Somewhere along the line I ran into Alan Taetle. Pretty soon the conversation turned to dress.
"What is it with the Atlanta technology scene dress code. I just got back from Austin and everyone gave me grief about how I was dressed in khakis, a button down, and a sport coat. Everyone told me I was overdressed. What is it with Atlanta that makes everyone think they need to put on a suit? It's ridiculous!"
Standing there in my open collar grey suit I had to agree. Even more so as I wore jeans and a nice t to work and took a suit to change into to attend the SVB event. I felt pretty ridiculous at that point. It's because it's the South I said. It's because people call on other businesses and need to be dressed up. It's because entrepreneurs get coached to dress up. It's because investors wear suits.
Alan was not buying any of it and after a little debate either am I. No more hauling suits to the office for me. It's just a waste of energy to dress for the approval of others without any reason for doing so.
The subject of startup equity distribution is one that seems to generate a lot of interest. Mine was piqued again by James Altucher's brilliant article on The Ultimate Cheat Sheet for Starting and Running a Business. I wish I had have written this one line, "The rules are: I'm going to give no explanations. Just listen to me." It's a masterpiece. If you want to start and run a business and don't have the time to read this article just stop right now. It's that good.
My suite neighbor John ripped on the post and one of his favs was also mine. Number seven.
How much equity should you give a partner? Divide things up into these categories: manage the company, raise the money, had the idea, brings in the revenues, built the product (or performs the services). Divide up in equal portions.
It is a little unfortunate that James used the word equal portions. Just listen to me. Equal is bad. But I am going to use a hypothetical to highlight what I believe James was saying.
Imagine it is early 2015. Both Accelereyes and nCrowd are setup for exits. Gonna happen. John and I are hanging out on the yet to be built roof top of Atlanta Tech Village for Friday night happy hour and start talking about what is next. We get in this quite intense discussion about how we can leverage the GPU and camera functions in computers to determine what consumer offers on a web page are most enticing in real time and sell this to local advertisers to create more efficient online marketing campaigns (I made this up on the fly, just accept it.)
It is our idea. The two of us. We each get a share and start working on seeing if this is real. It is.
Several Friday night happy hours go by and somehow or the other I am able to convince John that I am a better business guy than him. That I should focus on running the business. One share for me.
John agreed to let me run the business because he knows that he is much better than me at all things technical. He is going to build the product. He gets a share.
John and I are each going to stroke a check from our anticipated exits, but this is a big idea and we are going to need more. He is going to be deep in product development. It is my job to go get the coin. I get a share.
About the same time as all this is going on some BLiNQ Media sales friend decides to get out of Gannett and join our new venture. One share for her.
So at this point there are six portions. I have three. John has two. And the sales lady has one (and she gets paid nice commissions). 50%, 33%, 17%. Not a bad starting point for a more serious discussion about equity split.
Not equal but equal portions based on the division of labor.
Here are ten ways you get people to
read your junk.
1. Sell your bootstrapped
company for $95 million, buy a building to turn into a tech hub, and then start an accelerator with $120k in funding guaranteed to accepted startups. Not going to happen for most of you. Does not
count as one of the ten. Proceed to number 2.
2. Say smart opinionated
things. If you can't do this one thing you should not proceed to number 3.
3. Lurk on other blogs until
you understand the community. If there is no community help start it. The
site owner will be forever in your debt. Comment. It builds links and
drives traffic back to your own blog.
4. Take a stance. Tell people
they are wrong. Stop the rah rah. Focus on what matters. Don't ask for
discussion, provoke discussion.
5. Seed Hacker News. They will
let you know when you go too far. Trust me on this one. The stuff you
write is not worthy of Hacker News? Return to number 2 above.
6. Find SEO voids and exploit
them. What the heck am I talking about? Google what is a technology startup. That FoG SERP
has been sitting there for about four years now. I have a few dozen others
that send me consistent traffic regardless of my recent activity. Always fill a void. Good general rule.
7. Give link love. You will get
8. Time. It takes years to
build traffic to a blog. Unless it is not really a blog but an online
media outlet. Or you sell your bootstrapped company for $95 million, buy a building to turn into a tech hub, and then start an accelerator with $120k in funding guaranteed to accepted startups. Money changes everything.
9. Be consistent. Set a
schedule and try to stick to it. Keep your posts on topic(s). It helps
your community know what to expect.
10. Back to the comment thing.
Allow comments. If you don't allow comments it is not a blog. It is just a
CMS. If someone in your organization is too stupid to understand that a
blog without comments is not a blog and just a CMS you should leave and
find someplace to work where management has a clue. Either that or go into
the wading pool with moderated comments then jump in the deep end when the
parents go to the snack bar to get a beer.
11. Be a person. Blog posts are
written by people.
That is kinda it. It is great to see
all of the startup blog activity in Atlanta. Outside of the tactical errors
the only thing that is missing is someone writing from a full-time investor
point of view. It will be interesting to see who picks up that rock.
Last tip. Keep your posts short, this
one is too long. Later.
A long time ago in David Cumming's blogging time line (and not so long ago in mine) he wrote an article about the rise of the Atlanta startup bloggers and was kind enough to include FoG. You go there and you will see a long list of Atlanta startup bloggers and a few not so startup folks as well.
I took my blogroll down quite some time ago but in no particular order these are the Atlanta area technology oriented startup blogs that I read on a regular or semi regular basis.
Rob's Blog - Rob Kischuk. A catchy name and ability to articulate the entrepreneurial mind set. He needs to write more.
Not Only Luck - John Melonakos. My office neighbor, have to play nice.
JohhnyBird. He actually goaded me into picking up my blog pace.
TechFlash - Urvaksh Karkaria. All the Atlanta tech news you want without a paywall.
Hypepotamus Startup News - Michael Flanigan & Scott Henderson. Good writing style and great way to quickly catch up on Atlanta startup news. Kudos on their emails. They do a great job of sucking you in.
MailChimp Email Marketing Blog - Numerous. If you ask Ben he will say MailChimp is not a startup. He is right. MailChimp is an established mid-sized company. If you aspire to create such a thing sooner (hopefully) or later you are going to want a blog. Like many things MailChimp does it right. Something to emulate.
This is just my personal list and nothing more then that. I am sure that lots of these folks don't read my stuff and a lot of the folks that I did not mention may or may not visit here. It doesn't really matter, it is just a personal preference.
I would be interested in knowing your personal favorites. Not only the blogs themselves but more importantly the why.
It's a much broader than your typical technology startup funding event. It will explore alternative and traditional lending options, angel investments, crowdfunding, private equity and more.
I have the honor of being on a panel, Startups Start Here, moderated by Daryn Kagan of CNN fame. I will be joined by a great group including Daryl Dollinger, Co-Founder of Raving Brands and President of Big Game Brands; Andrew Linder, Partner at Frontier Capital; Sig Mosley of Flashpoint Ventures/Imlay Investments/Mosely Ventures; David Rudolph, Founder and CEO at PlayOn! Sports; Michael Tavani, Co-Founder & Head of Product at Scoutmob; and Mark Wilson, President & CEO at e-Verifile.
Quite the panel.
you are seeking startup, working, or growth capital this will be a nice event to learn about various local sources of captial and find out which are right for your business. It is a bargin at $30 and friends of FoG can get a $10 discount (the discount code is ATCLW).
My take. At the end of the day costs do matter. Well not really the end of the day, but around the time you get married, have a kid or two, and enter middle adulthood. Quality of life issues. That is the argument of all places non SV.
Costs aside, I have a long held belief that immersion is critically important. This is based on my full-time two year business school experience. If you take a moment and suspend the thought that MBA's are the scourge of startup society, and some with good reason, my point is being fully immersed was part of the learning. A big, big part. At the end of the day this is the argument the pro SV camp is making. And it is valid. To achieve immersion you have to have density and no where is the startup density greater than Northern California.
So the question becomes is it possible to create a dense immersive startup community this side of the Heyward Fault?
Maybe. The jury is still out. Austin, Boulder, and NYC all seem to be making great strides. And going back to my B-School experience, is there really a big difference between Columbia and Indiana other than one program costs twice as much as the other? I don't think so. The same holds true for startup markets. If it is at least partially about ROI then the best may not be that when you take costs into consideration.
I was joined at the front of the room by VillageDefense which I regret to say I don't fully understand cause the demo had some technical issues; DudeRanch, a TripAdvisor for wannabe Cowboys and an interesting domainer story; Sidewalk District, which is going to need some serious UX work to to work; and Ionic Security, fresh off a $10 million Kleiner/Google Ventures round.
Mr. Cummings claims the meetup is the largest startup event in the South. Mr. Bird claims I am OG, which I think is a compliment. Regardless it is worth a trip if you want to see the new edge on the Atlanta startup scene.
Nice video from the Metro Atlanta Chamber highlighting the 2013 ATDC graduate companies and the strategic benefits of that technology hub. Great to see companies like BrightWhistle, KontrolFreek, PatientCo, and Urjanet, which I helped in some way, growing up.
While Atlanta Tech Village seems to be getting all the attention these days ATDC continues to be an important node in the Atlanta startup ecosystem. Kinda interesting that the fourth 2013 ATDC grad company, AccelerEyes, is now my neighbor at ATV.
I have written a bit about the stages a successful startup goes through in the past. Covering theories such as concept, seed, early stage and growth stages for those that were not reading in 2009.
One of the things I have always believed is that at some point, in the $50 million revenue range, a startup is no longer a startup and is really a small company. Maybe I was wrong. I now think sometimes it happens before that mark.
I am basing this on my current experience with nCrowd. Back in January when we announced the CrowdSavings acquisition All Things D reported that nCrowd had 70 employees. That number goes down a little as we rationalize the organization and up a little as we purchase the assets of Tippr. But for the sake of discussion let's use it.
If you use David Cumming's Employee Counts as a Proxy for Startup Revenue post with $150,000 (I have always used just a straight $200,000 myself) of revenue per employee for a venture backed startup without a recent large round of funding one could estimate that nCrowd has revenue of about $10 million. That estimate would be low, because our revenue per employee is higher, but it is no where near $50 million. and nCrowd is starting to feel more like a small company than a startup.
Why is this? The answer is three fold.
One, the way we have grown is partially due to organic geographic expansion and partly due to executing a rollup strategy that also quickened our geographic expansion. The latter has lead to more time being spent on integration then one would normally see for a company the size of nCrowd.
Two, due to the headwinds created by Groupon and LivingSocial, the financial markets are not receptive to investments in the local e-commerce space (and have not been for some time) so our actions are driven by profitability and building long-term value. This is not a bad thing, it just makes things feel a little more small company like than startup like.
Three, I personally don't get to spend as much time as I want talking to customers, growing our member base, and building product. The startupy stuff. My job is much more corporate whack a mole. I get involved in acquisitions, handle the duties that a company Secretary is required to do, the administrative things that our CEO does not have the time or inclination to do himself, and oversee parts of the technology integration of the assets we purchase.
This is all good. But it points out that some startups become small companies much before others and that the $50 million number I have been throwing out there could be a lot lower in certain circumstances. Sometimes a startup becomes a small company before you know it.
nCrowd is no longer a startup. It's a small company. And that is great progress.
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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.