Finding Inspiration and Amazement

June 20, 2011 Leave a comment

Whenever I need a little inspiration or just want to experience pure amazement, I sometimes turn to TED.  In the organization’s own words, “TED is a nonprofit devoted to Ideas Worth Spreading” and it doesn’t disappoint.  Because TED started in 1984 as a conference-only format that brought the world’s foremost innovators and big thinkers from around the world, exposure to its content was extremely limited by invitation only to those who had been incredibly successful in their field.  Some might argue elitist.  With conference attendance/membership fees ranging from $7,500 – $125,000, its not a hard argument to make.

However, since 2006 TED (which stands for Technology, Entertainment, Design) has been posting its speaker talks online with free access for all.  Today, you can access over 800 speakers and nearly 1,000 talks from incredibly inspiring individuals speaking on jaw-dropping topics (their word, not mine, you can actually sort talks by “jaw dropping”) that you likely know nothing about but that will captivate you because of the depth of knowledge and passion exhibited by the speakers.  For me, many of these speakers have a way of extracting me out of my tactical day, moving me beyond what I know or care about on a daily basis into a new and interesting worlds 20 minutes at a time.  It’s pretty cool.

Here are a few talks to get started that might not be as distributed as talks by the President, Bill Gates or others of high prominence and influence:

  • William Kamkwamba:  How I Harnessed the Wind.  At 14, in poverty and famine, a Malawian boy built a windmill to power his family’s home
  • Appreciate music?  Even if you don’t, these are amazing talks by Evelyn Glennie, a deaf percussionist, who Shows Us How to Listen and Benjamin Zander, conductor of the Boston Philharmonic, on Music and Passion.
  • Jeremy Rifkin on The Empathic Civilization, using a novel animation technique to narrate a philosophy on how and why we relate to one another the way we do and implications for our future
  • Bill Ford:  A Future Beyond Traffic Gridlock and the future of mobility.

What are your favorite inspirational, amazing talks by others on TED or elsewhere?

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I Rest My Case, This is War

June 9, 2011 Leave a comment

6/16 UPDATE:  Here’s a really informative graphic as to what’s happening in the U.S. related to skilled workforce requirements.  The most compelling points?  1) By 2015, 60% of the new jobs will require skills possessed by only 20% of the population, and 2) In 1991, by contrast, less than half of the jobs in the U.S. required skilled workers.

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One of my recent posts discussed the war for engineering/developer talent, particularly in the Bay Area.  It’s getting worse and I just don’t see how it is sustainable.  Here are some recent additional data points related to the overwhelming demand for engineering talent:

  • A recent Techcrunch article discussed some analysis by TopProspect, an emerging online recruiting destination, that shows analytically who is winning among the top technology companies – Facebook, Google, Twitter, Zynga and others.
  • Check out this blog post by Gordon Hempton on “What It’s Like to Be Recruited“.  It details Gordon’s experience of posting his resume and subsequently receiving 266 emails and 96 voice mails from companies and recruiters, most of whom ignored his very specific job request for mobile development and instead were recruiting him for a broad range of development positions and platforms.

What is clear from this and other analysis is that we are in a zero sum game right now.  Meaning, there are simply not enough quality engineers entering the market to come close to the demand, there’s a nearly fixed pool of talent trying to supply both incredible existing company growth and the startup ecosystem.  The result is an all out war, including underhanded PR stunts, espionage and poaching that results in some companies winning (Facebook, Zynga, LinkedIn and Groupon) and others losing (Google, Microsoft, EBay and Yahoo) in talent acquisition.

I’ll refrain from calling this a talent bubble, as I hate the term bubble for what’s happening in tech right now – it brings back too many bad memories from 1999/2000 when this term was coined and was far more appropriate.  Because I went through the original bubble, I know what is happening now is vastly different.  We are investing in real companies now.  Sure, valuations are high, but newly funded businesses for the most part have real products and customer traction which was not the case a decade ago.

However, much of the talent population, engineers in particular, are too young to have been through the 1999 bubble, so I worry about soaring egos, mercenary behavior and lack of perspective which defined attitudes in 1999.  Engineers were hiring their own agents back then.  Put yourself in their shoes.  Young guns getting constant calls from recruiters, offers to leave their current positions for 25+% compensation and perk increases, which they can repeat from employer to employer.  Tempting, right?

I gotta believe that the demand/supply equation will balance itself, it always does.  But how long will it take?  To the engineers I say good for you, take advantage of the opportunity while it exists, but be careful.  Things have a way of coming back to center.  Put value in building great product, team loyalty and product ownership in addition to your career path and compensation.  See your work through.

Fortunately, this is exactly what I’m seeing at least in the engineers I’ve had the pleasure of working with.  Motivations seem much broader today than they were 10 years ago and attitudes and perspectives towards what is happening in the talent marketplace seem much more balanced, which is refreshing.

Why is this?  I think its because the role of the engineer has changed from pure coding and taking orders from business folks to now having a deeper role in product development and far more empowerment around solving technical problems.  With the proliferation of technology platforms and languages, there are many ways to solve complex technical challenges and the engineers are leading these efforts, they are closest to the product and thus enjoy increasing levels of autonomy in their work.

It’s a great time to be an engineer!  And a frustrating time being a company trying to find the best ones.

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Tech is Alive in Austin

June 4, 2011 Leave a comment

I just spent two packed days in Austin, TX connecting with members of the technology startup community, both entrepreneurs and also the investment community.  I also had a chance to spend some overdue quality time with my two nieces, Zoe (2) and Shelby (9 months).  My brother Chris lives in Austin and is part of a group of entrepreneurs and investors that are really shaping Austin’s present and future role in fostering a comprehensive environment for companies to launch and thrive.

Austin grew up in the early 90’s as a technology community hub, particularly in Enterprise Software and Hardware, as the birthplace of Dell, Tivoli, Vignette and Trilogy among others.  Today, slowly but surely there seems to be a newer crop of companies emerging in Consumer Internet and Mobile – HomeAway and BazaarVoice being two successful examples – and a whole slew of new and exciting startups that are getting funding locally through Austin Ventures, Silverton Partners, NEA and even outside of Austin from firms such as Boulder-based Foundry Group.  Startup programs such as Capital Factory and Startup America Partnership, in addition to the large and local University of Texas, are helping to perpetuate and grow Austin’s track record of starting, scaling and exiting new businesses all while enjoying a great quality of life.

I was really energized by what is happening in Austin and look forward to my next visit.

One thing is clear, people love living in Austin and they rarely leave.  And if they do, they come back.  Exciting times in the heart of Texas.

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Don’t Hate Me Cause I’m a Business Guy

May 30, 2011 Leave a comment

I recently read a fantastic post by Jacob Quist entitled “Why Engineers Distrust Business People” that provided a unique perspective on what I never fully understood, but was always aware, to be a common tension between deeply technical folks and those of us who are far more competent in non-technical arenas such as business operations, business development, sales or marketing.  In Jacob’s post, he believes the foundation of this distrust is due to the fact that historically engineers have been directed at the highest levels of the organization by business people and it only takes a few bad experiences to perpetuate a stereotype.  This is certainly a 2-way street, there are plenty of bad engineers and technical leadership out there, but typically its the business side of the house that directs the organization.  At least historically.  Jacob is right, its all about providing mutual value which leads to mutual respect.  Now with so many new startups founded by engineers, there’s a burst of independence from these bad experiences, creating a challenge for even the most effective, accomplished business entrepreneurs to find “co-founder” opportunities unless they bring the idea or concept to the table.

As a “business guy” who’s worked closely with engineers in startups for over 10 years, I’ve consciously made efforts to complement, not contribute to (read: get in the way of), the technical aspects of the business while treating the technical/engineering function equally if not more important than anything that drives the success of the organization.  Most recently I’ve tried to take it one step further, a step that I rarely see other business folks embrace – ensuring technology leadership has an equal seat at the table at the highest levels of strategy and product development and enabling the technical staff, the engineers, to contribute to product development in the form of a “safe challenge” dialogue with the product team.  This view has evolved over time for me as I’ve been exposed to increasing levels of strategic talent in the technical individuals I’ve worked with.  Experienced engineers often have incredible design and product sensibilities because they are the closest to the end product.  While they may not create the original design or spec, they are problem solvers in implementation, constantly iterating to find the best solutions.  And they usually understand a product’s complexity better than anyone, which HAS to be considered in any strategic product discussion.

So to all of you startup engineers out there, especially those who are founders and assuming you need a business partner (and you do, subject of a future post!), what should you look for in your “business partner”?

  • Demonstrable success in starting, building and scaling a startup.  These are 3 distinct phases of a company’s early growth that require different skills and perspective, and you need someone that has success in all three.
  • Philosophically aligned on the role of technology.  Ask the tough questions about the qualities of a great CTO, the role of the engineers and how strategic decisions are made for the organization.
  • The business co-founder does not have to be the CEO.  This is a great ego-check moment.  There should at least be a dialogue and healthy debate, never a default assumption.  And discussing how roles will evolve as the company grows is equally important.
  • Find an overall athlete (COO or Head of Ops)  instead of a functional expert.  This is probably the most controversial point that many will disagree with.  Many founders want to solve their most immediate need (more sales, marketing to acquire customers) and thus seek to find deep experience in a single skill as the first or second key leader.  I would contend that in a startup, there are a dozen areas that need leadership now to properly set the company up for success and that if every other attribute on this list is met, the “right” business partner can fill any immediate functional need sufficiently in the interim.  Another important point – acquiring and building out a talented, cohesive and high performing leadership team is difficult and a skill that should be historically demonstrated by your partner.
  • Ability to immediately contribute.  Leadership recruiting, product strategy, fund raising, sales, business development, marketing – the seasoned business lead can successfully step into most of these roles initially as the other functional leaders are recruited.
  • Test for worst case scenario.  When all hell breaks loose and it looks like the business is going to crater, how will your partner deal with it?   Do you share common philosophies on hiring, spending, tough decision processes?  This is difficult to predict, but you have to talk about worst case, because in a startup, worst case is most likely case!

What other qualities should you look for in your “business” partner?

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Tips for First Time Angel Investors

May 19, 2011 Leave a comment

As part of Boulder Startup Week, David Cohen and Brad Feld held a Q&A for prospective Angel investors at the TechStars Bunker yesterday.  David is a serially successful entrepreneur, Angel investor and current Founder and CEO of TechStars, arguably one of the most successful mentor-driven seed stage investment programs for Internet startups.  Brad is a successful entrepreneur, founding partner in Boulder-based VC firm Foundry Group and co-author with David of Do More Faster.  These two guys know a thing or two about successful Angel investing in Internet businesses.  And as a prospective new Angel investor, I found the session pretty informative.

Here are a few tidbits of advice for those interested in becoming Angels from David and Brad.

First things first, be honest if Angel investing is really for you?  If you don’t have the ability to today write 2-3 $25K checks each year for the next 3-5 years, then don’t do it.  If you can’t lose every penny written from those checks without having a pit in your stomach, then don’t do it.  For you math wizards, that’s having between $150-$425K in cash sitting under your mattress today such that if your mattress spontaneously combusted it would be no big deal.  Why does all that cash need to be accessible today?  Because you will need to make follow on investments in the same companies over time, essentially committing that cash today or putting yourself at risk of not getting a sufficient return on your early investments.

Once you commit, determine the “volume and velocity” of your investments.  There are 3 variables you need to determine up front that must jive with one another:

  1. How many total dollars are you committing to Angel investing?  Example: $600K
  2. Over what time horizon?  Example: 3 years, so $200K per year
  3. How many investments per year do you intend to make (assuming that each investment requires 2 funding rounds over the period)?  Example:  If each investment requires 2 rounds at $25K or $50K total, then you can afford to do 4 investments per year totaling $200K per year, or $600K over the 3-year period.

How does a new Angel get exposure to quality deal flow?  This for me seems like the biggest challenge as I contemplate jumping into investing.  The “best” deals with the most accomplished teams inevitably get funded by the highest profile Angels and VC investors.  And the most discerning entrepreneurs of course prefer experienced Angels with solid reputations and a track record of not just writing checks, but helping their portfolio businesses succeed.  Oh well, gotta start somewhere I guess.  David’s advice was to create a single-page investor profile – type of companies, investment criteria, size of investment, professional accomplishments, references, etc. – and distribute to a few well-connected and accomplished Angels and VC’s as an offer to co-invest with them.  The other way is to join an Angel Group.  But…

Beware of Angel Groups, they can be effective, but do your diligence.  There are good and bad angel groups separated by how active the individual members are at actually writing checks and making investments.  Ask how many investments the group has done in the past year?  What % of the membership is writing checks?  How do they qualify Angels?  If you are considering a group that charges entrepreneurs to make a pitch or for sketchy “boot camps”, run for the hills, its supposed to be the other way around folks.  Innovative groups such as the Open Angel Forum started by Jason Calacanis were created to truly serve the entrepreneurs and put these “bad” Angel Groups out of business.

Determine how involved you want to be in the target company – Leader/Active, Follower/Advisor, Everyone else/Passive.  There is no right answer, this is a personal choice based on how involved you want to be with the management of the target company and helping them raise the rest of the money they need.  If your investment strategy is to make 2 investments per year, then you are likely to take a more active role than if you are making 20 investments per year.  The key point both David and Brad make – be transparent and upfront with the entrepreneurs about the level of involvement you intend to have with the company.  Don’t have company leadership believing you will be actively advising if you intend to write a check and disappear.  And it goes both ways, a meddling or overbearing Angel can put entrepreneurs in difficult and distracting positions.

And finally, in order to be an Angel that doesn’t suck for the entrepreneur, follow these 5 simple rules.

  1. Make a decision on your investment within 24 hours
  2. Take the entrepreneurs phone call, especially when they are upset
  3. Tell 3 other prospective Angels/friends about the Company (to help them close the round)
  4. Clearly communicate your intended level of involvement post-investment
  5. Directly contribute to solving 1 out of the top 3 challenges that keeps the entrepreneur up at night.

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Crafting Your Startup Pitch

May 18, 2011 Leave a comment

I participated in a session today during Boulder Startup Week hosted by Jason Mendelson, a Partner in Foundry Group.  The audience was a group of entrepreneurs in various stages of fund raising activity.  Jason had some great advice for the group as a long-time Venture Capitalist who sees over 1,000 pitches per year.  Of the 1,000 he sees, 500 of them are immediately discarded to to bad grammar.  Really?  Of the remaining 500, 300 have an ineffective or even no “Elevator Pitch” – which Jason claims is the most important thing an entrepreneur has to get right to get initial investor attention.

So there you have it, you can be in the top 20% of deals he sees just by 1) mastering the English language and 2) having a concise, well-articulated Elevator Pitch.

What comprises an effective Elevator Pitch?

  1. Proof of a massive problem. What problem are you solving and how big is it?  This should be easy to nail quickly.
  2. How your business solves the massive problem.  What unique solution has been developed or conceived?
  3. Why YOU rock! (as an individual and how you are different than everyone else).  VC’s invest in people, first and foremost, so don’t be shy about why you are the best at what you do and what gives you a special advantage to outlast everyone else.

And all of this communicated before the elevator gets to the 4th floor!

So now that you are in the top 20%, here’s the next set of deliverables to win your prospective VC’s heart and cash.

  1. 5-7 page Executive Summary in written form.  The days of 70-page business plans went out with 8-Track tapes and Betamax.
  2. Product demo or prototype.  Showing your product is ALWAYS the most effective way to get attention.  It shows passion, commitment and enables an investor to share your vision for solving big problems.  It does not, however, eliminate the need for the Executive Summary.
  3. Personal connection.  I thought this was a really interesting and refreshing insight.  In order for Jason to invest, he must build a relationship with the entrepreneur and he expects incredible energy from that relationship, energy that first emanates from the entrepreneur and that increases with each visit as trust is built.  Why?  Because when times get tough, the personal relationship is what gets you through it.  The trust is the fallback for difficult conversations and wrenching decisions.  Personally, I want my VC to act this way, I was super-impressed by this investment philosophy.

Where do most entrepreneurs fall short in their pitches?

  1. Inadequately evaluating or addressing the competitive threat.  Even if there is no one on the planet that is doing exactly the same thing you are doing to solve a particular problem, for you to obtain customers there has to be a compelling reason for them to allocate time to you v. whatever else they could be doing.  Literally, the Internet is your competition in this case.  Don’t ever tell a VC you have no competitors, its the Kiss of Death.
  2. Inadequate attention to Business Model – Both Revenue and Expenses.  The one fundamental truth about Revenue projections?  They are always wrong.  100% of the time they never come true, the business will learn, iterate, pivot and generate revenue in ways that weren’t originally contemplated.  But its OK.  They key is to understand the drivers of revenue – # customers, page views, $/customer – those things that if you can scale, even a few of them, it drives revenue.  Expenses, by contrast, better always be right.  They are controllable and need to be well-thought out.

Finally, how does the entrepreneur find investors and get their attention, particularly VC investors?

Jason’s advice, as someone who is regularly spammed by entrepreneurs who blast out wildly to VC “lists” having done little to no research on the VC’s investment criteria –  do your research in a targeted way and wrestle ONE VC to the ground first.  Get personal, find common ground, ensure they invest in your sector, follow the directions above and generate interest and dialogue.  Once you have one that is responsive, cross-reference what other firms your one firm has co-invested with in the past, which are in the same sector or stage of development from an investment standpoint and create some competition for your stock.  Just don’t delay a deal by trying to create an auction!

And my favorite quote of the day.  Asked how long an entrepreneur should expect funding to take, from “first date to wedding”.  Jason’s answer?  “It depends how hot you are”.  Quick on his feet, very quick.

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The Next Government Buster?

May 17, 2011 Leave a comment

I’ve read a few really interesting stories over the past few days about Bitcoin, a relatively new, decentralized peer-to-peer (P2P) payment ecosystem that avoids any sort of centralized banking oversight and is anonymous between the transacting parties.  Think about these two attributes for a second.  No centralized government oversight means no regulation, no taxation, no monitoring of how and where currency is being spent, no traceability, no monetary policy.  And anonymous between the parties, in combination with no oversight, means you can buy and sell things – any and all things – without anyone knowing what is bought or sold.  While there are other forms of P2P payment systems such as PayPal in operation, none of them meet these two criteria.  How Bitcoin works is fascinating.

Jason Calacanis, arguably one of the most influential web technology voices and certainly one of the most outspoken about new and emerging web technologies, posted a story about Bitcoin yesterday entitled Bitcoin P2P Currency:  The Most Dangerous Project We’ve Ever Seen.  The gist of his message is that this could be one of the most disruptive web technologies since the creation of the Internet itself due to the potential dis-intermediation of governments and the complete decentralization of a globally centralized system (monetary oversight, central banking).

There was an insightful response to Jason’s post by Robert Tercek, a serial innovator in digital media, entitled Is Bitcoin the Wikileaks of Monetary Policy? that is a must-read.  Robert describes how the Internet has decentralized numerous industries, particularly ones where the incumbents were able to previously control their positions with regulation or by proprietary access to data or licensing.  He sums it up with “Bitcoin is to central banking as Gnutella is to music publishing, as BitTorrent is to motion pictures and as Wikileaks is to government secrets.”

Jason and Robert contend the only way this type of innovation is stifled is by governments making it illegal AND actively prosecuting individuals.  And even this type of threat at best forces a migration of innovation into even more diffusion and decentralization until local government incentives are aligned with the innovation.  In the end, centralization and oversight die.  Wikileaks and Napster started revolutions that spawned even more decentralized and ultimately more effective web innovation.

I wonder, is this capitalism at work?  Can we assume that the intersection of innovation and economics will always result in the most efficient, effective equilibrium?  Or are there areas of centralization, policy and oversight that are beneficial to society as a whole?

This will be one technology to watch.

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Your Phone Will Control Your Home

May 11, 2011 Leave a comment

We knew it was coming, but Google finally today announced Android@Home, Google’s new open framework to allow your Android mobile device to (eventually) control everything in your home – music, lighting, security, cameras, doors, appliances, you name it.  I think the “home” is a next big frontier of unexplored opportunity and is going to create an entire new ecosystem of startups and companies focusing on the intersection of mobile and home.  While Microsoft (Kinect), IBM and HP have been in this home sensor space for years, Google has a history of changing the game and bringing new technologies to the masses through their open development platforms.  Google Chrome OS, with 160M users and Android, with exponential growth and now the leading mobile operating system in the world, are two examples of Google’s ability to create explosive products and platforms.

Over just the past decade, we’ve seen a migration in opportunity from initially web only, then to mobile smartphones, then to mobile connectedness to others through applications and social media, which by the way is not nearly fully exploited yet.  It seems with Google’s announcement today, at least one next evolution of connected technology is our mobile device as a true connector to everything in our lives – people, home, car and every activity that fills our day.

Consistent with other Google applications, Android@Home is an open platform that encourages any developer to create applications that operate on the platform.  Google with their worldwide influence, has a unique ability to define and lead game changing technologies by first defining the platform standard, then opening it up for developers everywhere to create applications, increasing consumer adoption and ultimately leading to exponential scale.  Google’s vision in this case is to create a “smart home” by having millions of developers building applications that over time will completely automate your home through your mobile device.  Pretty cool George Jetson stuff that he might have developed at Spacely’s Sprockets!

I’m excited to see what will happen over the next 12 months in the home automation space now that Google has officially entered the market.

Now, if only Google could create a platform for increasing home values to 2005 levels, I’d really be impressed 🙂

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Lifelong Learning With MIT – For Free!

May 6, 2011 Leave a comment

Ten years ago the Massachusetts Institute of Technology (MIT) began OpenCourseWare, a program to publish educational materials from all of its courses freely and openly on the Internet.  At this ten-year milestone, the program has 90% participation among faculty, sharing 2,000 courses with over 100 million individuals worldwide.  The program’s objective over the next ten years is to serve 1 billion people.  Wow.

While these courses do not bestow degrees or certificates, there are some incredible stories about how these world-class instructional materials are changing lives, particularly for the under-privileged and those in remote locations throughout the world.

It’s been 14 years since I completed graduate school at Kellogg and while I actively read to keep stimulated, there are areas, particularly in technology, that I could really stand to dig a little deeper to make me a more effective leader.  So I have just started an undergraduate, self-paced course through MIT’s program called Introduction to Computer Science and Programming that educates on the role computation and programming can play in solving problems, including application using Python programming language.  Lots has changed since my undergraduate FORTRAN programming class in 1987.  It should be fun!

43% of OpenCourseWare users are self-learners and 40% of them use the service to “explore areas outside my professional field”.  There are lots of areas of curiosity and interest for me in these 2,000 courses.  Particularly areas I know nothing about but have a curiosity to learn.  Anthropology and Urban Design are two areas I know squat about, but with a small amount of time and access to such great educational resources, I can get a cursory introduction.  Heck, why not Genomics and Computational Biology while I’m at it?

The world truly is at our fingertips.

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The Founder Conference

May 5, 2011 Leave a comment

I attended The Founder Conference this week in Mountain View, CA.  I don’t really attend many conferences, but every once in a while I’ll go to an event if there are a few speakers I’d like to see.  This one had two and it was a decent event, with about 500 entrepreneurs in attendance to hear some startup luminaries like Guy Kawasaki and Naval Ravikant speak about startup funding and delighting your initial customers.  Additionally, Phil Libin, CEO of Evernote, gave a killer talk about the success and growth of his company and how he did it.

I intended on summarizing some of the key points, but there’s someone else who did a stellar job, even shooting video of the event.  See Dan Odio’s Founder Conference Blog Page for a re-cap and great video.

For the highlights, I suggest the following:

  • If you are interested in raising money for your startup or understanding what is happening in the VC/Angel marketplace right now, definitely watch Guy & Naval’s talks.  Guy Kawasaki is a serial entrepreneur, former Chief Evangelist for Apple and author of Enchantment.  And he’s a great, engaging speaker.  Naval Ravikant is also a serial entrepreneur and recent founder of AngelList that brings together founders with Angel investors – about 1900 of them!  He knows a thing or two about what’s happening in the marketplace for startup funding.
  • If you want to hear a great startup success story and be awed by how to really track performance and understand your customer’s needs and behavior, then watch Phil’s talk on Evernote.

These 3 presentations I thought were the best, most useful of the day.  Enjoy!

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