What Do You Look For?
I'm asked this question all the time. Is it team? Is it the idea? Is it product? Is it market?
The answer is that it is all of them and most importantly it is the way they all come together in a single company. Why is this the right team to do this? Can they package their idea correctly for the market? Is the market ready for their product?
I saw this 15 second clip at the end of one of the startup stories videos and it does a good job of explaining this "the way they come together" notion.
That’s quite a lot of calls to make. Thankfully those things aren’t independent or the probability of discovering magic would be so low that the even best VCs wouldn’t see a return.
You’re right that magic is discovered! How though you might ask? By focusing on a problem long enough you discover the nuances of it, and many pieces of nuances allow you to solidify your thoughts on an overall ecosystem.This builds your confidence through understanding how all of the pieces work, will work, and interact with everything else (hopefully at least, internally and externally; product strength + market advantages etc).This is why, I’m sure Fred’s said it too, many investors tell you they want someone who’s been working on a problem for a long time, or they are looking for the creators of a market – a clear signal they’ve likely been working on the problem the longest.
Magic is not something you go looking for.Magic will hit you in the face if it’s there.
Exactly. I call those eureka moments. 🙂
That’s a better word – but I’ll never remember how to spell it. 😉
Ah HA moments
If ur curious and hungry.
Or steamroll you if you’re not observant.”Look out, its Magic!”
“By focusing on a problem long enough you discover the nuances of it”I think this is a great comment.I would just like to add that there is also a downside in knowing so much about something. You tend to make snap judgements based on your knowledge and consequently are less willing to try something ridiculous because you can remember a time in the past when something didn’t work.In the 80’s I had two ideas which I ran by veterans in the respective industries involved to gauge whether there would be any interest. One idea was advertising on gas pumps (self service had just started). The few people I spoke to emphatically said it wasn’t a good idea that the oil companies would never go for it “Sunoco’s pumps are their shrine” (not that people wouldn’t advertise). Forgetting for a second whether I could have pulled that idea off (not saying I could have) later of course someone did this idea.Another idea I had was a guidebook of apartments available in Philadelphia. I had a customer that owned many apartment buildings in the city. They told me very certainly the idea wouldn’t work because the buildings didn’t want to rent to anyone (like minorities they might have even said). Later of course this was an idea that was done everywhere.The people who told me the ideas wouldn’t work weren’t wrong. They were just basing on what they knew (and I didn’t).Of course as Fred says “the timing has to be right”. And maybe the timing was wrong for those ideas or maybe it was right and the people whom I consulted simply did not know times had changed.
So you’re a long time member of the ideas that would have worked club. I don’t ever see you at the meetings. I couldn’t begin to list all the times that has happened to me. Not that I’m really good at finding new successes. I just like to keep track of ideas which means I can go back and see which ones would have panned out.I’ve posted here before that many successful people seem to jump on an idea and get it to market quick and cheap. Then move on to the next idea. They of course have lots of resources to throw at things, which is a big help. Maybe I should start categorizing my ideas as “Self Fundable” and “Outside Funing Needed”? Any experience on this?
I think a lot of us on AVC are secretly apart of that club! What I’ve always taken from it are learning why those ideas were / are successful. Then can apply them to the next or bigger schemes.I went through a period, as I imagine most do, where I would get down on myself for those ideas not coming to fruition. However you learn that they didn’t come to fruition because you weren’t quite ready yet. Over time with learning enough you’ll become ready.I agree with the having resources vs. scarcity driving creativity. My mind has always been my unlimited resource to tap into. It’s apart of the whole “Stay hungry, stay foolish” adage.After staying hungry for so long (and being equally foolish / crazy with the scope of my ideas), I now have a number of side-projects I have thoroughly thought through (the accumulations just come to me all at once and I write them out in one place – and add to my organized files over time) that once I have my own resources I could easily start managing those projects, and add additions of $10s to $100 millions of revenue/profit to whatever I’m doing. It’ll end up being a game of prioritizing whatever I will enjoy doing more, and/or whatever requires more of my attention. I look forward to the future.
@mattamyers:disqus @756d90319d15655102e7c63a898291cb:disqusThe problem with any analysis of someone who is successful (Jobs, Buffett, Ellison, Zuckerberg) is that there is never any control group of people who have thought the same things or had pretty much the same qualities that have failed or even not succeeded to the extent they are on the dartboard and people care about them at all. And we never know the full story anyway. Maybe the failed entrepreneur had a special needs kid or a bigger attachment to their grandmother.Business is not like “how to be a good teacher” where we can maybe control for at least some factors and judge the outcome.I mean if enough people in this world are trying enough things certainly some of them are going to be a huge success, right? Random chance says that.Most things that I have read over the years of course give the “dog and pony” show version of why someone thinks someone was successful based on what they have said or was seen openly. And business writers as a group are generally naive as far as how business operates. They will write something that is interesting to their audience and literally tell you what they want to hear. As someone who has smoked both the WSJ and NYT in the past I speak from personal experience on the press.”I went through a period, as I imagine most do, where I would get down on myself for those ideas not coming to fruition. However you learn that they didn’t come to fruition because you weren’t quite ready yet.”As long as you carefully analyze why you do or don’t do something and are comfortable with that there is no reason to do that.Even if you relied on someone else’s advice like the kid who listened to his Dad who told him not to get involved with Zuckerberg.
It’s very true that life circumstances can determine what scope of success someone can reach, just as much as the parents or role models you have (or don’t have), just as much as the city you are in.I think the main leading metric is being able to observe and realize what leading metrics lead to success.How can you figure this out?Comparing and contrasting success vs. lesser success.Why is Starbucks everywhere now? Why is Lululemon so popular? Etc.. Once you know how to spot these it becomes pretty obvious — you can realize even just their brand names plays a huge importance alone, regardless of every other factor.For example, Zuckerberg – based on all accounts of un-denied accounts of events – saw an opportunity through developers that hired him, mainly through creating a social network that was exclusive to Harvard’s .edu emails, and knew he needed to be first to market for it to succeed, thus leading on the twin brothers to delay / prevent their launch prior to The Facebook’s.So, he was good at spotting it.Sadly many people don’t care who’s providing a tool/service if it’s solving a problem for something at a cost that makes it worth it for them – they don’t care what character the founder has. Though luckily that same character will pass through into how the company is run and evolves – and thus Facebook has abused users many times over, and most people I know don’t trust Facebook — something that’s pretty important during the age of nearing 100% connectivity where trust and reputation are key to relationships, and relationships being key to consumers wanting to use your tools/services.One problem with why “learning on your own” isn’t so successful is we don’t support people as well as we need to. And we also fail to promote that it’s just as important, or even more so, to promote the supporting of important projects other people are working on. It needs to be considered something valued in the culture, and the industrial complex of academia has won – though like the military complex, the academic one too shall shift to something more useful to all societies, to everyone on this globe called Earth.
“they don’t care what character the founder has.”Key statement.To much character (honesty) (in a business acquaintance, partner etc.) and you’ll never end up making any money. To little character (in the same person) and you’ll end up getting screwed although you can also make money while turning a blind eye.Like the story of the “Three Bears” it has to be just right.
Unlike porridge you can never have too much integrity.
Love this! 🙂
Re: Key statement – The nice advantage I feel I have is I try to be a very good, kind, thoughtful, respectful person – and I genuinely want to help people and help the world move forward.Anyone I speak to who feels the same understands and realizes I am very authentic in this lifelong endeavor. The awesome thing too is that you attract people with the same qualities.Like attracts like.One slight frustration I run into is I am very intuitive in feeling people out, though you can’t know exactly what energies mean necessarily – so it’s a bit of a game at the moment in seeing who I want to trial working with, though I know it’ll all play out however it needs to – teaching me whatever lessons I need to learn along the way, hopefully always growing by surrounding myself in people who want to grow and who help me grow.Re: “Three Bears” – That’s why it’s best when you aren’t pressured. Less likely to make mistakes – though you can be prepared and align yourself to be able to quickly and successfully execute / scale.I’ve realized the size of the big problems I’m working on allows me some freedom time-wise, and the more I discover with it, plan it all out, the more I wouldn’t even care if there’s competition because that shouldn’t be a problem either.
NO ONE WANT TO BELIEVE THING THAT MAKE SOMEONE SPECIAL IS ROLLED THE DICE WELL.
The unlucky, or luck neutral, always have issue with the lucky.Why them and why not me? — Not fair!I follow Edna in The Incredibles – “Luck favors the prepared”– Odds calculated.Along with comment of mine above “I’d rather be lucky than rich” —It is what it is, so figure out which you are, and adjust accordingly.
I don’t know if it will help you or not…but I’ve developed a little list that I try to run through for each of the various ideas I can’t get out of my head…I wrote briefly about it awhile back -> http://falicon.com/post/999…
“You tend to make snap judgements based on your knowledge and consequently are less willing to try something ridiculous because you can remember a time in the past when something didn’t work.”I’m working from a different direction than most. I had lost trust and have been diligently working for the past 5 years to gain it back – which means constantly challenging / exploring my reactions to things, including any judgements I may have. Recently I’ve brought in some smart friends who have been helping call me out on some final things I know I need calling out on, and that extra nudge to break through the blocks that have been stopping me from going where I need to. I’m almost there..”The people who told me the ideas wouldn’t work weren’t wrong. They were just basing on what they knew (and I didn’t).”Well, technically they were wrong. They didn’t have the domain expertise to make such a judgement call though. Not that they should be shamed for not having the expertise – though you can find out fairly quickly what domain experience someone has with a few basic questions, assuming the questions are coming from someone with domain experience.
ONLY THING LOTTERY WINNERS HAVE IN COMMON IS THEM BOUGHT A TICKET.
“… though you can find out fairly quickly what domain experience someone has with a few basic questions…”Excellent! I do software consulting work. If you ever need a consultant I’m available. Why the blantant selling? Well, entrepreneurs should be selling 24/7. But, more importantly I agree with your statement and like to find entrepreneur clients that have the “edge”.
I don’t mind people reaching out to me, as long as people don’t do it over and over again; Not saying you’ve done this. :)I don’t necessarily need a consultant, though follow me on Twitter and let me know it’s you so I can DM you?
I don’t have a twitter account. I guess I need one.
@domainregistry:disqus I am interested in your response to @mattamyers:disqus comment “By focusing on a problem long enough you discover the nuances of it”. You response being “I would just like to add that there is also a downside in knowing so much about something.”I had an exchange with @charliecrystle on his blog re Beginner’s Mind, which Jerry C had pointed me to, and Charlie was interested in.I am extremely lucky in the creative profession to have the ability to have been in certain problem spaces a long time, but to pivot constantly via Beginner’s Mind. Many in my field can get stuck, and not get unstuck easily. Perhaps my constant exposure to business pivoting has helped me stay fluid. Perhaps I am very flexible by nature. But I hope you don’t discount those who can stay fluid and not dig heels in. We exist.
they are totally related. they are a continuum.
Agreed. One evolves into the other, and everything reenforces everything else in your mind (at least it should be – or you need to then mark / understand the risk associated).
took a while to find which comment this reply belonged to.
Engagio shows threading & reply to/from clearly 🙂
A sharp feature! With a dedicated mobile app I’d gladly pony up a few bucks. I’m mobile heavy for commenting. Usual laptop/desktop time is work. You’re going mobile web first correct? I like caching conversations to read while I’m offline on the train or in remote walking areas.
Thanks Mark. We will soon have a mobile version for Android and iPhones.
don’t get me started. that is my biggest beef with D2012.
@fredwilson:disqus @disqus By D2012 do you mean Disqus 2012?I must mention that I also have a major issue with Disqus from recently. Just a few weeks (3 or 4 weeks) ago I was able, on my mobile, to read both the posts and the comments on avc.com (and was able to do the same for a long while before that). But since the last 3 or 4 weeks, I have not been able to even _read_ the comments, neither by clicking on the specific post link (from the main avc.com site) nor by clicking on the comments link at the end of each post (after opening a specific post).And FWIW, I have _never_ been able (IIRC) to post my own comments (on AVC) via mobile, ever since I started using an Internet-enabled mobile, which was about 2 years ago. I’ve been able to both read comments and post my own comments on many other sites, though, right from the start of using an Internet-enabled mobile phone.Hope the Disqus team is listening and fixes this soon. I am using Android 2.2.- Vasudev
One of mine, too. I hope that will be resolved because it’s quite important (not just “nice to have”).
Perhaps a tiny icon [up arrow] that scrolls me up to the original comment? Highlight the comment I clicked it on, so I can scroll down easily to where I was? I keep wishing for that feature, just thoughts
they just addressed this. hover over the link that says parent
@fredwilson:disqus – this is major piss off for me – who said what. Just basic visual clues. So wish there had been time last week at Disqus meet to go over the commenter thread layout and comment real estate and [email protected]:disqus While I Adore Engagio, I want D2012 to work in the space where I use it. To have to wait to get thread before engagio mops my brow of my D2012 worries is maddening!
they made some changes last night. there is now a link on each reply that says “parent”
easy as pie. mouseover on a comment shows a box on left or right with the referral comment. jQuery, few lines of code. It could almost be a hack in the browser url(I just now noticed a “parent” link.. not sure if it was here before.. but this now helps a lot)
Some changes were released this weekend. Does it make it a bit easier?It’s still not perfect, IMO, and we already have some add’l unreleased improvements in mind — but this is a step toward it.
Not perfect by any means, but considerably more parseable seemingly without adding noise.Is the link to the parent new or reworked? Either way it’s quite useful.
you have no idea how happy I am to see the “parent” link back (previously “in reply to”, no? much better in my view).
Now you know why Fred has 1000’s of touch points a year, but only makes 5-6 investments.
It’s the full monty that’s important!Luckily you don’t need to have all of the puzzle pieces figured out, you just need to be following and evolving the right set of leading metrics and theories for where you’re headed. Where you’re headed will be determined by your intent – or how it’s more commonly phrased, determined by the problem(s) you’re trying to solve.Once your idea is evolved enough then it’s game time to trying to prove whomever you need to prove that your idea is awesome, will work, is worth their time / is exciting.That’s actually harder I’m finding than allowing ideas to evolve (you just need time and a mind for that), mostly because even if people love what you’re doing, want to work on it, it’s a big decision to commit 4+ years of your life – especially when they have had thoughts of moving to a different city already in their mind, etc..Re: Difficulty convincing developers / others – Mostly referring to university students who are nearing the level of school they’re wanting to finish for now. This is why I’m looking forward to the talent that will be available 1+ year from now, after I’ve had time to let them know opportunity is available locally with lots of headway / breathing room to decide.Re: Convincing investors – There’s local money here available, though it seems to move very slowly. The startup community is just forming, which is pretty neat, though I so far feel the main people involved are wanting controlling it more for their own gain – than merely supporting and facilitating a healthy local startup community; Controlled vs. managed ecosystems – will be the bane of my existence. A social good, healthy, challenging problem to be solving though. Have been having more fun the more I discover the solutions and connecting with others. 🙂
Are you in a startup hub?
Hell no. My city is starving for leadership. There are 4-5 old money families here who own a large percentage of the properties and pretty much control the politics. So much money flowing in this city though that you can’t tell everything is done pretty badly. I think the city has a future plan of ~6 years? In comparison, Toronto looks and plans for 200-250 years in the future.The potential is here though. Huge potential.
FWIW, same issue in my town. I decided it was time to become outspoken and it has been fun so far.
Cool. We should connect. Once I have my own projects a little further ahead I plan to do the same. Can’t change things if you don’t make some noise. 🙂
I know. You guys don’t know how much I appreciate what I’ve learned from you. You are definately a cool hand….
Oh, cool, thanks. 🙂 I find the same about others here, though I don’t think about myself as being in that teaching position very often.
Let’s see… building something in the cosmos as you do the gig working with folks (if I remember some of your writings right)… and when you get others to think, that’s teaching…
Oh yeah, sent this via the Twitter, but it applies to @leigh also… for you may be hung in Canada, but the ol’ story of the old money wanting to keep the young blood at bay as they try to keep the general population below their ‘level’ of knowledge happens global… ;)http://www.youtube.com/watc…
Oh yeah, sent this via the Twitter, but it applies to @leigh:disqus also, for you may be hung in Canada, but the ol’ story of the old money wanting to keep the young blood at bay as they try to keep the general population below their ‘level’ of knowledge happens global… ;)http://www.youtube.com/watc…
Potential for what? What are you trying to accomplish?
Healthiest city on the planet + create a strong tech / startup community.
To Matthew A. Myers: Healthiest city on the planet + create a strong tech / startup community.Do you mean people’s physical health?Also, do you have the funds to build a community?
Must be hard to judge whether something is “too early in time” or a “bad idea”, you will know with hindsight
That’s why you need theories to judge ideas off of. Each context will be so different it would be tough to judge otherwise — you’d need to have domain expert in the area to know, and that usually isn’t possible for the wide range of variation investors want to be involved with.
We make those mistakes regularly
BEST WAY TO FIND OUT IF SOMETHING A MISTAKE IS DO IT.
Doing final paperwork to shut down my tech start up as we speak. Biggest learning from failure #1: Getting startup capital is really really really REALLY hard. If you think it’s hard, it’s even harder then that. If you live in Canada, even harder. If you are two women even harder.Still do it again though. (and while not tech start up per say, I actually am 🙂
Hm. This isn’t the same tech startup that I visited your offices of a few months ago is it??
no no — my new company is doing very very well although capital still issue. so far we’ve managed to get clients to help pay for our growth. we keep vacillating on investment.Oponia was solving large file share issues between computers (ala dropbox) about a year before they got their first 25K. We were told by everyone here filesharing wasn’t a real problem to be solved.
Just proves to you you really shouldn’t listen to most people … Too bad it never had a chance. I’m sure you would have managed it well and made it happen.
Oh my $25K. Well, that’s not enough to even get through market research. You shouldn’t have started on $25K.
Are you killing it because you couldn’t raise capital, or because it failed to find a market?
one tied to other. couldn’t get funding to get product where it needed to go.ps. just found our first video we did of the product (it’s a bit fast but we had it done for free so wasn’t allowed to criticize too much)http://www.youtube.com/watc…
Very possibly due to the landscape in Canada at the time.
gazillion things — maybe the way we pitched it — how far we got — our first couple versions weren’t right — people kept talking to me (and some of the right people – i was lucky to get that far) but as Fred said, the magic with all those + & + & + just wasn’t there. :(ps. landscape in Canada did not help
Rule #1. If you’re in Canada, get out of Canada. I can’t think of any recent Cdn startup that hasn’t raised capital outside of Canada. If you only saw Cdn VCs you would have gotten a grim picture, especially if it was prior to 2010.
learning #1 (for future blog post): get out of Canada 🙂
But, money may flow for other businesses. It’s not good to go with a blanket statement. You should try first then if nothing flows move on.
I have a friend who is a student at Waterloo. He spends half his time in the bay area doing internships (he’s at twitter now)
Exactly. Refer him to us if when he returns just in case 🙂
@ErikSchwartz:disqus Don’t listen to @wmoug:disqus. Refer him to me if/when he returns 🙂
Hey! I asked first 🙂
Sorry guys. When he’s ready I have my proposal first in line.
Last one wins! 🙂
That’s fair. Game over.
I am a contrarian. I love Canada.
But if the money isn’t flowing you need to go somewhere else. It’s about business.
Me too. I love the US.
MOVE TO NICE CITY WITH MONEY AND SMART PEOPLE.LIKE DC.
@FakeGrimlock:disqus I would shoot myself in DC. But glad you like it.
You were ahead of the curve in 2007. Shame it didn’t work out.
we had some bad luck — Parakey was a startup by Blake Ross which was the closest to where we wanted to eventually go. They were bought by FB before they launched which SUCKED for us. Dropbox is starting to go there now (see this article where they talk about where Dropbox is going — http://www.businessinsider….
That’s a great video!! You sure had the simple/one-click part figured out. Move on. Lick your wounds (if you haven’t already)You’re great because you learned a lot from the failure, not because you failed at it. So don’t fail on the learning, because that’s real failure. If you had one great idea, you can have many more greater ideas.Get someone that can make a difference to support your idea early on. You need some wind in your sails.
I’ll get to another tech startup after Gravity. For now, it’s Gravity and only Gravity.
I’m sure you would. You have a good thing going right now with Gravity.
I hope you will blog on this Leigh.I’m dancing around this myself.
I think once all paper work is signed i definitely will. So many learnings. Don’t know why people get their MBAs. They should just start a company instead.
This is what my Grade 10 highschool (business) teacher told us; Beforehand he half-jokingly said he could be fired for what he was about to tell us.I definitely took it to heart.The struggle seemed harder than most have, though my options and learning has become much more expansive; The struggle would have been less if society was more supportive and facilitated that ‘alternate’ means of learning.
smart man 🙂
Indeed. I have to talk to him soon. I see him walking up and down the main downtown street here occasionally – he looks like he’s in a lot of discomfort, I’m wondering if I can nudge him into yoga…
If you’re looking to join something big … (if Engagio opportunity exists or isn’t available or what you want, re: I know you’re advising officially – not sure what else you and William have figured out though) — then let me know. :)My plans have evolved quite a lot. I know the community you’ve wanted to do could easily fit into my overall plans. And I’d be lucky to be able to work with you.
Hang in there Leigh.
tnx Dave. Definitely not the fun part.
If it were all fun, it would become boring
Leigh,Nothing worthwhile is easy….The only consolation I can offer is just imagine when you get to be as old as me and JLM you too will have some really awesome stories! :)I also found another commencement address that is really worth reading, it just might help….http://changespeakingout.bl…
Bummer. I am sorry to hear that.
it was really shut down a couple years ago. sold tech to another start up but they have now failed as well so time to move on as they say. but yah, total bummer.
Listen, it’s like trading in the stock market. You have to be prepared to loss some money on a trade. When you sell to cut your losses you just move on! The failed trade is history and you focus on the next trade.Just move on. Don’t even think about. Everything you learned is in your head and will be usable when needed.
“Listen, it’s like trading in the stock market. You have to be prepared to loss some money on a trade. When you sell to cut your losses you just move on! The failed trade is history and you focus on the next trade.”Sounds very simple in theory…much more difficult to execute in practice. As a trader, I have to say that learning to deal with losing/failure is a learned skill. I’ve seen a number of traders come through my firm and never earn one paycheck. The reason that most don’t ever earn a dime (besides the fact that trading is enormously difficult) is that most are never able to detach from the previous trade or previous day’s/week’s/month’s results — whether those be results be good or bad. I believe that the way in which a trader has to think is very similar to the way that an entrepreneur has to think. Find a strategy/business model that makes money and learn how to delicately balance conviction and flexibility in your ideas.
Right, it’s about discipline. You figure what you want to make and what you’re willing to lose on a trade. When you hit either mark you must have the discipline to sell, period.
You’ll look back one day with nothing but fond memories of this experience…and after you get over the frustration of failure, I think you’ll actually feel very good about getting the weight and stress of the uphill battle off your shoulders (leaving room and energy to fight other, more rewarding, battles)…In the meantime, watch this clip from the latest Rocky movie (horrible movie, but possibly the best motivational clip/advice in a movie of all time — words to live by) http://www.youtube.com/watc…
that is awesome – the comments section is great too :)YEAH!
I wish I knew more about the process of failing This send to be difficult to handle from your description
I’ve failed many times, it’s not an issue. You just move on to the next idea on the list of a hundred you thought of during your promotion of the most recent failure. The market decides who is successful. You can’t control it. If you could there would be no failures.
More about the emotions of failing and how to handle them – failing and getting up once is hard, it should be that the second time is easier because you learned from the first. The question is what should you be looking to do when you fail beyond pick yourself up.
Yes, what to do next after you pick yourself up.One of the reason’s I mentioned letting the past failure go and move on is because you don’t want to focus on that failure when evaluating your next move. You want to look at the “new landscape” of the market and the opportunities that exists. You’re new knowledge gleaned from your failure is in your head and can be applied. If you focus on your previous failure it will work against you. Kinda’ like you drive in the direction you look. Yea, I know that just way to general a principle to apply here but’s it’s the only thing I can think of to make this short.
thanks for sharing. what does paperwork consist of? i wish more would share their winding down experiences. i actually tried winding down multiple times but couldnt find a better paying job or a suitable buyer; i half-jokingly say i even failed at failing! :)i wonder if that will be more commonplace in light of falling start up costs. i think just as falling costs have revolutionized the launch process i think they will revolutionize the winding down process too.
Yeah. You hope to never get to that, however it would be calming to have in the back of your mind a specific process you need to follow to disband.
paperwork is different in Canada bc of the laws around shareholders etc. (we took friend and family $$$ — that is the WORST part of it)
This is another problem with the startup methods today. Were your friends and family experienced and successful business founders? Probably not! That is why it’s bad to follow the suggestion to use family and friends as startup investors.
ME, GRIMLOCK, NEVER SEE FRIENDS AND FAMILY FUNDING TURN OUT OK. IT PUT PRESSURE ON FOUNDER TO NOT TAKE RIGHT RISKS.
Good point.It makes me wonder who came up with the whole “friends and family” as start up investors? Maybe it wasn’t a suggestion but a realization that entrepreneurs who couldn’t find money anywhere else went to family and friends for it.
@leigh:disqus Sorry to hear you’re in the bluesy part of closing. I happily closed a few businesses, even when it was really sad the the idea was too early. The fit being wrong with my partner, and the economy tanking, was the thing I needed to shed fast.I looked back on that experience feeling it was a failure, but glad to be out of it, and years later ran into people who thought it was amazing, and such a great thing we did (it was a gallery of mixed art and design, all disciplines). People remember the coolness we achieved, I still was stuck in the bad fit and the not working pieces. I changed my tune to see what I learned.Still beating my dreaded day job in RE to death – the paperwork has dragged on 18 months and now drains my very lean startup of needed cash. I was very good at that business and did it for cash, but hated every moment of it.I’m really hoping act 3 is going to be magic. I already failed part 1 of it, so part 2 has wisdom behind it. I had already noted Fred’s magic formula when the Failure video was posted.
My first job out of highschool was working for a company called Telepersons (my brother did the computer programming for them and they needed a jr. do it all girl so i was employee #1)They had 2 failed businesses — this was their 3rd. It eventually became Lavalife – one of the first online dating success stories — now i get to see both of the cofounders Dave and Ed on Facebook with their glorious lives and great cars :)I’d say 3 is a magic #.
“It eventually became Lavalife…”A perfect example of how startups transform to become something they didn’t exactly startout to be.
actually they started off as a touch tone telephone dating service and just migrated to the Web once the Internet took off so i’d say in their case they evolved vs. transformed.
Right, we’re just having a terminology issue.Some companies would have had the attitude “We’re gonna’ be the best telephone dating service. Forget the internet!” That’s being inflexible. I call it the “my baby issue.”Most good teams are open to evolving quickly in the early stages to make the *business* a successful.
Right on!Which is your new biz in this line up, after burying the recent one?
only on start-up #2 but did join a start-up of someone else’s before – so maybe that counts as #2?maybe i’m too superstitious to be an entrepreneur!
Leigh, I wish you and your partner the best of luck. If I had one piece of advise, give yourselves time to mourn. I’m convinced that losing a company is not that different from losing a close friend or relative.
eight years on, still grieving…..as are my two ex-partners
Failure just really isn’t my thing. People say fail early and often. I say f*ck that. 🙂
“If you are two women even harder.”The only reason I can think it would be harder for a woman is if people didn’t perceive you were able to give 100% to the company and have other obligations (like children) etc. Why do you feel it was harder for a woman?
I’ll say this:1. statistics prove me correct in my assertion2. enough anecdotal info relayed to me from those who are in inner circles beyond that, too tired to get into the gender debate today 🙂
Sorry for what I said. I’m not doubting it is true at all.I’m just wondering (and I should have said “is” not “was”) what the anecdotal reasons that are given.I shouldn’t have said “The only reason I can think” because it gives the impression that I can only think of that one reason.
Well maybe it’s just me then. But, I don’t care what a person looks like or what gender they are. If you can make me money, I’m all ears. Because in the end business is all about money.
Totally agree. Worlds changing. Besides, it wasn’t why we didn’t get funding (i don’t think 🙂 just as I said, probably made a very hard thing even more difficult.
@domainregistry:disqus Wear a dress next time you ask for $ and see how it works for you. Not kidding, eh? People talk out both sides of their mouths. While the AVC community supports the women in its midst, you be floored at how the the great out there “supports’ women in theory but not in practice.And my mother raised me as a man (i.e. not to be specifically female) so I would have an advantage. I have a confidence many women don’t have due to her and my father, who believed the same. And even still, it’s a PITA (pain in the ass).Sadly I agree with @leigh below. #changetheratio
PITA — didn’t know that one. Love it.
“Getting startup capital is really really really REALLY hard.”Yes, that’s also a major failing in the U.S. Everyone talks about jobs, but they fail to realize that money creates jobs. We could put everyone who wants a job to work tomorrow if the capital was available. There are people who are becoming unemployable as we speak. That would not be the case if we would make it easy for startups to get the funding they need.BTW, its no harder for women than it is for men. Money knows not your gender!
Imagine giving all of the soldiers sent overseas the cost of their deployment + other the other associated costs, and kept those resources home + those human resources home. Imagine the personal growth, the local growth, the economic growth, etc. that would occur. The richness that would be created wouldn’t be matchable. Horrifically, it goes towards fostering killing others rather than creativity.
STARTUP FUNDING ALREADY TOO EASY, QUALITY OF STARTUPS TOO LOW. MORE STARTUPS NOT GOING TO FIX THAT.
That’s a tricky one, FG.On the surface, it would seem that if there are low-quality start-ups out there that should automatically follow from it being too easy to get funded. But that is an over-simplification.There are outstanding startups that struggle because the principals don’t have the access to get in front of the right people who can take them to the next level or worse yet they don’t know how to reduce their concept well enough to be noticed and acted on by VCs who are already inundated and are forced to have a short attention span.Result is a lot of great startups never see the light of day. Meanwhile, there are ideas that are not very resilient or not that well built but they are extremely well presented. And those get green-lighted only to become one of those low quality startups you refer to.When I worked in television, I experienced the same thing and you come to realize why there are so few REALLY great television shows out there. It ISN’T because it is too easy to get a show on TV. It is because pitching to a network (like a VC) is an entirely separate skill from making a great show (or startup). Complete success only comes to those who have mastered both skill-sets.
Good start to a much needed in depth analysis of funding realities.I think FG is over simplifying but you need to if you want to keep posts short enough.”Ease of getting funding” doesn’t equate to “should get funding”.
Well expressed and I agree with your bottom line assertion — “Ease of getting funding” doesn’t equate to “should get funding”. But at the same time I don’t think there is any good that will come of making it harder to get funding. And that’s the depth we both agree is there that gives a lot more meaning and context to anyone’s assertions.(Attention DISQUS people: Could not REPLY at AVC… had to do this through my DISQUS Dashboard. Something is broken. Please investigate. Thank you.)
REAL REQUEST IS MAKE EASIER FOR GOOD STARTUPS TO GET FUNDING. THAT NOT SAME AS MORE FUNDING IN GENERAL.
Define startup funding, so we’ll be on the same page.Some thought before hand are:I’m not talking about a few bucks to start a software project. I’m talking about starting a business that will last. A few hundred thousand is great to let a couple people code up a prototype of their idea. But, when you want to build a business that can grow long term and bring hundreds of jobs with it. That’s a different story. I’m not talking about a quick flip. Although those are great they many times end up being purchased by the kind of long term business I’m describing.
@leighIn the Army if you get wounded, they give you a Purple Heart replete with George Washington’s visage. The medal hangs from a ribbon which is…………………………………………purple and GW’s visage is in the shape of a…………………………heart.The Army is nothing if not logical.Once upon a time at the Naija Hotel in Seoul, I argued for a long time over what seemed a goodly number of San Miguel’s that the Purple Heart rewarded failure.There was considerable pushback.I felt it was a bit incongruous to advertise that the enemy had been successful in targeting you to say nothing of multiple awards which might suggest a pattern of troubling behavior — the inability to duck when shot at.I did not feel this strongly but I had an audience (Lts of three different nations and a squad of fetching Australian Sheilas from their embassy) and an inexhaustible supply of beer and I was thirsty. Sort of like a trifecta, no?After a lengthy and increasingly transcendental debate, I had all the Australians on my side (they were drinking Foster’s which even then came in huge cans and national pride required them to match can for bottle, so the chemistry of the situation began to press upon them), all of the Sheilas, a few of the Yanks (no West Pointers) and none of the Brits. The Brits were absolutely intractable.If it had been an election, I would not only have won handily but would have had the best victory party compliments of the Aussie women.I tell you this because I suspect one day you will wear this entire experience like a Purple Heart — evidence that you were in the fight when the great issues of your day were decided and that you bled a bit for the privilege..
tnx JLM … I’m (un)married to an Australian — if you give them the right drugs/drink they’ll always be on your side 🙂
.There are only a few things you can really count on but that is one of them.Fair dinkum!.
what does (un)married mean?
oh it means we share a toddler son and mortgages but haven’t actually gotten married 🙂
yes. why i always go for the most convoluted way to say anything i’ll never know 🙂
@JLM – I agree with what you say – but more , I think it laudable that you took the time to say [email protected] I just listened to JLM FW AW and WM talking about the future of blogging.What comes through is that it is about social engagement more than anything. I hope that the sense of community you get from getting people to advise, empathise (maybe remember what it was like when they failed) will help you get back on that horse. More bruises leads to better riders ! Good Luck !
@leigh:disqus I am 110% sure it will make you even stronger…and you will kick some asses in the near future.There is this greatest statement in one of the EPICs”THIS MOMENT WILL ALSO GET PASS YOU”…. i am not sure i exactly translated it.That is the way success and failure should be taken … it will become a past in few moments.btw, welcome to the FFF club. Fred has told he will consider the Fun Failure Friday posts .. we will share our failures with fun :-).
i think Fun failure fridays would be awesome.
could you say one more ingredient is needed:+ continuum
that’s what i was trying to convey without using the word
looking it through the lens of continuum, another set of ingredients emerge like: patients, persistence, skill, process, failures, learning…
Post a video. Get back to weekend and family. +1 Respect. Conversation ensues.
yes, but i am going to participate in the convo while i have a leisurely morning around the house.
Device ubiquity around the house, no doubt makes that easy.
PIPTM – this should be engraved or posterized. But you need to revisit these factors every 6 months or so, in light of the traction acquired, market changes and pivot wiggles that the startup actually ends-up making,- until the company reaches their cruising altitude and starts killing it.
I think that recipe just requires one more ingredient…. the right amount of luck! 🙂
Timing I think is that variable that applies across the board against all of the others. And it ends up looking like luck. Luck is what happens when you increase your chances with all of these.
Totally agree – If you try to sell onions to an established restaurant by turning up reliably for 5 years visiting every morning with great produce – One morning you may get lucky !
I like your food analogies :)The different grades in produce quality is something that France has mastered. In the US, it’s hardly noticeable. If this type of cherry sells for twice as much as this one, there is a reason behind it. (I’m using Cherries bc it’s cherry season & I love that fruit)
William for you …My neighbour keeps cows on the Alp during the summer. The herdsman lives up there during the summer and makes cheese twice daily. It is hard, lonely, physical and dangerous work on the Alp. Down here the farmers make hay for the winter when there is not enough grazing for the cows.Cows milk protein is stored for the winter in the form of cheese. That’s how the Swiss learned to survive in the mountains. With each herdsmen live some pigs. The pigs get the whey from the milk each day after the curds have been separated for the cheese. When the pigs aren’t eating (organic) whey, they wander around eating clover and alpine herbs. The herdsmen keeps them away from some areas of the alp, where the herbs do not get so much sun. It makes the herbs “herb” (which in German means bitter).These pigs are turned in to sausages at the end of the year, they have short but relatively happy lives with plenty of exercise.I understand a connoisseur can taste which alp the weaners were raised on, and who the herdsman was.These sausages are sold at a slight premium price – but I have no idea why – because they all look the same shape and colour -Some people are just lucky and get undeserved overnight success 😉
i am a big fan of luck and consider myself among the luckiest.http://www.avc.com/a_vc/200…
I think luck can be contagious 🙂
love stories like that :)edit: and the top of the comments section to that post is gold!
You’re lucky you are in NYC.My exposure to NYC was in the early 70’s going there with my father for trade shows this was before even squeegee men. Based on that (and note what I said in another comment here about knowing to much) it would never occur to me to want to live there out of college.If you get a chance you should try to dig up a copy of “NIGHTMARE IN THE CITY THAT NEVER SLEEPS” that portrays NYC in that era.This is the story of what happened in New York in the 1970s. It’s the story of the death of an idealistic welfare state, and of how New York’s climb back to dominance laid the foundations for Thatcherism, Reaganomics, and the political economy of the rest of the 20th century. It’s the story of why New York was where the future came to rehearse, and is told through the experiences of those who were there, including:Ed Koch – the Mayor who saved the cityRupert Murdoch – the Media Mogul who got him electedMike Wallace – Pulitzer Prize-winning author of “Gotham”Tommy Ramone – The Inventor of PunkCurtis Sliwa – Founder of the Guardian AngelsHerman Badillo – The Congressman who warned them allFelix Rohatyn – The banker who rode to the rescuehttp://www.cnbc.com/id/4349…
“You’re lucky you are in NYC.”I’m glad you mentioned that.Fred, what’s going on with the “new” NYC startup scene? Recently you mentioned it, but I haven’t heard more about it. Is the plan still to make a silicon valley in NYC?
i sure hope not. i am hoping that we build a great tech industry in NYC in our own mold
What do you want to say to entrepreneurs to attract them to NYC?
What do you want to say to entrepreneurs to attract them to NYC?I would like to have replied below but the Reply link doesn’t work.
.In 1975 President Gerald Ford approved the financial bailout of NYC.Lots of folks are too young (or too old?) to remember that NYC went flop sweat broke.The result of deficit spending and a welfare state run amok.Felix Rohatyn, a Lazard I banker, made it happen.That was when Wall Street and Washington could actually work together in the face of crisis.Folks put aside politics to make things work. It can happen..
i saw curtis sliwa on the street with his wife the other day. he still wears the beret.
That’s not a good thing to be a big fan of, IMO, though it definitely does help.I believe more in relying on my own efforts (including asking for help from others, as makes sense, including the environment – like pre-existing knowledge available on the Net or in books), while welcoming any luck that comes my way.I should mention that I do know you do a lot of stuff.
better to be lucky then good….best to be both 🙂
I don’t know. I think it’s better to be lucky. Luck can happen to anyone. Being good takes a lot of time and effort.
My mother always parroted her mother’s phase ” I’d rather be lucky than rich.” It stuck with me.
All of these are necessary but I think from a lot of founders perspectives it is not that they come together, but that they evolve like a group of people learning to dance, which is another ingredient – experience or knowledge.In the centre of a pre-nascent business is a market. As markets mature problems emerge continually and apparently spontaneously – hence apparent ideation is possible.Knowledge from the market or from parallel disciplines allows solutions to be conceived – The genesis of an idea.Ideally this arrives before the technology exists to solve it or exploit it fully , allowing or enforcing that the concept will be enabled, This involves prodding and poking, being sniffed at and held, by people who develop IP or competitive advantage (usually informally). Some, with experience, bond into a team. Teams can first form elsewhere and enter markets, but only immature markets – Few car component startups are forged by total newcomers.Further prodding, trials, hypothesis and feedback shaping and hammering, gradually forge a product from the market.By definition a product (Latin prōdūce(re) ‘(to) lead or bring forth’) can only occur when the market is ready – it is a production in the sense of theatre or a “play” – It requires stage, and audience, a story line, entrepreneur (the original meaning) and a troupe. Otherwise the show will not go on !Some will see the limelight,- all must be forged in experience.
poking and prodding. that’s where its at.
The right combo of elements is hard to define for a start up but like Potter Stewart’s comment about pornography ” I know it when I see it”.
I studied Pornography at RISD in the most interesting class I ever took.Yes, know it when you see it. Precise elusiveness.
Lots of ducks need to line up….
Or moons 🙂
And we have the chutzpah to try and line them up 🙂
Exactly. Bit of this, bit of that …
Of course the problem is that every one of us on the other side of the table believes 100% that we can answer ‘YES. That’s us!’ to each of these points.The real challenge is to prove it. The more we do, the easier it is to identify that ‘magic’ really is happening right in front of our faces…
Brilliant Observation !Many will have heard the old adage – “A bank is someone who will lend you money when you can prove you don’t need it”.Sadly after sub-prime and the erosion of moral hazard this became “Banker are idiots who believe in chain letters and tooth faeries and invested our money in them”. We can’t have it both ways.And that is why any half decent team will first seriously seek investment when they are sure they don’t need it, but are sure they do need it to profit maximize.We aren’t there yet and I wouldn’t yet take my mothers money – she can’t afford to lose it. We treat outside money in the same way – Maybe its old school – I really don’t care.When we are scalable, When we have the metrics, When we have traction and IF we are still in one piece, then we will give investors an opportunity to be part of our dream.Absent that attitude there is no scarcity value – and absent scarcity value we are just a bunch of guys playing the numbers and hoping to get lucky.Who wants luck – Not me – But great fortune is another matter!
thats an awesome point (and you’re a good exampe of that kind of doer). Can’t tell you how often I have to try to convince [good] people at bigco to get out of paper architecture/analysis and start building things.There should be a game called “demo / paper / idea” (ala rock / paper / scissors )
Fred, hitting any of these 5 things is like hitting bull’s eye and if someone looks for 5 equally rare things then probability will be small fraction 1%. So it’s not magic, its math:) but yes when you aim for hitting bull’s eye at such low probability then its equivalent to magic.What i feel is that an entrepreneur has to start walking, rest everything (including these 5 things) will fall in place on its own.
Chin scruff FTW!
Perfect VC elevator pitch. I also like the order. It goes from easiest to determine to hardest.
VC elevator pitch. i like that.
Surreal, watching the ultimate Fred commercial on avc.Now to get back to being the wrong person, with the wrong bugs, and the wrong virtual machine (which froze my pc), before the right birthday dinner for Michelle’s sister Stephanie.
“Surreal, watching the ultimate Fred commercial on avc.”I know eh? I wish he smiled at the end though. 😛
You think person is the easiest?
Person is definitely the foundation to every other piece there.
If it is business it has to be both ways i mean the … Elevator Pitch.I actually heard the Investor elevator pitch on the second round just 20-days back … it was “I believe in this team and putting more money … you have to return it with multiples Or-else I will be the bad boy of this group “.
Or You Could be Spain -Owe the most moneyHave no Plan to repay At the wrong timeWith the same people in charge that already f$%#^$%ed upWith a gun to your headOn the weekendThat’s the bailout (magic
or you could visit spain, italy, and greece before the become part of germany :)))
dont forget to visit the US and japan too before it all becomes a part of the UN
And don’t forget to book a ticket on SpaceX for outer space – Mars or further – before this planet becomes unlivable …. which is what the trend is.
.Germany will conquer with the Mark what it could not do with a tank..
My best friend is German, from Cologne, and he is godfather of @PantherKitty. Had his 50th today, in Cologne then flying back. A consummate artist, sorry ‘kuenstler’ as they say. By chance featured in style section of NYT as b’day present, looking great. Back in the day, he was in army and arrived ahead of schedule every time. Pre-clock. Amazing. You would so enjoy the precision of it. Like arriving at 4am to office.We are BFF since 20 years. He shows me German get go all the time. The ‘mark will conquer’ mentality. I worked for him, collaborated with him, and we just chill as friends. I actually helped make him a big success when I wrote his invoices and charged his big corps for the magic he made. I set all his prices and scaled him in steps to charge what he does today by building his pricing. It was a very silent job I did, but damn did I kill it for him! You should see what he makes now, and he still has me price things for him.As you know @JLM, I am a back room girl transitioning to the front room reluctantly. I need a ‘me’ in my own back room, a clone, to kick what I did for him.Yes, the mark will wipe floor on Europe. Having lived in France, Spain and Italy I am not happy to see them suffer. I get both sides, I don’t love where either are at.
Software/algorithm for grading essays, why not for business plans,http://www.nytimes.com/2012…
probably a ways off – or it could grade and 8th grade business plan :)As an aside I heard an interesting thing on the radio (NPR ) that flitering software at larger companies was partly to blame for filtering too many qualified applicants out .. I think it was npr .. but did a quick search right now and cant find the audio.
That would be great. It would take a different way of thinking than what was applied to the recruiting industry (See andyidsinga below for a reference).I remember telling people how stupid the approach was. Of course no one listened. Oh well, I guess we humans won’t be replaced anytime soon.
when i first saw the title of this post in the really simple syndications – what came into my mind was :’what do people look for when they approach a new group side-project or startup’ ..i.e. you’re not the founder what do you look for?45 degs off – but maybe a topic for another day 🙂
It has to be the total package. That’s why the failure rate of serial entrepreneurs is very high (more than just the team). That’s why amazing product still fails (great idea and product, bad timing). That’s why often there is only one winner in a category (it takes more than just a great idea to be successful).
i think wattpad is a good example of this. there have been other attempts to do what you are doing (fanfiction?) but you went with a mobile first approach and i think the timing was better as well
definitely agree and as Fred mentioned – Wattpad ia a good example of ‘total’ package
The importance of “right time” is hugely underestimated.
Just need to be prepared for when the right time comes around, and you’re more set than not.
That’s the one big question, “doing it right?” I believe it means more than defining your position in the market or defining your runway, it’s the translation of your entire business at a specific point in time, which helps your audience ascertain your economic value.
Luck is preparedness, as they say.
Fred,Is there a methodology to finding the “magic”?
for the VC or for the entrepreneur?
For both, but you can reply based on whichever one you want (or both if you like).
How do you create luck though?
Here is one theory you might enjoy:How to Increase Your Luck Surface Area
.Get up early.Work through lunch 2-3 times per week.Stay late — not crazy late but just a bit.Read one hour per day about your profession. Hard, tough professional reading.identify and meet the leaders in your profession at the rate of one per month.Keep daily notes and a journal in a Moleskine notebook.Do one unplanned kind thing each and every day.Call a friend unscheduled and with no agenda weekly. Speak for no less than 30 minutes.You will have found luck and if not, I will give you something of value.Call me in one year..
It’s a *break* during the day when truely successful people *work* and eat!How else can it be a tax deduction?BTW, I responded to the startup community discussion below but you might not get notified because the Reply link didn’t work.
I love the “Do one unplanned kind thing each and every day.” advice…many of the others are golden nuggets as well, but that was my fav.
I agree with everything about this list except the work through lunch thing. I used to do that in high school a lot, and in college I often worked through dinner. I now realize that one of the reasons I found that period of my life emotionally tough was crashing blood sugar. It is worth it to me to spend the time eating rather than working in order to be more mentally productive.
@JLM:disqus This sound like an outline for a coaching thesis. Except it’s call me in one month and check in, not one year.
OK, I want to propose something and get feekback.How ’bout you hire more people to do the work for you? Then you take lunch everyday and you leave the office at 3pm instead of staying late?
.That’s great for the CEO and in a mature company that is exactly what should happen as long as the CEO is using that time to fuel the vision and to think.A really good CEO should have everything so systemically organized and delegated that he really HAS to do nothing.That will take you about 10 years of CEOing to get there.I think in the scenario we are musing about, we are talking about a start up and a lean company in which the CEO may have to take out the trash from time to time..
“A really good CEO should have everything so systemically organized and delegated that he really HAS to do nothing.”Hmm… I can tell already that statement is gonna’ be what keeps me awake at nights this week. It relates to generating code instead of hand writing code. Which sparked a new way of thinking about what leaders should really be doing.BTW, eMOS uses the generating code approach. Sorry, but I need to always be telling the story!
continue to put yourself in situations just outside of your comfort level (not crazy outside your comfort level, just a little outside)…you’ll find ‘luck’ more often than not (and grow by leaps and bounds regardless).
that is great comment – I remember Seth Godin discussing a similar concept in the past in one of his books
Thanks…I love me some Seth Godin…so no doubt that is where my thoughts on this topic partially originated 🙂
This is a truly insightful clip. I don’t think you can bank on creating magic (just like you cannot ‘make’ something viral).But you can & should follow the VC process.
Just getting to this.You can look the person in the eyes, feel the idea, vet the team and think yes!Time and market though are always a leap as you are years out and for the most part, not under your control.It’s magic and serendipity to some degree when it comes together for certain.
look no further!
Would I put my name on it test? i.e. Cigarettes?
You basically just described everything about my business without the details. How do I get a meeting?
tell me a little bit about your business. we have a very specific investment focushttp://www.usv.com/2012/05/…
Very interesting. thanks.
great video Fred. Where would you put perseverance trait in that package? In other words, is perseverance a good thing or is it good when entrepreneurs know that it is over for a particular startup?
I like perserverance and tenacity very much
Another Fred quality that goes against the grain.
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