My bag o' thoughts:
About entrepreneurship, venture capital, parenthood, and the world in general
Managing Partner at Founder's Co-op and Managing Director of TechStars Seattle
I recently had coffee with an entrepreneur whose first company did not succeed. He was a bit down in the dumps...understandably. My advice to him was as follows:
Pick yourself up, dust yourself off, and move on. And do it relatively quickly.
Decide what you're going to do.
If you need a job, determine that fact and start looking. If you want to try another startup, you're probalby more likely to succeed. Step up and start taking the steps to building a company.
Navel gazing does not move you forward.
Depression does not move you forwad.
Be sure to exercise regularly .
Get a consulting gig : it buys you time, pays you and gives you current market knowledge (of some market).
I've long been interested in schwag. Below are three photos of schwag from a recent event I went to. Uniqueness and food are the winners when it comes to schwag. I'd choose the ping pong balls but you got hand it to Liquid Planner candy bar folks (below)
I forget whose t-shirts these are....and you can't read the name so I'm not sure how useful they are as schwag.
White Pages in Seattle produced this ingenous schwag and associated it with the company ping pong tournement (a good recruiting tool).
Liquid Planner used the tried and true M&M and pen combo. Not very creative but effective!
It was a great first day at Code Fellows yesterday. I managed to sit in on the kick off orientation in the morning. The energy in the room was high and i thought the instructors did a great job. I'm really excited to see how this company evolves over the next few months. There's lots to be done! I've been describing the company in the following way.... codefellows is bootcamp for engineers. The comapny is a combination of hands on programming instruction, mentoring, community and networking to cool jobs.
I've been having having breakfast with Aaron Bird, CEO of Bizible pretty regularly since TechStars. His company raised 1.7MM in capital in November 2012. The company has historically been focused on he calls, "closed loop marketing" for the SMB marketplace. Closed loop marketing connects leads from different sources of marketing to sales so you have much more effective marketing spend than you would otherwise. At breakfast today, he stated that his goal was to get cash flow break even on the money he raised. I think it's possible that Aaron and team might be able to achieve this goal. However, after listening to him for a while, I suggested to him that his focus as founding CEO should not be on getting to break even -- rather he should focus on the following in this order:
Nailing product market fit in a big fast moving market
Nailing the unit economics of his business
Getting to cash flow break even
It's important to note that these goals are not mutually exclusive. Rather, solving one often leads to the second and third. But, ranking these priorities in this way has the founding CEO focused on the thing that requires the most psychic attention and testing.
Did you know -- Apple has single handedly become the largest manufacturer of cameras in the world. The camera in the iPhone and the iPad is (more than) sufficient for most consumer uses of camera and video. Apple didn't set out to dominate and transform the camera market.
I'd argue Apple's dominance in the camera market is a direct result of the introduction of the iPod in 2001. There was no camera on the device. In my opinion, it was the introduction of the iPod in 2001 that led to the rapid adoption of the iPod as a music platform in the minds of consumers, that provided the product and consumer adoption foundation for the introduction of the iPhone in June 29, 2007 and the subsequent introduction of the iPad on April 3, 2010.
Canon and Minolta are the reasons why you should care about innovation at your company. The evolution of Apple's camera dominance makes me wonder what the executives at Canon and Minolta thought about when they first saw the iPod. Did they think that this music device would lead to the elimination of their business' revenue? And what did they think about when they saw their first iPhone? And what do they think about their situation now? I'm sure both camera companies had smart and competent managers that just didn't see, couldn't believe that they were under such a serious threat by Apple. And even if they did see the threat, what could they have done?
These are awesome questions that if I had time, I'd want to go and interview the management and board of directors of each company. I think this kind of market evolution will increasingly happen in the next decade or two as technology companies like Apple disrupt traditional markets. And moreover, I think the rate of speed of the transformation of markets makes it more imperative for companies like Canon and Minolta to prioritize the search for innovation.
When one thinks about the implications of this market dominance from a business strategy perspective they are profound.
I received a call on Friday from an entrepreneur I've known for a 7 years. He's a few years younger than me and has a company backed by venture capitalists. He's raised approximately 6MM dollars and has been trying to strike lighting -- professionally speaking -- for about 3 years. He started the call by saying, I've got a situation and thought I'd phone a friend.
He proceeded to tell me that he had already pivotted the company once about 1 year ago. He's since come to the conclusion that the path he's put the company on is a losing one. He's torn between two choices:
Pivot again -- to something bold and he isn't exactly sure what that is
Return capital -- Of the original 6MM raised, he still had 1.5MM
I empathized with his predicament....and his instinct to phone an entrepreneur (friend).
It was approximately 6 years ago that I made a similar call to a entrepreneur friend of mine name Tom Higley. I remember it vividly. It was a Friday night. I was CEO of Judy's Book at the time. We had pivoted once and had not caught lightning in a bottle. On that call, Tom asked me what my gut was. I told him I thought that I should shut the company down and return $0.50 on the dollar to my investors. By Tuesday of the following week, that's exactly what I did.
I did two things on the call with my friend. First, I asked this entrepreneur the same question that Tom asked me. I asked him what his gut thought he should do. Like most of entrepreneurship, there's no right answer to situations like this. Second, I told him the story of Judy's Book, what I did and what I learned with the benefit of hindsight. I told him I was glad I was decisive and acted on my guy but if I had a re-do I wish I had persevered. I think the fear of failing is worse than actually failing and in the situation with Judy's Book many things happened in the market after we sold the assets that would have totally changed my perspective. The iphone and twitter became phenomena providing the market context for Judy's Book and local search to take off. I could never have known these market externalities in advance. Ahhh....hindsight is 20-20 :-)
It was a fun call. I don't knwo what my entrepreneurial friend is going to do. I gave him some shared experience that I am sure he'll consider as he weighs his gut and his options. It's moments like this that make entrepreneurship so exciting and profound of a choice. There is no right answer and he's a meaningful player in determining a positive or negative outcome. He's on the field of life and business!
My friend, Dan Levine, introduced me to a nice young Jewish boy named Grant, the 21 year old. Grant is going to graduate UW in May 2013 and wanted some life advice. Grant emailed me and asked me if he could bring his friend, Tony, the 22 year old who graduated in May 2012. I scheduled to meet them this week at Zoka, a local coffee shop for 30 minutes. We were scheduled to meet at 4PM. I showed up at 4:10 and Grant and Tony were sitting by the door. We had never met but I knew it was them that I was meeting. They jumped up and introduced themselves. I got a soy latte and sat down with them. Grant started to talk. I wasn't sure exactly where the conversation was going to go but it was the end of the day and their enthusiasm was engaging. It became clear -- 3 minutes into the conversation -- that they wanted to talk about their mobile app and business that they had been working on for the last 6 months. I heard about the founding of the business -- Tony had started it while he lived in San Diego. He had moved back home to Seattle and had partnered with Tony while Tony was finishing up at UW. They weren't making any money yet. But they had this little business and were trying to figure out whether it was worth continueing to pursue. I'm not going to divulge their business idea -- but in the past 6 months they clearly demonstrated some learnings from the market. I was impressed with what they had figured out -- and I was more aware than them of what they didn't know that they didn't know. But in the end -- I end up staying and talking with them about their idea for 2 hours. Trying to help them and give them tips so they might actually turn this thing into a success. At the end of the coffee meeting, I reflected and realized I had learned at this meeting...
i) Naivete and enthusiasm are an entrepreneurs friend. These attributes can be a HUGE asset and what may seem impossible ...may in fact not be.
ii) Writing down ones key assumptions and figuring out what tests one wants to run is the entrepreneurs job. The definition of the test reflects the frame or lens of the entrepreneur. These assumptions and tests point the direction of the most likely learning that will be obtained. A lot of the learning that one actually does in these market tests can not be known a-priori.
iii) Listening AND selling are equally critical skills to accomplishing the entrepreneurial goal.
A couple weeks ago, I wrote about how naming a company is a real pain ....but never mentioned the results of our naming efforts. Well, in this post, I'm happy to share with all of you that RevenueLoan is now LIGHTER CAPITAL.
- We're a lighter financial institution, as in fun and lighthearted
- And we plan on making raising capital lighter, as in easier and faster funding for small businesses
We’re about more than RevenueLoans
As we worked with small businesses over the past year, we realized there’s a lot more opportunity to disrupt the small business growth capital and lending incumbents. We intend to be the team that causes that disruption. What’s screwed up about small business capital now? That really merits its own post, but…let's just say there's lots that's screwed up and if you're an entrepreneur with a business that is growing getting access to capital to grow your business is way too hard and the process success. Getting money takes too much time, hassle, and work and the investors ask for too much (equity, control, interest rates, etc.) Lighter Capital changes all that -- and we do so with a deep understanding of what it takes to be an entrepreneur.
Lighter, as in fun and lighthearted
We aren’t your father’s local 3-6-3 bankers. We don’t wear suits. Our offices don’t smell of rich mahogany. We know building a business takes hard work - getting funding shouldn’t make your life harder. So we wanted our name to represent our focus on keeping business upbeat and lighter. And even it we don't fund your business, we want to do so with respect and a smile and leave you feeling like you haven't wasted your time or had to dress up to be someone your not. We like quirkiness and appreciate weirdness and generally want to have fun building this company as you should have fun building yours.
Lighter, as in lightweight funding
I’ve been in both the entreprenuer’s shoes and the financier’s shoes for long enough to have seen where taking outside funding can get painful. Under the right circumstances, taking bank debt or VC funding can make sense, but we’ve seen a lot of companies where those sources of capital start to weigh-down a company instead of lifting it up. RevenueLoans give companies more flexibility without demanding your first-born-child. And we’re working to make it faster and simpler to get our money, so entrepreneurs can focus on what they do best – building exciting new businesses.
Expect to see some of these changes in our company and loan process in the coming months. I’m psyched out of my mind about some of the work our team is doing, and this name change is an exciting step in the direction we’re taking.
In the interest of being open and light – check out this video of our team debating the name change:
This may be a repeat for some of you, and is a bit self promotional....but Mark Suster (General Partner at GRP in Los Angeles) wrote a thoughtful piece in TechCrunch yesterday about the startup scene here in Seattle, including a very generous mention of what we're up to here at Founders Co-op.
Last night I was fortunate enought to be voted Best Angel / VC Investor at the Seattle 2.0 Awards. I am truly honored -- and feeling undeserving. I will work harder to actually earn this award. There are lots of more experienced and better vc's than I in Seattle -- They may not be as good at promotion but when it comes to making great bets on great companies I still have a lot to prove. I'll get there though. Thanks for the acknowledgement.
Had my best revenueloan meeting yet last week. Can't tell still if it's because we're making real progress or drank too much during the meeting. I must admit that I've become a fan of baord meetings with booze.
