Weekend Update

Posted on September 24, 2010 · 5 Comments

Every November since 2007 I have organized Atlanta Startup Weekend. After some deep thought on the matter I have decided to no longer led Atlanta Startup Weekend. The decision was both complex and difficult but it is the right thing to do. Atlanta Startup Weekend accomplished what I intended. It built a stronger technology startup community in Atlanta and beyond. It was one of the sparks to ignite a new generation of entrepreneurs across the South. People that met at Atlanta Startup Weekend are forming companies together. In a few weeks Twitpay, a company that came out of Atlanta Startup Weekend in 2008, will be on the stage at Venture Atlanta pitching for a $5 million Series A.

I have gotten to know entrepreneurs across the country as a result of Startup Weekend. I really enjoy the excitement and pressure of the weekend. But it is time for me to move on. Jason Ardell and I have been having discussions and I believe he and other Atlanta Startup Weekend veterans will be moving forward with the concept. I love that some young smart folks have gotten enough value out of past weekends that they are stepping up to lead the effort going forward. The weekend always belonged to the participants and now a few of them are going to be running it. One of the magical parts of Startup Weekend is watching who steps up to be a leader and make things happen. It is great to see that happening in Atlanta with the event itself.

September 24, 2010 | Comments | Tweet | Posted in Entrepreneurship, Fun, Networking, Startups, Too Many Events

The Real Lesson of AngelGate

Posted on September 23, 2010 · 11 Comments

So Michael Arrington walks in uninvited to a dinner party of a bunch of powerful angel investors and they all shut up and tell him to go away. He starts screaming collusion in a quite successful attempt to draw page views. Good for him.

Well a bunch of angel investors got together over dinner at a place that has an entry wine price of $60 a bottle. What do you expect them to talk about? Lindsay Lohan? Financers get together and they talk deals. They talk deal terms. They talk valuations. If you don't think they are talking about these things you are naive. There is even a quite popular app that enables angels to collaborate with other investors. No BFD. Get over it.

The more interesting thing is this. Right about the time Arrington was dropping his link bomb about walking into a bar local VC Alan Taetle was preparing for a panel at CapVenture. I literally sent him a text "panel fodder" with the link as he was walking to the stage. The conversation did not go that way. Instead in his closing remarks Alan stated something to the effect of "I have never seen a as big a difference between Atlanta and Silicon Valley as I see right now."

The aftermath in the blogosphere of AngelGate is quite telling and supportive of Alan's statement. Comments like "the angel/seed market is really competitive these days, particularly in silicon valley", "the root problem (I think) is the excess of seed capital", "too many sources of money and too high valuations for early stage companies", and "angels and traditional VCs alike are fighting for deal flow" which pretty much sums up the sentiment. Somewhere in the flood of info I read about $4 million pre-money valuations on $500k seed investments. And I swear to Jobs, I have heard both a VC and angel that I respect a great deal to use the term "frothy" to describe the current environment on the West Coast.

Frothy? Only in a Guinness east of the Mississippi. So what gives?

Well this whole super angel VC debate that has been going on for about 90 days is much more than just theoretical. These dudes are going at it. Big name brand funds are swooping down and writing $500k seed round checks. They are doing this for structural reasons that need no explanation to readers of FoG. But they are doing it for another reason as well. Fear. Fear that their way of life with exotic imports, expensive wine, and hot assistants will go away along with that big fat carry if their funds do not perform. Fear is a very powerful motivator.

Here in the South the seed stage investment environment is parched. There is almost zero competition for seed stage deals (I know of one such situation in the past two years). Deals get done. But only the better ones (not a bad thing) and it takes about six months to get something closed. I do not see anything changing that in the near term. These West Coast early stage investors may decide they need to go where the deal terms are better. They may decide they need to travel. I would not bet on that behavior.

As one astute observer said the other night, "if you are portable, go." At the moment, it's hard to argue with that advice. My advice remains unchanged. Focusing on building product and getting customers. You do those two things and everything will turn out just fine.

With that said the real lesson of AngelGate is that there has never been as large a disparity in seed stage investing than what currently exists on the West Coast and in the South. Deal with it.

September 23, 2010 | Comments | Tweet | Posted in Angels, Entrepreneurship, Startups, Venture Capital

Moving and Staying

Posted on September 22, 2010 · 3 Comments

So over my time in tech I have helped many a CEO in one way or another. Below is the full text of an email that I received from one of them. I found it to be thoughtful and balanced. It is published here with permission as I believe that others will find it insightful. I made some small changes to conceal the identity of the company.

Hey…Saw the going back and forth with TechDrawl. I'm not one to post in the open too often, but it seems that there is a pretty straight forward way (especially in the age of the Internet) to have the best of both worlds. When we were building our company our course of action was to open a small office in the Bay Area. If you look at a 3-year plan, you realize pretty quickly that no matter where you live, you will be on a plane ALOT.

Most of the bizdev and money was on the West coast. Access to lower cost of well trained engineers and living (allowing more money to be put into the business) is a great selling point of Atlanta. Also, in many cases, more customer activity will be East of the Mississippi. I found myself equally busy on each coast, where I called home didn't really matter (other than the cost of living).

By having a presence on the West Coast,it gives credibility that does not exist with a Georgia address. With VC's, with business partners, with customers and especially the press. It also gives access to unique skill sets that may not exist here (strong executive relationships at big tech). By having the Atlanta address, we hired great engineers at half to 3/4 the cost and had less competition to keep them. In the current climate of cheap sub-leases, telecommuting and low-cost video telephony, I see no glaring reason that an Atlanta based start-up can't keep roots here if they want to make the effort. At the end of the day cost and time to execution are going to be the gating factors, and they can both be managed (and improved) with a set-up like this. Managing is the key word. You have to have strong enough leadership to manage people you don't see every day (or you do with a cheap camera and IP phone).

September 22, 2010 | Comments | Tweet | Posted in Entrepreneurship, Startups

Hitches & Cuts

Posted on September 21, 2010

Those of you that follow me on Twitter might have seen that Blake Perdue got hitched this past Sunday. He is going to spend his life with the lovely Charlotte who is a fashion editor/writer in NYC. Blake is moving to the city and becoming a family man. Charlotte is getting a standup guy. Blake and I are cutting the cord.

I am losing the co-founder to a startup that we cranked up about a year ago called Socialytics. Losing a co-founder at the early stage of a startup is devastating. It kills momentum. It focuses attention internally on getting through the exit. On the outside I put on a good face. On the inside development stalled.

At Socialytics we have lived on gentlemen's agreements more than contracts. It worked for us. If one of us did not hold up our end of our verbal conversations Socialytics would be completely dead by now. But we did.

A result of the breakup is Socialytics has pretty much been moving sideways. In hiberantion mode. Alan Pinstein, who was one of the key contributors at the first Atlanta Startup Weekend has graciously stepped up to help me vett a couple of people that could step a the technical co-founder role. We might have someone soon.

But losing a co-founder is tough. You lose six months. It happened to me in 2006 and the startup died. Working toward a different result this time around. Give me enough rope and I just might hang myself. Glad I own a good knife.

September 21, 2010 | Comments | Tweet | Posted in Entrepreneurship, Startups

Atlanta Web Week

Posted on September 19, 2010

It's Atlanta Web Week. Altanta Web Week is a series of events, parties, and studio hops built around Web Directions USA with the intent to celebrate Atlanta's vibrant web community.

Web Directions was founded down under back in 2004 by Johnn Allsopp and Maxine Sherrin. They put on conferences in Australia, Japan, and England. They decided to bring their web goodness to the USA and chose Atlanta as the place to do so. Smart folks are John and Maxine.

They take a different approach to conferences. Call it the Regator approach. They do not call for speakers, they put together programs based on current industry trends and find entertaining and practical speakers. Their overall philosophy is to put together conferences that they want to attend. Sounds good to me. To pull this all together John has been making the rounds and is working with Atlanta Web Design Meetup Group and AIGA Atlanta.

The whole week has lots of free industry events and parties. The Web Directions conference itself is $999. Use the code ATDC to get a big bad discount. I am looking forward to dropping in from Lift for the open web landscape discussion (Loews Midtown is going to be hopping on Thursday).

If are not able to make the scene at Loews Web Directions is holding their first ever Amped hack event on Saturday at the Georgia Tech Research Institute. It’s a free hack day for web devs and designers. It's going to be catered. There's going to be have a party at the end. There's going to be prizes including an all expenses paid trip to Japan for Web Directions East. Sounds like a hack day like no other.

This week in Atlanta is going to be a world wide web extravaganza.

Update: Direct links to social events. AWDG Opening Night Party at Einstein's on Thursday. Atlanta Web Groups Party on Friday at RiRa.

September 19, 2010 | Comments | Tweet | Posted in Internet, Too Many Events, Web/Tech

Groupies & Mobs

Posted on September 17, 2010 · 6 Comments

I have been tinkering around in mobile marketing space for awhile. Really more at the intersection of mobile, flash marketing, location-based services, and social spaces. It's a big intersection. What got me going on it was a mom named Anne that came up with a rather simple solution to a couple of the problems facing flash marketing deal of the day companies like GroupOn.

GroupOn is killing it. Forbes called Chicago based GroupOn the fastest growing company ever. The way a GroupOn deal works is they offer a deal per day in a host of cities via email. It's typically 50% off. The consumer pays for the deal up front. GroupOn keeps 50% of that payment and distributes the other 50% to the retailer over a period of time. Boom, instasales. But the GroupOn concept has some problems.

If you spend anytime talking to merchants these problems come up pretty quick. Retailers don't really like the economics of the deal, they are only getting 25% of their normal retail price. And while GroupOn sells the deal as a customer acquisition method, most retailers feel that the customers don't come back. As one merchant put it to me "people that use coupons are people that use coupons." They even have a derogatory term for them, groupies. Here is a nice little merchant horror story.

If you spend some time on these deal of the day services as a consumer you also notice a few issues. One is certain types of services companies can not keep up with demand when they run a deal. As an example I purchased $175 car detail for $59 from Atlanta based Half Off Depot on April 29. Shortly thereafter I contacted the establishment to arrange an appointment. When I called the number on the coupon I was told that I could not make an appointment via phone though that was the only contact method on the coupon. So I asked for the email address and wrote a note. When I emailed I received an auto reply saying it would be 7 – 10 days before someone got back with me. When they finally did the appointment was set on September 12. Four months after I purchased the deal. When they came out to do the job they were only there for about 45 minutes. I am not alone. These types of stories abound. And worse. Yesterday TechCrunch reported how a fraudulent GroupOn deal in Atlanta really brought the service drawbacks to light.

Anne had the solution to these problems and a couple of other issues that I will keep in my pocket for now. Regardless somebody is going to figure this out and make a lot of money. It could very well be GroupOn, they have some smart people and raised $135 million. That somebody could also be another little Atlanta deal of the day company called ScoutMob. ScoutMob is more of a mobile app than email service. They push virtual coupons to Androids and iPhones. ScoutMob's business model is a bit different. Instead of having consumers paying up front they pay when the redeem the coupon. And without reveling how the business works the economics to the retailer are much more attractive. ScoutMob has solved the issues with flash marketing outlined above. There are about a dozen other startups in Atlanta tackling the space. Currently of note beyond Half Off Depot and ScoutMob are ClipZone, Extrafeet, iCouponBook, OfficeArrow, PlacePunch, SparkSpree, and Thanks Again. There is one in stealth that could get really interesting.

It's a big busy intersection.

September 17, 2010 | Comments | Tweet | Posted in Internet, Mobile

About That Comment

Posted on September 16, 2010 · 3 Comments

So today I made a comment on an article written by Ben Dyer over on TechDrawl. Here it is;

Good grief. There are so many fundamental false assumptions in this article and the comments that I might have to start blogging again.

Guess I should have used a little smiley face or something. As I said in a follow up comment, this was not meant to be mean spirited. I have the utmost respect for Ben. I think we are good. At the heart of the comment it is that I do not believe a premise in the article to be true. I will explain below.

Yet, Atlanta remains on the sidelines even as the epicenter of consumer technology (and wealth creation) is expanding its Valley tentacles to include New York, Boulder, Chicago and Austin. And while Atlanta does have a strong gaming community, we are better known in consumer tech circles as the epicenter of brain drain.

Atlanta is not on the sidelines of consumer technology. There are over 100 startups in Atlanta focused on consumer driven technology. Some of them are externally funded. I am quite confident that someone will pick apart this list but eRollover, Generation Station, looxii, OpenStudy, PlayOn, RentWiki, ScoutMob, Twitpay, Vertical Acuity, and WorthPoint come to mind. Others such as BLiNQ, Regator, and Wavee are darn well self funded. Heck, Ben's is funded somehow from his article. While the list has not been made public, 25% of the companies that will be presenting at Venture Atlanta are consumer technology plays. I believe, that with unchanging general market conditions, you will see at least four Atlanta based consumer technology companies close venture rounds in the next six months.

And that is really the only issue I had with what Ben wrote. The comments are where the real action was.

Once again you ATDC guys show you don't get it. This city is not in the game.

I have seen hundreds of consumer technology players in Atlanta. Trust me. I get it.

You can't get BigCo mentorship from the Technology Ecosystem players like Apple or HP or Microsoft or Google or Intel or well any of them.

There is no place like the valley when it comes to a cluster of big tech companies but there are a few firms in Atlanta that are doing interesting consumer tech. AT&T Wireless, CNN, Coca-Cola, Cox, Home Depot, Newell, HowStuffWorks, S1, PGI, Turner, The Weather Channel, WebMD. You gotta make the effort to connect.

You certainly can't generate media buzz.

Twitpay.

And then of course personal attacks after the comment. They really don't bother me. Except for one.

Dismissing his assessment as "false assumptions" is to have lost the ability to listen to the warrior fighting the battle.

Hopefully if nothing else this post will explain what I meant by my comment. I listen to entrepreneurs everyday. I help entrepreneurs move their companies forward everyday. I lead a lot of activities beyond the scope of my day job to build a stronger consumer Internet technology community. Perhaps I have failed. I don't think so. Atlanta is a little bit better place to start a consumer tech company than it was four years ago. And I never ever stop listening to the market.

Best of luck to Ben in his new venture. I am confident that he will make the right decision for his company.

September 16, 2010 | Comments | Tweet | Posted in Entrepreneurship, Internet, Startups

GVU Fall Showcase

Posted on September 15, 2010 · 1 Comment

One of my favorite outings of the year is to walk across the courtyard from ATDC to the Technology Square Research Building for the GVU Showcase. Two floors chock full of cool geeky stuff. Stuff like augmented reality, brain-compter interfaces, tangible media,and wearable computing. there will be over 100 research demonstrations by Georgia Tech faculty and students. It’s a free and fun glimpse into the future.

September 15, 2010 | Comments | Tweet | Posted in Computing, Fun

Angels in Atlanta

Posted on September 1, 2010 · 4 Comments

Last night I sat at the monthly Atlanta Technology Angels I sat on a panel with Mike Dowdle of Generation Station, Merrick Furst of Profounder, Wayt King of Shotput Ventures, Glenn McGonnigle of TechOperators. Fine group of men. Our topic for the evening was “where are the fundable deals in Atlanta?” I had two points that I wanted to share last night and today.

One was that there are a lot of angel type deals getting done. ATDC recently surveyed its member base. The results were astonishing to me. While the numbers are raw and need some massaging, over the course of the past year approximately 60 startups took in a seed or angel round raising over $18 million in the process. That is not counting those companies, and there are quite a few, that took in venture capital. ATDC's great social experiment of 2009 was a success.

Two was that mentoring by angels is very important. Not sure how this went over with the group but I believe it to be true. Atlanta needs more angels out tinkering with startups. The example that I gave was the one of SkyBlox pivoting to ScoutMob. From my understanding an angel played a big role in that move. I also find it interesting that at the same time the Atlanta event was transpiring that there was an old and new school angel investing clash in Chicago that mentioned the importance of mentorship at least twice.

Those other guys had good points too. Mike on how long it takes to raise money, Merrick on how we need to be more honest with entrepreneurs so that they can create a fundable deal, Wayt on the lack of entrepreneur scrappiness (which by the way was generally agreed to by those in the room), and Glenn on how this is a separation between the types of deals angels in Atlanta want to fund and the types of startups being created.

Great conversation. It was a good night.

September 1, 2010 | Comments | Tweet | Posted in Angels, Entrepreneurship