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It Bothers Me

Jun 10, 08 in Entrepreneurship, Startups   15 Comments

One of the things my mama taught me was that "if you don't have anything nice to say, don't say anything."  As I have grown up and entered the business world this saying morphed a little.  More along the lines "don't just bring problems to the table, bring potential solutions."

Before I got back to my office after the GRA/TAG business launch competition my mobile phone was ringing in response to the initial announcement and it was not too long before the tweets were flying.  The conversation was taken to the next level when Scott posted an article on the matter.  I am glad that Scott posted what quite a few people were thinking.  Having the conversation out in the open is healthy. 

I understand that ATM Direct winning the competition bothers a lot of people.  I understand why it bothers a lot of people.  But what really bothers me is no one has any suggestions for positive change.  From my point of view you can whine, suggest ways to make it better, or get out your pen and stroke a $100k check.  I am going for the positive inexpensive option.  I encourage you to add to or take away from this list as you see fit in the comments.

So, if I were in charge (and I am not), I would change the terms and conditions of the GRA/TAG Business Launch Competition to include:

1.  In operation for less then two years.
2.  Any form of funding must be less then $500k.
3.  Revenue since formation must be less than $100k.

Moreover, if I were in charge (and I am not), I would move away from the focus on clusters and let any startup that meets the core criteria enter the contest.  In my mind the more entrepreneurs that are involved the better.

What would you like to see GRA/TAG do to improve the competition?

Comments

Everyone is complaining that this company is on it's 3rd go-round with at least $30 MM cumulative capital invested. Isn't the solution self-evident? Does it really require deliberate articulation?

Change and clarify the critera. Then be consistent in the application of those rules. That's it. Finito.

My two cents ...

Cheers.
Scott

Scott Burkett  |  Jun 10, 08 at 05:07 PM

Scott: I love you man. Not exactly productive feedback. Yes it does require deliberate articulation. The rules before were clear, they were applied consistently, and a bunch of people are annoyed. I think that if folks in the community were to articulate what they think a "launch" company is that GRA & TAG would listen. If the response from the community is "finito" it very well may be.

Lance  |  Jun 10, 08 at 05:18 PM

Why 2 years? Its a LAUNCH competition... so why not startups < 1 year old? Even < 6 months old?

Russell Jurney  |  Jun 10, 08 at 05:32 PM

I could be mistaken, but I believe your additions were part of the criteria when my company participated in 2007.

I get your point about whining. While something doesn't feel quite right about this year to me, it is what it is, and ultimately has little bearing on me or my company. Makes for good debate over a beer though!

I'd add one more suggestion to your list - don't look to contests or VC's to make your company happen. It's in your (the entrepreneur's) hands.

David Jones  |  Jun 10, 08 at 06:47 PM

This was a subjective competition. The problem was not the criteria. It was the decision of the judges.

None of the judges was willing to say that despite their fit within the rules, they don't deserve to win. "Technically they qualified" is a horrible excuse.

Paul Freet  |  Jun 10, 08 at 09:21 PM

Paul. No whining allowed. No where within the text of the post or the comments before you were the words "technically qualified" typed. How about a thought for positive change?

Lance  |  Jun 10, 08 at 10:27 PM

Lance: I think it was hard at first for people to make constructive comments for lack of information.

My suggestion lies in the area of communication. The questioned details of ATM Direct's past were easily discoverable within a few minutes on Google, and had been called into question (and at least partially answered) well before the final decision. If a decent explanation could have been found within 10 minutes of googling, I think the discussion could have started more constructively. A fragment of a competition-related blog post or a blog comment such as this would have helped: "Some people have noted that a company named ATM Direct was sold several years ago for $30 million, and that IP assets of that company were sold for $600k earlier this year. Accullink LLC was formed in January 2008 for the purpose of acquiring these assets. The full $600k was personally invested by the founders, and as such is not considered to be an outside investment." (or whatever the accurate answer here was). I don't think these details hurt the quality of their entry (or their credibility), and in fact would have made me inclined to admire the tenacity of founders who believed that their ability to execute would generate a good return on costly IP, and bet their own money on it. It puts people in a position to debate whether allowing the same founders working on the same IP that has been significantly invested in should be allowed. Or to debate whether $600k invested by founders should DQ them. This information was all very hard to get at, and hence hard to address constructively.

Communication is my suggestion. We are all grateful to you, Lance, for getting the word out on these things via blog, twitter, etc before anything official has been said (the winner still hasn't been announced on the TAG site), but something more informal yet official would be beneficial. A place where the finalists and winners can be officially announced when they happen, not when the press release is ready. A place for interesting intermediate updates and input into next year's competition. This could have all worked itself out in the comments of an official blog post announcing the finalists in the first place.

This isn't to take away from everything you did to be the semi-official voice of the process and keep us updated. An official voice, however, would help with the dialogue.

Rob Kischuk  |  Jun 10, 08 at 10:58 PM

Rob: fair enough. I can not speak as the official voice, but I will give you the facts as I know them.

1. ATM Direct did not provide a preliminary entry to the competition (one is not required and they were not the only company to take this path).

2. The company submitted its executive summary and business plan by the April 15 deadline.

3. The company was assigned to me to make a recommendation on advancing to the semifinals.

4. The semifinalists recommendation team met to discuss the companies that should advance to the semifinals. ATM Direct is put in that pool contingent on us gaining a better understanding of their financing history. It was actually the highest ranking company based on the judging criteria (which is distinct from the eligibility criteria).

5. Tino Mantella had a conversation(s) with Nandan Seth about the funding. This conversation led to the disclosure that Accullinks purchased certain assets of ATM Direct for $600k, most of the funding came from Nandan. The asset purchase was via a 363 transaction and essentailly included the IP and trademarks. It was further disclosed that the asset had never generated revenue.

6. Decision was made that they qualified and that the semifinalists judges should decide if ATM Direct should advance. All of the above was discussed. They advanced to the finals.

7. It is my understanding that the same process in number six was repeated in number seven.

Your story reads better than mine.

Lance  |  Jun 10, 08 at 11:30 PM

Great facts, Lance. My suggestion for next year is that if such questions are being raised, the competition finds a way to disseminate such details earlier in a way that doesn't harm the company.

I also appreciate the reference to "judging criteria", folks need to know that this isn't just an arbitrary popularity contest. Judges adjusting *judged scores* based on perceptions surrounding *eligibility* would be quite bad.

Agreed that they qualified under the rules, and agreed that they probably made a great entry - strong CEO track record, large unsolved problem space, identified solutions with IP protection.

I toy with the idea of some sort of "launch factor" need-based bonus awarded to companies that would gain remarkably more leverage if they win, but at some point it seems like tweaking the College Football BCS formula and shifts the debate around rather than improving anything.

Rob Kischuk  |  Jun 11, 08 at 12:22 AM

Lance - positive change first starts with people recognizing that there is a problem (by people bitching about it) and then admitting it (i'm not sure if TAG/GRA sees any issue here yet). From there, i think we can have a more positive dialog about what should be changed.

First, don't let this happen again would be a positive suggestion.

I'd suggest a positive reaction from TAG/GRA is just some acknowledgement to the Atlanta community that maybe the decision wasn't the best and that in future years a better attempt will be made to try and better disqualify these types of companies.

I think Tino could do a good job by just talking with the community online about it and just agreeing that maybe it wasn't the best choice.

Ultimately, it's their money and their organization and their call -- the judges made the decision and it is what it is. Period.

However, I think one of the things that's a little different than the past here is that through social media, the community has more of a vocal voice in what's happening. Events like this get more of a collective voice when issues like this come up. The worse thing to do is to avoid them or somehow try and make them a none issue. Best to just confront it head on.

You're a big champion here and I understand your intention to be the peace maker. I think that this dialog -- while negative -- is actually very positive. The way it can really get very impactful in a negative way would be to avoid it or try and underestimate it (from a TAG/GRA standpoint, not you personally).

I'll try and move this to my own blog and not take up more of your comment space.... sorry


Jeff Haynie  |  Jun 11, 08 at 12:23 AM

I think one element that is very encouraging is that the early stage community is clearly raising their expectations of the organizations that have positioned themselves as leaders. I'm not sure the outrage would have been this heated a year or two ago.

Those heightened expectations are a challenge to which all organizations purporting to support the emerging venture community, including StartupLounge, must rise, or be marginalized.

Personally, I think it's great that people give a damn, and feel that their voices matter. I'll say it - whining is good - and I'm glad my son can't read that. The passionate engagement to me is a much more important outcome than the result of the contest itself, because that attitude ultimately has the potential to provoke and sustain fundamental, systemic change.

-- mike

Michael Blake  |  Jun 11, 08 at 12:53 AM

I agree with what Haynie and Blake said.

There is clearly a conversation that is happening that TAG, GRA, et al are not a part of. In my original post which apparently started this ****storm, I invited them to come on and post a clarification for the community. I still think this is a logical next step.

Transparency good ... silence not so good.

This discussion has been twisted and yanked in a lot of different directions - some I agree with, some I do not. But in the end, the core issue is clearly striking a nerve within the community. A few short years ago, all of this banter would have been conducted in a chain of forwarded emails. Thankfully, we've evolved (I think).

Despite the clarifications provided by Lance, I still do not agree with the end result of ATM Direct being allowed to participate. However, what's done is done, obviously.

If asked for my input into future competitions, or to again serve as a mentor, I will gladly do so, as I do believe the TAG/GRA competition is valuable here within the community. But some effort clearly needs to be put into clarifying the criteria, and possibly into implementing some sort of oversight controls.

I will slightly disagree with Haynie on one thing, though - the use of the words "peace maker". A peace maker is only needed when war is breaking out. This is far from that. This is simply healthy dialog. I honestly believe that no one inside of TAG or GRA thought this issue would blow up (at least I hope not). There is an opportunity here to improve, for sure.

In fact, this could very well be a watershed event for this community as a whole. Time will tell.

To Sanjay's point (via Twitter), regarding another competition. This is something that we've been kicking around within StartupLounge for a long time. Who knows ... we'll see. We're not short on ideas, just time :)

Cheers.
Scott

Scott Burkett  |  Jun 11, 08 at 01:20 AM

All right, Scott, I like the stroking a check option. :)

I think its great that people give a damn as well Michael. As I tell my kids, just ask nicely and you are more likely to get what you want and it is much more pleasant.

Haynie also has a good idea on not making the contest winner take all within his longer thoughts on all this: http://tinyurl.com/6n2ue9

Lance  |  Jun 11, 08 at 07:52 AM

I firmly believe the TAG/GRA competition is a very valuable and healthy event for the startup community of Georgia.

MY PROBLEM: The competition seems to have changed with each passing year into an event that picks a mature, established company and less about helping to launch a "new" company.

MY humble SOLUTION:

1) I agree with you Lance - do away with the silly cluster idea and open it up to greater number of entrepreneurs via a simplified application process – see Y Combinator for guidance.

2) Make the competition more "Open" and "Social" - by broadcasting online the various competition stages/behind-the-scene moments and by allowing live voting from potential customers.

I believe this would be an exciting way to gain market exposure for everyone involved and to find out if a company’s offering would have some target market demand.

3) Reshape the competition to more closely follow the model of Y Combinator and TechStars.

Both of which focus on getting good ideas off the ground and made into viable companies via four steps: find, fund, educate & launch - quickly. These steps could be completed over the same three-month period the competition currently uses.

Furthermore this would be an excellent way for the TAG/GRA competition to meet the stated goal of "encouraging and supporting the creation and growth of new companies"

4) Stop with the winner takes all approach and split the $300,000 total prize up into four “seed funding” awards. I agree with Jeff Haynie’s split idea of 1st gets $50k, 2nd gets $30k and 3rd gets $20k. 4th place can have the services.


In the last few months events such as PitchCamp and Startup Riot has reinvigorated my belief that Atlanta can be a true startup hot bed similar to what I experienced in Austin, TX and Seattle, WA. An adjusted TAG/GRA competition could do the same for other members of the Atlanta startup community

Sam Bowen  |  Jun 12, 08 at 03:36 PM

I can understand why a restart winning this competition gives everybody heartburn. The one thing I think that everyone needs to consider is that we as a community want to put our best foot forward in this event. All bemoan the lack of capital in our market. Well the judges for the competition, Advent, Battery and Oak in particular, represent billions of dollars in capital. If the companies presented are *too* young, this competition could have a deterring effect for attracting capital as opposed to increasing interest.

So I would keep it at less than 2 years. Like it or not ATM Direct impressed a group of people, we as a community need to continue to impress.

Alan Taetle  |  Jun 12, 08 at 03:53 PM