A Sack of Seattle

Question of the day

What's the elephant in the room of your life?

Party Foul

This past weekend I was in San Diego for a friend's bachelor party. It is the last of my single college friends to get married. One of the nights, a group of 10 guys went to a nice restaurant in downtown San Diego. We had reserved a private room at Osetra. The food was good and the conversation engaging. There were no naked women or excessive shots of Tequila. Bachelor parties have apparently tamed with age. Unbeknownst to me, one of the guys ordered a few $500+ dollar bottle of wine. A few of the people did not have any of the wine. When the bill for the evening came it was over about $3,000.  The bill was paid for by one guy and we all planned to pay our share later.  As one of my friends at the dinner pointed out to me-- this guy committed a party foul -- if you're going to order a $500 bottle of wine, you should pay for it rather than have it go into the shared bill.

Founder's Co-op likes 2 (and 3) person teams

We have 2 portfolio companies at this time and we've seen success with 2 person founding teams. I've also had a lot of personal success with 3 person founding teams. I recall there was a study done at MIT years ago that looked at the number of founders and success of startups as measured by revenue 1 and 2 years after founding. It turns out that the success of your start up is directly correlated to the number of founders up to 4 and then it starts to decrease. The theory behind the article makes intuitive sense -- up to 4 people working together can make more traction than just 1 sole entrepreneur.
In addition to the research above, at Founder's Co-op we're seeing these 2 person teams work very efficiently and effectively. The teams both have 1 business and 1 technical founder.  The companies are able to make substantial progress on both product and business each day because of the diversity of skill.
They're both ramping revenues in the first 6 months of operations and I'm super bullish about both companies. If you're applying to Founder's Co-op, you should know that our default preference in terms of number of founders is as follows:

1. 2 founders: 1 technical and 1 business
2. 3 founders: 2 technical and 1 business
3. 4 founders: 2 technical and 2 business
4. 1 founder: 1 technical

I tell you this because this is our preference -- this is not a rule. I'm sure we'll fund the single business guy too one day. That said, I highly doubt we'll fund a founding team of 5 or more -- just too many founders and too much founder conflict. By the way, my first company, Firefly, had 7 founders.

How to make money on the internet?

This is a great little video from the guys at 37signals. Worth watching here.

Too much focus on customer acquisition in my blog?

Someone recently gave me the feedback about my blog that I've been writing too much about customer acquisition. As I've gone back and looked at my blog, I'm not entirely sure Marcello is right, but his feedback got me thinking - Why am I so focussed on customer acquisition?

• In a nutshell, I don't think this aspect (i.e. customer acquisition) of building a business is emphasized enough to entrepreneurs.  In all the advice out there, customer acquisition sometimes feels like a dirty word or a trivial concept and for that reason, I want to shine a light on the topic.  That said, I'm fully aware that customer acquisition does not a business make!  Once you've spent all that money acquiring a customer, you've got to monetize and retain that customer.

The democrats

I have 2 comments:

1. Hillary and Bill Clinton are really pissing me off.
2. Have the democrats found yet another way to lose an election when the economy is tanking, the war in Iraq looks like a disaster, and the country is losing confidence in itself?

Competition makes us stronger

In the internet age, every business person wants an edge and they want that edge to last. Just today, I had coffee with someone starting an online media company. He asked me -- what should I do about the 3 other competitors in the same space. The answer is pretty simple:

1. Deal with it
2. Have a better SEO strategy
3. Out-execute them

Executing on the answer is much harder than saying it.

Entrepreneurial advice of the day

I met with a former management consultant turned entrepreneur today. He has an interesting new business in the online word of mouth marketing space (which I can't talk about yet because he's in stealth mode).  My advice to him -- which seemed to resonate with him-- was fairly simple:

1. Start selling now -- don't wait for the website.
2. Get fucking aggressive on customer acquisition

He really liked that I told him to get fucking aggressive. He said that no one else had told him that and he appreciated the spirit with which I conjured the expletive.  I told him it comes from me having made the mistake of sitting back and thinking business is going to come to me. I told him to call me when he makes his first sale....I hope he does.   

The benefits of Founder's Co-op

I met with an entrepreneur who asked me to spell out the benefits of Founder's Co-op and I told him that the fact he had to ask the question meant that our initial web site was lacking.  In a nutshell, the benefits to entrepreneurs in Founder's Co-op are as follows:

1. Community: When I asked the founders of the two companies (Cooler Planet and Orange Line Media) that we've already invested in what makes Founder's Co-op great (yes it was a leading question) their answer was the community. Now, I know this sounds like a sappy touchy feely answer -- but I think it actually may be true. There's a lot of emotional and business benefit that comes from being associated with and in the same space with others attempting to accomplish the same thing as you.  It's why people trying to lose weight do better as a community and why those trying to run a marathon train together (who else would tell you to cover your nipples with Vaseline and band-aids).
   The companies we work with currently choose to work in our offices (not a requirement) and also participate in the Founder's Co-op equity pool (a requirement). At Founder's Co-op, we believe the sum of the parts is greater than each of the individual parts. We also believe that Seattle lacks a center of technology start up culture and we want to work to foster that culture. Moreover, often advice and mentorship from people who have done it before (i.e. Chris and I and the other Founders Co-op mentors) is great but advice and shared experiences from other entrepreneurs in the process of trying to grow a company can really help tactically and emotionally.  I'll tell you that I've heard my share of SEO, SEM, and .net secrets being shared over lunch more here than anywhere else! Lastly, and perhaps most importantly, the community component of Founder's Co-op makes it a lot more fun for everyone involved.
2. Advice and mentorship: Given that Founder's Co-op serves first time entrepreneurs, surrounding those entrepreneurs with other successful technology entrepreneurs is enormously valuable. As partners, Chris and I meet with each company each week. In addition, we assign at least one mentor besides us to each company as an advisor. This is the starting point of mentorship and counsel. These regular meetings and relationships form the backbone of advice that fundamentally serves to guide and support the young first time entrepreneur.  The discussions range from high level strategy to the tactical. and include all areas of technology, technology platform, business model, recruiting, business development, marketing, customer acquisition, from entrepreneurs who have been there done and done that.
3. Network: Our entrepreneurs get the benefit of the social networks of Chris and I, of our mentors, and of our investors. This is an easy sentence to write but the power of the extended network in Seattle, San Francisco can make raising capital, getting a business development deal or getting an answer to a market question much easier. 
4. Capital: Oh, yea, we also invest in our companies and try to support them as they outgrow the initial seed and early funding rounds.

That's all I'm going to say about the benefits of Founder's Co-op for now. I think the best way to understand the benefits is to talk to the enterpreneurs in the co-op. I need to figure out a way to get their voices heard because they'll be much better able to tell you about what's good and bad about Founder's Co-op. Stay tuned for that. Have a good weekend.

Economic outlook

Mark Pincus has a great blog entry on the US economy here.  A portion of his post is posted below:

"I can't see how the dollar can't decline given that the fed is dropping rates to save the economy and counter tightening credit markets; meaning rates paid on dollar fixed income deposits will go down relative to other worldwide oppts. It seems that at some point the federal govt will have to start offering higher rates on t-bills as noone will be willing to buy its paper at low these rates.

So what happens when the fed is lending cheap and borrowing high? Seems like that spirals deficits even faster which btw contribute to obama's calls to raise taxes and 'pay our fair share'.

Where does this all go? Seems only outcome is higher taxes and interest rates along with record inflation as the dollar dives and real assets esp commodities skyrocket. Assuming that the rich give their money to hedge fund managers who are smart enough to bet on these trends, we end up with even greater concentration of wealth as a very small few avoid the economic landslide and increase wealth while the majority share a fairly equal misery."

The things I'm doing besides Founder's Co-op which I admit is not totally in synch with this economic outlook are:

1. International Real Estate
2. Google stock (yes, I bought a bunch at $415 -- feeling happy about that today
3. And I just bought SKF -- shorting the financial sector again. With all the people thinking we're out of the woods on the economy, I still don't think so. I bought it at a price of $99.