The Best Startup Advice I Have

David Cowan of Bessemer Venture Partners has had a similar experience to Altus Alliance when he recounts "The Best Startup Advice I have". That is, after hearing what Mark Leslie had to say it changed the way we did business. He does a nice job of recapping Mark's principles. For more on Leslie's Enterprise Sales Learning curve, I provided an update in an earlier post.

Vision

Saw this quote today and reminded me of some people I've come across in my career.

“Vision without implementation is hallucination” Benjamin Franklin

Vision is great but you'd better know how to execute or be lucky enough to be surrounded by people who do. The fun part for me has always been putting vision through its paces in the real world. Inevitably, your vision alters and you learn a ton along the way that alters the strategy that will achieve the vision. Mark Leslie's (of Veritas fame) Enterprise Sales Learning Curve framework lays this out in detail. Here's an update on that work.

Term Sheet Series wrap up

I've posted here before on the term sheet series that Brad Feld of Mobius Venture Capital has compiled. Here's the summary of the series with shortcuts to each area. Whether you are a new entrepreneur or a veteran, there are good points and reminders.

Building team trust

Brad Feld has a good post about the importance of building trust on teams. Small teams can be like families. Without trust, a family falls apart. Startups aren't much different.

Are female sales pros staying at home an untapped gold mine?

My answer is yes. I know there are many women who were previously top notch sales pros at places like Sun, Time Warner, IBM, Pfizer, Oracle, etc. who have chosen to hit the Pause button on their career while they have young children. I applaud them for doing that in a world where value is often ascribed to how much money you can bring in the door. However, as kids get into grade school, there are often some spare hours available. My belief is that these spare hours and the desire to earn income and/or have non-parental goals are a big reason why you see the explosion of "Direct Selling" (aka multi-level marketing) companies. There are also many women who go into real estate. However, if you have skills in high tech or pharmaceutical sales where the selling process can be quite sophisticated and you received tremendous training, direct selling and real estate may not appeal to you.

This dynamic combined with entrepreneurs needing to be creative and run a lean operation creates an opportunity. Take Jet Blue. A CBS segment highlights how they leverage "stay at home moms". I have a couple client companies that are both exploring this opportunity. They'd like to find accomplished sales pros who would be willing to work on an uncapped commission-based compensation program. Like Jet Blue, they would be happy to accomodate sales pros who would prefer (or require) a more flexible work schedule/load. Typically, big corporations don't want to deal with those kinds of work arrangements -- at least amongst the high tech companies I've worked with/for. Their idea of flexibility is often that you can work from home a couple days a week but they still expect a full-time load.

Brad Feld is on the board of the National Center for Women & Information Technology and recently commented on why he's involved with that organization given their focus on bringing more women into the IT field. While they appear to be more focused on the computer science part of the IT industry, it's not without precedent to have former sales & marketing people move into product development teams (I saw this at Microsoft a number of times). Perhaps this could be another angle to achieve their goal. Another organization I've heard of is called WorldWIT (WIT stands for Women Insights Technology). They have some blogs related to the topic of balancing work and life issues including Jessica Niehaus' that pointed me towards an article about the "have it all" myth which highlights the number of women in the aforementioned situation.

How would you tap into this "untapped gold mine"? I know they are out there but it's not obvious the best avenue to reach out to them. Send me your thoughts or post a comment here.

Is Microsoft a "biosphere"?

From Wikipedia's description of Biosphere II, "It was used to test if and how people could live and study in a closed biosphere, while carrying out scientific experiments." After spending 12 years working at Microsoft, this sounds pretty similar to what it's like working at Microsoft. It's easy for an employee there to live an existence that is like living in a self-contained planetarium. It's even easier for this to happen if you are in product development (vs. sales & marketing). Like inside the Biosphere II, you can see the outside world though the view is distorted and you aren't often looking outside.

The fortunate/unfortunate reality for Microsoft is that so much is going on inside the company that it's hard to keep track of it all. If you are interested in making the most of what's available internally, it can be a full-time job to track what's going on. Look at someone like Robert Scoble. The guy is fanatical about trying to keep everyone up to date on what's going on inside Microsoft and he regularly admits he can't keep track of it all. Scoble commented recently on how Ray Ozzie was one of the few C-level execs at Microsoft to attend a non-Microsoft event. Microsoft would benefit if there were more Scobles and Ozzies getting outside the Microsoft biosphere to see what's going on in the "real" world. They'd be blind-sided much less frequently if that ethos was a part of every product development group. As a side-benefit, it would also reduce many of the myths about what Microsoft is up to and what drives it. Having been inside the company as long as I was, it was often entertaining to read about the Oliver Stone-esque conspiracy theories about what people thought was going on at MSFT.

Healthcare expenses for small companies

Like most of my clients, I am an owner of a small business burdened with ever-rising healthcare expenses (it's brutal). Forbes has an article about what some small businesses are doing about their healthcare costs which highlights the struggles/trade-offs being made.

Having spent considerable time working in the healthcare field (primarily on the business/technology side), I've seen first-hand the idiosyncrasies and inefficiencies of our healthcare system every year that spends over $300B (yes, billion) on administrative costs alone. It's one of several factors that pushes corporations towards offshoring and outsourcing since the cost of having an employee is very high particularly when factoring in healthcare.

Being an optimist by nature, I think that corporations are going to force reform on the healthcare system that will eventually reduce costs. More controversially, I think you'll see corporations be more invasive with their employees when it comes to life-style choices. I've already read stories of smokers being denied employment. With the growing obesity problem, I wouldn't be surprised to see something like body-mass-index being a hiring factor since there's a direct correlation between weight problems and healthcare expenditures.

Cliche of the week: Meeting the numbers

Fred Wilson has another good "cliche of the week" -- Meeting the numbers. A few excerpts I like:

• I have never felt that venture capital was a particularly quantitative business. And that's coming from a quantitative guy.
• I've heard people use many different metrics in talking about the value of businesses... But for me, there is only one real measure of value and that is cash flow.
• The first thing you must do is instill a culture of meeting the numbers in a Company and it has to start at the very top. If the CEO/founder/entrepreneur doesn't care about meeting the numbers, then nobody else will.

Tales of Enterprise Software's demise are exaggerated

VC Bill Burnham has a good post on why he thinks Enterprise Software still has plenty of legs.

Most startups should avoid venture funding, not pursue it

At least that's what Greg Gianforte, CEO of RightNow Technologies, thinks. I don't think it's that black & white but the points he makes are good.

Here are some links to past posts about fundraising and venture capital that can shed additional light on the issue:

• The Cost of Fundraising
• VC & Angel relations
• Is Venture business a seller's market
• Entrepreneur's view of venture investment
• Fixing Venture Capital
  

If you do end up fundraising, check out this series on deal terms, etc.

Is Zillow reading this blog?

Perhaps Rich Barton is reading this blog. Back in April, I commented on why I thought the odds were against Zillow. The lack of knowledge of the idiosyncrasies of the real estate market was a key issue that I thought would impair them -- it looks like they are starting to plug that gap. Yesterday, they announced additions to their board that included familiar names -- Erik Blachford (ex-CEO of Expedia) and Greg Maffei (ex-CFO of Microsoft and current CFO/President of Oracle) and one name less familiar (Gordon Stephenson). Gordon is the co-founder of a real estate brokerage. Coincidentally, I was one of Gordon's first clients when he got into Real Estate right out of Stanford in the late 80's. We were both in our early 20's looking to build real estate empires coming at it from different angles. I later got distracted/consumed by Microsoft and scaled back my real estate investing but he's been in it ever since.

Washington 3rd in # of VC investments

A few excerpts from the article in the Seattle P-I reporting on venture activity in Washington...

Twenty-six companies in the state received financing, ranking it behind only California and Massachusetts in number of deals...


A diverse group of Seattle-area companies received financing in the second quarter -- ranging from digital content storage maker Isilon Systems to high-speed Internet service provider Ygnition Networks...



Investments also were pretty evenly split in terms of company development -- with six early-stage deals, six second-round deals and eight later-stage deals.

Ten Strategies That May Improve Your Business

VC Jason Caplain has a good list of 10 ways for companies to improve their business. Click here for the full list and commentary behind each one. Here are my favorites...

• Service your competitor's customers when they have problems
• Hire smart people
• Understand who your best customers are and shower them with attention.
• Work with partners, not service providers
• Spend time with others in the market that have "done it before" and pick their brain

Top media brass in my backyard

Every year, right after the 4th of July, Allen & co. has their invitation-only event in Sun Valley where they spend $20M to entertain & educate this elite audience. The media is kept out but they camp out around the edges of the conference. After Davos, I'd guess that this event is the 2nd biggest event in terms of power players in the business world getting together. It certainly tops Davos in terms of composition of billionaires (Gates, Buffett, Brin, Page, Jobs, Murdoch, Dell, Knight, etc.). The main news that came out of the event (other than who attended) was the announcement of Morgan Freeman teaming up with Intel for something they call Clickstar. Major deals such as the ABC/Capital Cities merger were consummated here and the accompanying investment banking fees is what allows Allen & co to drop $20M per year.

You've probably never seen more private jets in one place than what you see at the little Sun Valley airport during the conference. Though they keep it well hidden, there is tremendous security. Michael Stapleton Associates, an explosives-detection security company designated and certified by the Department of Homeland Security to provide anti-terrorism technologies, provides security together with local law enforcement officials and various subcontractors. Though security is tight, it's easy to walk around the Sun Valley Village and see various celebs whether it's Barry Diller rolling by on his mountain bike or Phil Knight walking by in his signature shades.

Most locals who work the conference are discreet about what they are doing but you hear some funny stories from time to time of the high maintenance people when they go on outings such as rafting trips (e.g., you better hand them a glass of wine as they step off the raft). Otherwise, the execs try to do their best to keep it low key as one of the unique aspects is the fact that they bring their families along and the spouses and kids are entertained just as much as the execs.

Open source marketing -- Sugarshots campaign

On an earlier post, I introduced my notion of an Open Source Marketing campaign. iMedia has taken that idea and run with it. The latest article in the series starts to expand what's been done thus far from a focus on media to a broader marketing focus. Since the kick-off of the first campaign with Sugarshots, momentum has picked up including feedback from two people who have talked up Open Source Marketing. Joseph Jaffe who mentions Open Source Marketing in his Life after the 30-second spot book that is climbing the charts of business book sales and James Chertoff who coined the term in his Open Source Marketing manifesto. The article ends with a shout-out to Joseph, James Chertoff and Steve Rubel (who has also spoken of Open Source Marketing and Open Source Press Releases) to weigh in with their thoughts. Hopefull Joseph, James, Steve and others do this along with many others (that includes you).

Partner leverage and reminders

Ed Sim has some good tips and reminders in making the most of partner relationships. Some of these are super critical for startups since partnering can burn through a lot of cycles when resources are most crunched.

What's a "reverse merger" or "backdoor IPO"?

Those were questions I used to ask. Fred Wilson has a good explanation of not only what they are but the caveats associated with them.

Excellent series on deal terms, board compensation, etc.

Brad Feld of Mobius Venture Capital has done a great job of raising issues and sharing experiences with various elements of a VC term sheet with a balanced perspective. So far, here's what he has...

Brad claims the list is complete (one update below)...

• Conversion
• Liquidation Preference
  
• Price
  
• Redemption Rights
  
• Dividends
  
• Pay to Play
  
• Anti-dilution
  
• Protective Provisions
  
• Board of Directors
• Conditions Precedent to Financing
• Vesting
• Information and Registration Rights
• Right of First Refusal
• Voting Rights and Employee Pool
• Board compensation
• Update: Restriction on Sales, Proprietary Inventions, and Co-Sale Agreement
  

Housevalues looking for VP of Marketing

Here's a chance to build a brand for a company yet to put significant focus in that area yet they are highly profitable and rapidly growing. The job is working for my friend Ian Morris -- a great guy to work with and for.

Here's the job summary: Reporting to the President & COO, the VP of Marketing is responsible for strategic and operational management of the comprehensive set of marketing functions including lead generation and customer acquisition campaigns, marketing communications, public relations and will lead and execute the effort to define HouseValue’s branding to our constituencies and the execution of that brand throughout the internal HouseValues organization.

If you want more details on the job, let me know. I have the full job description.

Ramping up on a new technology

Tim Oren has a good post on how to efficiently ramp up in a market/technology. As a venture consultant, I have to do this all the time. Same is true for VCs, someone taking a new job, etc.