Thursday, November 30, 2006

Web Innovators - Energy of entrepreneurs

I attended Web innovators group in Cambridge, MA last night along with 150 other entrepreneurs, couple VCs and a leverage buyout firm person.

David Beisel of Masthead Ventures heads the group and is organically growing it like an entrepreneur. It was good to see David after so many years as I last saw him during my second round funding cycle for Coola in 2001.

What I like about Web Innovators Group:

  • Well planned, name tags ready from the wiki RSVP.
  • Structure of the evening was 2 startups get 6 min each, and there wer e5 or 6 other startups (called side dish) with their tables on either side of the room.
  • Rest of the evening was open for networking, and the energy of the room was amazing.
  • No vendors peddling any ware.
  • No one asking you to signup or pick any brochures.
  • The presentations were real people, honest comments. Where else would you hear an entrepreneur say to a crowd that they have maybe 4 business models.
  • Quality of crowd was good, everyone as eager to network and moved around a lot, which offered better randomness of meeting an interesting new person within 5 minutes.

What can be improved:

  • People can write what they are looking for specifically in the wiki during RSVP or in a separate section. Some were looking for a specific type of developers, there were developers looking for cool startups.
  • Could promote more Q&A of each presentation to help the presenting company and also to help us understand the company/market evolution of players better.
Summary of presentations:

Grazr - Mike Kowalchik - real honest conversation, has cool potential. Was honest about their options for different business model. Company worth watching.

Calabash Music - Brad Powell - very canned presentation, maybe he was tense. But wonderful product and site. It surely has potential to become the next big music site.

“Side Dish” companies, who gave informal demos during the socializing portion following the structured presentations:
FineTune - Mykel Ruvola
Startup Business School - Richard Banfield - I believe that entrepreneurs are all brilliant in their areas of ideas and many need help in building out the business. Richard seems to mean well, but I heard from many in the room wondering why an entrepreneur would trust and pay for canned startup knowledge. - Paul Cosway (founder) and Darryl Pomicter (bizdev guy)- Cool URL. Web 2.0 has some trends and some anti-trends. They were clear not to call it an audio search engine. Worth checking out.
Citysquares - Ben Saren, our local search engine building all of local stores info for us. They have the usual users vs business customers, need one to get other dilemma. The team seemed upbeat and may attract some investor soon.
Offertrax - Ron Pruett and Ben Carcio

Some interesting new people/startups I met:
Dharmesh Shah of, an amazing mind, he articulates ideas as well as he writes his blog.
Coach Wei founder of Nexaweb, an amazing entrepreneur who survived the bust of 2000 and has built a beautiful enterprise web 2.0 company.
Josh Schanker of Sconex, the high school online site.
Anna Denton of "Boston Where" with a cool new startup idea.

It was flattering to meet couple readers of this blog. Thanks folks :-))

All in all, an evening well spent. It validates my belief that there are growing number of entrepreneurs looking to find each other for support and all entrepreneur networking is not to raise money.

Saturday, November 25, 2006

New Entrepreneurs lead markets by making them

I came across an old web entrepreneur who is doing all the right things, is passionate about his idea, has tons of experience but somehow sounds boring compared to a young web 2.0 company who is in his space. I feel sorry for him, but got the Aha about something fundamental about being an entrepreneur.

Real entrepreneurs are not the ones who use the latest jargons but ones who personify the latest trends in their thinking and execution plans.

What is fundamental for any startup is the passion of an entrepreneur. If the passion can be left raw, and the entrepreneur allowed to take risks to follow their heart, assuming the basics of a smart team are in place, we can see a successful startup evolve.

The passion sadly get skewed as the 30 sec pitch is practised multiple times by the time it gets in front of people it matter. When you talk in detail to an entrepreneur, their fundamental belief systems and way of operation comes through no-matter how much it is camaflouged in the latest trends and jargons.

All startups operate in an ecosystem of other entrepreneurs, existing companies in their space, investors, influencers and media folks. Media chases the latest big thing. Investors huddle in trusted circles and look for new trends to understand where innovation may happen next.

I am not for force-fitting your startup into the latest trend. I want to go deeper to tune to market trends to build your operational plan around it. Being an entrepreneur is about adapting change and enjoying and capitalizing opportunity it presents.

For example, when we hosted Coola, we paid $700 to Digex, which merged into Worldcom and collapsed and we moved to a hosting company at $175 ( we hosted 1 million users) and thought we got a deal, while today hosting costs start at $10 monthly and the variables of the options are also different. With my last startup Moomli, we build a whole ecommerce platform and store front with opensource software.

More important is the trend change with relation to hiring, retaining talent and marketing.
There are so many sources online to build your logo, to outsource components of work, to find smart people not by looking at resumes but by looking at their work and their place on the web.

As for marketing, I hate to admit new entrepreneurs carry less baggage if they did not know about linkexchanges from the past, or even focused too much on Search Engine Optimizations because history has told us that real brands on the web including the latest big brand of Google was build by passion with lot of PR and not real marketing dollars. So marketers need to understand how to generate loyalty in their customers and tie their brands with the passion of the startups and let it fly, for which they need to know the navigation in today's web and brands.

The best way, or the only way I know to do it is immersion, just start a site or get deeply involved into startups and be critical of your own experience that you are doing the right thing for the scenario involved, and not because it worked for you in the past.

Enjoy the ride, the fun is in the change and how we adapt and stay young in it.

Monday, November 20, 2006

BarCamp Manchester - review of event June 18th 2006

I attended BarCamp Manchester at the incubator ABI along with 60 other people.

True to its adhoc nature, we could post stickies on what topic we wanted to talk about and pick one of the 4 available meeting rooms.

Attendees: Loved the quality of the crowd, wish I had more time to chat with few people in smaller breakout sessions - Lots of entrepreneurial geeks, real people who love technology, a VC who offered funding for people who can develop the local economy of Mt.Washington valley, lots of open honest conversations.

10.30am: I spoke on "building the business side of a business". The google spreadsheet of the business components I discussed is here. I enjoyed the audience and the followups. Its amazing to see how many entrepreneurs are around us all.

11.15am: I attended "3D Animation in a Small Studio" by Kelly Muir. This was a presentation by their company "Hatchling". It was interesting to hear their down to earth story of how they are growing, finding customers and the challenge of the rigid market structure of how broadcast videos are done by ad agencies and web videos are done by new players and customers find it hard to understand the same company can offer both preserving the style of content. They do sales videos for Reebok and I am curious to see their Charmin ads at their NY sponsored bathrooms. Talk of a revolutionary medium to reach people :-)

I liked the real people, the real startup story and learnt something about animation industry, cost of making an animation on the web etc and left inspired by the optimism of the Hatchling team.

Lunch: Thanks to the sponsor ABI who did not pedal any ware and were supportive to the spirit of BarCamp. Thanks to Ian and Kelly Nuir for the painstaking details of all food including veg and vegan food and all the soda and candies. Can't ask for more!

12.45pm: Open Source for Public Radio by Brendan Greeley, Blogger-in-chied of Public Radio. Interesting request, he wants to request public radio supporters to donate time and build open source software that he needs. Will write more about this later. Honest coversations.

12.45pm: Blogging 101 by Ian Muir, I couldn't attend as I thought I knew the topic, but talked to Ian later about Blogging tools to stitch a blog into the blogosphere. Hi susggestion is to use just a few - Flickr plugin, magnolia, digg or reddit and delicious, not clutter with a lot of options.
He has promised to post his slides on the wiki.

1.30: Second Life by Jason Rand. This was an awesome presentation. Jason started out saying he had not planned to present this, maybe there will be interest. I'll write a review of this in detail. But I just loved it! It was interesting to see so many people from the audience talk about their second lives. There was agirl who hung around in a star trek group practising swords. Jason told us the technology of second life, the scripting optins available and we discussed how American Apparels must have gone about building their site in second life. Jason's avatar is "raybock" and he is part of the Giveme Liberty Bar. I enjoyed the discussions about how to build audio (concerts) and video on second life.

2.15 Drop your pants by Ian and Kelly Muir was a session where everyone got 1 min to share their idea and the crowd gave feedback for 3 minutes. I'll write again in detail about the ideas and comments. Worth every minute!

3pm: Ruby on Rails - had rave reviews, I missed it but attended "Startup Strategies" by Ray Deck which was my favorite. He gave us a framework to work for startups to find their real paying customers. I plan to write a separate review on this one. Ray has this magic to bring some interesting audience discussions.

3.45pm: Am Empire of Geeks by Shimon Rura and Aaron Amstel
Nothing like what I expected, a very interactive, interesting discussion about whether geeks can get together and coolaborate and build a company diversifying seevral tech ideas to make money for the group. It had some idealism about openness and fairness, but brought very smart honest discussions about the feasibility of such a group. In this world of open source successfully run by geeks, it should be very possible, so we planned to continue the discussion further later past BarCamp.
For me personally, I keep remembering the conversations as I see news of some early stage web 2.0 companies folding (like irows) and others (like kiko) selling on ebay. There seems a need for some collaboration among geeks, hope Shimon and Aaron can make it happen.

We drove back to Boston, pondering lot of ideas. Since then, I've had interesting followups and can't wait for the next BarCamp.

Saturday, November 18, 2006

Business side of a business - preview of presentation due at BarCamp Manchester

Yeah, I hear it myself, the title sounds funny! But I've heard from two different startups, one from east and one from west coast, both with initial funding, asking for me to help build the business side of their business. Yeah, both calls came from their investors.

So, what is the business side of a business? Here is my summary, I plan to present this at BarCamp Manchester June 18th.

Lets sync up on fundamentals. A business is a set of people with a great product that solves the problem for some set of people or companies who are willing and able to pay for it.

Realistically, in the startup world, its simply a product being built by a team targeting customers who will pay for it. Since I operate in the world of tech startups, this means a tech idea thats funded to being built out for some customer.

I am writing this because I had two different experience with each startup. Both are technology companies with some tech software engine in different areas, with no real customer. The founder was a technologist or a creative content person and thought business side was marketing. One simplified marketing to PR and buzz. The investors each had a vision of a larger than life segment of customer who would pay, but no one had talked to the customer or knew how to get there. One of them dreams of a consumer play with lot of jargons, all sounding cool, unless your money is in it.

As perfect timing, I attended the Sales and Marketing breakfast meeting of Boston Startup Meetup organized by Ray Deck of Element 55 and met a bunch of grounded entreprenuers, with one thing in common - all are focused on their customers and cared to learn and share how to better reach their customers and scale their business.

I see three building blocks to building the business side of the business.

One: Business Operations

Legal, Development environment, Office setup, Accounting, payroll

Two: Marketing

Real marketing is all about communicating to different constituencies of your business in a measurable fashion and based on the metrics revise your communication.

The basic assumption is that you know your customer.
(more on this piece later)

Three: Sales Infrastructure

I've put together a spreadsheet (it keeps growing each day) online at google spreadsheets of all the business components.

Tuesday, November 14, 2006

Dancing with Giants

I have written about how I had a deal from Intuit (offer) and Infospace (revenue partnership deal) before I closed my first round of funding.

I had two advisors who had both sold their companys to large companies and adviced that it was a better strategy for a first-time entrepreneur to partner with some large player who could become a potential buyer, but I did not listen. Ok, I hadn't got started fully and wanted the taste of building the company, scaling team, building customer base ...
We later worked with large companies on strategic alliances - TIBCO, Palm, GE, New York Times ..

I want to write about two things here - Decisions points about going into such an alliance with a large player and more important the reality of what competencies need to be developed to make it happen.

I hear many entreprenuers talk about some big player "interested" in them. With Infospace, VCs loved us because we had the signed deal. So, interest needs to be built into a deal agreement for entreprenuers to really dream on it.

Decisions points of building strategic alliance with big companies:

We hear media stories of some large company buying some startup and its painted cool, mostly by the dollar value of the deal. ( I don't want to talk about the purchase path, which is a totally different dance).

1. A big name partner can become a buyer later down the road. This means you build relationship, understand the internal landscape and demonstrate clear value of your startup to the company.
2. A big name company can serve as validation to the VCs about the viability of your startup.
3. Its definitely helpful in building brand, getting media stories and in attracting future customers.
4. Its important to remember a big name company deal should make economic sense for your startup, only then it can scale into all your dreams.
5. A startup culture is so different from any large company department, so opposites attract easily, but they do not neccessarily operate in the same frequency. So its important to make sure your team stays excited about the value of your business and not get carried away into empty noises.

Competencies to build a large company partnership

Many founders think of this as a business development skill to be hired. Its a dance at multiple levels of the large firm to be played by same or different people in the startup.

One of my famous statements from my early Coola days are "We are big, we happen to be small right now". I cannot believe I actually said it but I believed it, so, it didn't seem hard then.

1. Its a very unique competency to build a large company partnership from a small company. The founders with their passion can do this best and can look for people who have done it before.
I had done partnership deals for clients from BBN and Harcourt, and believed I knew how this was done. But when you set out as a startup, all bets are on YOU! I was surprised that I had to prove that my startup will stay viable well past the deal and we were here to stay. Later I learnt that all that can be satisfied by some contract clauses, but the most important thing is to convince the people of the large company that your company was worth betting their career on.

In our case, people got excited about our technology and it helped to build irrational trust on us.

2. It takes time, so the important thing is to stay engaged.
A big company is several departments, so it takes time. But everytime, its a relationship game involving clear communication of what value we add.
Startups typically have people who want to get results and work their tail off for it. So, remember, it is better to test the waters with the first intro meeting. Gather information about the company, their language, culture, people and adapt your presentation to them with subsequent meetings. I remember many times where we went into meetings with a plan and walked out with no results, with the door almost closing on us. Just remember, you can negotiate and find a common ground only as long as you keep the negotitation process alive. So, it is better to pretend that you are not at the negotiation table, but exploring options and validating it with buy-ins from different stakeholders and keep the process alive till you really see a deal materializing.

3. Be prepared for the intimidation factor.
I took a friend entrepreneur to a large financial firm in Boston and he presented his tech idea and he came home and closed his shop. This is a real story.
Most large companies look at new technologies and usually say, we have something like that in the works in a different department. If their pain was real, it was possible they discussed some high level solutions that may sound like yours, but remember big companies need startups for the execution. If you go back to them after 6 months, it may still be in the same stage.
I also think, it will help not to go in with the attitude that you are small and they are big. If there is a real deal in the end, it means that both party have value to offer to each other.

4. Money speaks better than words.
Its common for a large company to say lets try it for free and you may walk out of a deal with some integration work but no real money. I see many entreprenuers float happily at the prospect of a big brand name partner and dream of future money. I have been one of them. If you give in, large companies will say, free for us, charge others using us as reference.
Remember, everything costs you money - your time, your team efforts, the delay of starting over with another partner. So, be polite but firm and bring in a paid deal.
You can agree to give the core product for free as a pilot for 3 months and charge a setup fee that will cover your costs, making it sound reasonable and fair. Your team will be excited at the real validation of their product and work.

5. Know when to pull back, but keep the engagement

I had a big company who said, you have something really cool here, so you are going to offer it for cheap for us and grow at our expense and later we'll be dependent on you. Its possible. All relationship power structure change over time. But make sure you communicate your intent to treat your customers as partners. Walk away from the deal as it could be a matter of some particular person, but keep the relationship alive. I walked away from one such deal who refused us a branded play but updated them and brought them into our folds after we had partners they respected.

6. Scaling of your company is morphed by the partners demands

Many of us do not foresee how the first big customer/partner changes our startup. You'll need more people to manage that account and may have to hire fast. Some in your team may start identifying their jobs with this partner and bring in biases towards them.

Once you sign the first large customer/partner, your startup is in very dynamic turf. It is better not to fight it but accept change and do the right thing for your company. Its possible that you may have to keep the person who worked on this deal dedicated to that account and it maybe good to scale revenues off that account. Or its possible you may want to pull the main person out to scale more of such accounts. You have to decide and take the change in attitude and demands that come with it.

Unfortunately for some founders, I find that their excitement of their startup goes down as they lack operational experience to scale the team around executing on a partner or scaling business development teams. This may be the right time for them to bring in some experienced person who brings this competency.

Just remember, the beauty of a startup environment is that its never static -- first the uncertainity of the concept validation, raising money, finding the right team, and this signing the first customer is more profound where you execute on your promise to your investors, team and the promise of your concept.

Remember, you chose to dance with giants, keep your pace to the big steps, as you are now on your path to become big.

Wednesday, November 01, 2006

Tune to the market to find your exit options

I am part of the unconfernece movement, which brings tech entreprenuers together at BarCamps.

I spoke on"Business to Concept"at BarCamp Boston in June 2006. It was about taking a business concept and how to validate your idea and build in into a business with market development and money . Thanks to Chris Penn of Financial Aid Network for the podcast.

I am so excited today to hear the news of one of our Boston BarCamp companies Reddit's successful exit by its aquisition into Wired Digital.

Reddit is a great product, was always second fiddle to Digg from a brand perspective. So, apart from my personal feelings, I think there is a lesson to entreprenuers here.

- They raised just $100K in summer 2005.
- They executed on their product, site, launched, offered a clean user experience online
- They formed an optimistic team and networked like crazy.
- They exited into a bigger company where they can execute on their vision accepting market conditions, instead of fighting a marketing game and losing focus to raise more money for the same.

The last part excites me because they tuned to the market to understand their exit options. They focused on what their core competency was in the team and enjoyed executing on it (It showed when you met any of the team members).

So entreprenuers can have great exit plans which they tout when they raise money. The reality is to be aware of your options and decide based on what your team really enjoys and wants to continue to do as part of the passion of the business.

BTW, BarCamp Manchester is round the corner on November 18th. I plan to go. Hope to see you there.