They were put into ten-week placements at a bunch of companies, at first ones I knew personally, later with the assistance of 3i and one of the folks from Garage Technology Ventures.  The aim of the program was to expose UK undergrads to the unique culture of Silicon Valley in the hope that one or two of them might go down the startup path.  (One graduate of the program will be joining us at AppWhirl shortly, so I consider that a win right there!)

On the entrepreneur / VC relationship

Fred Destin concludes his investigation into the friction between the VC community and entrepreneurs here http://www.freddestin.com/blog/2009/12/the-arrogant-vc-a-view-from-the-trenches-full-length-version.html#comments and I think he summarizes the issue about right.

Anyone who is in the orbit of VCs / entrepreneurs / startups hears and sees the effect of these differences of opinion regularly.  The start-up game is fraught with risks and most start-ups fail.  This environment is going to cause a lot of heat and noise.  But it’s like family - despite all the opportunities for conflict and bruised egos we have to remember we’re all on the same team.

Government, big lumbering behemoth old-guard competitor companies and fickle consumers represent big enough challenges.  We don’t need to fight each other too!

It's hard to build a $50MM+ ad-supported business

Another in my recent string of posts pointing to articles I enjoyed in my daily perusal of VC and entrepreneur blog postings.  This time it’s Jeremy Liew’s note on add supported businesses.  It helps to read his previous writing on the subject, which he links to in the post.

The main thing I like about these is the fact that he puts the numbers into some perspective - you can look at the kind of sites he’s namechecking for comparison and ask tough questions about your own business’ ability to scale that big.  Some of the time when I chat with other entrepreneurs whose business models are entirely ad-based I just don’t see a credible way they can scale to this degree.  One thought does sort of pop up though - I think the number of those companies that receive VC funding puts a question mark behind the statement that VCs only back companies that are swinging for the fences, and not looking for singles.  It’s hard to see how so many survive the scrutiny of thinking about revenue growth the way Jeremy talks about it.

What does it mean to be an entrepreneur?

I liked this quote from Mark Suster’s post on Venture Hacks:   “being an entrepreneur is really sexy… for those who have never done it.”

It’s so very true.  I think for most entrepreneurs you don’t do it because it’s sexy, you do it because you’re driven and cannot imagine doing anything else with your life.  It’s intangible, it’s hard to put your finger on, but in your gut it’s what you have to do.  It’s hard.  It’s at times exhiliarating, terrifying, rewarding, heartbreaking.  But it’s not easy.  It’s not a career path to choose lightly.

Great blog post with real detail on oversight in startups

Must read for any startup CEO & Founding Team: http://bit.ly/53oEnc

This is a great post from one of the VC blogs I follow, Seeing Both Sides, about oversight in start-ups.  I agree that it’s best for CEOs and founders to get ahead of this stuff, but there really is a lack of detailed information on VC expectations in this regard.  We’re very lucky to be in the current generation of entrepreneurs where so many VCs and successful entrepreneurs blog in detail and reduce the information imbalance between investors and entrepreneurs enabling both to work much better towards aligning interests.

Full link:

http://bostonvcblog.typepad.com/vc/2009/12/a-lot-has-been-written-in-the-last-week-about-the-scandal-at-canopy-financial-a-venture-backed-high-flying-company-that-att.html

“Entrepreneurship exists in the tiny space between madness and genius; and, its journey requires a few cross border violations across both madness and genius to get to the final destination.”

— comment by JLM on the The Herd Instinct (via fred-wilson)

Interesting effect of illness on autism

I have read that there are many reports of an interesting side effect to being ill, with autistic children, and I see it in Ethan.  I came home late last night after an event and Ethan was sick - a fever, generally unwell.  His talking was clear and coherent and well constructed.

All day today he has been talking so well, in full well constructed sentences.  This happens most times he’s ill, particularly with a fever.  He gets clearer in his communication.  Sadly it fades after a little while and he reverts to the challenges he has to deal with on a daily basis when it comes to communicating.  But oddly, during his moments of illness, and for that brief period afterwards, he exhibits such an easy confident conversational manner.

So, he’s off school today.  Not running a fever any more.  Back to his usual energy level.  Chatty as anything.  I think I’m going to stay working from home as much as possible today :-)

Oh… and Santa, if you’re reading this:  ”Huge Airport” please.  Just passing on a request.

How to talk to a VC at an event ...?

I do sometimes wonder how one should talk with a VC when one bumps into them at an event.  I was out last night at a bash for the start-up community.  I bumped into a smart young VC who only recently joined one of the bigger firms.  I think I ended up talking the poor guy’s ear off.

Here’s how it ran:  We’d both arrived early, not many people there yet.  I noticed a guy I recognized, name badge rang a bell, but couldn’t place him.  So, after a brief “hi” I said as much.  He reminded me there’d been a workshop a couple of weeks back where a couple of VCs talked to a dozen or so startup CEOs with tips and feedback on pitch decks.  I asked him to remind me what company he was with, and he named a VC firm.  Ah… yes he was one of the VCs there wasn’t he.

Start-up Visas

“While fast-growing companies have long been the main source of new jobs and innovation, this country makes it outrageously difficult for immigrants to launch new companies here. This doesn’t make any sense. After all, Google, Pfizer, Intel, Yahoo, DuPont, eBay and Procter & Gamble are all former start-ups founded by immigrants. Where would this country be today without their world-changing innovations?

Immigrants have not only founded big, well-known companies. Foreign-born residents made up just 12.5% of the U.S. population in 2008. But nearly 40% of technology company founders and 52% of founders of companies in Silicon Valley.

Yet we don’t seem to care. We send recent, foreign-born university science and engineering graduates back to their own countries after their student visas expire—unless these creative sorts are willing to spend some of the most entrepreneurial years of their lives working in a big company under an H-1B visa after they finish their studies.”

Paul Kedrosky and Brad Feld: Start-up Visas Can Jump-Start the Economy - WSJ.com

(via fred-wilson)

How I use social media in 6 points

Just posted on Facebook to explain to my family & friends why they see so many tweets on Facebook right now.  I’ve been using social media tools since long before the term was coined.  I suppose that’s obvious - I was using the web from it’s first days in the early nineties, as a Physics undergrad, and evolved with it from there.

How I use social media today:

Memes I hate: "I don't live to work, I work to live, man"

I read this post on TechCrunch where a London VC calls out EU start-up teams for not working as hard as their Silicon Valley counterparts.  There is certainly a case to be made here - I have often commented to friends on the same issue.  One obvious counterpoint is that I see European startups paying WAY WAY less for talent than Silicon Valley alternatives, even when London is such an expensive city to live in.  But the beef I have is with all the snarky comments to the effect of “I don’t live to work, I work to live”.

It’s a phrase I used to hear a lot as a hiring manager for a big US multinational back in the late nineties.  Primarily from young guys, straight out of college.

Why do so many entrepreneurs have VC issues?

My Monday morning begins with catching up on a bunch of VC blogs and other start-up-related feeds.  I think there’s a wealth of knowledge being communicated daily to entrepreneurs, but many won’t touch it for some reason.

First on my reader today was Fred Destin asking why entrepreneurs hate VCs.  It’s something that annoys me when I talk with fellow entrepreneurs - this anti-VC thread, almost as though we’re all supposed to join in venting about how bad they are.  I’ve been told I have VC Stockholm syndrome when I suggest that perhaps it’s worth working a little towards accommodating the VC occasionally isn’t a bad thing.  Maybe that’s true.  Maybe it’s just that I have tried to put time and effort into understanding what VCs need out of me and my company in order to mutually align goals and increase my chances of success in building a billion dollar company and changing the world.  Maybe both.

Ads & Twitter (and Disqus) - reposting some comments

I recently commented on one of my favourite VC blogs - Both Sides Of The Table

As an aside, this is the first time I’ve done this.  I am usually a lurker.  But I like Disqus - the idea that if I comment it’s not lost in the ether, it’s easy for me to keep track of.  Now my comments are a conversation, and part of my constant process of learning.

23 & me, James Bond, Christopher Walken and a View To A Kill

In the Bond movie A View To A Kill Christopher Walken plays the psychotic product of a genetics experiment designed to produce a race of superhumans, with a penchant for airships and a plan to destroy Silicon Valley with the aim of profiting handsomely.

I guess it’s not surprising then, when I see the blimp belonging to “23 and me” a company that aims to decode your genome for you or something similar, hovering over Mountain View, I cannot help but feel a little bit creeped out by it.  It’s just all a little too View To A Kill for my liking.  I keep expecting Grace Jones to parachute past me.

Of course part of this may be that there’s only room for one Bond Villain in this town, and with my hideous facial disfiguration, that’s my role.

To break in America you need to let America break you in

I remember when U2 released The Joshua Tree.  I had been a fan since very early - they were popular among the other boys in house at school.  The Unforgetable Fire was always blaring out of someone’s study or other, for ages following its release.

Anyway, I remember that in an interview or review or similar (it’s a long time ago I don’t recall exactly) talked a lot about how they recognized that to break into the American market in big way, and take that step up to another level with staying power (that, let’s face it, few if any of their post-punk contemporaries have succeeded), they had to live in America, embrace America.  To understand America well enough to serve the American audience they had to learn what it is, in some small but significant way, to be American.

It’s hard to argue that they weren’t right.  The Joshua Tree was indeed a very American sounding album, and it was just a monster hit.  It elevated them to a completely different plane of stardom.  In the US and worldwide.

I wonder if the same is true for start-up entrepreneurs.

“The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to its close. In its place we are entering a period of consequences.”

— Winston Churchill