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“Please help me understand the value of working with a VC”

DSC01831Someone recently asked me, “please help me understand the value of working with a VC.” Here’s an elaboration of what I responded:

  • Some very large percent* of your company’s success will come from you and your team.
  • The rest? Everyone else, including VCs, mentors, advisors, customers, board members, etc.
  • What VCs bring much more of than everyone else: money, credibility and pattern-matching.
  • All are pretty important!

Speaking of raising money, I see roughly two** types of companies:
A) Growing and have 100% confidence in their approach. They know exactly how money will help them grow faster, through some combination of past experience and empirical evidence.
B) Confident in their idea and team, and have a set of things they’d like to prove out (unknowns, risks, hypotheses). Money will enable them to go off and tackle those things.

Of course in reality every company is a mix of A and B. In my opinion, it’s better to be as much “A” as possible and very little “B.”  When you’re “A” you’re in control and others are along for the journey, helping you. With “B”, you’re now working for someone else. This is hyperbole, but directionally correct.

One of the key benefits of working with a VC (a good one, anyway) is that they’ll stick with the investment when things don’t go as planned (which is, unfortunately, the norm). Why? Because good VCs allocate funds for the company well beyond their initial investment and will support the company even when things aren’t going well. Indeed, having a good VC on board is often the difference between going out of business vs. being able to continue forward (towards the possibility of eventual success.)  All things equal, additional funding means more time to figure out how to make something succeed.

A good VC will also help you find and recruit key team members, provide warm intros to initial customers and lend a great deal of credibility to make sure those intros are taken seriously. It’s easy to massively under-appreciate the value of this credibility until you’ve benefited from it.

Also, unlike everyone else at the table (including founders, employees, mentors and advisors) a good VC is drawing from orders of magnitude more data and pattern-matching that can help you identify opportunities or avoid pitfalls. It’s easy to underestimate the value of the short-cuts that can surface by having a good VC on your side.

How do you know if a particular VC is a good one or not? Ask them about successful investments they’ve led that had significant ups and down along the way. What happened? Ask about key customers, key hires and key decisions. How did these come about? Ask the founders too.

*In truth what I originally wrote was “98 to 99%” but that’s not fair or correct. There are pivotal moments in the life of a company (initial customers, recruiting, key ideas) and these don’t necessarily come from the founders or people involved with the company on a day to day basis.

**Also, don’t forget about option C: don’t raise any money. Here you usually trade off a lot of convenience, but you keep ownership and control. The problem is that if your company is “A” — and destined to be a big company — that tradeoff is probably worth it. Bigger pie.


What are you passionate about in a company?

Someone just asked me, “what are you passionate about in a company?”

Here’s my partial answer…

Be on a purposeful mission
I love “the hunt” involved in driving towards big goals. And while things like making money, shipping code, increasing some important metric, closing an important customer and so forth can be missionary goals, there must be much more. My ultimate motivation and sense of fulfillment can only come from a deeper mission or sense of purpose.

Startups necessarily involve boat loads of grunt work, production support, debugging, inevitable customer issues, and mountains of minutia — and all melts away in the presence of a higher calling. Incidentally, having this clearly articulated and self-evident becomes critical to building a great team.

Work only with the best people
Ultimately it’s lonely to work alone, to be a solo-founder or to be the only person in the company with “ownership mentality.” There has to be a team of people that inspire and push each other to be the best.

My Tough Mudder team had that. I want the same camaraderie, competitive spirit and motivational support in my next company.

I need to be pushed out of my comfort zone and I need to be around people who want to be pushed out of their’s.

Build a beautiful, elegant customer experience
The more successful companies tend to be very calm, methodical and analytical in how they tune and iterate their products and services. “Look at the numbers, prune and tune” is super important. However, if that’s all the company is, count me out.

I want to build that which is artful, playful and where crazy attention is paid to building great customer experiences even when the quants are saying “it doesn’t matter.”

Once upon a time I was speaking out about a severely broken, but rare customer experience problem, and someone who had a say on the matter replied, “Joe, that only happens 3% of the time, so it doesn’t matter. You’re just going to have to accept that we are going to fuck some customers sometimes.”

Really?  Then count me out.  Being analytical should never mean there isn’t time to do the right thing if a customer is getting “fucked.”

Quite the opposite, the DNA of the company should be to fix those things AND go the extra bit to make something special for some 3% somewhere else in the customer experience.

Break new ground
Being second to a market, or playing the long game of chipping away by being (even 50%) better than existing big/dumb/slow dominant players is no fun. It’s often easier to hire, easier to market, easier to get PR and more satisfying and generally more thrilling to do something that’s fresh, innovative and new.

“Breaking new ground” doesn’t have to be in product or technology, either. It’s perfectly awesome to break new ground with design, customer experience or business model.

Have a great business model
A startup is basically a group of people going about a market opportunity by way of testing unproven hypotheses. All things being equal, I’d rather that business model not be one of them. There are too many other things to prove (market fit, customer acquisition, operations) than to have the question of viability even after everything else is a success.


Side note:  I could write another entire post about all the times I’ve compromised on these ideals and how that’s helped reinforced their importance to me. For another day.

Dining out at the local market, Basurto — Cartagena, Colombia

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Seattle Half Marathon Recap

Seattle Half Marathon Recap

Running through the downtown core in the fog, the streets filled with runners, felt like a zombie apocalypse.

Running in the cement confines of the I-90 tunnel was a kind of sensory deprivation. Felt like a giant treadmill. Guy with megaphone shouting “full marathoners to the left, half marathoners to the right” was echoed and muffled from the first part of the tunnel….and again evoked a zombie apocalypse.

Aid stations! Everywhere! So many of them. What the heck!!? This is definitely no Tough Mudder. — I didn’t need to carry water or GU. They had plenty, all the time, everywhere.

Coming out of the tunnel and down to the waterfront — what a beautiful city.

People I talked to cautioned about the hills at Madison and Interlaken. They were tough, but not bad. It’s no Tough Mudder. The energy of the other runners carries everyone forward.

Marching band! Bluegrass band!

By the way, what a beautiful city! Interlaken is beautiful.

Sign says “You’re almost there.” Another says “That’s what she said”.

Down the hill past Row House, one of my favorite cafes.

The final stretch. Some guy is handing out krispy kremes. Another sign says “Great job, random person!”

Finish line.

Text message: Will and Sarah had their baby!

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How to Print Your Own Children’s Books (that won’t be eaten or torn apart)

We had a baby in August of 2010 and it’s been a whirlwind.  Here’s a quick post having nothing to do with tech or startups, but if you have have infants or toddlers at home, you may be interested in this.

My little one is starting to identify animals, cars and other things and is learning the words.  Picture books are great tools for vocabulary-building. To make the experience even more memorable and personal, why not use your own photos and create a customized photo book that can become a keepsake?  Right now, my grandparents are enjoying an amazing trip to Africa, New Zealand and Israel. They are snapping tons of photos that they want to share with baby Aaron, both now and when he is a little older.  And why not learn the word for “lion” from a picture of a lion that grannie Joan took herself?

The problem is, of course, that most photo books are printed on flimsy paper that infants and toddlers quickly rip apart (or eat!)  So here is a set of services I found that specialize in custom children’s books – “Board Books.”   I haven’t tried any of these yet, but I plan to soon.  Enjoy!

My Custom Story is one online service that helps you design and print your own custom baby photo book. The books have sturdy, long-lasting laminated pages that will easily withstand the test of belonging to a toddler or baby. Fill the pages with your own text and full color images for a fully customized keepsake that will bring joy to story time. A book that measures 4″ by 5″ usually costs around $27.95, while a 6″ by 6″ book costs $39.95. You can upload photos directly from sites such as Flickr or Picasa.

Pintsize Productions also provides the opportunity to design and print children’s photo books. You can choose from a broad variety of designs, including designing your own basic board book from scratch, giving you the versatility you need. The full color photos are printed on sturdy, thick paperboard, guaranteed to last. The optional special finger tabs on each page make it easier for little ones to turn pages. The books can be purchased either singly or in large orders. If you are interested in a Pintsize Productions photo book, you can request a price quote at the official website.

Treasured Ink can transform your photos into a sturdy keepsake board book. The finished product features 10 pages with vivid, high-quality depictions of your favorite photographs. The square pages are mounted on professional cardstock, ensuring that little hands will not rip or tear the pages. For an 8″ by 8″ book, the cost is $39.95 each. A 6″ by 6″ photo book typically costs $29.95. If you have extra photos, you can add two more pages at just $3.00 each.

How to Use Google Docs to Get Continuous User Feedback

This quick post shows you how to implement a continuous feedback system using Google Docs Forms and a simple script which I’ve included.

What’s Great About This

  • Incredibly quick to set up (~5 minutes per survey)
  • Realtime emails give you “the pulse” of your business
  • The data is logged in a spreadsheet so you can visualize trends
  • It’s free

Example Surveys

  • First-Time Customer Experience - we created a short survey that is emailed to customers after they complete their first order.  It asks them how they felt about the quality of the service and includes open-ended questions about what they felt was most valuable and what they felt was missing.  We’re in private beta and let a trickle of new customers in each week, so this is a great way to measure our progress as improving first-time customer experience.
  • New Writer Engagement – similarly, after a writer does their first couple of assignments, we ask them how they felt about the pay, the overall experience and how likely they would be to tell other writers about us.  This has been a great way to assess how well we’re on-boarding new writers.
  • New Feature Feedback – when we launch big new features, we include surveys that ask for quick feedback.  Since our community knows we respond to feedback quickly, usually within hours of launching new features we’ll receive detailed, focused feedback on new features.

How to Set Up

1) Create a survey using Google Docs Forms

Select “Form” from the “Create new” menu in You can create a simple customer development survey in less than 5 minutes to capture input from lists, free-form text areas, grids and more. You can even style the form to match your branding.

2) Change the form settings to allow anyone to take the survey.

By default, an option like this will be checked: “Require [] sign-in to view this form”

Un-check that option and save your form, giving it a name that means something, e.g. “Feedback on new grading UI”

3) Next, open the Google Docs spreadsheet associated with the form you just created

When users take your survey, their answers land in the associated survey of the same name. Normally, you would check their responses by opening the survey, but we’re going to add a script that mails out their responses to your email address.

4) Select “Script Editor” from the “Tools” menu

You’ll see something like this:

function myFunction() {

5) Replace the default script with the following script.

The script below will email survey results to you a neatly formatted email. The script is dynamic, so even if you later add or change questions in your survey, it will keep working. When you receive results emails, the name of the survey will be in the subject line of the email.

Here’s the script:

6) IMPORTANT: Be sure to change to_email in the script above to be your email address or team distribution list.

7) Choose “Current script’s triggers” from the “triggers” menu and make sure the settings are:
- onFormSubmit
– From spreadsheet
– On form submit

Also, on that same form, press the “notifications” link and choose “immediately” for the second value. This is so you’ll know right away if things aren’t working properly.

8) Open the survey’s spreadsheet and choose “Send form” from the “form menu.”

Email the form to yourself so you can get the URL for use in emails and on your site.  Tip: shorten these with before sending.


Didn’t Get Into TechStars? Don’t Sweat It

Didn’t Get Into TechStars?  Don’t Sweat It

I’m a mentor for TechStars and am very excited about the next cohort of companies. The competition was fierce this year (way up from last year). As a result the companies and teams look amazing.

Obviously this means a lot of great people didn’t make it in. I was pinged by two such teams this week. Sure, they were disappointed, but they shouldn’t let it stop them. Based on the competition and limited number of spots, it’s harder to get in to TechStars than to get in to a top business school during a recession (more valuable too, in my view, but that’s a different blog post).

Both of these folks asked “what should I do now?”

A: nothing different than what you were doing before.

My answer was something like – “programs like TechStars are great, but they shouldn’t be the single enabler. Keep on moving forward on your company.”

His/her response was a practical one, that they are running out of money and needed the TechStars’ stipend to allow them to make rent; without some cash, they’d have to get jobs. In fact, one of these folks already has offers in the works from some prominent companies (maybe starts with a G, A and or F).

Simultaneously, some of my startup friends were complaining that they recently lost out on candidates to Google; seems they are throwing around some insanely incredibly unbelievably rich offers lately. Seriously, I’ve hired maybe 40 software engineers people in the last 4 years and I could not believe the numbers.

Anyway, a lightbulb went off:


1. Get a job at Google.

2. Work 9-to-5. Skip the seminars and keep your lunches to 30mins. Focus, focus, focus. Deliver and have real impact.

3. Work nights, weekends and vacations on your startup

4. Use the cash from you day job to pay for contract dev and design to make your prototype happen.

Goal: get your startup concept to enough validation, proof or traction that you can get seed money and jump to it full time.

Obviously there are some potential work conflict and legal tangles that you want to be careful with here, such as any non-competes, keeping your IP 100% separate (computers, accounts, work times, etc) and so forth. In fact, you’d probably want to run it by a lawyer, keep a paper trail and maybe even figure out a way to get your employer’s blessing (I know it has been done before).

Point is, if you’re going to be successful with your startup, then you can’t let not getting into TechStars or not having enough cash stop you.

7 Ways to Raise Money Without Giving Up Equity

7 Ways to Raise Money Without Giving Up Equity

My friend Sheryl of Greenopedia was just accepted to Startup Chile, which provides office space, a little seed money and an adventure in Chile, without giving up any equity. This seems like an incredible opportunity for any seed stage internet company. This was the first I’d heard of the program and honestly I felt like I’d missed out on a good thing. Anyway, I decided to research other alternative grant and funding programs that don’t require giving up equity, and here’s what I found:

1. Startup Chile

Startup Chile is an initiative of the Chilean government to bring international entrepreneurs and start-ups to Chile, and provides funding and support for successful applicants. Applications are submitted online, then evaluated by a team of judges. Successful applicants in 2010 received a $40,000 grant per project, along mentorship, temporary workspace, a one-year visa for each member of the team, and organized networking events. Residents of Chile or businesses already operating in Chile are not eligible. Last year’s participants included H2020, Assert ID, Inventure and many more. The program is based in Santiago, Chile and is aimed at international, globally minded participants.

2. Kickstarter

Kickstarter is one of the largest and most successful crowdfunding programs to date, and works by allowing projects to post a summary online and solicit backers for variable levels of funding. The pledges are only processed if a project reaches 100% or more of it’s goal within the allotted timeframe, and rewards are offered as an incentive to backers. Applications are submitted online, and there is no maximum or minimum on the amount of your funding goal. Applicants are required to have a US bank account, address, and government issued ID, but pledges can come from any country. Some notable successes include Diaspora* social networking site, and TikTok+LunaTik multi-touch watch kits, which received over 6000% of the initial funding goal.

3. IndieGoGo

IndieGoGo is a similar model to Kickstarter, where a project sets a goal amount and receives pledges from funders. Funders contribute money (and receive perks) once the project has reached 100% or more of the requested amount within the allotted time. Applications are submitted online, and there is no limit to the amount that can be set as the funding goal. IndieGoGo is open to anyone, and while based in the US, accepts campaigns and payments in 177 countries. Check out the successfully funded Satari Star Accessory.

4. Profounder

Profounder is a more community-based program, which allows you to repay investors with either perks or a variable share of your profits, while allowing the entreprenuer to keep full ownership. Profounder is more business-based than other programs, featuring support for planning and structuring your business also. The program is available to entrepreneurs and for-profit businesses based in the US.

Fair Trade retail platform Chaka Market Bridge and BucketFeet are a few of Profounder’s success stories. Profounder is US based.

5. Development Innovation Ventures
DIV is intended to promote collaboration between innovators in diverse fields including academia, private companies, and NGOs. DIV funds the identification and implementation of solutions to global development issues. Applications are submitted online at, and submissions are welcome from organizations outside of USAID, including private businesses. Grant amount is $350,000, and the deadline for applying is July 11, 2011. This is a US government grant.

6. SBIR (Small Business Innovation Research Program)

SBIR is a program that encourages small businesses to explore their technological potential through government grants. SBIR grants can help fund critical startup and development stages and encourages the commercialization of technology, products, and services.

Following submission of proposals online, applicants will be judged on small business qualification, degree of innovation, technical merit, and future market potential. Applicants selected to receive a SBIR award will then begin a 3-phase program, Phase I (up to $100,000) supports exploration of feasibility, Phase II (up to $750,000) for R&D work, and Phase III (no funding) where the innovation enters the marketplace. In order to be eligible, the business must be independently operated, for-profit and American-owned. The principal researcher must be employed by business, and the company size must have fewer than 500 employees.

7. RevenueLoan

Founded and run by Andy Sack and Randall Lucas, RevenueLoan provides up to $500,000 to businesses that already have solid revenue and growth.

Their sweet spot is companies that have $1m or more in revenue, 50% gross margins and a growth plan for investing the $100k to $500k loan. Instead of selling off equity or paying back the loan in fixed intervals, RevenueLoan lets startups payback as a percentage of their revenue over time (with details like cap left to negotiation).

Andy Sack is also the leader of TechStars Seattle, a founding partner of Founder’s Coop (early stage VC fund) and a serial entrepreneur himself, so he created RevenueLoan with a firm understanding of gaps in traditional financing faced by early stage companies.

Looking for techie to fix serious bug!

I’ve been nominated for “Best Startup Technologist” in the Seattle 2.0 Awards for the 3rd year in a row…. This proves that there is a very serious bug in the nomination software which has remained unfixed for three years. If you know any good tech people, please refer them to the kind folks of Seattle 2.0 so that they can fix this bug ASAP. Thank you.

But on a more serious note, thanks for your support. It is pretty cool to be on the ballot with some people I truly admire and respect.

How to recruit top engineers to your startup

I’ve had the good fortune of working with great engineers and I’ve hired somewhere around 40 to 50 of them in last 5 years. Since I believe that having second-rate people will kill a company, I’ve put a lot of thought and effort into figuring out how to recruit great engineers. I’m talking about the steps that happen before you see a resume or conduct an official interview.

Posting job descriptions online is easy and doesn’t require much effort. But when you post to, craigslist and so forth, you’re spending a ton of time filtering through the disenchanted and the desperate, and you’re not hitting any passive candidates. The best devs are the ones not looking for jobs!

We recruited an excellent team at Snapvine entirely through personal networks and going after passive recruits. After our acquisition by WhitePages, one of my goals was to rebuild the 50-person engineering team there. At the time, the WhitePages “brand” for devs was weak, so we decided that we need lots of face-time and direct interaction if we were going to stand out. It’s the same situation for any startup, since startups haven’t built a reputation. Cold emails and 2 paragraph blurbs are not going to capture the attention of the best people.

Some things we did that worked successfully (in no particular order):

Sponsor and/or host dev events and talks
This is an easy non-recruity way of building relationships with passive candidates. Invite someone to speak about a relevant or interesting topic. In fact, the speaker may be a passive candidate you want to recruit. Then get the word out through your team and online forums. Giving talks works too.

The real results come through coaching your devs on how to build relationships and how to soft screen at the events, and through establishing a simple system to track passive candidates and ensure that followup takes place.

Have lots of coffees with talented people, always
Identify high caliber people, cold email them, or get introduced through mutual friends ala “hey, I saw your project on github and it is cool, would love to meet up and chat about it”, then have coffee, and follow-up in a month, etc. This only works when the email is from a dev (we used people who had high profiles), not HR/recruiters obviously.

Lots of times, doing this gave us ins with other passive candidates that we didn’t know, e.g. “Hey my friend is thinking of leaving Amazon / you should talk to him / got any open positions?”)

In passive recruiting, HR / Recruiting’s key role is to keep things organized and to facilitate. This isn’t as easy as it sounds. The emails and meetings must be done by the devs directly (and that’s not something that comes naturally.)

Payoff can take months, so even when the economy tightened and we froze headcount, we continued these types of passive recruiting efforts. Considering that the best devs can be 10x as productive, it’s worth it.

For college recruiting, focus!
At WhitePages, our strategy of going deep at one school (UW CSE) worked out very well. Most companies only drop in at a school once per year at the annual career fair. If you only do that, then unless you’re Facebook or Google, students won’t be lining up to talk to you. We had students lining up, because we focused our efforts.


We gave talks on campus and postered the CS labs with flyers. We asked professors to email their students and we bought plenty of pizza. At these talks, we collected emails and chit-chatted with students. We followed up and invited students to our offices for events.

We also invested heavily in an intern program and we made sure our interns had an excellent experience (giving them real projects with real impact, pairing them with mentors, scheduling face time with key people throughout the summer, etc.) We also coached them on how to spread the word about our company and projects to their classmates.

By our second career fair, we had students lining up to talk with us, and we successfully closed engineers who had competing offers from Amazon, Google and Facebook.

Convert your contractors
Hiring contractors can be a quick way to fill an immediate need and carries a low commitment (both for them and for you). We had good success treating the high contract wages as a “try before you buy” fee, and once we decided a contractor was a good fit, we made concerted efforts to convince them to join us as a regular employee. This strategy worked well, and became part of our playbook.

Favorite tools for late night startup hackers

Working flexible/crazy hours and from various locations is the norm in the startup world, and I’ve been meaning to write a quick post about some of the useful tools I’ve come across for helping collaboration in my startup, MediaPiston.  I just saw this tweet by @thinkmaya which inspired me to get the post out.

Here are some of my favorite collaboration tools in no particular order:

1. oLark – If you make it easier to do something, they’ll do more of it — in this case: getting customer feedback.  oLark puts a live chat box on your website and routes chats to your favorite IM in realtime.  I can initiate a chat with visitors or vice-versa.  Every startup doing customer development / lean startup should be using oLark.

2. – conduct free screencasts without hassle.  The key is “without hassle.”   There was some one-time software setup for me, but from that point on I just launch the app and it spits out a URL to send to whomever I happen to be talking to and they can instantly see what I’m doing on my computer.  I’ve never had it stutter or be a problem for the other side.

3. Propane for Campfire – Propane is a rich client GUI for Campfire (a group-chat room geared for developers).  At MediaPiston we keep a chat room open 24×7 and have things configured so that merge conflicts, check-ins and and other code or server related events show up.

4. FaceTime – Sometimes it’s easy to have a face to face discussion, or you just need to look someone in the eye.  My sister for example likes to gesticulate, so when she was helping us out on a big project, I found that FaceTime was the best way to communicate.

5.  ScreenFlow – Sometimes screencasts are the best way to explain something or to get feedback on a concept (without needing the other party to be 1:1 live) and I’ve found ScreenFlow to be the best tool around for quickly making great screencasts.  Simple but powerful editing + easy upload to YouTube.

6.  Thinkfuse - Thinkfuse turns the mundane necessity of status reporting into something easy and fun.  I’m using Thinkfuse with our account managers so we can easily capture the status of various customer accounts, comment on them and see the history of everything rolled up. (Disclosure: I’m an advisor to Thinkfuse via the TechStars program, Update: they’ve sold to and the product has unfortunately since been shut down)

7. CloudApp - sometimes you’re on an IM chat and you want to share a screenshot with someone in realtime.  CloudApp makes that possible by automatically uploading screenshots to a server and putting the public URL in your copy buffer.  It can be toggled on and off in one click too.

GitHub – Social features meets source code repository.  Every checkin or at least the one’s commited by me :) get reviewed and commented on.  “Um, you program Ruby like a Java dev, try it this way instead…” and the feedback process is awesome for keeping dev collaboration tight and helping bring new team members up to speed.  Side-note:  I know someone who wrote a script to crawl GitHub to identify the best coders for recruiting purposes!

Q:  What are your favorite tools for helping collaboration given the odd hours and distributed team environments common to startups?