Musings from a startup entrepreneur

These insights from a successful, start-up CEO (Dharmesh Shah of Hubspot) on made me nod in agreement and chuckle: Startups: 10 Things MBA Schools Won't Teach You:

I particularly liked the following points - which I paraphrase:

2. Start-ups need to be clear about what they are not doing.
Everyone knows that a business plan is an extremely creative piece of literature that projects lot of results about lots of decisions made in the future. The purpose of writing business plans to primarily to do lots of thinking about scenarios so that when you reach a decision cross roads, some of the factors to be considered might be familiar to the management team - thereby preventing either paralysis or constantly switching strategy.

5. Pricing is discovered in the market
ie in customer conference rooms in pre-sales, in project planning meetings with customers, NOT in Excel in the office!

6. "Every time you add a new product or product option a small part of your company dies"
It just becomes messier on virtually every front! Treat product extensions with caution!

7. Marketing is about more than .... the right shade of blue for your logo.
Oh, the hours that have been spent on colour palettes, the depth of drop shadowing, the size of the font on the slogan underneath the corporate logo. It makes me want to pound the table and cry!

Some good but tough questions for new ventures

I don't recall how I landed on this article about willingness to invest in web 2.0 start-ups, written by Tom Shields, managing director at the Woodside Fund, a venture capital firm.

He asks some great questions for any business idea, but particularly for Web2.0 ventures. Worth paraphrasing I thought:

1) What gives you an unfair advantage?” 

Most likely that takes the form of deep technology, proprietary content, or an exclusive business deal.

2) What is your business model?

One thing technical founders often do is put the product or service out for free, planning to put in the business model later. Often, however, the business model needs as much rapid development as the feature set, and can take quite a while to emerge.

3) Are you a feature or a product?

If your service depends on another service or community, like MySpace, then you’re going to face questions about why MySpace wouldn’t just duplicate your functionality. There is a fine line between “boiling the ocean” (trying to do too much) and being just a feature, and that’s where you want to position yourself.

Finally, there are a couple of characteristics that will definitely help your case. One is a clear understanding of your short-term direction, and the specific milestones you are trying to reach – e.g. number of visitors, downloads, etc. Another is a culture of rapid prototyping and fast learning.

Cambridge Startup Weekend

I attended the Cambridge Startup Weekend over the past weekend.

Startup Weekend is an intense 54 hour event which focuses on building a web or mobile application which could form the basis of a credible business over the course of a weekend.

There was a huge amount of enthusiasm and excitement at the event for building products and businesses. Here’s the format:

1. 150 people registered to attend
2. On Friday evening, 45 (yes, forty five!) people pitched their idea in 90 seconds or less
3. Each attendee is given three votes to choose the concepts that they like
4. The top dozen ideas or so re-pitch to the audience
5. Each person in the audience then joins a team of their choice and starts
6. Mentors and grey beards are on hand to provide guidance

There were a couple of ideas that I liked – interestingly enough, two of these ideas received virtually no votes. Of the ideas that won through to the second round, I couldn’t see any that would really have any commercial viability. (I admit that I didn’t contribute any ideas of my own.)

What WAS really apparent was:

• All the companies need to start by concentrating on their business strategy first, before writing a line of code. From the judges’ questions, it was clear that this is what they were interested in.
• The intersection of technology and markets is the heart of Product Management’s role. This event would have been more commercially successful if there were more PMs knocking around. However, their presence would have deflated the enthusiasm of the budding entrepreneurs which is the exact opposite of the required outcome!
• Although, I arrived late at the adjudication ceremony and I didn’t get to see all the final presentations, it was interesting to see how the businesses morphed over the weekend.

In the end, I teamed up with a couple of PhDs doing digital identity from the University of Newcastle. See their announcement of Identity Deployment of the Year (IDDY) 2011 Award from Kantara. It was great because they brought me up to date on progress on DiD in the last 6 years that I haven’t been paying attention. I shared some knowledge with them about the early days of DiD.

Interestingly, not much has changed – the big problems in identity haven’t been solved. Many of the participants have changed their business model though. The industry body, Kantara, has taken over the mantle from Project Liberty - not quite sure why Liberty died.

Importance of the cost of land on entrepreneurship

One other factor that weighs heavily on entrepreneurship is the cost of land (and therefore the cost of living). The UK is cramped nation of 60 million people - space is in high demand, driving up the cost of land. The US is a vast nation that remains sparsely populated, even with 300 million people in it. The risk of starting a business (and possibly losing your home) is much more significant in the UK than US. For the more extreme contrast, compare with Japan (130 million in a country most mountainous that 75% is uninhabitable).

As a side note, land is more expensive in California than elsewhere in the US, approaching the value in the UK. In my experience, Texas with a reputation for cheap land, hard work and can-do attitude, is much more entrepreneurial than California. Silicon Valley has historically built an innovation cluster (compare with London's financial industry) and now has all the ingredients to make building new high-risk businesses much easier.

Lack of Entrepreneurship in UK - stop whining

Why Britain needs to change its view of entrepreneurs

http://www.nesta.org.uk/informing/articles/rebecca_harding.aspx

I find the point of view that UK lacks a culture of entrepreneurship short-sighted - get over it - innovation is a second class career in the UK. This is from a Brit that has bounced between both sides of the Atlantic, who has founded an internet company in the UK, but now lives in the US tech community.

As Napoleon described UK as a nation of shopkeepers 200 years ago, the same is true today. The UK is blessed with historical existence of the City of London, a financial trading power house that generates billions of dollars of value. It's an center of excellence whose contribution to the UK FAR exceeds that of other trading centers of similar size. As a result, the UK (and the Scottish even more so) are supremely skilled in dissecting risk and reapportioning it and trading it. This contribution is something that the UK should be thankful for and, at the same time, recognizes what is disables.

So, imagine I am a bright, young thing in the UK, fresh out of school or university. The most profitable method of being successful is to be drawn to the bright lights of the metropolis and work in 'the City' - where I use other people's money to buy and sell resources and to shave off a commission out of other people's ventures. Would I even consider assuming the majority of the risk of a venture myself? You must be 'havin' a laugh'.

It is well known that immigrants are much more likely to start new businesses for the reasons that they usually lack powerful networks of local contacts and cannot bring an existing reputation in their new country. They rely on their own intuition to build a shelter for themselves and their family.

UK enviously looks over its shoulder to the US, a nation of immigrants with an immense repository of raw commodities and natural resources. It's a nation so large that it can't be dominated by the financial industry in New York (a country can only have one financial center after all). As a result, any bright, hard-working American considers entrepreneurship to be perfectly valid career choice.

Speaking from personal experience, I have found the UK venture community to be superb at quantifying the risk in a start-up business - analyzing it, slicing it and dicing it, synchronizing it perfectly with the rest of their portfolio of investments. They may (or may not!) provide the cash for the venture, but infrequently the practical expertise to assist the new business.

The venture community in the US, on the other hand, provides not only the cash, but also the understanding of the fledgling business (as frequently those with the cash have been successful entrepreneurs themselves, thereby perpetuating the cycle) and are more likely to jump into the ditch and dig or into the boat and row (you chose your metaphor!).

So my answer to British whiners is: if you don't like the golden egg, then kill the goose, otherwise recognize its limitations and be grateful!