Who’s Gonna Own This Problem?

Posted on April 12, 2011

Last week while I was vacationing Stephen Fleming alerted the world to a new article by Steve Blank entitled "One Hand Clapping – Entrepreneurship in Ann Arbor, Michigan." It's an article that Steve wrote about a few days he spent in the home town of the champions of the West.

I suspect that if some professor where to invite Mr. Blank to Georgia Tech he would have many of the same observations and the challenges would be the same and as equally apparent. Those challenges being the lack of venture capital (this includes angel funding) and the lack of a startup culture. I have never been to Ann Arbor but I suspect that Atlanta's startup culture is a bit stronger than that of Ann Arbor. Regardless Steve states that an influx of venture capital will solve the startup culture problem. Perhaps he is right. But the interesting thing (Steve says so himself) is this.

The interesting thing is that no one seems to own the problem. The University of Michigan tech transfer office has an incubator but 1) mixes software, hardware, med devices and life sciences deals in the same program, and 2) takes no ownership of figuring out how to get a risk capital ecosystem in place. Surprisingly, the same with the entrepreneuship center in the Business School. I would have thought they’d be leading the charge.

Cut University of Michigan and paste Georgia Tech and the paragraph holds true. The closest I have seen to anyone taking ownership is Venture Atlanta, with a hat tip to Morris Manning & Martin and DLA Piper for making an effort to get outside venture capital to invest in Atlanta startups.

But the really truly most interesting thing is that I believe the paragraph above is a prescription on what Georgia Tech and ATDC need to do to drive technology enterpreneurship in Atlanta and Georgia. Stop mixing software, hardware, medical devices, life sciences, and cleantech in the same program. Start taking ownership of figuring out how to get a strong risk capital ecosystem in place. Expand beyond helping entrepreneurs launch and build successful companies. Be on a mission to create a strong innovation cluster.

We are so close. It is so obvious. It would be a shame if we did not make it happen.

April 12, 2011 | Comments | Tweet | Posted in Angels, atdc, Entrepreneurship, Startups, Venture Capital

Sales Is Everything

Posted on April 6, 2011

So I was having a chat with a VC the other day and he said something quite simple and obvious. To parapharse:

"Sales is everything in the early stage. I really wish that we saw more aggressive CEOs that had what it takes to close deals."

Yep.

All too often entrepreneurs take a build it and they will come mentality. Much more often than not it does not work that way. It is a big reason that founding CEOs get replaced. It is a big reason that the Series B or C is not an up round.

In the early stage sales is everything. Have someone on your team that can close deals.

April 6, 2011 | Comments | Tweet | Posted in Entrepreneurship, Startups, Venture Capital

FU Money

Posted on April 5, 2011

The continual self consternation of the Atlanta startup community borders on amusing. Dozens of well intentioned people associating and coming up with solutions to what supposedly ails starting a technology company in the South. The solution is really quite simple and straightforward. Atlanta needs more people with FU money.

FU money removes a lot of annoyances and provides a level of day to day autonomy that you just don't have without it. If you don't have to worry about money you can pretty much do what you want. Sure a bunch of people with FU money will buy a new Lexus and drive off to their new second home. But a bunch of folks will want to and have the means to start another company with a win under their belt, which creates a positive reinforcing spiral.

Let's take a recent example, Dell acquing SecureWorks. When the deal went down the infotech circle started buzzing. Lots of discussion on the value of the deal. My thought was it had to be more than $500 million otherwise they would not do the deal but I had a hard time seeing more than $750 million. Splitting the diff I told people that $600 million felt about right. Well it just so happens when Dell released its 10K it disclosed it paid $612 million for SecureWorks (page 112). The point being I have a feel for these things.

So who got the $612? Investors for sure. Employees as well.

If Mike Cote, the CEO of SecureWorks, had rights to the startup CEO median equity of 6% he pocketed $36 million or so. Mike Cote had seven members of his senior management team. The median equity holdings for these types of folks is 1%. Do the math. Eight members of the SecureWorks team have very serious FU money. If I were guessing, like I did with the sales price, I would venture that somewhere between 25 and 50 member of the SecureWorks team are now millionaires. Take the average and you get to 37 or 38.

Some of these folks will start new technology companies. Some will become angels. There are a few VC limited partner types in the bunch and perhaps a actual VC or two. Some will drive off into the sunset behind the wheel of a large self parking automobile. But you wait and see. FU money is the answer to jump starting the Atlanta startup scene. It's as simple as that.

April 5, 2011 | Comments | Tweet | Posted in Entrepreneurship, Startups

Share The Air Presentation

Posted on April 4, 2011

Depending on who you ask Rachel Sequoia gives either the greatest or worst pre-launch startup pitch ever. Either way you have to listen to her. It’s an engaging pitch for a ridiculous concept

And yes it’s been revealed as a prank.

April 4, 2011 | Comments | Tweet | Posted in Business, Current Affairs, Entrepreneurship, Presentations

The Online Marketing Opportuntity

Posted on March 31, 2011

eMarketer has a nice article out today about how advertising dollars are still not following online and mobile useage. It's nice but does not really do a good job of quantifying the online marketing opportunity. This chart, from a presentation by Mary Meeker last November does.

That's $50 billion dollars with a "B" as defined by the most renown Internet industy analyst on the planet. Here is Mary's (who left Morgan Stanley to join Kleiner Perkins Caufield & Byers as a partner) entire presentaton "Ten Questions Internet Execs Should Ask and Answer".

March 31, 2011 | Comments | Tweet | Posted in Internet, Marketing

Complete Flip Flop

Posted on March 29, 2011

Silicon Valley Bank is my bank of choice when it comes to startup banking. The SVB Accelerator program is pretty sweet choice for startups. No need to go to branches and wait forever to deal with some issue. Great online customer service. No monthly fees. And most importantly great value add in terms of advice, education, and connections.

Recently SVB Analytics held an online seminar "Into the Cloud – Trends in Software Investments and Exits." Interesting topic these days and the presentation was chock full of good information. If you want you can download the presention or listen to the seminar playback via the link above.

They spent a lot of time talking about how the current time is much different than 1999. Concentration of high valuations in a few large companies as opposed to more widespread increase in valuations. The New York Timed DealBook had a nice write up on the same subject, "Investing Like It's 1999." A worthy read.

As often happens with webinars I was duel tasking and my attention started to drift until someone put up and started talking about this slide.

I get all the stats. I get all the analysis. But that complete flip flop in operating philosophies from a focus on revenue and profit margins to a focus on user engagement and growth sure make all those backward looking stats a bit less meaningful. And it sure seems familar to me. 1999.

March 29, 2011 | Comments | Tweet | Posted in Current Affairs, Startups, Venture Capital

Gabe’s Codified Startup Advice

Posted on March 22, 2011

Yesterday a simple note from the CTO of Georgia Tech made its way to my inbox with a single sentence and a URL. "Have you seen this?" was all it said. It referenced the personal domain of Gabriel Weinberg who I am quite confident I had not heard of heretofore so I clicked away to come across a gem of a post.

Gabe does startups in Philly, and like me gets a lot of requests for startup advice. And like me he found himself giving a lot of the same advice to many entrepreneurs. Unlike me he decided to codify the advance he is giving in a flow chart.

I love this thing. It is awesome.

It is awesome because it actually captures the conversations of the majority of entrepreneurs that reach out to me seeking advice.

It is awesome because it asks the right questions in the right order.

It is awesome because the questions of committing full-time, having a technical co-founder, launching, getting traction, and knowing how to scale the business all come before the raising money question.

This flowchart is awesome because it is going to become a reference tool I use a lot.

Not sure that I totally agree entrepreneurs should not seek advice until well down the path but I appreciate Gabe allowing me to republish his flow chart here. The comments in Gabe's original post are worth a read through and Martin Dengler's version of the graph is a little cleaner. One of these is going on my office wall.

March 22, 2011 | Comments | Tweet | Posted in Startups

Facelift

Posted on March 21, 2011

Back in February when I reported stats for FoG at the age of five I noted the large drop in comments. I received a few responses, two of which are shown below.

Pretty interesting to note that they came via Twitter, somewhat proving the point Andrew, and Wayt were making. It also confirmed that FoG needed a commenting and social facelift.

So I facelift she got. Using Fred Wilson's A VC as a model FoG now is using Disqus as its commenting system and has some nifty new bottom page naviagation that I believe will increase page views. The sidebar has also been cleaned up a bit. Most of the heavy lifting of this project was done by Matt Smith a rising young star in this community.

If anyone has any other thoughts for improvements or specific requests please let me know. In the comments.

March 21, 2011 | Comments | Tweet | Posted in Personal, Web/Tech