Constructive Failure: The Difference in Silicon Valley
“I always tell people that what distinguishes Silicon Valley is not its successes, but the way in which it deals with failures.” Randy Komisar explains in a video, brought to you from the Stanford Technology Ventures Program, that failure is inevitable and unavoidable in entrepreneurship. Entrepreneurship is all about innovation and “taking a risk to do things that haven’t been done before.” The title of his speech “The Biggest Successes are Often Bred from Failures” exemplifies the necessary mindset of an entrepreneur and why Silicon Valley has been able to capitalize on a philosophy of accepting failure and learning from it in order to produce winning companies. The industry is much like the batting averages of baseball, they will always have misses, but if this risk could somehow be reduced “then we wouldn’t need Silicon Valley.”
So how do we deal with failure? (more…)
Mark Cuban’s 12 Rules For Startups (Or Anyone, Really)
Mark Cuban, inspired by Jason Calcanis’ post about saving money in a startup, recently posted 12 general rules for startups. The rules, formulated based on his past experiences, are simple but nonetheless insightful. The key lessons to take away are 1) invest in quality human capital 2) make sure they stay happy and motivated 3) reduce cost of operations outside of core competencies and 4) love what you do and make sure your goal (at least at the onset) is to grow organically long-term:
Here they are:
1. Don’t start a company unless its an obsession and something you love.
2. If you have an exit strategy, its not an obsession.
3. Hire people who you think will love working there.
4. Sales Cures All. Know how your company will make money and how you will actually make sales.
5. Know your core competencies and focus on being great at them. Pay up for people in your core competencies. Get the best. Outside the core competencies, hire people that fit your culture but are cheap
6. An expresso machine ? Are you kidding me ? Shoot yourself before you spend money on an expresso machine. Coffee is for closers. Sodas are free. Lunch is a chance to get out of the office and talk. There are 24 hours in a day, and if people like their jobs, they will find ways to use as much of it as possible to do their jobs. (more…)
Poll: How Will You Fund Your Business?
Every entrepreneur is always thinking about the issue of funding. Running out of money is one of the common reasons why startups with great potential close down. The right amount of money at the right time is crucial. Young entrepreneurs find it even harder to arrange for funds because not only do we not have any considerable savings, our fledgling networks would rarely consist of accredited angel investors.
For the average entrepreneur, self-funding is the most common, but I think it’ll be different for young entrepreneurs. If you either have a business or are planning to start one, how do you plan to fund it? Tell us and our readers!
Word To The Weis: The 68 Ventures Man (on Board of Directors)
Just yesterday I discussed my encounter with Professor Mark Long, a business expert who has been involved in 68 different ventures, and particularly his insight into the incubator process. Long also discussed, however, the utmost importance of having a stellar Board of Directors. From his experience, an under-performing board of directors can destroy a venture. In fact, he believes that it is the second leading factor to why companies fail (the first one is a secret). Long is a strong proponent of a talented and dedicated Board of Directors and believes that only lifestyle companies can remain without a board.
Long discussed several best practices that he has observed over the years in the most successful boards:
1) Boards are composed of 9 or 11 individuals (Odd numbers only)
2) Board Members are paid. With non-paid board members you get what you pay for (nothing). If it is very early stage a nominal equity stake can be used as compensation
3) Good people to have on your board:
a) 2 people that have nothing to do with industry that can have an outside perspective
b) 1 retired mentor from industry
c) 1 general business expert
d) 1-2 young and energetic people
Most importantly, Long advised getting people on board that will give their honest opinion and are not there just to please you
Other useful tips on boards: (more…)
Jurvetson Calls For “Disruptive Force”; Says Economy Won’t Hurt Startups
CNET News.com reporters Michael Kanellos and Carl-Gustav Linden recently met with Steve Jurvetson to discuss how the downturn in the broader economy will impact venture capital firms. For those of you who don’t already know, Jurvetson is a leading venture capitalist in Silicon Valley, best-known for his involvement in Hotmail, Interwoven, Kana, and Skype. He is a managing director at the presitigous venture capital firm Draper Fisher Jurvetson.
When asked how much the economic downturn has changed the venture capital, Jurvetson’s response was positive. He claims that in an up or down market, there will always be ideas. The market for innovation and entrepreneurship should not be considered volatile with respect to broader economy; in his experience, entrepreneurial activity can almost be thought of as a constant,or even continuously accelerating.
Jurvetson positions himself as somewhat of a maverick or rebel when describing his investment mantra:
I don’t really care what the venture industry thinks…We want to invest in unique ideas that can change the world. We don’t even care what industry they fall into, but ideally they’re driven by some major disruptive force, as a different way of looking at the economy and venture opportunities. I know that 10 years from now we will be investing in something that relates to that.
Over the next five years, Jurvetson sees a lot of money going into (more…)
Word To The Weis: The 68 Venture Man (on Incubators)
During the 3rd day of the Indiana University Innovation Fellows we had a chance to meet with Professor Mark Long. Long has been involved in 68 different ventures, so he shared with us his insights and experiences. One of his focuses was explaining how many startups benefit from incubators.
Incubators are programs designed to accelerate the successful development of entrepreneurial companies through an array networks, resources and services. They vary in the way they deliver their services, in their organizational structure, and in the types of clients they serve. Launching in an incubator dramatically reduces startup costs; rent is set at low prices and resources such as conference rooms and equipment are pooled. We’ve covered some of the more famous incubators, such as Tech Stars, Launch Box, Y Combinator and DreamIt, which all take a portion of the company (typically between 2 and 12%) for a seed investment. However, the incubators that Long is familiar with are R&D shops that have a different structure.
Long explained that incubators are looking for businesses that have : 1) Business Plan 2) 6 Months Rent in capital (specific only to some types of incubators) 3) Dedicated management team. For more information and to find an incubator near you click here. Keep in mind, you are not limited to your own state. In the words of Mark Long, “neighboring states love to pull companies”.
Tim Draper Explains How To Get Funded
One of our partners, Vator.tv, just released an interesting interview with Tim Draper, Founder and Managing Director of Draper Fisher Jurvetson, a prestigious VC firm. The conversation was centered on the types of companies and their teams that the firm invests in as well as the process. Although the economy is sinking, Draper believes that it is neither a fantastic time like in 1999 to raise money, nor a tough time like in 2002 when VC’s kept close reign over their money; rather, “…the pendulum is somewhere in the middle.” At the same time, changes within an economy usually give rise to entrepreneurs who find opportunities to build businesses. But, what types of entrepreneurs is Draper looking to invest in? (more…)
Your Baby Is Ugly!
“Find people as crazy as you are and make them a co-founder…the best time to do this is in college.” Dharmesh Shaw, the founder of HubSpot challenged entrepreneurs at MIT this past weekend to take action and to stop making excuses. The opening remarks were followed by several panels and a networking event that brought together entrepreneurs and organization leaders from around Boston. Although the goal of Underground 2008 is to inspire, connect, and create, the overarching goal was to bring influential leaders together in attempt to start connecting entrepreneurial organizations on various campuses for the first time.
Dharmesh, who also blogs at OnStartups.com, and made some interesting points on why people don’t take that dive and start. The first excuse he comments on is that people don’t have an idea, or they don’t think that their idea is good enough for that matter. People say, “Why should I do a startup?” (more…)
Word To The Weis: How To Outsmart Your Brain (Part 1)
How many times have you started a task or project swearing that you would do whatever it took to make sure that it was successful? How many times have you followed through on that promise? The reason this strategy very rarely works is because it is flawed. Doing whatever it takes is unquantifiable and dooms you to failure.
Whenever you take on a project, you become very aware of the future costs and benefits. To ensure that you follow through on your task you can do one of two things: either increase the potential benefits or decrease the costs. Traditionally, most of us have focused on increasing the benefits; we think about what the future payout could do for us and the world we live in: fancy cars, mansions, or saving the manatees. The often overlooked part of the equation is the cost side. Just as companies can increase their profit margins by decreasing their costs, you can increase your success by limiting the mental cost of the project. (more…)
Advice From The Top Generation Y Tech Entrepreneurs
BusinessWeek recently ranked the best 20 something year old tech entrepreneurs. You have probably heard of the majority of their companies, such as StumbleUpon, FriendFeed, and Facebook’s Causes. Here they are along with their companies and advice:
Funding: $7 Million from North Bridge Venture Partners, Sigma Partners, O’Reilly Alpha Tech Ventures
“Make sure you have a solid business plan and you’ve done your homework and are passionate about what you are doing, and people will recognize your potential,” says Buytaert, also Acquia’s chief technology officer.
Garrett Camp – 29
Funding: Acquired by eBay in May, 2007 - $75 Million
“Get a good demo and a reasonable interface (more…)
