Category: Entrepreneurship
On Monday I was at the White House to help announce the Startup America Partnership. As part of this, TechStars announced the TechStars Network, an affiliation of TechStars-like programs across the country along with our commitment to the Startup America Partnership to help 5000 experienced mentors work with 6000 entrepreneurs to create 25,000 new jobs by 2015. For an awesome description of Startup America, please read Aneesh Chopra’s (the United States CTO) post on TechCrunch titled Startup America: A Campaign To Celebrate, Inspire And Accelerate Entrepreneurship. By the way, I think it is awesomely cool that the CTO of the United States blogs on TechCrunch!
Over the past eighteen months I’ve gotten to know a number of people in the executive brand of our government, especially at the Office of Science and Technology Policy and the National Economic Council. In general, I don’t engage that much with government, but I have with issues that I care deeply about like the Startup Visa and entrepreneurship. In this case I’ve been blown away by the intelligence, thoughtfulness, tirelessness, and capability of folks in OSTP and the NEC. When I was first involved in discussions around entrepreneurship that later evolved into the Startup America Partnership, I was originally skeptical about what I was hearing. Nine months, and a bunch of discussions later, I think the White House has approached Startup America in a very smart and powerful way and I believe that everyone involved has a major clue about entrepreneurship, the importance of it to our economy and our country in general, and how to help celebrate, inspire, and accelerate entrepreneurship across America.
When I was first approached to talk about how the White House could help entrepreneurs, I focused most of my comments on trying to help the folks I talked to understand the difference between high growth entrepreneurs and small business people. They are both important to our economy, but have very different needs and until recently I didn’t feel like the White House, or other branches of government, really understood the difference between the two.
Fortunately, the White House listened to a number of smart people, including the amazing folks at the Kauffman Foundation. I worked closely with the Kauffman Foundation in the mid-to-late 1990’s both through their partnership with the Young Entrepreneurs Organization as well as being an “entrepreneur-in-residence” (a fancy word for “one day a month consultant”) where I worked with a team on better understanding high growth entrepreneurs. I continued to spend time with the Kauffman Foundation over the past decade, but lost touch with many of the people I’d worked with as the organization evolved. In the past few years, under the leadership of Carl Schramm, the Kauffman Foundation has reasserted itself as the most significant organization thinking about, researching, and advocating for entrepreneurship as part of its mission to accelerate entrepreneurship in America. I’ve gotten to see them in action first hand through work that I’ve done with Lesa Mitchell, Paul Kedrosky, and Bo Fishback and I can confidently say that Mr. K’s legacy is in great hands.
Along with Kauffman, Steve Case, the co-founder of AOL, his wife Jean and the Case Foundation, has been working hard to help the White House craft a public / private partnership to shine a bright light on entrepreneurship and help accelerate it across the country. I’ve never worked closely with Steve but have always admired him from afar and love the leadership team of Steve and Carl heading up the Startup America Partnership.
As David Cohen and I talked about the idea for the TechStars Network over the past few quarters, it became obvious to us that it would be a natural part of the Startup America Partnership as we both strongly believe that mentorship is a core attribute of growing entrepreneurs and entrepreneurship. We both believe that TechStars like programs can existing in over 100 cities in the US, covering many different industry segments (not just software and Internet), and the value of coordinating the mentor, entrepreneur, and investor activity across the entire country is extremely powerful. We had already identified over 100 different accelerator programs in the US that were modeled after TechStars and had helped a number them get started, so as we put together the original members of the TechStars Network, we were psyched that 16 high quality accelerator programs joined us at launch.
It’s important to realize that each of the TechStars Network member programs will be locally owned and operated. We strongly believe in the power of a network model in the construct of expanding entrepreneurship, not a hierarchical centrally owned and controlled one. We think entrepreneurship across the US is not a zero-sum game and we want to play our part in expanding it. TechStars will still run programs that it owns and operates in Boulder, New York, Boston, and Seattle, but we’ll continue to aggressively expand the overall network across the US as well as the world.
I’m extremely excited to play my small part in the Startup America Partnership. For those of you out there questioning how government and entrepreneurs intersect, I encourage you to give the Startup America Partnership a chance. Start by looking at the 27 private organization commitments to the partnership. And, if you want to engage in any way, just email me and I’ll try to figure out how to get you plugged in.
I just had an exchange with an entrepreneur that I don’t know. It went something like the following via several emails over the course of a week.
Entrepreneur: I’m working on something really amazing that I’m looking for funding for. Can we get together to discuss?
Me: Can you send me a short email overview so I can tell you whether or not it’s something we’d be interested in exploring? I don’t want to waste your time if it’s not.
Entrepreneur: I’d much rather get together face to face.
Me: Can you send me a short email overview so I can tell you whether or not it’s something we’d be interested in exploring? I don’t want to waste your time if it’s not.
Entrepreneur: My idea is special. Will you sign an NDA first?
Me: I don’t sign NDA’s. If you are unwilling to send me a short overview that you are comfortable sharing, then I don’t think I’m a good target for you.
<time passes>
Entrepreneur: Following is an email describing my idea. Since you won’t sign an NDA, you agree that by reading beyond this paragraph you are agreeing not to share my idea with anyone, forward this email to anyone, or discuss the idea without my consent.
Me: I have not read past the end of the first paragraph (“<paragraph copied>”). I have permanently deleted this email from my inbox.
Entrepreneur: Why aren’t you willing to read my email?
Me: I’m unwilling to have an implied NDA applied to me via your email. You seem to be operating from a perspective of “implied suspicion.” I don’t work this way – I much prefer to operate from a perspective of “implied trust.” Since you clearly don’t trust that I’ll behave responsibly, then I don’t think I’m a good match for working with you.
I’ve written about my “fuck me once” rule in the past. In the book Do More Faster, I have a chapter about this – Wiley made me change the title to “Two Strikes and You Are Out” but the rule is the same. I enter every new relationship from the perspective of implied trust and allow this trust to be violated once (where it’s my responsibility to bring up and address the violation.) If there’s a second violation of trust, I’m done with the relationship.
I’ve generally decided not to engage in new relationships with people that approach things from a perspective of “implied suspicion.” Yes, I know there are plenty of people in the world that behave badly, but I try really hard not to be one of them and when I do, I own my bad behavior, apologize, resolve things, and try to learn from the situation. It’s easy to find out about me (both the good and the bad) if you are concerned about starting a relationship from a position of “implied trust” and – if you are interested in a relationship and unwilling to do the prep work to start from this perspective, I don’t really know what else to do other than disengage.
I spent some time thinking about whether this was an inappropriate, arrogant, or naive position from my perspective and decided it’s not. I’m already completely maxed on “new relationships” so setting a certain type of expectation for the entry into a new relationship (namely one of “implied trust”) helps filter out relationships with people who I likely won’t connect with anyway since they have a 180-degree difference in their view of how to approach a new relationship.
I know there is an enormous amount of noise around the system about “how to protect your idea” and “how VCs behave around your idea” although in my experience the noise is completely disconnected from (and much louder than) the actual signal. I’m curious what entrepreneurs think about this in the context of a first engagement with a potential VC investor that they don’t know.
Most of the companies I’m an investor in have a fiscal year that lines up with the calendar year. As a result, with a few exceptions, the 2010 numbers are done and the 2011 numbers have reset to zero.
When I was running my first company (Feld Technologies) this was a big moment each year. I still remember it vividly – we pushed and pushed and pushed an increasing revenue (and profit) number each year with the goal of exceeding the previous year. On 12/31 at 11:59pm, the numbers were in and it was time to start over.
While I recall a few “flat” years, I’m pretty sure we increased the top line at least a little over each of the seven years we were in business. We had several big growth years (100% or more). Our bottom line always held its own – I think it was “flat” in the flat years, but again we had several big growth years where we got to new levels.
But every year on the first day back at work after the new year I recall being somewhat daunted that we were back at zero for all the numbers.
Welcome to 2011.
I recently sat through an annual CEO 360 review at a company that has been very serious about executive development since inception. It reminded me how powerful this is when it’s done correctly.
In this particular case, the entire board and management team had an hour-long facilitated discussion without the CEO in the room. The facilitator is not an employee of the company but has worked with the entire management team on executive development as they’ve grown over the past 5+ years.
This company is doing extremely well and the CEO is excellent. However, the fact that he’s comfortable enough with himself (and his team) to step out of the room and allow us (board and management) to have a candid, direct, confidential discussion is an important message to everyone.
Most interestingly to me was the value of the conversation. Even though this group has worked together for a long time, the company continues to evolve and the CEO knows he has opportunities to continue to grow. By having this type of a candid conversation across the team and the board, it creates real clarity around where the personal growth opportunities for the CEO are.
A minority of the companies I’m on the board of do this but this particular CEO 360 Review motivated me to rethink that and encourage it in more cases.
I’ve spent a lot of time this year talking about the importance of entrepreneurship to our economy and society. Hopefully the work and energy that I’ve put into understanding and helping develop entrepreneurial communities – first in Boulder – and now throughout the US via TechStars, energy around my book Do More Faster, and our investments around the country from Foundry Group reflect this belief.
As part of the mission I’m on, I’ve spent more time in 2010 in Washington D.C. than I have in the last decade. My energy there has gone into three things: (1) Startup Visa, (2) Patent Reform, and (3) Entrepreneurial Community development. I’ve learned a lot about how things work in DC and have had my share of frustration, but I’ve also come to appreciate the overall dynamics more.
I was very pleased to hear recently that President Obama has declared this week National Entrepreneurship Week and today National Entrepreneurs Day via a presidential proclamation. The folks I’ve been working with at the White House and at the Office of Science and Technology Policy definitely get entrepreneurship and the distinction between “entrepreneurship” and “small business” (both are good, just different) and I’m optimistic that the activity around entrepreneurship in 2011 will be enlightened and productive.
In the mean time, if you see an entrepreneur today, give him or her a hug and say thanks.
On Saturday, I spent the day with my MIT fraternity (the Lambda Phi Chapter of Alpha Delta Phi) at the Microsoft NERD facility in Cambridge next to MIT. We did a full day entrepreneurial retreat called “ADPrentice 2010.” This is the second time we’ve done this – the last time was ADPrentice 2005.
My frat at MIT has spawned numerous startups that I’ve written about in the past, including my post on 351 Massachusetts Avenue (home of the first office for my first company – Feld Technologies). I’m extremely proud of the legacy of entrepreneurship from MIT’s ADP chapter and am happy to continue to play a role in helping encourage it.
Several ADP alums, including Sameer Gandhi (Accel Partners), Mark Siegel (Menlo Ventures), and Eran Egozy (founder/CTO of Harmonix) came and participated. Sameer, Mark, and I were judges for the three ADPrentice contents, which included creating an elevator pitch, creating a marketing plan, and running a startup simulation Dungeons and Dragons style (yes – we used six-sided dice.)
Alex Moore, the founder/CEO of Baydin (a TechStars Boston 2009 company that was recently funded by Dave McClure as a result of a taxi ride) was the ringleader along with a few other alums and undergraduates who all did an amazing job with the day.
Once again, I was blown away by the intensity and intelligence of the MIT undergrads that I spent the day with. It’s hard to believe I was one of them a mere 25 years ago. At some point Mark leaned over to me and said “I don’t think we could have gotten into MIT if we applied today.” While he was being cute (Mark and Sameer are both off the charts brilliant), the message was a powerful and inspiring one as the current generation of MIT undergrads are incredible.
At a talk I gave recently to a room full of first year graduate business school students, I was asked “what motivates me.” Before I answered, I felt compelled to explain what intrinsic motivation is and used the following example to describe it.
“Tonight, I’ll spend about 90 minutes talking to y’all. I’m doing it because I enjoy it and I learn from it. While I hope it is useful to you, that’s not the reason I’m doing it. While I hope you have fun, learn something, and enjoy our time together, I won’t feel better or worse if you do. In fact, since my goal is to learn from everything I do, I’d much rather you give me feedback about things you think could have improved our 90 minutes together.”
I then went on to explain that I’m motivated by learning. I’ve decided to spend my entire professional life learning about entrepreneurship and have decided that my laboratory is “creating and helping build software and Internet companies.” I derive enormous personal pleasure from the act of working with entrepreneurs, helping create companies, and learning from the successes and failures.
Over time, I’ve expanded the range of things that contribute to my learning. During the past four years I’ve spent a lot of time with first time entrepreneurs through the creation and development of TechStars program. As part of that, I decided to try to codify some of what I’d learned. That led to me writing Do More Faster with David Cohen, which led to another opportunity to learn, this time about the process of creating, publishing, and promoting a book.
In each of these cases, I’m intrinsically motivated. I hope that TechStars is a success. I hope that every company that goes through TechStars benefits from it. I hope that the book that David and I have written is good. I hope that it is well received. I hope that people learn from it. But none of these are why I spent enormous amounts of time and energy on each activity.
I spent the time and energy because I continuously learned from my experiences. And I deeply enjoyed the activities I was involved in. Sure – I had plenty of difficult moments (or days), lots of things that didn’t work, and plenty of things that I felt I didn’t do nearly as well as I could have. But I learned from each of them.
I recently was in a conversation with someone who was clearly extrinsically motivated. He approached me as though I was extrinsically motivated. He kept thanking me for what I was doing for him and then asking me what he could do for me. I finally stopped him and explained the difference between intrinsic and extrinsic motivation. I told him that I had no expectation that he’d do anything for me – that I was spending time with him because I hoped to learn something from every interaction I had.
While I’ve presented this as an absolute (e.g. you are either intrinsically or extrinsically motivated), I know that it’s a spectrum for almost everyone (including me). But I think it’s important, and very useful, to understand which end of the spectrum someone is on. Don’t assume everyone is like you!
I think the best way for entrepreneurs – especially first time or aspiring ones – to learn is to hear stories from other entrepreneurs. That was one of the motivations for David Cohen and I to write Do More Faster.
There are two such stories in Westword Denver this week. Both are companies I’ve been involved in that have gone through the TechStars program in Boulder. And both are rich in content.
The first one is about Next Big Sound and is titled Fueled by venture-capital funding and a love for unknown bands, can Boulder’s Next Big Sound predict the next rock star? My partner Jason Mendelson was Next Big Sound’s mentor during the TechStars Boulder 2009 program and led the investment in Next Big Sound shortly after the program ended. In addition to the story of the origins of Next Big Sound, there is a great discussion of TechStars and how it contributes to the Boulder entrepreneurial community. While the article is unrelated to Do More Faster, the CEO of Next Big Sound (Alex White) has several chapters in the book that address similar topics to those in the article.
The second one is about EventVue and is titled TechStars post-mortem: Could Boulder startup Next Big Sound suffer same fate as EventVue? EventVue went through the TechStars Boulder 2007 program (the inaugural year), raised an angel round (which I participated in) but never really got lift off. The founders Rob Johnson and Josh Fraser shut the company down in February and wrote a brilliant post-mortem which was republished in this post. Rob also contributed a chapter to Do More Faster which included this post-mortem by him and Josh along with a lot of additional commentary on what they learned.
When I ponder where / when I learn the most about entrepreneurship, it is when real entrepreneurs tell their very specific stories. Success stories are nice, but failure stories, and all of the ups and downs that occur along the way, are the real winners. Yesterday at Liberty NetLeaders the attendees had a treat as Mark Pincus spent an hour talking about his entrepreneurial experiences and the last night at the Boulder Esprit Awards (where David Cohen and I got an award for co-founding TechStars) there was more storytelling. And on Monday I’m going to interview Greg Maffei and Michael Zeisser of Liberty Media for Entrepreneurs Unplugged.
I never get tired of talking to entrepreneurs. I learn something new every time, and every story makes me a better investor.
I think I’ll avoid all the “are super angels colluding“, “no they aren’t“, “go fuck yourself and stop talking horseshit“, and “guys, quit being narcissistic and do something productive” blog chatter today and focus on something that came up yesterday.
I was on a call when someone asked a straightforward question that had a binary answer (yes or no). The person responded with a five minute explanation with a lot of details, all factually correct and contextually relevant, but at the end still didn’t answer the question.
My partner in my first company (Dave Jilk – now the CEO of Standing Cloud) used to have an endearing way of dealing with this. Here’s how it would play out.
Dave: “Is the release going to be on time?”
Software Engineer Dave was Talking To: “Blah blah blah, five minute explanation of all the things that he was struggling with, why everything was difficult, what the risks were on timing, blah blah blah, why the client was giving mixed signals and changing things, and can’t I have a faster computer please?”
Dave: “That was a yes or no question.”
We spend a lot of time getting derailed in our work. I’m as guilty of it as anyone as I often answer a question with a story from my experience. Sometimes that’s a helpful thing to do; other times I should just answer “yes” or “no.”
The corollary to this is to ask why. I’m a huge fan of the 5 Whys approach and went through it with a long time friend and CEO of a company I have an angel investment in at dinner last night. He’s been struggling with some stuff and I explained how (and why) he should be using 5 Whys to try to get to the root cause of the issue, rather than staying on the surface and not actually learning anything. In his case he was experiencing the opposite of the yes/no problem – he was trying to ask an open ended question and getting a yes/no answer. For example:
CEO Friend: “Are the trials converting into customers?”
CTO: “No”
The appropriate response from my CEO Friend in this case would have been “Why?” And I’d predict he’d need to ask “why?” several (four?) more times before he got enough information to actually know what was going on.
I encourage all CEO’s in the world to use these two approaches judiciously. Don’t ask me why – just do it.