For the last few months, there’s been a storm brewing. It’s a storm that eventually confronts almost every startup on earth, and it’s named “What are we doing?”
Questions of strategy, vision, and objectives do drive the conversation with investors, and the further along the path to funding you go, the more critical it becomes to have consensus on these three points:
- Objectives – What do we want?
- Vision – Who do we want to be?
- Strategy – How do we achieve these goals?
You’d think that having a common viewpoint on these questions is simple or easy or intrinsic. But unfortunately, it isn’t. Later down the road you may be confronted with a confounder who wants to sell out to the first bidder, as soon as possible, because their objective was instant gratification, and their vision was immediate buyout, and their strategy was to push the product into the lap of anyone who had the cash and moderate interest.
The best piece of advice that I’ve received from VCs I know is to figure out what I want, and communicate it to my partners/cofounders. An honest, open discussion is the right place to start. It definitely is worth it to know if there are differences early; then there exists the possibility of making sure those differences don’t become issues. Funnily enough, at the time I considered this advice to be somewhat worthless. I said to myself, “what crap! I mean really! Obviously I want the company to be successful and I want to make millions of dollars!” Later, when I remarked on what was said, it sparked a conversation between my teammates and me.
And that conversation was mind-blowing.
What we discovered was that:
- Person A is ‘in this’ to make money, and cares little about the company, the product, the vision, or anyone else. (I’d like to add that this is not necessarily a bad thing since this person reminds the team constantly to monetize the product, meet deadlines, and move forward)
- Person B: sees entrepreneurship as a lifestyle and plans to start many businesses, not just this one, and needs the company to be successful because they view this as a long term relationship building exercise (success meaning, “worth millions” vs just being profitable, which we are)
- Person C: is an ideas person and wants to change the world through technology, and thus really cares about design, code, efficiency, and user experience… but not about money whatsoever
- Person D: is really deeply involved in nonprofits and social media and truly cares about this particular product/field’s ability to help organizations fundraise and gain traction, and thinks it should be given away for free as a service to humanity
That’s a lot of difference, right? Not only that, but some people wanted to sell out early, and others want to keep the company and generate revenues … no matter what. Some people support getting VC funding and others think, “why bother?” It was really eye opening, and I realized that it is a conversation that needs to be had.
I couldn’t agree more with her. One of the great things about Giv.to is that we built the product with helping the world in mind. Of course, there has been a push from outsiders (who shall remain nameless) to make it into a product that serves brands instead of organizations, that has features that cater to the private sector. I have impressed upon the Founders that I think Giv.to should remain, or that we should maintain, a product that is geared toward helping others. That I think we should provide the service free or near free to nonprofits.
But I dont know if this opinion is compelling or what the end result will be. I think many start ups also face this dilemma and as a result go through a shift in vision, strategy, and objectives on the road to funding. There is pressure on startups to follow the ‘fad’ and make something ‘viral.’ But what about non-fad, non-viral, world changing stuff? I know an aerospace engineer who thinks he can build a model (or at least demonstrate) that will increase highspeed rail travel by double or triple. He worked in Navy Air, he went to MIT, and he’s brilliant… but he can’t find anyone to fund him in the USA, because VCs are mostly interested in twitter apps (like ours). I told him to move to Japan. And I also vowed inwardly that if I end up making any money off of Giv.to, or any other start up I end up doing, I’m going to invest in his idea.
And I confess I haven’t always thought this way, or don’t always think this way now. But I do think Giv.to is a great brand, with a strong message and good name, with products that really help organizations ‘figure out’ social media. Working with a tiny budget in a nonprofit that needs every dollar to accomplish its mission, they appreciate things that are easy, free, and can outsource a campaign to the followers (which is what Giv.to does, plus other cool stuff). We’ve had a lot of positive feedback and we’ve learned A LOT from our customers – and we implemented changes along the way accordingly. I’m thankful all the time for the DC non-profit community, and firms like Convio, because there is such a spirit of cooperation and so much passion for diverse causes.
I retweeted Jolie’s article, and I really hope others will too. The more people who get this message, the better.
I took a break from tweeting about TechCrunch Disrupt and went with Mike to Tech Cocktail last night at Slaviya (formerly Left Bank) in DC. I have fond memories of Left Bank, as last year we presented Giv.to there and got tons of great feedback. And also criticism. I went up to one group (who shall remain nameless) and not only was their pitch lukewarm, but they didn’t know their competition and therefore could not respond to my simple question of “how is your product different than X?” That’s okay though. I definitely (still) feel put on the spot when asked to pitch and sometimes awkwardly blunder my way through it.
I love Frank Gruber for starting Tech Cocktail and I think it has made the DC startup community a small world with a tightly knit group of players. I love seeing what everyone is working on, meeting developers, lawyers, and our own local venture capitalists/angels. I saw some startups that really could add to the online conversation, and provide neat tools that I would genuinely use. Tech Cocktail despite its name is so much more than just a ‘social hour,’- start ups really use these events to practice/hone their skills in their most friendly market. I would love to see Tech Cocktail build out some kind of feedback mechanism for the start ups that presented so that others could make suggestions, vote, etc. on the start ups who present at each event.
Also, talked briefly with Peter Corbett about iStrategyLabs building an Innovation Center for start ups in DC. I LOVE THIS IDEA and IM SO GLAD they are doing it! So many of us work out of basements and our own bedrooms that it’d be fantastic to have a place (hopefully with a bit of character, not a pointless grey land of cubicles) that we can utilize for meetings, gatherings, etc. Mike and Sean bonded over their barely functioning cars, and once again I was reminded of how much I hate mine. To do item: purchase a car I actually like, that has a somewhat lower car payment, with four doors.
All in all, great Tech Cocktail once again. Look forward to seeing everyone next time!
As a person with an ERP background, and deeply held respect for data, I’m not usually one to rag on Business Intelligence. There is, undeniably, a lot of value in knowing where you’ve been. But there’s an evolution in thinking, and I think it’s very exciting, and that’s in the realm of predictive analytics. What I’ve seen in my six years of implementations is a lot of ‘stuff’ (data) that is basically gathering cobwebs in the database tables. Unused. A lot of companies archive this information without even looking at it. And analysis of all the data might yield interesting results, some facts and figures, but most people don’t have the skills to make real predictions using data, no matter how much of it there is.
Consider, for a moment, the stock market. I can take any stock on yahoo, and I can get daily, historical returns. I can get the PE multiple, EBITDA, the SEC 10k, and I can learn everything about the management team, including their kids’ names. But does this wealth of information get me anywhere? Not really. Why not? Well, because I’m not a financial analyst. Even with financial analysis experience (which I do have, incidentally), I’m not necessarily able to make conclusions about future performance with certainty. Even if I took all the information available about the market, the competition, and rolled it all around in my brain, the chances I’d come up with an accurate prediction are practically 0.
In the same way, companies aggregate their own floods of information, but the person doing all the number crunching usually 1)doesn’t understand all the information that they are looking at and 2)isn’t trained in predictive analysis. I think a wealth of tools exists that have enabled organizations to look at the crushing load of data and derive insights from it. It can be described sufficiently in business intelligence to give it meaning to the user. But, that still doesn’t take us all the way to what we need, which is predictive capability.
What would be really incredible would be real-time predictions, with abilities to change certain key parameters. I want to know, with 95% confidence, with an error rate of 3%, what are the chances we will make our numbers for next quarter given our standing as of right this moment. And no, I dont want to schedule a meeting with Bob from Accounting and John from Strategy to tell me this, I want an application to do it. Sounds awesome, right? And that’s a financial calculation, mostly. But what about even better predictive analytics, that looks at several different data sets, and joins them all together so that it can tell me if I discount one product, would we beat our financials, and how much can I discount it, and what are other possible solutions?
In short, applications that advise rather than show and tell.
(Sidenote: Hey Mike. I think this should be our next product. Whaddya think?)
There are a lot of players in this space (SAS, Teradata, MuSigma, not to mention the BI integrators, etc.), but there’s plenty of room for more. It’s a universe of data. And I think that the modeling tools , and their hideous interfaces, could definitely use an infusion of creativity. And perhaps also some taste. Whatever, you know what I mean. There’s a conference in DC in October (details) and I’d love to go but it’s expensive. What’d be better is if any start ups in the DC area in this field would email me and we’d have a get together. Hint Hint.
So, last week I went out to lunch with a small group of Georgetown students and Chris Sacca was there to chat and give us free advice (free! advice! from Chris Sacca!) and some of the things he said really struck me as being a true evolution in the minds of venture capitalists, and one that I think is 1)necessary and 2)welcome and 3)awesome. The message was a recognition that for many founders, although our company is ‘our baby’ and we sacrificed thousands of hours, months/years, possibly relationships, the overriding concern is money. Too often, entrepreneurs sell out or give up at precisely the wrong moment. I could make up a bunch of reasons why this is, but let’s be real here, it’s about the money.
But not in the way most people think. We are not just money-loving bastards, wanting to make a buck.
On our own startup, givto, there have been ups and downs. At one point, one of our founders had to literally ask for money from his parents. And his friends. And wasn’t eating, or sleeping, ever. We all have debt, and I don’t mean $4 and change, but literal mountains of student loans to pay. Plus the debts we’ve taken on for the company. Plus our housing, cars, and food. Although Giv.to is now profitable, no one is living large. There have been definite sacrifices in time, in money, in relationships, in “fun” for the company over the last year and half. Sometimes, it feels we are snailing our way down an endless road to nowhere.
But we did all of that because we love Givto, and we have a vision and purpose and we believe in it. That being said, if someone offered to buy us for $2 million dollars tomorrow, would we (could we) refuse? I don’t know. For Mike and Adam, it’s been a definite struggle to find talent and resources. For me, having another job and doing an MBA and doing a start up leaves me little time for other important things, like seeing my family. Or sleep. Our other partner, Michelle, is in law school full time and could definitely use the money.
I know many start ups are in similar or worse positions – strapped for cash, exhausted, but elated they’ve made something from nothing, thrilled that someone (anyone) else thinks it’s a great product. Unless they were born millionaires, every founder is faced with the inevitable choices of giving up, selling out, or holding on for just one more day.
This is why I think Chris Sacca’s viewpoint on giving founders smaller amounts of money to “tide them over”, and/or buy a small amount of their shares for immediate cash, is a fantastic idea. For a relatively small amount (say $5000), startup founders could feel less like they are in a financial nightmare. I’m not talking about Dom Perignon and nights at Nobu – I’m talking about the ability to pay for server costs. For business cards (at one point Givto was too poor to pay for business cards…). Or for just peace of mind. Through a veil of desperation, it’s hard to make wise decisions about the future of a company, especially when getting out of it looks (at times) like the only option. VCs tend to think the only money that “moves the needle” so to speak is a $100k investment, but that isn’t the case. I think it’s the smaller amounts that say more, if only because it acknowledges a true understanding of the startup dilemma, and I think it also generates a level of trust between the founders and their investor. As foolish as it sounds, Founders want to know that VCs care about more than the product, they care (even just a tiny bit) about us too.
This is also why Chris Sacca is (so far) my favorite guy out there. Not only does he understand the founders dilemma and is working to spread his theory on small cash infusions to start ups to other VCs, he also legitimately seems to care about “the kids”. His response (read it here), was not important in the sense that it was ‘a response to Ron Conway’. What was far more important were the ideas embedded in the email, and I urge every founder and VC to read critically and give these some thought. After meeting with him (which was prior to Angelgate), I know this response is not just words but a firmly held point of view, and one that he talks about with passion. And that’s awesome.