ReadWriteStart had a nice article the other on the downside to bootstrapping. But better than the article was a comment by Micah Wedemeyer, the founder of DoLeaf and a part of the dev team over at BLiNQ Media.
The money quote:
So…the downside to bootstrapping is that it makes it hard to get VC money? Next you're going to tell us that the downside to being gay is that it's hard to pick up chicks.
Gotta love a good analogy.
So this little meme about how different things are in Atlanta than other parts of the startup world has cropped up again. I don't think so much. And instead of pontificating a point of view I will tell you a real story that a few people are familiar with, the company conceived at Atlanta Startup Weekend 2007, Skribit.
So Skribit got rolling. Launched a nice product. Got a lot of attention. Decent traction. It's the summer of 2008. I am having a little chat with an investor. Question. What are you guys going to do with Skribit? Answer. Seems a little small.
Fast forward. 2010. Skibit founder Paul Stamatiou meets the Startup Boy himself, Naval Ravikant. Naval founded VentureHacks and AngelList. Navel invested in Twitter and Disqus. Guess what Naval told Paul. Yep. Market seems small.
From there to here, from here to there, fundable companies are everywhere. And if they are not it is usually for the same reason. If you are not getting traction with investors don't blame them. Figure out the reason why. Fix it.
Last month I had a little sit down with one of my advisors. The message was to focus.
Well I have more than one advisor and recently caught up with another one. Their message, "it's not time to focus just yet, you can keep those plates in the air for a little while until one of them gets so big it requires two hands to hold it."
Not exactly the same advice. It is rare when a host of individual advisors will agree on the same course of action. As an entrepreneur it is your job to take these conflicting nuggets of info and decide on the proper course of action. Or you can do what a serial entrepreneur once told me, "only listen to people with money." Then again, people with money offer conflicting advice as well.
So TechDrawl is saying let’s somehow build a new investor orientation that does not exist in Atlanta. It is my point of view that doing this is going to take a bit of time to correct and entrepreneurs should focus on building their businesses. At some point this is essentially the local investors don’t get it or the startups are not fundable.
Let’s find out.
It just so happens that Fred Wilson wrote an article today about AngelList. The name says it all. A big long list of angel investors and the deals they have done. While I am sure that is ideal to have someone already committed before you do so and a warm intro to one of the folks on AngelList, it is not necessary.
They have a nice little application form. The things it asks for are interesting. A product demo, team, social proof, traction, and differentiation. That is what angels investors in San Francisco are asking. Sounds familiar to me and I have not been to the valley in a while.
Anyhow, you think you got what it takes? Reach out to me and let’s work your deal. It’s what I do for a living. And on Saturday morning for fun.
So over on TechDrawl Dave Walters has a post that is stirring up the restless yet once again. Toward the end Dave poses a series of questions.
So the real question is: when the revolution happens, will you help push
it forward or will you defend the old school? What side of history will
you be on? I ask the question equally of investors and entrepreneurs
because it will be ours to live day-in and day-out. Will you mentor
younger entrepreneurs? Will you make investments based on passion for an
idea not an actuarial view of the world? Will you lead the community?
Will you become an angel following a successful exit? Will you finally
welcome the consumer Internet with open arms? Will you give away 10%
more of your company to make it 70% larger? And most importantly, are
you willing to celebrate failure enough times to have a real crack at
creating the next Facebook or Google?
While passion is important, investors do not invest on passion alone, they want potential. And I thought this part of the world sometime ago that goading investors is not a really good strategy. They are not going to invest in the consumer Internet unless that is where they came from and they see a deal that they like. There are people that do this, though not a lot. The only way that is going to be solved is a big success in the space.
Sure Sig exiting the game is going to be leaving a big hole. But he is certainly going out with a bang if what I am hearing about term sheets is true. Not only is the money is laying down going to be missed but the organization that he brings to the deals is paramount. While I certainly don't know, I would say that in a typical deal that Imay leads they throw down $250k with the terms and grab another $500k from seven independent angels. Imlay herds all these cats and get the deal closed. It's a lot of work.
And it's a lot of money. Again, I don't know, but let's say that Imlay has $25 million outstanding right now across more then 30 deals. In order to step into this role and maintain the proper asset class balance a person would need to have a net worth of $500 million. I don't know anyway outside of John Imlay that has that type of coin. And I am telling you eight people getting together to do a deal where the big cat can write a $100k check is not going to happen five or ten times a year in this town.
The real questions you need to be asking yourself are how do I make this thing go without taking rather expensive angel financing when the value of my company is so low, how do I get a product, how do I get users.
There are people in Atlanta that are doing this with consumer focused Internet companies. But they are not reading FoG or TechDrawl. They are building a business.
Not the same as the old boss.
She’s a woman. She has a bio background. I would not read too much into that. She was the best candidate. Diversity is good.
Her first name is Nina. Last name is Sawczuk. She speaks startup. She speaks business. I like her.
Nina started working at ATDC last fall leading our biosciences effort. She was the CEO of a startup. A startup that failed. It happens. She’s an entrepreneur and understands what it takes to be one.
Nina has a nice educational pedigree. Undergrad Johns Hopkins. Masters in Molecular Biology from Harvard. MBA from Duke. More importantly, she is smart and engaging. Willing to learn. Based on conversations that I have had with her over the past year I think she can manage. Manage to exceed the expectations of ATDC members.
And I am sure at some point in the hear future there will be plenty of opportunities to meet Nina.
Here is the official release if you care for such things.
Negative returns, venture capital fund raising down $30 billion, number of future firms closing funds down by over 500, few IPOs, SOX, exits only to strategic buyers, exit values down, no big technology shift creating innovative growth opportunities. John Jannarone of The Wall Street Journal does a pretty good job of summing up the state of venture capital.
At a macro level there is going to be a smaller VC asset class. At a micro level deals will be done. Less me too, more revenue traction. Entrepreneurs will have to find ways to get there.
Back in April I quit Foursquare. But I have been using it again for about five weeks or so. The opening of the Tech Square Waffle House kinda got me to open the app again, and I have been on it pretty consistently since. Here's why.
There is value. Somewhere along the line merchants caught on to using Foursquare to drive business. Whether at Marlow's in Atlanta or Simply Splendid Salads in Louisville, retailers are catching on. I bet I have saved over $30 using Foursquare in the past month. In these times being frugal is good for everyone.
No spoilers. Nothing worse then learning via your social network that Spain won 1 – 0 on a corner when you are Tivoing or expecting to catch the late replay telecast of the match. This does not happen on Foursquare. You do not tell people what is happening or what you are doing. You tell them where you are. Foursquare is a great Facebook/Twitter alternative publishing tool. It enables you to avoid your social stream if you need to do so while not completely jacking out.
Social network management nuances. I don't intend to explain this fully but there are certain things that you can do with Foursquare that allow you to manage your social network relationships in a more real world way. You can do things with your more intimate Foursquare network when you are in the same physical locale and communicate them out to your broader networks in a way that keeps all your relationships happy and healthy. That is all I am saying.
So I am back on Foursquare, let's see how long it lasts this time.
Today my mother turns 75. Over 20 years ago when I was applying to graduate school I described the impact she had on my life in one of the admission essays. I am publishing it below. Happy Birthday Mom. Thanks for everything you did and do for me.
Describe the specific experience in your life which contributed to your personal growth.
Do normal people really live like those families on television? This was a question that I was constantly pondering during the years of my youth. My family life during this time could not be considered typical.
When I was seven years old my parents were divorced. It was a nasty affair with my father going off to live with another woman and my mother admitting herself to a mental institution due to the inability to cope with her shattered life. When she released herself the police were with her to pick up my brother, sister, and me from my grandparents. They did not feel like my mother was fit to raise us. Even today, 18 years later, the whole ordeal is just a blur in my memory. What an experience.
Things eventually settled down and returned to some semblance of normalcy. Mom was working forty hours a week and carrying a full load in college. She wasn't around much. There was no one there to tell about the school day or to fix a hot dinner. Mom's not to blame, she just wanted a better life for all of us.
All the hard work Mom was doing eventually paid off. She now has her master's degree and is one of the most respected professionals involved with drug counseling in this community. She had to make a lot of sacrifices to get what she wanted and so desperately needed. Mom had a great drive to make something out of her life. The living example she provided instilled me with a desire for success with a never say die attitude.
How did all of this contribute to my personal growth? While I was learning from my mother's example I was also dealing with the difficulties of growing up on my own. I figured out how to deal with day to day problems on my own. I made choices concerning my future on my own. I was forced to look at options and weigh the consequences of my own actions. My friends had their parents telling them what to do. It didn't seem fair. In retrospect, this responsibility made me the independent person that I am today. I am not afraid to accept new challenges. I am confident I will make the right decisions.
I no longer ask myself if life is like television. America is not Hollywood and I am glad. I would like to think that my tumultuous youth worked in my favor and made me a better person in the real world in which we live.
It has been quite some time since I have seen or heard from Sky Dayton when somehow I stumbled across an episode of Jason Calacanis' This Week in Startups where Sky was interviewed.
When it comes to all things Internet Sky is one smart cookie with the
perspective of someone that has been involved in the space for 17 years.
He has also knocked a few startups out of the park during this time
frame. I'll never forget his Boingo pitch to me after an EarthLink board
meeting. It was a single sentence. Lance, wants the biggest issue with
the WiFi? The answer was fragmentation and I immediately understood
the Boingo concept and what he intended to do.
So I listened to all two hours of the show. With Sky and, the love him or hate him, equally experienced and successful Jason C going back and forth the show is chock full of wisdom.
"Niche is the new mainstream."
"My test for an idea is I wake up every day and it is the first thing I think of."
"The press is like fun house mirrors."
Both this guys understand what it takes to be an entrepreneur and how to get attention for whatever they happen to be working on.
Personally I find Jason's email newsletter to be a little of a long read. But this is good stuff so I subscribed to the TWiST podcasts on iTunes. It is easy to listen while you work.