So I became a Startup Riot ambassador. Mainly because I believe that it is one of the most important events on the South technology scene. Startup Riot is growing and branching out. They have started MAKE which is essentially a startup weekend like experience and it is good to see someone picking up the ball there. But the big gathering is Startup Riot SHOW.
SHOW is an all-day pitch event that highlights 25 startups giving three minute pitches. If you want to see the latest early stage stuff this is the place to be. The prices are low, ranging from $30 to $70 for the day and it is free to present.
This year SHOW takes place on February 22. Registration closes on February 8. The registration to pitch has passed but if you have it going on you still might be able to make the stage. Drop me a line.
So one of the things that I am doing these days is having at least one breakfast/lunch/drink a week with an advisor/business partner/friend/mentor to catch up and talk about what is going on in our day to day worlds. It's just so easy to get too heads down and overly involved in a startup. I am sure that I am not alone in my tendency to do that. Startups can be all consuming. So it's good to get out and hear some fresh perspective.
I was recently having such a lunch. Part of the conversation went like this.
Me: "So I went and talked to the devs..."
She (interrupting): "Always talk to the devs, they know everything that is going on."
True. The geeky guys (and much more often than not they are guys) somehow or the other seem to know everything that is going on in the company. Kinda surprising from a bunch of staring at screens and not talking much dudes, but I have seen it in startup after startup.
Earlier this week Flashpoint, Georgia Tech's new startup accelerator, held it first ever demo day. While really a bit more of a pitch day, I only saw one demo, the teams did a great job. Locally David Cummings has a nice summary of the companies that pitched and TechCrunch even covered the event.
While in many respects it is to soon to tell, the capstone of the program begs the question "is Flashpoint a success?" The early answer is yes.
This answer is based on my involvement in the formative stages of Flashpoint back in the second quarter of 2011. Call me a bit player but I was a member of Flashpoint's formative team. I was there when we hashed out the concept of "startup engineering", an idea of Merrick Furst's that I thought was brilliant when he first pitched it. I there when we defined winning (we actually used the word) as creating two or more fundable companies after four months. It is a real metric. So how is Flashpoint doing against it?
Flashpoint is winning. Pindrop Security recently received an investment from Sand Hill road based Andreessen Horowitz (a little cherry picking perhaps from Flashpoint's valley demo day event host). And word is, while a bit odd to be jumping from accelerator to accelerator, that two Flashpoint companies will be joining the next Y Combinator class where they are assured to get $150k in funding from Yuri Milner's and Ron Conway's Start Fund. Add in Social Fortress' executed term sheet to raise $2 million (they still have to fill out the round and that is often quite difficult), and you have between three or four companies that have become fundable. In terms of the goals of Flashpoint, that is winning.
And it is still early. The Flashpoint companies have come a long way in four months. It is going to be most interesting to see how they are received next week when they enter the land of Fred Wilson for demo day at Union Square Ventures in NYC and they week after at Andreessen Horowitz in Menlo Park.
VentureBeat reported today that Fab just closed a $40 million round led by Andreessen Horowitz. Fab is an oft talked about company in the halls of Half Off Depot. Before today I do not know about the company's pivot from a social network for gay men. Interesting.
(1) A laser-like focus on design. From the design aesthetic of Fab.com’s website and mobile applications, to the products that are featured for sale, to the end-to-end customer experience, Fab.com is all about good design. (2) Social commerce. More than 50% of Fab.com’s 1.2 million members have come from social sharing. (3) Innovation. Fab.com builds all of its own technology and is the world’s pioneer in integrating social and commerce features to enhance the product discovery process.
So October turned out to be another record month for Half Off Depot. Our more established markets showed some nice growth and our expansion markets came up to speed nicely, most of them exceeding rather aggressive growth plans.
But this week I had to let two people go. That's always tough to do. Hard saddening decisions. Every time a team member fails to perform to expectation disappointment abounds. While I am sure the folks departing will rebound nicely it is a major life occurrence. Something that they will always remember. It is something that I will always remember as well. Because regardless of the reason when somebody does not perform to expectation it is always a bit the fault of leadership. You hired the wrong person, did not manage them well, or did not provide them with the attention and support they needed to succeed. It hurts.
But in a startup people really do need to make their own way. They have to figure it out. There is not a lot of time for counseling or nurturing.
As a leader you have to do what is best for the company. Startups are leaving breathing things. For a startup the size of Half Off letting go two people is akin to cutting off 4% of your body. It's like losing the use of a hand or a foot. But it will heal. The scars will go away. We will be stronger for the challenge.
So the past few days I have been hanging out a bit in the nifty new Flashpoint accelerator space. It's kinda a cool open space with high benches and work seats. Very open flow to it. And it is quite shocking to see a logo you helped create in a larger than life execution. We wanted the green to pop and boy does it. Kinda hides the fact those are official Georgia Tech blue and gold colors in the logo.
Flashpoint had it inaugural class kickoff yesterday. The accelerator program run through Georgia Tech, and which I played a small part in getting together, has selected its inaugural class of 18 teams to participate in the first cohort which runs from September to December. These teams are being funded by the $1 million Flashpoint Investment Fund I which is led by Sig Mosley of Imlay Investments. The program will culminate in two demo days, one in Atlanta and one in the valley hosted by 500 Startups.
Led by Merrick Furst, Flashpoint has an interesting focus. The accelerator intends to de-mystify the startup process by improving on a repeatable process of scalable business model discovery and further developing principles that support real world value creation. They call it startup engineering. Along with Merrick's startup risk framework, Flashpoint is using two textbooks to help the teams with the process. The Four Steps to the Epiphany which has been a personal favorite and Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers which seems so practical that I have already ordered a personal copy and may get the iPad app.
It is going to be interesting to both help a few of these initial teams as a mentor and see what pops out at demo day come December.
So give or take a day or two here or there I have been at Half Off Depot for 100 days. Time to take stock of what has transpired.
I joined the company as employee 21. We have about 50 now. The largest department remains sales, it has just about doubled in size. We have field sales folks now. Depending on how you count I have about 14 direct reports.
We are also building out strong teams in dev and marketing. We have a part time CFO that put together a financial model any spreadsheet jockey would be proud of. Service and support are coming together. We are hiring solid and smart people that know what to do. We had an offsite where we laid out our strategic initiatives for the second half of the year.
My primary job is to lead our sales expansion. I have seen this movie before. In about two weeks time we set our sights on our first true expansion market. It was Tampa. We launched the effort on June 1. Started actively marketing to consumers on July 1. By mid July it was obvious that things were exceeding expectations. I told our board this and recommended that we accelerate our market expansion plan. They agreed to enter three additional markets by October 1. Two days later my leader bumped that up to August 30. Yesterday we started marketing local deals one day early. Today we officially launch in Charlotte, Nashville, and Orlando. From two to six. Boom baby.
As a partial result of all of this sales growth is quite nice. Partially because our sales is still mostly coming from three markets. Our monthly revenue run rate is up about 35% since May. This revenue growth is without the aid of the markets we just opened. Yesterday was a record sales day, beating the old record by 25%. We are learning to tune the engine. Add on the incremental markets we just opened. It's gonna work.
The downside at the moment is I am kinda killing myself to make it happen. Since I made that October 1 commit I have had a total of two days where I did not work at least six hours. My daughter's 13th birthday and a quick lake trip. The norm is 5:30am to midnight with a few hours for the family in the early evening. Several Fridays have not ended until nine. Cars, hotels, and planes. I have woken and could not remember what city I was in. Most Saturdays start at six in the morning. Not sustainable.
So we need to continue to build out revenue and start work on getting more leverage in the business. People, processes, and scale. That is going to be the focus on the next 100 days or so, which will pretty much land us in 2012.
So I have known Paul Stamatiou for nearly four years now. We met at Atlanta Startup Weekend in 2007. He pitched Skribit at that event and my thought when he did so was great idea, we can build it, not so sure about the market. The market turned out to be small.
About a year ago Paul packed up and moved West. He ended up working on a Y-Combinator startup called Notifio. That one I did not get at all.
Well earlier this summer we shut down Skribit and Paul got involved with yet another startup (seems like one of the big benefits of YC is safe landings). It went through the monster size YC class this summer. I had no idea what he was doing except working hard.
Last week I got a note from Paul. Essentially said, go take a peek at this. This was Picplum. Picplum is aiming to be the easiest way to send photo prints. Nice service and I can see how this would be a big winner with parents of young children. Those grands in faraway places really like to have prints.
Picplum is a monthly subscription service starting at $7 per month. You upload or email them photos, add a list of recipients and they automatically print and mail photos. Automatically being the key term.
Picplum has an interesting back story. They acquired the assets of previous YC company Picwing, and took over its printer relationship and initial user base. It seems that another Paul, Paul Graham, was a big fan and user of Picwing. The Picwing founders had gone off in another direction and PG was looking for someone with some passion to take it over. As I recently minted uncle Stamatiou was just the guy to do it.
The Picplum product is built fresh from the ground up. But they have a built in customer base and lots of interesting data to help them to understand the business.
PicPlum is offering a special to the readers of FoG which enables you to give the service a whirl by offering your first batch of photos free to two receipents. Here is the landing page to use the promo code.
I am a member of the Jason Nation and over on the Launch blog Mr. C has a nice article. The overall post itself is about management misdirecting employees. While I don't always agree with everything Jason says or does he nails the startup sales equation.
Dealing with a rabid pack of sales wolves is perhaps one of the hardest management challenges in business.
Sales people are an odd group of mercenaries, and the best ones seem to have a perverse sense of competition and drive that is unique in the employment landscape. They are very aware of incentive structures and seem to love being put in them.
They like having a percentage of sales targets to hit, and levels and bonuses associated with certain milestones. The more complicated a structure and game, the more turned on and tuned in they seem to become.
Great sales folks seem to look at life as this huge casino or Zynga game, where they are placing 20 bets on five different tables.
I've long learned to embrace this dynamic at new companies by setting
a) absurdly low base salaries (think $30K to 60K)
b) absurdly high commission structures (10% to 25%)
Why?
It's a filtering mechanism for me to get the most insane, rabid and self-confident sales folks -- and filter out the lame "professionals." The times I've put up six-figure bases and the standard 3% to 5% commission structures, I've gotten the weakest, non-rabid, meek sales executives who are more concerned with driving almost fancy cars, wearing fine clothing and having lush expense accounts than their actual commission structure.
Those sales folks are death at startups. They lack the drive and creativity to sell new products because they are -- largely -- old, fat dogs.
At some big company with 300 sales folks, they're great for managing existing accounts. At a small company with under 10 sales folks, those "professional" sales types are the kiss of death. They need everything handed to them on a silver platter, and they can't close deals because of the product, the marketing kit or the fact that we're doing something new.
In fact, two sales folks I gave the low-base-and-high-commission structure to easily broke $500K in *commissions* for me in the first two years of the Silicon Alley Reporter and Weblogs Inc.
They both made fives times what I made as CEO -- and I loved it.
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The opinions expressed here are mine and mine alone (with the exception of comments by others of course). They do not represent the opinion or position of any other person or entity. All postings adhere to my personal values.
which seems so practical that I have already ordered a personal copy and may get the iPad app.
