Currently Obsessed» Uncategorized

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

jheitzeb — Fri, 22 Jul 2011 17:45:22 +0000

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:

RECIPE FOR THOSE WHO DIDN’T GET INTO TECHSTARS

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

jheitzeb — Sun, 08 May 2011 21:23:25 +0000

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:

Image by ZeroOne on flickr.

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 http://grants.gov, 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!

jheitzeb — Wed, 13 Apr 2011 23:24:52 +0000

Seattle 2.0

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.

Seattle 2.0 Awards: vote

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

jheitzeb — Thu, 20 Jan 2011 08:05:36 +0000

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 monster.com, 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.

How?

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.

A Simple New Year’s Resolution: Wake Up!

jheitzeb — Fri, 31 Dec 2010 13:47:19 +0000

Perhaps my New Year’s Resolution should be to blog more since I haven’t posted here since July! This post diverges from the regular tech and startup material (for more of that, see my recent guest post on the 500Startups blog, “The Entrepreneur’s Guide to Conflicting Advice“)

And so 2010 comes to a close. Another year has passed meaning it’s once again that time when we start listing down goals for the next year. Resolutions can range from reasonable to downright optimistic, and are usually rather long lists…but for 2011 I have a single, elegant New Year’s resolution: to wake up every morning no later than 7am or at the sunrise, whichever is earlier. And I plan to strictly follow this each and every day for the entire year.

photo by jamesjustin (flickr)

Why? It’s elegant: just one simple goal. And yet I believe waking up early will carry many benefits. The brain is most receptive to new ideas in the early morning. There are significant health benefits to waking up early. I’ll get more time to spend with my family without sacrificing work hours. And I’ll be able to enjoy the simple pleasure of seeing the friggin’ sunrise.

Rising early in the morning is not a new concept. Rather, it is one of the best characteristics which our earlier generations had. Thomas Jefferson was a famous advocate of waking up early in the morning and once said that the sun had never caught him in bed for over fifty years. A notable English theologian and economist of the 19th century, Richard Whately, was also quoted as saying, “Lose an hour in the morning, and you will be all day hunting for it.” The American journalist George Horace Lorimer, who worked during the 20th century, proves my earlier point that more productive work is done in the day if one wakes up early in the morning. He said, “You’ve got to get up early every morning with determination if you’re going to go to bed with satisfaction.” One of the most prominent cliches of all time reads “Early to bed and early to rise makes a man healthy, wealthy and wise” (Benjamin Franklin)

I can’t even count how many times I’ve hit the snooze button in search of a few extra minutes of sleep pleasure only to find myself rushing to my first appointment having skipped breakfast. Waking up early will ensure that I always have proper and nutritional breakfast. This is a very important benefit as the breakfast is known as the most important meal of the entire day. It sates our hunger for a long time and thus effectively compels us to have a light and healthy lunch. A full breakfast also revitalizes our body in the morning. Besides being very beneficient for health, waking up earlier also allows us to have a regular schedule for the whole day. By fixing a time to get up, I would have an opportunity to set a schedule for the week and be assured that I can follow it since my wake-up time will be constant. This will easily result in much more flexibility in carrying out the day’s work.

I’m no longer going to miss one of the wondrous features of nature – sunrise. Pausing in silence to observe the first rays peek out over the horizon need not be limited to those times you’ve scale the summits of Rainier, Mt. Fuji or scrambled up some sand dune in Morocco…I’ll be taking a moment every day in 2011 (admittedly, this part isn’t very realistic since I’m in Seattle). I’m not a particularly spiritual person, but a few extra moments to contemplate the natural beauty of the sun can’t do any harm.

However beneficient the advantages of waking up in the morning are, everyone is bound to have their own resolutions for the New Year and I really want to hear yours. Whatever they are, however, I wish you a very happy and productive New Year and sincerely hope that you are able to follow your resolutions.

p.s. if you’re looking at more traditional “lose weight” type goals, check out this helpful nutrition website.

Unexpected Startup Lesson #1: Quitting the day job

jheitzeb — Mon, 10 May 2010 17:22:02 +0000

This post is the first of a series on “unexpected lessons” learned through my experience as co-founder and CEO of Snapvine, a venture-backed mobile social networking service founded in 2005 and acquired by WhitePages in June of 2008.

In the years just prior to starting Snapvine, I racked up 2 years of debt attending the MIT Sloan School of Management. School was great, but the costs were hefty: tuition, travel, the expense of selling a house and moving, the opportunity cost of going without salary for 2 years, the high cost of living in Boston and stress associated with my wife changing jobs twice to follow along.

Thus, 6 months after graduation when I was contemplating leaving my job, the risks felt enormous. My inner voice was asking:

What if we go 12 months without pay only to fail to prove out the concept?
What if we DO prove out the concept but fail to raise money?
What if we DO raise money, but fail to deliver on the vision?
What if we DO raise money AND deliver on the vision, but the business model doesn’t pan out?*
What if we fail and my wife doesn’t let me do startups anymore?**
What if my MBA classmates get 3 years into a great career while I spend 3 years for ZERO and then I have to crawl back to the corporate world begging for a job, while they are laughing at me?***

Chewing on these types of questions was totally unproductive and made me feel shitty. I’ve come to realize that doing startups is mostly an irrational choice. Just effing do it.

photo credit: divemasterking2000

After I quit my job, incredible people jumped into my world to help. Before the company even had a name, people like Hadi Partovi, Thomas Reardon, Kirsten Morbeck, Rob Williams, Rich Miner, Jeremiah Robison, Curtis Vredenburg and many others helped shape the product roadmap, recruit early employees, craft a pitch deck and introduce key investors.

The unexpected lesson: about 4 to 5 months after quitting my job I was already ROI positive in terms of networking, learning and satisfaction.

In just a few months I felt completely confident that if the startup went splat on someone’s windshield, I’d be able to find a more interesting and higher paying job that I had before. Also, compared to an MBA, doing a startup felt like an amazing deal: On one hand, an MBA (tuition alone) might run about $85,000 whereas the startup has cost me only $5,000. The salary was the same ($0) but the learning and networking with the startup was much, much greater than with the MBA.

In retrospect, jumping into the startup led to some immediate and unexpected benefits that, at least for me, far outweighed the forgone salary of my previous job and positioned me better for my future. Quitting turned out to be a zero risk move.

* Interestingly, this is probably the closest to what actually happened, and things turned out fine
** Even though we’d already had the discussion “if I do 55 startups in a row and they all fail, is that okay?” Answer: “yes”
*** I’m pretty sure they wouldn’t laugh at me if I ever failed, but I’m hopeful they’d hire me

Sell Ice Cream, Not Cream and Ice

jheitzeb — Sat, 13 Mar 2010 23:20:52 +0000

Doing a startup? Think carefully about the differences between technology, product and business.

The startup world is full of incredibly smart people who design new applications that “change the world” but lack a clear business model (product, but no business). It’s also common to see highly educated people create beautiful code that few users actually care about (technology, but no product).

Two weeks ago at LeadsCon (the premier lead generation conference organized by Jay Weintraub @jayweintraub) I saw scrappy, analytical sales-oriented entrepreneurs without much technology or product — but they had businesses that generate millions of dollars annually. These businesses roughly work like this:

acquire traffic (buying ads, traffic through SEO, etc)
filter it to determine the intent (a simple web form)
sell the resulting “leads” to people who have products or services to sell to those people

Some say that the lead gen business for the education vertical alone is a billion dollars. I spoke to a company in the home improvement market who got their start by walking door to door asking homeowners what repairs they needed and writing down names on a piece of paper. On their first day alone they collected over $500 in profit by cold calling contractors with those leads. Three years later they and making over $10mm annually.

Product and technology minded people ask “why don’t those contractors or schools just build the web forms and buy traffic themselves, directly?” The answer is that contractors and schools aren’t in the online business — and they value the convenience of ready-to-transact leads. By analogy, just remember that kids don’t buy eggs, milk, cream and sugar when they want ice cream — they pay $6 for a single scoop, because it’s ready to eat.

Photo by Flare on Flickr