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Archive for the ‘Entrepreneurial Ecosystem’ Category

 

Why Young People Are The Most Common Entrepreneurs

Tuesday, April 2nd, 2013

People wonder why more VCs fund young people, why more young people are entrepreneurs, and things like that. I have a theory: Young people are too dumb to know better.

This is a huge advantage and it has multiple dimensions. Certainly, it was true of my first start-up. Ah, I remember it well. Our initial business plan said that if we worked really, really, really hard, we could make $35,000 per year!

That is what people are up against. Start-ups where the goal is only to make $35,000 per year. The result is that their cost structure is massively lower, they have access to talent that is incredibly inexpensive, they think 100 customers offering them $20 per month is a mind-blowing business.

But here is the real challenge: They will do anything for a buck. Think about it. If what I just described sounds pretty awesome, imagine what they would offer to do if a customer offered them $15,000. They would do ANYTHING. People with experience out in the corporate world don’t just have mortgages and families and cost structures. They have an idea of what a dollar should be worth. They look for businesses that have “models”. They look for businesses with “Market Size”. And they look for businesses that sound “reasonable”. This is probably the most heart-breaking of all. Very few “grown-ups” try to start businesses that are incredibly hard and/or expensive. They know better! It’s too hard! It’s too expensive! The model doesn’t work!

Young people will start that business and then slowly pivot their way to real revenue and profitability.

If you want to start an awesome start-up, you should start thinking more like that.

Company Culture & Advertising.com

Tuesday, March 26th, 2013

advertising-dot-com-logoBen Horowitz recently wrote my favorite company culture blog post of all time. Here is the key:

In this post, when I refer to company culture, I am not referring to other important activities like company values and employee satisfaction. Specifically, I am writing about designing a way of working which will:

  • Distinguish you from competitors
  • Ensure that critical operating values persist such as delightingcustomers or making beautiful products
  • Help you identify employees that fit with your mission

That is a big deal. It is not about yoga or massages or open layout or all-hands meetings or transparency. Great culture is about things that help you win.

When I reflected on it, I have only been a part of one company that had a culture that was meaningful in this way: Advertising.com.

Advertising.com had a culture centered on one event: The War Room.

The War Room was an all-hands meeting that happened every day at 9am. It was a 30 minute review of the previous days results. The CEO attended, the COO attended, everyone attended – almost every day.

This was a powerful, powerful message. Advertising.com was (is) a performance advertising network – we were arbitrageurs. We were squeezing pennies out of nickels, so there was a significant operational component to the business: When you make all of your money at the margins, neatness counts. The CEO and COO would call people out: What happened with this campaign yesterday? Why was performance not better? What are we doing to improve results tomorrow?

This had an interesting by-product: There was a culture of early risers at Ad.com. At 9am, someone important was going to ask you about the operational details of things that happened the prior day. The worst answer was, “I don’t know, I will look into that”. The best answer was, “The targeting was over-constrained, we have already made a change this morning and it is already looking better.”

You wanted to give the best answer, so you needed to be ready. You needed to have reviewed your campaigns prior to the all-hands. You needed to identify and resolve issues right then.

And if you think about it, the result was not just that the all-hands was better and you looked better: We made more money. Results the next day were better because you took care of business at 8am instead of 2pm. That is 6 hours of incremental profitability that goes right to the bottom line.

What made this work: This was a rare and real example of top-down commitment. The entire senior management team was in the room at 9am every morning. They called in if they were traveling. They were engaged. This isn’t about putting together some values and sending out a quarterly email. This is 30 minutes every day spent reinforcing the real, REAL values of the business: Operational excellence, attention to details, doing the little things that make the difference between losses and profits in a performance business.

The result: One of the best acquisitions of all time. Because the founders stayed after Aol acquired them and continued to reinforce the culture, even Aol was unable to screw it up for years and years.

Mentormania

Tuesday, March 19th, 2013

Mentoring is great.

I am a mentor at Fortify.vc’s The Fort incubator. You know what I get? I get to be a mentor!

Lot’s of people want to give back and I am all for that.

But I wish we had more qualified mentors.

Let me be clear: Mentor’s can make or break your business. In David Thomson’s book Blueprint to a Billion: 7 Essentials to Achieve Exponential Growth, he reviews a significant amount of documentation explaining how if a business does not have a board member that has built a billion dollar business, the odds that an entrepreneur will build their own billion dollar business falls dramatically.

You should get a billion dollar mentor for your start-up.

But most mentors, myself included, are nowhere near what you are looking for. What is really crazy is that these days, I see people that are still in incubators, not yet having found product/market fit for their product, in many cases doing start-ups straight out of college, that are mentoring! I don’t want to be a jerk, and I have no illusions that I am some special guy, but really?

On the one hand, everyone should have a mentor. Larry and Serge have Bill Campbell. Bill Campbell probably has God actively mentoring him. Are these people bad mentors? No way, they are probably great (I have never met them personally). Still, if your mentoring qualification is primarily that people have mentored you, that is a bit disturbing.

Let me spend just a minute throwing myself under the bus: My last start-up was acquired when we were just 3 people. I have never directly managed an organization larger than 30 people. I have never raised a significant amount of money. Yet I advise people all the time because I think about all the crappy advice and crappy advisors that I got/had at my start-ups and I feel like I can at least keep people from getting the same crappy advice/advisors that I got.

Still, don’t pick a mentor for how nice and friendly they are. You need a mentor that will push you. You need a mentor that you respect. Everyone is a mentor, but you don’t want them to be your mentor.

 

I already wrote every post on Hacker News

Tuesday, March 12th, 2013

Screen Shot 2013-01-31 at 8.06.58 AM

I must admit, this blog post is no longer timely. About 60 days ago, I felt like Hacker News became much more technical and much less “How I didn’t get into Y Combinator and why rejection will help me win/fail”. But I wanted to make the point that if you are looking for entrepreneurial goodness, look no further! I already wrote all those posts.

Vacation and Entrepreneurs: I wrote that!

Pivoting, etc.: I wrote that!

Online Advertising is terrible (a popular HN meme): I wrote that too!

How to make $250,000 in two hours: I wrote that!

Something about technical architecture and start-up: I wrote one of those!

Complaining about Google: I did that!

The secret to recruiting engineers for your start-up: I told you that!

How my company got acquired, blah, blah: I wrote a bunch of those.

Writing better blog posts: I wrote about writing that.

Diet/Exercise/Tim Ferriss: I wrote that!

Starting Start-ups and stuff: I wrote that!

Incubators, etc.: I wrote that.

Confess that this looks like Hacker News when all the non-technical entrepreneurs are upvoting things.

The Best Thing About A Vacation For Entrepreneurs

Tuesday, January 29th, 2013

Vacations are great.

But vacations for entrepreneurs are opportunities.

This is your chance to step outside your regular routine and see other problems out in the world.

You need to find pain people have, but you have designed your life to minimize pain. Only by breaking with routine can you discover and learn new things.

Enjoy!

Engineers irrationally hate advertising

Thursday, March 15th, 2012

What engineer thinks this sounds very interesting:

  • Big data
  • Incredibly complex algorithmic learning
  • Huge scale
  • Millions of users daily
  • APIs
  • A de-emphasis on the user interface – EXCEPT WHERE IT IS EMPHASIZED

The answer is most engineers. Because most engineers cannot stand the idea of working for an advertising company.

One of the things I have noticed in the course of recruiting people to work at Advertising.com, Deconstruct Media, and Verve Wireless is that engineers have an irrational loathing of working on advertising projects. Despite the fact that their rational mind recognizes that advertising funds free content (including search engines like Google), they have no desire to help make the world a better place for advertisers and help fund the development of better content.

Why is this? When I was at Ad.com and random people would ask me what I do, I would say, “You know all those University of Pheonix ads you see on the Internet.”, “Yeah, I see those everywhere, they drive me nuts”, “I put those there!”

I would say that because it was funny. Engineers would feel like it was the truth and be depressed by it.

When you compare some of these projects to other projects, they frankly don’t compare too badly:

  • LivingSocial: We sell pizzas at half price – is that what engineers want to do?
  • Government contracting: We are building tools to help the FDA manage case applications
  • Yahoo: We help people read their email (where success=seeing more ads)
  • Google: We help people search for stuff
  • Even Quora: We help people get answers to their questions

Call me crazy, none of those seems inspiring. But advertising seems to create a response that is 100% pure loathing.

This is particularly tragic given the fundamental interestingness of advertising technology online today.

I will add to the list of good qualities advertising companies have:

  • Clear path to revenue, profits, and fundraising
  • Huge market
  • Rapidly growing

It is easy to start a company in this space – why aren’t engineers diving in?

Social Media Changes How Job Hunting Works

Tuesday, February 21st, 2012

I have talked to a couple of people who are job hunting recently and I noticed some interesting things.

First, generally speaking, I have historically been of the opinion that people that quit their jobs without having their next job lined up are suckers. Here is why:

  1. Being paid is nice. You want to get paid. If you don’t believe me, believe Latrell Sprewell. Everyone needs to feed their family.
  2. I always thought it was harder to get a job if you are presently unemployed than if you are employed. This is the dating corollary: A married man is attractive to women because he demonstrates that someone else thought he was a good catch. A single guy has no external validation. Stuff like that.

However, I recently came to doubt my wisdom and here is why: With the growth of social media, the tools one can avail oneself untoward when job searching publicly are much more powerful. And that is pretty interesting.

I recently had discussions with a couple of buddies that are job hunting while employed and each time I was shocked to hear that they were job hunting and I told them, “You should have called me sooner in your process.” It made me think that they are going to miss out on looking at some great opportunities because people don’t know they are looking.

Similarly, I have a buddy who is perennially unemployed and he is always getting good job offers and talking to tons of people because he is always tweeting and blogging about how he is looking for gigs. When I sold Deconstruct Media, a few people approached me and said, “If I had known you were open to selling, I would have wanted to have a discussion with you.” You can bet your bottom dollar that I regret not engaging in those discussions!

 

Is the Government even trying?

Tuesday, February 14th, 2012

This isn’t a political post, but it is a funny story.

So, from time to time, because I live in DC, I get sucked into reading a government RFP. I was reading one that just came out about how the government wants a tool for searching twitter for terrorists tweeting when I saw this line:

This must be a secure, light-weight web application portal, using mash-up technology.

So that is a virtually meaningless, yet buzzword compliant line, specifying how the solution is built, but not what it does – A CLASSICALLY SILLY THING TO DO. But the next paragraph put me over the top:

The application must be infinitely flexible….

Are you serious? The great thing about asking for a product that does something infinite is that I know the price: Infinity!

  • Infinite scalability: Infinite hardware: Infinite price
  • Infinitely flexible: Infinite development time: Infinite price

Clearly, someone was thinking about how flexible the product needed to be and chose the word “infinite” to describe it. Serious engineers would laugh this person out of the room.

I am telling you now that someone will probably win this contract (it sounds like it was written with a very specific idea in mind, so it may be pre-sold) and that person will build something not infinitely flexible – unless your idea of infinitely flexible is “you own the code, so you can add whatever you want to it.” In which case, everything is infinitely flexible – I could hack the binary of Batman: Arkham City to be a word processor!

Honestly, who could write something like that.

 

How Attention Was Destroyed By The Internet

Sunday, February 12th, 2012

Everyone talks about how the Internet is mucking up people’s ability to focus and pay attention. To whit:

I actually recently figured out the problem: Bad writing. I have blogged at length about the collapse of journalism in the face of new media aggregation.

However, I have realized that even scanning the RSS feed headlines of Alley Insider is no longer enough to keep me from giving them untoward attention. Essentially, virtually all of these organizations pay writers by the page view. The result is that writers are incented to reblog things left and right (Note the rreblogging of the Verge’s commentary on this unfunny ad that they prop up anyway) – in particular, reblogging their own stories with new headlines in a transparent attempt to drive additional traffic. This is something we are seeing more and more on alley insider and it does nothing but diminish the value proposition of the site.

Here are two clusters of alley insider articles. These articles came out, in most instances, within hours of each other:

Or how about this:

Why can’t we just have one well-written article with a link? Instead, these are all a paragraph, with two paragraphs of interlinking to the other articles driving them. This is woeful.

UNSUBSCRIBE.

New Economies and New Consultancies

Tuesday, February 7th, 2012

Lots of people have talked about how the economics of start-ups have changed. As costs have come down thanks to tools like MySQL, Amazon AWS, and free frameworks like Rails, where it used to require millions of dollars to build an early stage product, now a product can be built for virtually nothing.

The bottleneck now appears to be access to engineering talent.

There are no hardware constraints. The only thing that stands between an entrepreneur’s idea and the realization of that idea is convincing technical talent to devote their time to it.

One could write a whole host of blog posts around this, but I want to talk about a few interesting side effects I have seen.

There are more tiny consulting companies than ever. I am talking about free agents (1 person) and small shops (2-10 people). I have noticed that many of these are managed poorly. I would say a common thread in many of these is that the people that start them either never worked at a large consulting shop or they were a person that hated all the process and machinations at their prior employer, did not value them, and quit to go their own way. These companies are easy to start – you can simply hang around on oDesk or something worst case and build relationships from there – because demand for technical talent is so high.

But an interesting side effect of this is that as the technical talent gets distributed to these tiny companies, the process and project overhead diminishes significantly. That sounds great to engineers, but do not doubt that there is some value in process – particularly as regards to the creation of visibility in the process (which usually is completely unvalued by the people doing the work). The result is that the burden is placed on the client to “manage” the project and make sure that they are getting bang for their buck. I have also seen a sharp transition away from the trend toward fixed pricing of projects and de-risking the project for the customer to a time and materials model and “scrum-ey” project methodologies. This is great for the developer and CAN BE great for the customer, but only if the customer has the infrastructure needed to manage the project well.

So as technology frameworks have simplified the development of technology, the trend in consultancies has been toward smaller and smaller organizations, but increasingly these consultants are providing only technology development, not the infrastructure that many have come to expect that results in complete delivery of the final project. Customers own project management, QA and other typically core engineering functions – the consultant is just manpower.