Category Archives: Startups

Creating Your Own Wake

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As a founder your survival is a function of how you create your own wake.

Wikipedia defines a wake as:

A wake is the region of recirculating flow immediately behind a moving or stationary solid body, caused by the flow of surrounding fluid around the body. There is formation of vortex in the wake which is the region of low pressure in it.

…The formation of these waves in liquids is analogous to the generation of shockwaves in compressible flow, such as those generated by rockets and aircraft traveling supersonic through air.

wake

Circulating flow.

Vortex.

Pressure.

Shockwaves.

If you read the entire definition you’ll likely get lost in a hell of a lot of science but those are the words that jump out to me when I read the definition of wake. It doesn’t just apply only to water either, if we could see movements of air we’d be seeing the impacts of wakes and shockwaves all around us.

To me, in human terms wake simply means your lasting impact on the world around you.

I have been thinking about this phenomenon recently since I made the leap back into entrepreneurship as a founder, (re)discovering all the painful and challenging issues you deal with as you are just starting out. So many things are working against you and the inertia of the world is quite similar to the inertia of water. A boat doesn’t create a wake unless its moving. Same for us. Forward progress in life requires some sort of energetic force to drive you forward, pushing against the inertia of the world and creating a wake that ripples outwardly away from you and positively impacting others around you.

There’s some social science for ya.

One of the most important lessons I learned in the last couple of years is you can make the entrepreneurial path a little easier by creating a wake around/behind yourself. This is not easy, because it requires effort and energy to do things we generally don’t want to do.  Going above and beyond our normal comfort zone to stand out is almost the antithesis to what we as humans feel we want to be doing each day/week/month.

But standing out – creating a wake impacting others – is what is required of you as a first time founder who is desperately wanting to make it to the next level. That or get lost in the thousands of others vying for the same attention, money and position.

What would a wake look like in real life? How would it involve humans, social interactions, business decisions, etc?

I find the key to gaining an edge when just starting out is finding specific actions to take to create a wake in an industry – shockwaves that keep spreading and impacting people you might not even have direct contact with.

Start writing on topics people in your industry might find interesting, posting them on social media and guest posting on other media outlets. Who cares what you write about (okay that’s kind of harsh but you get what I am saying) and what others might comment on, just having a voice and putting it out there places you at the top 10% in your industry. Be consistent in your writing efforts and don’t worry your audience will find you. Create video or other visual content which is entertaining and educational and that others can share with their networks. It doesn’t exactly matter what you record and put out, it just matters that you start and don’t stop so others start to recognize you. Organize local events and meetups around relevant industry topics so you can help others connect with each other. Be seen and be known. Work on and release products which are both interesting and have high potential to change your industry. Who knows, you might learn something new! Carry yourself, shake hands and talk in a way where people will be impressed.

These are the things people remember, they are what people share with others and what sticks in a room once you leave. That’s your wake.

 

Founders RAW: Rahul Sood – How to Build A Luxury Brand

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I recently sat down for a Founders RAW conversation with Rahul Sood to talk about entpreneurship and various aspects of startup life. Rahul is cofounder and CEO of Unikrn, a Mark Cuban backed startup in the massively growing esports industry. Below is a short clip on how to build a luxury brand.

Coasting To Perfection

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Am I doing all I can each day to reach my own pinnacle in life? Have I done everything possible to become the person I was created to be or am I just coasting along the highway…?

A post today piqued my interest and spurred this intense inner monologue. MG Siegler writes about a recent SI article on Michael Phelps which details his comeback and rehabilitation from alcohol related incidents.  The article touches on a variety of events in his career but what jumped out to me was a very interesting and possibly troubling assessment by Phelps himself, where he simply admits he has never given it his all. Ever. Even after numerous Olympics and all the medal records he feels he under-performed and still has his best inside him. Siegler ties that thought back to all of us:

“we don’t often hear about someone at the pinnacle of what they’re doing also failing to give their all — and yet, that’s clearly the case with Phelps….. And so in a way, I think that’s a more interesting point from which to look inward. If you’re really fucking up and squandering your talents, it’s pretty obvious for everyone to see. But what if you’re only not “giving it your all” and coasting on doing the minimum to still be successful — even very successful? Or maybe not even the minimum, but something less than all you’ve got. I think a lot of people are guilty of this. Maybe even most people. Certainly I am, in some regard.”

So I ask you, are you just coasting through your life?

It’s a troubling thought if you really consider the question when its asked another way: will you ever reach your full potential with your current output of energy, focus and determination?

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I ponder this question quite a bit and maybe it’s the reason I have a number of current projects/companies ongoing in my life. It’s almost as if I can’t not do them. I don’t want to ever look back and realize I could have done more, that I should have applied myself more fully to the things and people in my life, and that I coasted lazily while others looked upon me with slight disappointment knowing I was fully talented and capable of greatness but in the end never doing anything worthwhile.

Wasted talent they’d say.

This is why I push myself to write even on days when I don’t want to or don’t feel like it. I want to follow my writing talent as far as it will possibly take me.

This is why I get in front of the camera and shoot more Founders RAW conversations.  Setting aside the enjoyment I get from doing them it’s not easy being comfortable in front of a camera and I believe people need to hear the messages we are putting out. I also want to follow my talent in media creation as far as it will possibly take me.

This is why I get on stage in front of hundreds of people each month and host Feature Friday events in Seattle – a monthly event which highlights 5 new up-and-coming area startups. This pushes me to become very comfortable on stage in front of crowds and calms the public speaking nerves, a wise move given public speaking is the #1 fear in the world.

This is why I push myself to build new apps and create whole new companies. I don’t ever want to find myself out of the loop on the latest trends, as well as sometimes it just takes a few cycles before the big idea takes hold.

This is not rocket science but I do these things so that I get better at them until a time comes where they are second nature to me. This is the 10,000 hours stuff Malcolm Gladwell talks about. It is said by the time the Beattles led the “British Invasion” with Beattlemania and brought their music into America they had already played together as a band live so many times they had eclipsed their 10,000 hours threshold and were very very tight as a band. That’s why they were so damn good so early on.

But it didn’t come overnight.

The Beattles believed – as I am starting to now – you are only as good as you choose to be. And “to choose” means you determine to do whatever it takes, however long it takes, with whatever means you have at your disposal to achieve you potential. Anything less is just cheating yourself and the greater world in the process.

Some have it easy you might say. They are naturally talented and without doing EVERYTHING THEY CAN they turn out to be Olympic champions and record setters. LeBron James, Michael Phelps, ect.. Simply more talented than anyone else. I say good for them.

But I am more impressed with the one who wasn’t God gifted with the most talent in the world yet works so diligently at their craft they become one with it, they become the legends we read about. The Wright Brothers. Steve Jobs, etc. The ones who came from nowhere, with no money and no connections, no Ivy League schooling, no Silver Spoon or lucky sperm club card to show off.

These people will it into existence. They are the ones we love to read about and crave to hear speak in public.

My guess is you fit that bill just as I do. So do yourself a favor each day and ask yourself if you are giving it your all – and be honest with your answer. My guess is you’ll be surprised at how much farther within yourself you can dig.

Do Something Everyday That Terrifies You

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1805756738_ec05607189_zHere’s some advice that might be scary to you: Do something everyday that terrifies you.

It’s a simple sentence yes, but its consequences reach far and wide. Having courage to do things that scare you is the essence of growth and progress, in both your personal and professional life.

I noticed this phenomenon recently in my own life when I chose to start meditating every day. Before I started, I viewed mediation as a foreign activity, something only eastern religions practiced. But actually, I was scared about doing it for some weird reason, namely because it was new and different to me.

Yet I decided to lean into my fear, push it aside and dive right in. Five months later and I am still going strong, maybe missing one day per week on the weekends when something comes up in the morning and I am not able to sit quietly. I can’t even describe the benefits I have enjoyed and the new growth opportunities I have opened up simply because I am sitting quietly each day and contemplating this crazy world we live in.

I also learned doing terrifying things are good for the soul when I reach out to people and sit down with them for a Founders RAW conversation. More and more of my guests are noteworthy people who have founded well known companies or are successful in their previous ventures.

I think to myself “they get hit up all the time so why would they answer my email? And why would they want to talk with me anyway?!”

But you know what?

I send it anyway.

And they answer it!

Meeting set, great conversation had, sweet new Founders RAW video for you all to watch, and new contact/friend made.

All because I chose to be uncomfortable and reach out to someone who might turn me down or not respond to my request. It’s crazy how your mind twists reality to scare you from doing things each day that would totally change your life. You have to acknowledge the warning but then push past it.

Ask for the sale.

Ask the guy or girl out.

Ask the investor for more money.

Jump off the cliff into the water.

Write the blog post you’ve been thinking about.

Smile at the stranger.

Talk to the stranger.

Post the picture.

Build the prototype.

Recruit the team.

Start the company.

Ask for the raise.

Join the new company offering you a promotion.

Move to the new city if you feel the pull.

Guys and girls – the principle works. Do something new and scary each day of your life and you’ll be shocked at what happens next.

Leading A Few Panels During Seattle Startup Week

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This coming week is Seattle Startup Week, a free five-day event highlighting the amazing startup culture of the Puget Sound. It looks like there will be more than 100 events happening over the next week and should be very fun, entertaining and educational.

In fact, I will be participating in 2 of them as I will be leading panel discussions both Tuesday and Wednesday evenings. Below are quick descriptions of each event. If you are free either one of those nights you should come check them out. Here’s the entire schedule.

Pick The Brains of Local Angel Investors and VC’s 

(Tues Oct. 27th at 6pm)

Learn from local Angel investors and VCs in Seattle  about what they look for in a company when they invest.We will be inviting local Angel investors and Venture Capitalists to get insights on the process they use when investing in startups.

Moderators

Nick Hughes

Director of Business Development, Knotis
Nick is an entrepreneur with achievements in e-commerce, digital payments and technology start-ups. He excels at interpersonal communication and leadership, business strategy and product management. | | Currently Director of Business Development for local e-commerce focused Knotis, Nick previously founded the mobile payment startup Seconds as well as recently forming Coinme, a new company built around expanding bitcoin and digital… Read More →


Speakers


Josh Maher

Angel Investor
Josh Maher is the author of Startup Wealth: How the Best Angel Investors Make Money in Startups (http://amzn.to/1NUAoz4). Startup Wealth delivers engaging interviews with early-stage investors in Google, Invisalign, ZipCar, Uber, Twilio, Localytics, and other successful and not so successful companies.  | He’s a passionate supporter of the Seattle startup community, President of Seattle Angel, a non-profit focused on education at the…Read More →


Yi-Jian Ngo

Managing Director, Alliance of Angels
Yi-Jian Ngo, Managing Director, leads the Alliance of Angels. A network engineer by training, Yi-Jian stumbled into the startup world when AT&T rebooted its corporate venture fund and recruited him as a founding team member. Working closely with entrepreneurs and helping them build their companies turned out to be such a blast that he continued that work at Microsoft. Most recently, he was a venture capitalist at Sierra Ventures, where… Read More →


Tim Porter

Managing Director, Madrona Venture Group
Tim is focused on investing in B2B software companies in the Pacific Northwest. He currently is particularly interested in the areas of SaaS applied to both horizontal and vertical applications, cloud infrastructure and automation, data analytics, security, and enterprise mobile. He is a board member or board observer of numerous Madrona portfolio companies. In addition to his work at Madrona, Tim is a member of the three-person Investment… Read More →

Gary Rubens

CEO, Start it Labs
Founded ATGStores.com in 1999 – sold to Lowe’s Home Improvment 2012, Founded Architectural Details, inc in 1990- sold to private buyer in 2007, expertise in ecommerce, online advertising and business growth.He invests in more than 50 companies.
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Raise Capital Like A Superstar

(Wed Oct. 28th at 6:30pm)
Learn from some of the most successful startup capital raisers that received nearly and more than 10M$ in funding. Local CEOs and CFOs and startup founders will share their experiences and advice and learn how to raise capital like a superstar!

Moderators

Nick Hughes

Director of Business Development, Knotis
Nick is an entrepreneur with achievements in e-commerce, digital payments and technology start-ups. He excels at interpersonal communication and leadership, business strategy and product management. | | Currently Director of Business Development for local e-commerce focused Knotis, Nick previously founded the mobile payment startup Seconds as well as recently forming Coinme, a new company built around expanding bitcoin and digital… Read More →


Speakers

Aviel Ginzburg

Co-Founder, Simply Measured

James Gwertzman

CEO, PlayFab, Inc.
James Gwertzman is the CEO and Co-Founder of PlayFab, a Seattle-based company that helps game developers future proof their games with an industry leading live game operations platform. James has over 15 years of experience as a senior executive in the games industry. He believes strongly in the power of alignment, empowerment, and transparency to build truly great business. Prior to PlayFab, James founded and then led the Asia operations for… Read More →

Michael Schutzler

CEO, Washington Technology Industry Association
Michael Schutzler is a successful chief executive with over 30 years experience in  | rapid growth, start-up, and turn-around ventures. As a successful Internet  | entrepreneur, angel investor, and CEO advisor, he has helped raise over $50 Million  | in financing for more than a dozen companies and has served as a coach and mentor  | to more than 50 founders. | Michael spent the first part of his career in the telecom… Read More →

Founders RAW is BACK!

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After a year long break, I am excited to announce we are back to filming more Founders RAW conversations.  We filled our need for a new film crew with the addition of Shinebox Films and quickly got to work to complete two new conversations.

For the uninitiated, here’s why I started Founders RAW:

“Founders RAW is actually an experiment.  As founders of an early stage startup we quickly realized how difficult starting a company can be.  And being part of the larger startup community in Seattle we discovered we weren’t alone in our crazy, mind-blowing experiences – apparently others have them too.  The idea started to form once we noticed the frequency of finding ourselves 30 minutes deep in truth sharing and wisdom dropping conversations with founder friends.  We wondered if others would be interested in what we have learned, so we figured why not to bring a camera.  I guess we’ll see what happens.

Founders RAW is a video blog with conversation style interviews focused on bringing out raw stories early stage founders experience in their challenging entrepreneurial journeys.  We invite founders to talk openly over a beer or a coffee about the “truth” of how they survive and grow their companies.  We post the full conversations on the blog but really, who has time to watch 45 minutes of video?  So we slice up the conversations and post nuggets each day as well as send out daily videos no more than 3 or 4 minutes long to blog subscribers.    Now we all can receive daily nuggets of the entrepreneurial truth.”

This year’s guest’s will include founders from Ghostruck, Unikrn as well as a prominent Seattle Angel Investor along with others to follow. You will see more on those when we complete the editorial process, but I wanted to highlight a handful of conversations we had over the last few years to get you back in the mood.

Brewster Stanislaw, cofounder of Inside Social

Marc Weiser, Founder of RPM Ventures

Simon Crosby, Founder of Bromium

Adam Lieb, Founder of Duxter

Bubbles And Golden Ages… Continued

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The following post is an adaptation from the original one I posted on this topic in May of 2011.

I once watched an interview where Fred Wilson offhandedly noted reading a book which transformed the way he looked at markets and the web in general.  I instantly went to Amazon and ordered it and spent the next week reading it front to back.  Whew… it changed my life as well.  I up and quit my job the next month.  Thanks Fred.

Not a day goes by in 2015 we don’t hear the word bubble in some capacity or another. We are on pace for one of the biggest years in Venture Capital deployment since the dot com bubble of 2000. Massive private funding rounds in excess of $1 billion (Uber, et al) coupled with the sickening obsession of Unicorns have created a market with flu like symptoms. Although I cannot predict the future I tend to agree with others who publicly state it feels like we are in for a correction here very soon. If you are a founder of an early stage company, it would do justice to understand the cycle we are in, where exactly we are in it, and what you should do in your specific situation.

Technological Revolutions and Financial Capital by Carlota Perez is one of the greatest overviews of the incredible economic phenomenon known as the bubble.   What we are currently going though – recessions and expansions, bubbles and bursts, highs and lows, whatever you want to call them – they are inevitable.  In fact, the history of the entire world economy is one big cycle which repeats itself over a period of about 60 years.  I cannot do this entire book justice, just take my word for it, go buy it and read it yourself.  You will publicly thank me later just as I just thanked Fred now.  But I will introduce the general phases a new technology (paradigm) encounters so the “layman” technologist, marketer, social media guru or business person can start to see a clearer economic picture.

I hope I am not being too being blunt, but without grasping this concept you are swimming with your cap over your eyes.  You need to understand what is actually going on in this crazy economic world we live in.

Irruption

As a new technology is developed and deployed into our society, it will enter a cycle of adoption.  Interestingly, Perez notes new technologies are created during the maturity phase of the last great technology expansion.  So although we are starting with the irruption phase, let us take for granted the specific technology has already been created and diffused through very early adopter communities.  During the irruption phase, we see a slowing or declining of the old industries and an early adoption of a new technology.  Carlota notes:

The very intense activity of the new paradigm carriers contrast more and more with the decline of the old industries.  A techno-economic split takes place from then on, threatening the survival of the obsolete and creating conditions that will force modernization.

Old print media anyone?  Taxing industry vs Uber and other on-demand ride services? This irruption phase is started with a big bang (invention and initial diffusion) and will propagate within a small community of early adopters.  Note the image above, depicting very low diffusion, even to a point the general masses dismissing the technology altogether.  Amazingly it is contained within this tight group of people and industries for some period of time.  That is until a tipping point is hit. Today, most people who have taken an Uber or Lyft ride – if given a choice – will only take uber from here on out.

Frenzy

Frenzy is a period of massive growth for a new technology.  It is a time of new market creation as well as for rejuvenating old industries.  Once a critical mass of consumers have been hit, the diffusion of the paradigm takes center stage.  Individualism rules the land, as does speculation, wealth creation and ultimately resulting in over-investment flooding the market.   

Frenzy is the later phase of the installation period.  It is a time of new millionaires at one end and growing exclusion at the other, as in the 1880’s to 1890’s, the 1920’s and the 1990’s.   In this phase, financial capital takes over; its immediate interests overule the operation of the whole system.

Notice the part about the growing polarization between the rich and the poor.  Sound familiar? Capital investments soar during this time, creating a false sense of wealth creation.  This craze attracts more and more individuals wanting to get a piece of the action; so late frenzy is financial bubble time.

Turning point

At some point, the bubble has to burst.   Things that go up must come back down.  Interestingly, the turning point is neither an event or a phase, rather it is a process of contextual change. 

The turning point has to do with the balance between individual and social interests within capitalism.  It is the swing of the pendulum from the extreme individualism of Frenzy to giving greater attention to collective well being, usually through the regulatory intervention of the state and the active participation of other forms of civil society.

The turning point is a space for social rethinking and reconsidering.  It is, in fact, the time when the mode of growth that will shape the next few decades is defined.  I would argue we have been in this phase for a while, maybe starting 5-8 years ago.  After picking up the pieces of the crash of the early 2000’s we are now starting to see realignment in almost every industry known to man.  Name an industry that is not currently being touched by the internet and mobile?  Exactly.



Synergy

This is a time for production.  Since the foundations and infrastructures were laid out during the previous phases, conditions are there for dynamic expansion and economies of scale.   The diffusion of the new paradigm now reaches far and wide, is accepted as standard, and now governs supreme.  It is a time for promise, work and hope.  For many, the future looks bright.   

Synergy is the early half of the deployment period.  This phase can be the true ‘golden age’.  It is likely to be the closest the system ever comes to convergence within the economy of the core countries of the system.

Mary Meeker anyone?  She has identified this expansion phase quite eloquently, particularly in the mobile space.  I would argue we are still at the turning point but on the cusp of this synergy phase.  We should expect to observe massive expansion and economies of scale in almost every industry imaginable for the next few decades.  New industries and markets will emerge.  Old ones will finally die off.  Will it be all golden?  I am not so sure.  But if history is any indication, we shall see an expansion of scale only experienced once every 60 or 70 years.

It was this exact point in the book which urged me finally jump off the fence and into my entrepreneurial pursuits full time.      

Maturity

Once again, the cycle continues.  Every paradigm has a shelf life and can only survive so long.  As it enters maturity, deep questions are asked about the system and the climate is favorable for politics and ideological confrontation.  Markets are saturating and technologies are maturing.  

Gradually the paradigm is taken to its ultimate consequences until it shows up its limitations... yet all the signs of prosperity are still around.  Those who reaped the full benefits of the ‘golden age’ continue to hold onto their belief in the virtues of the system and to proclaim eternal and unstoppable progress, in a complacent blindness, which could be called the ‘Great Society Syndrome’.

During maturity, the stage is set for the decline of the whole mode of growth and for the next technological revolution.  Since we are entering a synergy phase, I will not spend much time on maturity.  According to Perez, the next maturity phase should not be entered for quite some time and the decline of our current paradigm should not influence ones innovation or investment perspective.  Yet it is always smart to keep an eye on something like this.  Interestingly, it is in this period inventors and innovators are tinkering with what will eventually become the next great paradigm.  This begs the question:  What will supplant the internet?  I would suggest not worrying much about the answer to that question and take advantage of the current conditions.  According to Perez, it should be quite good for years to come.

The lesson I see here is to know that we are in a smaller bubble within a larger economic cycle.  The smaller bubbles grow and pop fairly regularly with the net result of growth throughout the 60-70 year larger cycle.  The key is to make sure you have made the correct decisions to protect yourself and your company from the small bubble gyrations.

Is It Fair That Founders Get The Lions Share of Equity?

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Something has bothered me for some time and its just now starting to get talked about.  Below is not a rant, but rather an exercise in thinking about fairness in compensation.

Founders receive huge amounts of equity in the companies they start, yet over time as more and more employees join on and work incredibly hard to help grow the business into a successful enterprise the percentage ownership (cap table) doesn’t reflect adequate compensation.  Why is it that an employee that joined just a few months or a year after the founder receive orders of magnitude less equity – and cash after a liquidity event – than the original founders?

Does it really matter if you were there first and if it was your idea to begin with?  If so, how important and impactful is it?  Millions of dollars?  Billions of dollars worth of difference?

Yes, founders do take inordinate amount of risk in starting a new venture and they should receive compensation to reflect that.  But when we are talking about $billion+ outcomes we then start to talk about income inequality on absurd levels.  The difference between a founder receiving $1 billion or $2 billion is not the same as taking that extra $1 billion and spreading it over 100 or 500 employees – that which makes quite a bit of difference in each of those people’s lives.

The fact is early and middle employees are hugely important to the success of a startup and should be compensated accordingly.  More so, they might even be vital to the company’s success, such as a Director of Sales or VP of Engineering may be in helping a gangly startup grow up into a mature and profitable company.

A recent podcast from Andreessen Horowitz covers this issue, and touches on how founders can think about structuring their equity grants a bit differently so that they can appropriately compensate early and later employees.

Anyway, listen to the podcast as it covers a lot of points in this touchy subject.

How To Approach A Startup When Looking For A Job

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A friend recently asked me a good question:

What’s your feel on whether or not to contact a company without a clear position opening. There are a few startups I really dig, but they don’t currently have a job opening that fits my role. Is it worth it to shoot them an email to introduce myself and possibly talk about carving out a role if they like me enough? Or should I not waste my time?

My answer:

Best to naturally network and get to know people in real life like you have done with me, rather than reach out cold knowing they aren’t hiring for your skill set and hoping for the best. They’ll probably just think it’s spam and not respond – that’s what I do.  Most companies/startups hire for personality + skillset, and the only way to find that match is to meet them first and get to know them over time, illustrating your value.  So.. find a way to get to know the founders and employees of the startups you like first, then work the angle of getting a job at their company.

Reaching out to startups in an effort to connect and get to know the company is definitely a great idea.  But cold emailing thinking you will be able to land a job is a longshot at best, and shows you have no savvy way to integrate yourself within their operations.  Especially if they display on their website they are only hiring for certain positions- and you don’t see a good role that fits your skill set. (If they DO show they are hiring exactly for what you are great at, by all means reach out to them!)

The secret to getting hired at a startup is to get to know the people within the company by any means necessary. This effort will provide an opportunity to determine if you are a good culture fit – and you might find out there isn’t a good fit after all.  And just like a lot of things, that happens over time. It’s all about learning as much as you can about the founders, the employees, their product and what type of office environment they have. No startup I know of will keep the best engineer in the world on staff if they are also the biggest asshole in the world.  And vis versa, no person will want to work with a company/founders who have no idea how to treat employees with respect.

Seek First to Understand, Then to be Understood.

And that is the root of networking – connecting with people in your industry.  “Networking” has gotten a bad rap and has been misconstrued in today’s fast paced transactional world. It’s not about the one night stand and getting hired as soon as possible.  It doesn’t happen overnight.  It happens over time and over repeated positive interactions with various people within the startup, to the point where numerous people are asking “what does that person do and why don’t they work for us?”

So if you want to get hired by great founders in the industry, get out there and make sure they know who you are and why they should want you to join their team.

Is Depression Actually Normal?

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I wrote a post recently touching on my brief bout with Founder Depression.  As a result, many mentioned it on Twitter or reached out to personally thank me for writing it and to let me know they also struggled with it.

This sparked a few thoughts: “Is depression actually normal?”  And “if everyone deals with some sort of depression in their life then what can we do about it?”

I have come to realize depression is something all of us deal with at one point in our lives.  It should not be taboo or anything.  It should be addressed and talked about openly as part of the entrepreneurial education process.  As founders, we encounter depression usually from external events such as failure of a business or a negative outcome of something in which we had hoped for when we first started out.

down-the-drain

I am starting to realize being a great entrepreneur starts by perfecting how to handle the shit in your life.  Because it hits the fan waaaaay more times than you plan.  I have also come to understand the successful ones figure out how to identify the piles in the road ahead of time, and navigate accordingly before they hit something fatal.

Athletes strength train and stretch in prevention of injuries.  Why are we not doing this in the startup community?  Why are we not helping people to prevent what inevitably happens to those of us who strive for more?

The point here is to understand its not IF it will happen, its WHEN it will happen to you.  And then go into your entrepreneurial journey armed with the idea that you will at times feel very down about yourself and your company.  This is reality and this is serious.  If a founder doesn’t take it as such they are potentially setting themselves up for disaster.

Like I did.

In a recent conversation with my father we touched on this.  I noted that only when I realized I had dug myself into such a deep hole emotionally could I fully grasp where I was and what I had to do to get out of it.

I realized even though I was not in control of external events I was in control of my thoughts, feelings and internal dialog. And I was the only one who could bring myself out of the funk in which I had brought myself into.  I had to consciously think and make decisions that would place me in a neutral or positive place.

No more negative self talk.  No more whoa is me. No more pity parties and thinking I had let myself, my family and my community down.  I had to stop fighting myself, put my ego aside and choose a different path.  One that – although it has a few more twists, turns, roundabouts and curves to it – is leading me into an even better position than when I was CEO of my own little startup.

The fact is, if you are a high performer and things don’t turn out exactly the way you planned you will naturally tend to go into a dark place.  Those sort of feelings will not help you move forward in any way whatsoever, so please think now about how you will respond once you sense yourself going down.

Bitcoin and the False Dichotomy

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This post originally appeared on Geekwire.

You might have asked someone recently, what the heck is going on with Bitcoin? Or maybe you are still wondering what Bitcoin is, or even questioning its relevancy?

A lot has changed in the last year in the cryptoworld — most notably Bitcoin’s price. It’s a good time to dissect a few points about Bitcoin and the cryptocurrency market, things I couldn’t help but notice during my first year in the industry.

The biggest point is the false dichotomy in the general perception of Bitcoin. I’d like to unpeel this and provide a deeper evaluation of the industry, because people who commit the mistake of false dichotomy do themselves a disservice by not taking a full view of what’s going on.

First, a definition to help us here:

A false dichotomy is a logical fallacy that presents two opposing views, options or outcomes in such a way that they seem to be the only possibilities: that is, if one is true, the other must be false, or, more typically, if you do not accept one then the other must be accepted.

As one of the few people here in Seattle who frequently (attempts) to explain Bitcoin to non-technical people, and being the one who handles customer interactions for Coinme, I have noticed a problem. The media, tech executives and the general public talk about Bitcoin mostly by committing to a false dichotomy. Quite amusingly, I find people either preach the positives of Bitcoin or they dismiss it, like Gagnam style. One side thinks we’ll live in a libertarian world where Bitcoin will eventually be an anonymized currency to rule us all, and the other believes it’s only for crooks in the shady, dark interwebs. “It’s doomed to fail!” they pronounce enthusiastically.

Well, neither are true.

When I read about a new random Bitcoin startup here, or a larger funding round there, I start to understand how things are changing, and in what direction. The more I talk with highly technical people who mine Bitcoin or build on top of the blockchain, I learn we’re very early in something very special. Even though we aren’t living in Crypto-utopia, there is a subtle rumbling deep within the Internet we should pay attention to.Studying Bitcoin and watching the markets adjust has taught me a very important lesson: nothing ever ends up being 100% of what you think it will be. Innovation cannot be predicted, and the future cannot be known ahead of time. Correctly predicting the future is simply a function of luck. But seeing around corners can be a function of deep listening, observing and learning. So the best action for success is to (safely) get as close to the something as possible, and learn as much about it as you can, so you start to identify where the world is heading. Only then are you equipped with perspectives on where to invest your time, capital and energy.

My time around Bitcoin has shown me that our world will not be changed as much by the cryptocurrency you read about today as by the underlying technology.

Joichi Ito, who has been involved in building many layers and pieces of the Internet — from helping start the first commercial Internet service provider in Japan to investing in Twitter and helping bring it to Japan — recently wrote about the similarities between Bitcoin and the internet:

The similarity is that Bitcoin is a transportation infrastructure that is decentralized, efficient and based on an open protocol. Instead of transferring packets of data over a dynamic network in contrast to the circuits and leased lines that preceded the Internet, Bitcoin’s protocol, the blockchain, allows trust to be established between mutually distrusting parties in an efficient and decentralized way. Although you could argue that the ledger is “centralized”, it’s created through mechanical decentralized consensus.

What Ito is saying is that we could actually be witnessing the early stages of the next phase of the connected world, a time not so dissimilar to what we experienced in the early 1990s.

An often quoted example of a false dichotomy was when the Internet first gained media attention in the early to mid-nineties. Back then, many people thought it was a fad, hard to understand and a waste of time and money.  They simply couldn’t get their head around the fact that there were more than just two possibilities: A (success) or Z (failure).

And therein lies the fallacy of the false dichotomy around Bitcoin.

What we witnessed with the Internet was the invention of the web and the browser, which commercialized the internet and brought with it every major corporation in the world. By ending up somewhere between A and Z, the world changed forever.

It’s clear to me and many others in the industry we are still in the “pre-browser” era of Bitcoin and blockchain technology.  It’s there, but you really don’t know how to interact with it. What happens when we reach the “Netscape” moment of Bitcoin?

Could Bitcoin — the currency — pop and crash?

Yes, it could.

But seeing investment dollars in the cryptocurrency/bitcoin market grow each quarter, one has to believe that if Bitcoin the currency pops, then something else will emerge even better and more suited for the general public.

What will that be?

I could take a guess but in reality I don’t have a clue. Yet committing the false dichotomy sin here is a grave mistake. An important point to understand is that Bitcoin, the cryptocurrency, is just one app that runs on the blockchain technology. People well-versed in bitcoin are familiar with the blockchain, the underlying open-source technology (or rails) that bitcoin the currency runs on. Looking deeper, theblockchain stack presents interesting solutions to problems which have hindered our society for quite some time — outside of finance. Issues such as trust, security and identity can be improved with applications built on the blockchain.

In fact, here are a few other areas where the blockchain serves as underlying technology.

  • OpenBazzar: An open peer-to-peer marketplace not controlled by any specific organization such as eBay or Craigslist. Ideas like this, using a decentralized platform to exchange goods and services, could change e-commerce as we know it.
  • Factom: A conceptual framework for a system that secures and proves the authenticity of records, documents or other important types of data that are later enshrined on the Bitcoin blockchain. This could transform how we handle record-keeping online.
  • Counterparty: An example of digitizing property and identity. Developers are starting to build networks that work in parallel to the Bitcoin blockchain to perform tasks that the bitcoin network can’t, but that make use of the bitcoin blockchain to, for instance, timestamp or validate work.

The reality is that no one really knows what will happen next — that is why it’s called innovation.  But something is going to happen in this area to improve our lives and I hope you don’t get caught up in thinking only A or Z is possible.

Most likely somewhere in between A and Z we’ll see Bitcoin technologies enhance our digital lives. There’s more down there than you think.

 

What’s Your Story?

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Have you ever thought about this question?

“What’s my story?”

I attended an event last night where the speaker talked about startups and creating a story around them as you build.  He then had a slide that simply said “what’s your story?” meaning what’s the company’s story you will be telling others, such as future employees, investors, and customers.   His whole point was a major differentiator between your company and all the others is the story behind it.  I liked where he was going with it but I think it can be taken to a much deeper level.

tell-me-a-story2

What’s your story?

Do you know the meaning of the life you are living right now?

Why are you doing what you are doing?

Does company you are starting or the job your are current in have a strong story and purpose behind it?

Why does the company exist?

Does it connect with people on an emotional level and add value to their life?

Are you doing something just to make money or are you also creating value in the world?

Yes, these are deeper and more serious thoughts than revenue models and exit strategies but they need to considered or one day you’ll wake up wondering what the hell you have been doing for the last decade or two.

I don’t know about you but I don’t ever want to have that feeling.  I’m not perfect and nowhere near where I want to be in this department but I am glad I am reflecting on thoughts like these.  They are definitely influencing my next moves.  I hope they help you as well.

If you need some help in this area, listen to Scott Harrison tell his story about Charity: Water.

When Losing is Winning

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I recently sat down with serial entrepreneur Jordan Weisman for a Founders RAW conversation and walked away a changed founder.  As we cracked our beers and adjusted our mics – we hadn’t even yet turned on the cameras – I asked him to give me a brief overview of his entrepreneurial journey.  Here’s a rough summary of what followed:

So I started out trying solve problem X…. that didn’t work.  So we tried something else…

Next, we founded a game company.  That was bought by company Y.   Boy was that crazy..

After that, I started a few more, one was sold to Disney.  Another I sold to….and  so on and  so on.

In total, Jordan has founded 14 companies over the course of his entrepreneurial life.  Many failed.  Some very much succeeded and you could sense he was very content with his journey.

I really wish we had captured those few precious minutes on camera!  I wish you could have heard it – and seen my face – during the conversation because my jaw was dropping lower and lower each time he said the words “…and then I started” and followed them up with “and that was sold to...”

It was during that specific moment I was struck by something very powerful, I realized I was grasping a strong lesson right then and there.  Of course you are going to feel like a failure if you start one company and it doesn’t work out.  But the truth of entrepreneurship is it’s a numbers game.  Or said differently, if you take just one crack at it most likely you are going to fall flat on your face.  But by simply getting back up and trying again you greatly increase your odds of succeeding.

At risk of sounding naive, pollyanna and cheerleaderish, I want to bring up a really important point.  The irony is the most successful people in our world have failed more than many of us, sometimes more than many of us – combined.  We all have seen the old Nike commercial where Jordan describes how many times he failed, yet he still is arguably the most successful athlete we’ve ever seen.  He says: “I have failed over and over and over in my life, and that is why I succeed.”  

Look at any billionaire founder (outside of Mark Zuckerberg) and you will see someone who did not make it on their first try at business.  Or second try.  It might have even taken them 3, 4, or 5 starts before the big one hit.

This is not a “let’s all grab hands, sing kumbaya and make each other feel better for failing” type of post.  This is about absolute truths of the world, and ones which are hard to truly understand when you find yourself in challenging moments.

The lesson here is all of us founders must understand the first few times are the most challenging.  If you didn’t achieve what you set out to achieve in your current startup, statistics tell you to try again.

Does a gambler in Vegas take just one shot at the craps table?

Was your your first job the best and highest paying you have ever had?

I am guessing no.  So don’t think your first startup is going to be your best.

During another recent FR conversation, Matt Schobe told me it took starting 2 other companies before starting Feedburner, which in the end sold to Google for $100 million.   Would you grind away at two tough startups before a third one gets acquired for nine figures?

I sure hope so.

And a subtle but important footnote in that story is Dick Costolo.  He was part of all of those attempts – there during the tough times and challenging days – which in the end led him to Google, and then on to Twitter where he is now CEO.

Oh and he recently took Twitter public, minting him many more millions in the process.  I am wondering if he would be there today if he quit after the 2nd failed startup?

Here’s Jordan’s advice to first time founders.

The Keys To (Revelevant) Local Commerce Are Now Within Reach

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So since we all now know daily deals aren’t the holy grail of local commerce, it begs the question “WHAT IS the holy grail of local commerce?”

I’ll throw in my hat and suggest a real-time product and service discovery platform within your local community would be a strong contender.  Imagine if the right information hit your mobile device just at the right time, suggesting (or urging) you to make a purchase or buy a product from a favorite merchant of yours, who happens to be right in front of you at the moment.

keysIt’ll happen.  And OfferSavvy is already treading in these waters.

I spoke with Justin Boggs, one of the OfferSavvy founders about the future of commerce, where he sees it going and how they are looking to roll out their product discovery platform.

A few years ago Boggs started to think about how Groupon, LivingSoclal and other daily deal sites were taking huge cuts from each deal sold but not adding much value to local commerce.  He thought “how do we track offline transactions, and do it better and in a more healthy way for the local economy?”

After going through Bizdom, an accelerator in Cleveland where they got advice and connections, they are now headquartered in Long Beach, CA and rolling out their first version of the product as we speak – a personalized product discovery platform with CashBack incentives on any purchases through the system.

Ideally, they aim to build out this commerce platform and offer it to brick and mortar companies to establish a full blown local product recommendation system, akin to what Amazon does on their properties.

The goal is to create something meaningful for business owners and local consumers, with cash back incentives for both if they opt for social sharing.

I sure hope they succeed, I cannot wait to get relevant deals and offers from a system that actually knows who I am, knows my interests, knows my favorite local merchants and understands my purchase history.

You can read the entire back and forth conversation below.

What is OfferSavvy?

OfferSavvy is a social commerce marketplace where people come to discover, share, collect and buy their favorite products. We incentivize social activity and reward users with CashBack Offers on Products and Social Bonuses when their social activity leads to sales. Users can elect to have their earnings deposited into their bank account or they can donate those funds to charity AND OfferSavvy will match that donation.

We believe we have figured out how to truly create social engagement around the shopping experience in a meaningful way. Most importantly, our goals are to present each user with a personalized experience and a wall of relevant offers. So with our advanced recommender technology, artificial intelligence machine learning software, graph database, and natural language processing capabilities, we can acutely monitor a users interaction with our website and people on the site, and then begin to customize the experience for each user. Thus we help people shop for fun and with purpose.

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What’s the vision?  And what problem is OfferSavvy solving?

OfferSavvy is shopping evolved. People love to window shop, score great deals, and tell their friends all about it. OfferSavvy delivers that experience in one place, and we help people earn some extra cash based on their social connectivity. Moreover, the best form of advertising is word of mouth. Big brands and marketers know this. You probably realize this too, as your friend’s opinions are more important to you than some paid advertisement.

So, we encourage our users to be social and share offers that they discover through OfferSavvy. And each track every link that is shared. Therefore, when any social activity leads to new signups and sales through OfferSavvy, we give a little Social Bonus to the user for being the catalyst to that activity. Every user now has the power to earn dollars just for being social. Plus for the millions of American’s that need their dollars to stretch just a bit further, every product on our platform has a CashBack offer attached to it, so you can find the products that you really want- and earn CashBack in the process.

Our longterm vision for OfferSavvy is to build out the commerce rails to allow any business to actively engage with us and make Offers through our platform. This will give our users a unified experience, and allow them to stay on our website rather than be redirected third party websites to buy products. In addition, we have already written card linked offer software, as a means to close the loop for offline redemption in store. So, when I am able to build out this vision, OfferSavvy will be a grand catalog of CashBack Offers, both online and offline, to your favorite brands and merchants. We will be able to serve up real time, geo-located, personalized, mobile and cardlinked offers for our users. This way we can help people earn rewards off of every transaction they make each month. If you think about all the money you spend each month, how meaningful would it be in your life to get 5-15% of that back… we can truly impact lives here, while building cool technology.

How do users discover and use OfferSavvy?

We just went live last week, so we have started contact all of our friends, family, and connections directly. So people are coming to the site mostly through a direct link to the site. In addition, the website is built on the premise of social shopping, which means that each of us spends time using the product, creating collections, and sharing products with friends through social media. This has lead to promising traffic from Pinterest and Facebook, and a couple of visits from Tumblr and Stumbleupon.  As time goes on, traffic in large part will be through natural search for products, and given are large catalog, we can compete for page rank.

What’s the story behind OfferSavvy?  Any lessons to share?

The initial thoughts and ideas were came to me a few years ago, since that time I have continue to iterate and cultivate what is now OfferSavvy. Officially, the company was started June 2012, when we got some initial seed funding.

Some things I’ve learned from building startups is that nothing happens unless you do it, and you can truly never expect anybody else to be invested in your ideas the way you are. So you really need to be passionate about what you are doing, and love working, because for the first several years, work life balances shouldn’t exist- if you want to build something truly impactful.

Another interesting thought is just how startups are a lot about “hurry up and wait”. You have this grand vision for what this thing could be, and you want it tomorrow, but come to find out that it is going to take quite some time to build such a thing.

Also, as the founder, remember that you don’t have to be the best at everything, instead try to be the maestro, and get the right and best people for each role of the orchestra.. the genius is witnessing the music as your group plays in concert, in harmony.

What is the company’s current status? (funding, beta, users)

We have raised a little over $300k in seed funding thus far. We now have a live product open for consumption, and watching intently as users begin to interact with our platform. Ideally we want to use data and user feedback to shape this into the product that people truly want to use. And we can take the evolution in development and modifications in stride as we have structured release cycles in agile development. This allows us to be nimble, and redirect development efforts quickly as users begin to tell us, and show us the right way to go. We are also looking to raise additional funding that would give us a 9-12 month run rate, so we can focus on user acquisition and engagement on the website.

What’s next?

We have some fun hacks under way as we speak that is truly ground breaking. In the next few weeks you can expect to see the release of some social products that are completely unique to OfferSavvy. One such hack will allow users to not only make comments on products or collections, but respond with hashtags.  You might say, “Hashtags” aren’t new? To which I reply, ‘what if’ every hashtag pulled the top user generated tweets & Instagram Pics in real time into the thread?  People would not only be discovering new and interesting products, but they would find additional rich social content surrounding that product.

So with a hashtag system in place you could not only read what people think or how they feel about the products, you can see the latest tweets about the product from all over the web attached to that hashtag, and you could see the most recent Instagram Pictures that people snapped with that product or brand with that hashtag. Check out our “Featured” section today to see this in action in a slightly different way, but it will give you a good idea of the direction we want to go socially.

Founders RAW: Startups Are A Lot Like Surfing

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This post was originally posted on GeekWire.

Seaton Gras started a tech incubator because he wanted to help entrepreneurs more easily create companies.  He named it SURF Incubator — an acronym for Start Up Really Fast.

But If you prod a bit more and ask him about the name, he might just dive into an analogy of how startups and surfing are quite similar. SURF is a great name since founders are constantly working against resistance to get a business up and running, he says.

Bromium founder Simon Crosby brought up that same analogy during one of my recent Founders RAW conversations.

He says:

“So you’re in the waves… and you got a board.  And your board is your ‘idea’.  And one thing you quickly realize is you cannot control when the waves come.. you have no ability.  When the wave comes, you gotta get on the board and you gotta surf… and there’s reefs and other dangerous things under you.  So you cannot control time, you’re in a very precarious situation at all times… and it goes up and down a lot, sometimes several times a day.”

New startups are being created at a fever pitch — and we’re coming off Seattle Startup Week where we crawled, sang, danced, learned, lived and breathed startups. But it’s important to remember: Not everyone surfs.

And they don’t for very good reasons.

It’s dangerous.  It takes time.  It takes patience.  It takes learning the ins and outs of the environment  so you can start predicting what’s going to happen next.  It’s not as glamorous as most make it out to be, sometimes it’s cold, it’s always wet and a mouthful of salt water doesn’t usually sit too well.

See the similarities?

Let’s not forget it takes lots of hard work and dedication to build great and lasting companies.  Here’s to hoping you paid attention this last week, made some great contacts and discovered your next steps to take. I know I did.

Now, it is time to act on those next steps.  Make a promise that your excitement and energy of wanting to be a part of the startup movement doesn’t get washed away just like the “NICK WAS HERE” signature I place in the sand of every beach I visit.

Below is the short clip of the surfing analogy from my conversation with Simon.  You can catch more of Founders RAW here.

 

Who Inspires Me?

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You might wonder who inspires me as an entrepreneur and a writer.

There are many, but one person is Mark Suster.  He is a previous two time entrepreneur – sold his last company to Salesforce – and is now an investor and has been with with Upfront Ventures for about 6 or 7 years.

He’s great because he views startups from both the investor AND the founder perspectives, hence he writes at Both Sides Of The Table.   His straightforward tone and no BS attitude is something I have taken to my own words.  Like him I feel truth, honesty and controversial topics should be embraced by an influencer.  Ya’ll deserve it.

To get an idea of who Mark is, here’s a recent interview with Sarah Lacy of PandoDaily.

If you are an entrepreneur I suggest sitting back and taking some notes.  It’s long, but chock full of gems.

Here’s All You Need To Know About Conducting Customer Interviews

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LIFFFT, an awesome startup here in Seattle, has put together a great presentation on everything you need to know about conducting customer interviews.

Discovering your customers and the exact problems they face is something you, as a founder, cannot predict.  So you must go and talk to them directly.  Here’s how you do it.

Pricing Is A Tricky Thing

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6a00d8341c03bb53ef014e606f4675970c-800wiI was recently asked my thoughts on how to approach pricing digital products aimed at the local Small and Medium Business.

Actually, the exact question was:

Basically, I’m looking at how new startups decide on a pricing structure when they’re selling to SMBs. Essentially, you’ve got your product/platform/system, and you’ve pinpointed your target customers—now how do you determine how much to charge? Obviously market research is important, but what specific recommendations do you have in terms of how to pinpoint the right pricing for a new digital marketing/hyperlocal platform? 

My answer:

Pricing is a tricky thing.  Price too high and you put yourself out of business because no customers will pay that high of price for your product.  Price too low, and you run the risk of giving away too much for free and struggle to keep the doors open – again possibly going out of business. Digital or not, a startup needs to be able balance the need to generate revenue with the opportunity to attract as many customers as possible.

I think it comes down to doing a few key things really early on.  First, study the current market to determine who is offering what and at what price points.  You should be able to look at the market and see the high end/low end products and their associated prices.  You then look for the holes in the market – where’s the point where customers are paying too much for not enough value?  That’s where you can bring something highly valuable to the table at a more affordable price and undercut the market.

Second, it’s really important to determine what problems you are solving and what value you are actually providing.  If it’s just the same as others on the market then it will become a price war with competitors – which you probably don’t want since it usually is a race to zero.  Ask yourself how can you do something new and innovative that hasn’t been done before, and then you’ll have more freedom on the pricing structure.  McLean Reiter, CEO of hyperlocal startup Knotis, echo’s my thoughts.  He says “Most SMBs have less than $1,000 to spend on marketing, annually, so it needs to be affordable and if possible, monthly, to help them manage their cash flow better. So It all comes back to value – what do they get in exchange for what they are paying for. You need to price yourself according to the market and your overall objective, while also maintaining profitability.

Lastly, it’s truly impossible to determine your exact prices before you go to market and interact with customers.  Smart entrepreneurs engage with their customers early on, ask them about price points and adjust/iterate as they continue forward.  Founders should also use these customer interactions to uncover the hidden needs of customers, which becomes the real value of your product and thus helping to determine a pricing model.  People pay higher prices for things they really need and can’t get elsewhere.  And ultimately, companies should A/B test certain price points (offer variable pricing to random customers through marketing and study the results) to see which convert better and then optimize from there.  

 Pricing can be tricky.  So agree to understand you will not know what your pricing will be out of the gate, you will only learn what it should be over time.

Will AngelList Help Or Hurt Startup Fundraising?

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Fall 2013 will be looked back on as the turning point in fundraising for early stage startups.   The JOBS Act, along with the acceptance of  “General Solicitation” has indeed changed the game for founders looking for startup capital.

Although changes in government regulation will have an impact on startup funding, I believe the biggest impact will come from innovations in the private sector – more specifically the Seed/Angel community.

AngelList has emerged as a black swan in the investment community and is opening up funding channels founders never dreamed of even just a few short years ago.   It allows well known entrepreneurs, advisors, and angel investors a digital network to follow startup activity and quickly jump into investment deals with new hot companies.  This makes it quite a bit easier for startups to close a round of seed funding.   The days of hitting Sand Hill road in hopes of simply getting your project off the ground are over.

And more recently, AngelList announced a new feature called Syndicates, where Angels can basically become “leads” and pool capital from other Angels (or Syndicates) to quickly create their own mini-fund.  They then use this to deploy into early stage companies on AngelList, with the transaction happening all through the AngelList platform.

I will not dive into details of Syndicates, please go here if you want a full description of how it works.  I simply want to touch on where this is going and why AngelList’s innovations are game changing to the larger startup community, for better or for worse.

The big question is how will this affect founders and the overall startup community?  Is it all good?  Or will there be unforeseen consequences which inevitably come with drastic changes?

Since I am not the expert I looked around to others and researched their take on the changes happening with Syndicates.

The innovations around AngelList are clearly going to benefit founders – namely to speed up the fundraising process.  Mark Suster believes it’s a net positive for the industry.  “The most obvious, syndicates can move faster in early-stage deals than rounding up 40 individual investors.”  Good, we don’t need to heard cattle as much anymore!

But what about for the angel investors?  Although it might be better deal flow, it seems market dynamics and economic factors are going to come into play on the investor side.  Hunter Walk sees interesting changes coming for angels, “My guess is there are also some angels who were popular when they represented a $25k check but won’t be as sought after if they try to push $300k into a round.”  The nuances here are not obvious and only time will tell if this is good for the angel community or not.

 Fred Wilson also believes this is good for founders.  “Angel List Syndicates are turning angels who have traditionally been followers into leads. That’s a good thing in many ways. The more folks who can lead a round, the better, at least for the entrepreneurs.”   But he goes even further to describe how it will force the investment community to grow and work harder.  “It also means that they will have to learn to lead and lead well. They will have to step up before anyone else does. They will have to negotiate price and terms. They will have to sit on boards. They will have to help get the next round done. Essentially they will have to work. That’s why they are getting carry from the syndicate, after all.”

So maybe it’s too early to tell how AngelList will affect the ecosystem but questions loom.

Is this actually going to flatten the playing field for all of us founders looking for seed capital?  Or is it just going to make it even easier for “highly connected” founders to close a deal even quicker than before?  You only get discovered on AngelList if you can float to the top by “trending” on the network.   What does “trending” mean on AngelList?  And how do you achieve that if you are not in in the Bay Area, in 500 Startups or a part of YCombinator?  Is AngelList inevitably the web 2.0 version of the Old Boys Club?  Or is it the fundraising mecca all of us founders have dreamed of when we say to ourselves “if only we had access to more angel investors!”

We shall see!

In the end,  AngelList is a new beast and we don’t know what the effect will be on the industry as a whole but I am fascinated with the direction things are going.  My hope – easier access to angels and seed capital for all qualified startups no matter their location.

In a recent Founders RAW conversation I asked Duxter founder Adam Lieb his thoughts on AngelList.

Great Founders Learn To Toe The Edge Without Falling Off The Cliff

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19_20120115feet-cliff032That statement emerged from a conversation I was having recently with a founder friend of mine.

This individual is struggling in their current situation – not far enough along to support themselves with their endeavor but not wanting to let go (if only slightly) to do other work which would pay the bills.   They said it feels like being between a rock and a hard place, and it’s painful.  I felt it was more like a cliff.

I simply said:  “Great Founders Learn To Toe The Edge Without Falling Off The Cliff “

I know this spot really well because I was there for quite a while and I remember almost falling off more than a few times.

What I learned through the process was how to toe the line – balance on the edge if you will – without falling off the cliff.  I realized entrepreneurship is balancing the risk of great rewards with the risk of detrimental actions.

How do you know which is which and what to do when you find yourself getting weak knees as you get pushed towards the cliff?

You have to look deep inside yourself and ask “what do I gain from staying here?  Do I really only have one option, which is to stay here and not evaluate my other options?”

Notice I said “gain” not “lose”?  There’s a big difference between those two perspectives.  When you are standing on the edge looking far down the cliff, you have much to lose.  So much in fact it’s hard to pinpoint exactly what you are doing and why.  Founders face so much challenge and adversity they can easily lose their perspectives and clarity of thought.

I told my friend he needs to look inside and ask what he gains from staying there.  He needs to look out for himself first and foremost.  He needs to take care of his basic needs – be it money, food, shelter, stress relief, relationships – and only them will the company stuff  work itself out.

I said, “trust me, it won’t get any better if you don’t step away from the ledge.”

Stepping away from the ledge is exactly what I did and I am so much better for it.  Yes, I had to swallow the pill and realize my “first” attempt at building my company wasn’t going to end like I dreamed it would just a few short years ago.  But as I backed away from the ledge and got my priorities/basic needs back in order, things started happening I never thought possible.

You would be amazed what happens to your business life when you remove self inflicted pain and stress from your personal life.