admin | January 30th, 2012
This FounderDating Guest Post was written by Lane Becker for our series: FounderTalk – The Real Story. Lane is Co-Founder of Adaptive Path and Get Satisfaction and co-author of the upcoming book, “Get Lucky” (get it now!). He’s also an advisor to several startups and can be reached and/or followed at @monstro.
Silicon Valley runs on money, talent, and sheer, unadulterated willpower. At least, those are the obvious things. Less obvious are those skills that are just as important but not so readily apparent. In particular, this industry banks on an ongoing influx of naiveté and unchecked optimism to keep its motor running. Try asking anybody who’s been ground through the venture mill a couple times—the second and third times down the startup chute are much harder than the first. First timers all share one distinct quality: they don’t know how hard it is. Yet. This is a blessing.
It Never Gets Easier
In my career I’ve done 4(ish) startups, and each one has required from the get-go a huge leap of faith: A belief that we know what the future holds, and that our new idea will push it further and faster in that direction. In other words, a belief that we could truly change the world—an easy thing to say but a hell of a thing to do. But each time, that belief gets harder to sustain, because every time you start over you’re cursed with the knowledge of how hard it was previously: The absurd challenges you faced. The places where you got it wrong and had to reboot. The hurdles you had to jump. The diving saves. The constant rejection. And worse of all, the times when you didn’t quite pull it off. For all the talk about our culture of celebrating failure, the truth is that failure, when it’s yours and you own it, fucking sucks.
And yet, I love it. Love it. Wouldn’t have traded any of my experiences in those 4 startups, the great ones or the awful ones, for anything else. Can’t believe how crazy lucky I’ve been to ride along for both the first and the second wave of dotcommery, and quite curious to find out what role I can play in the ones that come next. But here’s the thing: I don’t love it for any of the reasons I was told I would love it.
Instead, I love it for what I learned along the way about what really matters. So, here’s my advice for people who are starting companies right now, or anytime in the future. It’s not ten tips or eight things. It’s just a story, but one that matters hugely to me, because it taught me what really matters when you’re trying to build something you care passionately about. It’s the thing that keeps me going in this industry, even after all the tired Silicon Valley cliches long ago ceased to mean anything. It’s the story of our five million dollar seed round. Here it is.
Up, up, and Away
My most recent startup, Get Satisfaction, is doing quite well these days. Get Satisfaction sells customer communities to over 63,000 companies ranging in size from Procter & Gamble to one-person startups. If you’ve ever clicked on a “Feedback” tab on someone’s website, odds are good our product popped up in response. Get Satisfaction is now a prime player in the burgeoning world of “Social CRM,” which wasn’t even a concept when we launched in 2007 but has since become a significant force in the enterprise CRM market. We have an amazing CEO at the helm, Wendy Lea, who has a deep background in both enterprise CRM and social software, and she’s done an incredible job of driving our sales through the roof, all without ever losing her impressive Southern charm and composure.
So, nice work us! But it was not always thus. In fact, for most of the company’s history, it was a slog and a half and a constant struggle just to stay alive. My cofounders and I started the business in January of 2007, about a year into the Web 2.0 era, just as the first seed investment firms were starting to appear on the horizon. Between January and September of that year we took in $285,000 in investment from friends & family, which we rolled into a “Series Seed” round of $1.3 million, led by First Round Capital and O’Reilly’s Alphatech Ventures, that we announced on the same day that we launched our product out of beta, September 13, 2007. It was also my birthday, so we threw a combined launch/birthday karaoke party. I drank too much and belted out a slurry rendition of Bon Jovi’s “Livin’ on a Prayer.” It was a good day.
Things got harder after that. A lot harder. We launched the site as a consumer service—our initial idea had been that we would do “customer service without companies,” creating one huge discussion platform where anybody, customer or company, could show up and start asking questions and sharing product ideas with other passionate customers. And this absolutely happened, but it wasn’t happening fast enough for our investors—customers wanted to talk about the products and services they loved, but the growth was linear, not exponential.
But there was this other little thing that we noticed. One of the features we had created was the ability for companies to “claim” their areas, so if a customer was discussing, say, Adobe products, employees from Adobe could show up and identify themselves as such, we would verify them, and then the employees could use Get Satisfaction to have a product discussion directly with their customers. This feature, it turned out, was huge. Because we had done a good job SEOing individual topic pages, they were ranking well in Google, so whenever a new customer showed up and added a new company to the system (any customer could start a topic about any company or product) it would quickly get added to the Google index. Then, because every marketing person on the planet had set up Google alerts for their company and products, they would get pinged via email every time a new question or a problem a customer was having showed up in Get Satisfaction. Once the employee showed up on our site, it was a short hop to “claim” their company in order to be able to answer authoritatively.
Soaring… Like the Hindenburg
So, hey, we have companies signing up by the thousands! We have a long list of names and email addresses of marketers, executives, and customer service people inside thousands of different companies, all of whom are actively engaging with their customers on our site! Whoa! There’s the beginnings of a business model! (We think). It’s working! (We think).
By now we’ve been running the company for a year and a half, it’s mid-2008, and we’re running out of that $1.3M. Time to hit Sand Hill Road and bring in the big money! Except, as those of you who’ve been doing this for a while will recall, mid-2008 was the beginning of the last tech downturn, and investors were getting cautious. Turns out we didn’t have a business model—we had some directional indicators for a business model, and those are two very different things. Investors weren’t feeling generous. All we had to show was an idea—one that we knew would work, because of the initial traction, but since we hadn’t really even begun to move the service in that direction it wasn’t enough. There were a few false starts and partner meetings, but in the end everybody said ‘no.’ We were in trouble.
Our seed investors re-opened their pockets, we re-opened our seed round, and in came an additional $500k. The hope was that it would be enough to weather this brief (fingers-crossed) downturn, and would give us enough time to begin to build out a SaaS backend and prove out the financial model for the site enough to interest one of the institutional VC funds. But that didn’t happen—instead, thanks to a bunch of slimy east coast investment bankers, in late 2008 the economy collapsed.
Whoops. Well, at least we had company now—VCs weren’t funding anybody, and that definitely included us. We were, in a word, screwed.
It was a strange, disconnected, almost surreal moment. Get Satisfaction was really beginning to take off. We had launched our paid services, we had figured out a way to attach our community-based approach to traditional customer support strategies in a way that significantly reduced the number of inbound customer support emails the businesses that used us were getting, and all our of charts and graphs had lines going up and to the right in exactly the way we’d been told they were supposed to. We were getting accolades from customers, we were getting great press, but what we weren’t getting was funding, and largely because of factors completely out of our control.
All of this culminated in one of the worst board meetings I’ve ever had in my life. It’s December, 2008, and I’m sitting in the room with one of my cofounders, Thor, and two of our investors, and I’m yelling at everybody. This is not a proud moment for me; in fact, looking back on it, I’m hugely embarrassed at my behavior, but at the time I honestly didn’t know what else to do. The economy had collapsed; capitalism itself, it seemed, was on the rocks; what chance did our little company have? Our investors had already put in half a million more than they had intended to, and they weren’t in the mood to do it again. From where I stood, everybody seemed to think the best thing to do was prepare for the inevitable shuttering of the company or, at best, selling it on the cheap.
This was not ok. I started yelling. “You don’t trust us,” I yelled. “You don’t believe in us.” Kudos to our investors for taking all that pretty well, and letting me rant. “What will it take? What will it take to change your mind?” The answer came pretty easily: Find another half-million in investment. By next month. “Fine,” I yelled. “Screw you guys! We’ll do that.” Fuming. End of board meeting.
And then, very quickly, sheer panic. Because we had absolutely no idea how to do that. Where were we going to find half a million dollars? What could we possibly do next?
Guess Who’s Coming to Dinner?
It was at that point that I remembered a conversation I’d had just a few weeks back at a conference we’d attended—on the beach in Kona, Hawaii, no less, at a VC conference we’d signed up for back when times were more flush. Thor and I had been sitting on the beach mai-tai’ing our troubles away when we noticed that the guy next to us was a reading a book we’d both really enjoyed—“Cloud Atlas,” I think it was. So we struck up a conversation and it turned out he was an angel investor—Josh Felser, one of the two guys who now runs Freestyle.vc, a seed investment firm. Josh had been a serial entrepreneur himself, along with his partner Dave Samuel, and we sat there for a while and heard his story. We talked about books we’d read. We shared our histories. We told him how well Get Satisfaction was doing, even though that was only half-true. We drank more mai-tais. We hit it off. And at the end of it, in the way of every Silicon Valley conversation we’d ever had, Josh said the thing we all say to each other (and usually mean): “Let me know if there’s any way I can help.”
Well, ok, I reasoned. He’s been an entrepreneur; he’s sold two companies. I’m out of ideas, but maybe he’s got one. I called him up, told him I wanted to take him up on his offer. He immediately agreed to meet me for breakfast the next day.
I now refer to this, without exaggeration, as “the breakfast that saved Get Satisfaction.” Josh met me at Cafe Centro in South Park, just around the corner from our office, and over coffee I told him the whole story. Huge potential business, out of cash. Existing sources tapped. New sources uninterested. Economy collapsing. Investment bankers are jerks. Was there anything I could do? And he looked at me and asked me a really simple question: “Well,” he said, “Have you tried asking any of your friends for money?”
I had not, though I certainly had some wealthy friends by that point. Just like anybody who’s hung around this industry for more than a couple of years, I know a number of people who’ve tripped over the money land mine and had wealth blow up all around them, but one of my favorite things about living here is that for the most part nobody makes a big deal about it. We’re all still friends like we used to be—they just pick up dinner a little more often. And I didn’t want to invade that, or take advantage of the relationship—honestly, I told him, the idea of asking my friends for money seemed really difficult, and a tad uncouth.
“No problem,” he says. “Here’s what you do: Throw a dinner party. Make a list of all your high net worth friends and invite them. Make it clear that it’s an investment dinner—that you’ll cook, that it will be delicious, but that the point of the dinner is to pitch them on investing in Get Satisfaction. If they’re not up for it, there will be other dinner parties. Some of the people won’t respond, which is fine. Some will tell you no, which is also fine. But the ones that say they’re interested, that come to dinner and see the pitch—if they show up, I guarantee they’ll invest. They’re your friends.”
We threw that dinner party—Josh and Dave came, among others—and he was, it turned out, 100% right. We didn’t collect the full $500k that evening, but we got almost there, and doing so generated enough momentum to pull in the rest of it shortly thereafter—including First Round and O’Reilly, who were more than willing to participate once they saw that we’d actually managed to, against all odds, get traction.
And the best part of that evening was that one of the people who had come to that dinner was another person we’d recently met and hit it off with—our now-CEO Wendy Lea, who was impressed enough with the pitch that she wanted to do more than just invest. Fast-forward to 2012, and Get Satisfaction is skyrocketing. Wendy led three more investment rounds, convincing our existing investors to put in another $2.6 million against the current round (bringing our seed round, entertainingly, to $5 million), and then going on to land another $6 million from Azure and $10 million from InterWest. She’s brought in a stellar group of executives and employees who never fail to deliver. 2012 is already lining up to be a banner year. In other words, we made it through, and I couldn’t be prouder. And though I didn’t know it at the time, it turns out it all came down to one incredibly well-timed piece of advice.
The “T” Word
So here’s what this story says to me, and what I think the industry is really about, and what really matters in the end: Trust. Trust is a hard thing to find, and a harder thing to earn. Trust is what you get when you promise something to someone and then deliver, when you give something to someone without expecting something in return, when you invest in someone not because you think it will benefit you but because you genuinely want it to benefit them. Because with trust comes loyalty, and loyalty is critical to getting through this environment. We didn’t save our company by going on MSNBC or by throwing some extravagant party, but rather through private moments and experiences with people who trusted and believed in us.
I love Josh and Dave and would do just about anything for them, because when the chips were down, they were willing to do it for me. As I’ve made my way through the Valley, there are other people—not a bunch, but enough—who I feel similarly about, and who I hope feel similarly about me. I cherish these relationships and wouldn’t trade them for anything. So my one piece of advice I’ll give to anybody who gets into this industry is just this: Whether it’s your investors, your board members, your employees, or your cofounders, work with people you believe in, and people who believe in you.
Startups are hard—hard hard hard, hard in a way you can’t truly understand until you’ve been through it, and that’s true regardless of whether you’re a stunning success or a catastrophic failure. If you’re like me, you’re the kind of person who landed here because you’re passionate about what you make and because you truly want to change the world for the better (and if you’re not, I would recommend you quit now and take up investment banking instead.) And if that’s the case, when you look back over your career, it won’t be about how much money you’ve made or lost, or how many venture capitalists you’ve dined with, or how many private planes you’ve flown on. No, what you’ll care about most is who you spent your time with, the friendships you’ve developed along the way, and what you were able to accomplish as a team. Nobody can succeed on their own, and nobody can sustain the belief that anything is possible by themselves—better to find the people you trust, hold on to them tight, and change the world together.
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admin | December 12th, 2011
This FounderDating Guest Post was written by Frank Barbieri for our series: FounderTalk – The Real Story.
Frank is a SVP of emerging platforms at YuMe and was previously Founder/CEO of Transpera, a mobile video delivery and advertising network which sold in February 2011 . He’s also an advisor to several startups and can be reached and/or followed at @frankba.
You may be lucky enough to not have to raise money for your new venture. Or lucky and successful enough to have investors already banging down your door to give you money. More likely you are, as I was, one of the 99% of entrepreneurs who are bootstrapping their way along the passionate road to launching and scaling by any means necessary. And “necessary” for you might mean raising money. If it does, you will hear this: ‘VCs are rude.’ Is that true?
Before we tackle whether it’s true or not, know that this will definitely happen to you: A meeting that you think went great is followed by soul crushing silence.
Taken at face value this is rude behavior. And there are no shortage of entrepreneurs who rail against VCs who have exhibited this behavior (http://thefunded.com/). But, whether it’s rude or not, what I’ve found helpful is to treat fundraising like dating. Try it and it will make your life far less stressful and your fundraising far more efficient.
When raising the B round for Transpera I had one very public VC get excited enough to pull me off a conference show floor and into a hastily arranged all partner meeting across town in a matter of hours. It was crazy, spontaneous, exhilarating, exciting. I was certain we had found a match. After all, I burned an entire day chasing him and his partners around town and two hours in the actual meeting, which seemed to go very well. All day we were txting, calling, pitching, riffing, flirting. It was the perfect date. Like when you meet someone at an afternoon BBQ and spend the entire day and night doing one spontaneous thing after another ending up on their doorstep at midnight looking back at an expectant gaze.
I thought it was love at first sight. Breathless, the next day, I emailed the promised follow-up. That was four years ago. He never called back. And this is one of those “I’m a former entrepreneur so I’m different” VCs. After a few weeks, I admit, I went a little psycho. I txted, “Hey…I just wanted to check if my e-mail might be getting caught in your spam filter or something.” #humiliating.
It turns out, he was just not that into me. I’ve since gone through multiple rounds of financing and gotten a lot closer to many VCs, and I empathize. The sheer volume of introductions, reviews, follow-ups and due diligence that any one VC has to support is built for breakage. Though many have tried to make the process more efficient, there are few short cuts to running due diligence on a set of people and a company you’re about to pour a seven figure check and seven years of your life into.
Is that rude? Let’s say that there are many different communication styles and not all styles are compatible. I now know, and am confortable with the fact, that lack of follow-up is a simple indication of lack of interest and I don’t take it personally.
In sharp contrast, one of my favorite VCs is a guy who I still interact with regularly. Before I even pitched him he laid out his process: “I’ll listen to your pitch today. Think about it and research the rest of this week. Talk to my partners on Monday. And tell you my decision on Tuesday next week.” And w00t, the following Tuesday he called me to say, “No.” But it was the best “no” I ever got. He even told me why he was saying no. You’ll learn in fundraising that a fast “no” is always better than a slow “maybe.”
Raising money is like dating, so don’t go psycho. If you went on a date, and that person never called you back, would you write them a nine hundred word treatise on why you would actually be a great boy/girlfriend? Would you continue to call and text them? Hopefully not, so don’t do that when a VC ignores you. You are not going to talk them into loving you, and if you have to, it’s going to be a bad relationship. It is astonishing how many entrepreneur friends I have who have written that note. Would you really want to marry someone you had to convince of your hotness?
The quirk of raising venture money is that no matter how big the market, or how great your team, you may just not be the right fit for a certain partner, firm or time. The really good partners and firms will tell you this straight up, and keep in touch for your next project. But a lot will simply not call you back. Don’t take it personally.
You could rail at VC #1 in this story, but it’s far less stressful to look at these two different styles as simply different ways of saying ‘no’ to you. Signals that you should move onto your next prospect so you can close your round and focus on the business.
I did eventually find true love. And I can tell you it made all the jilts worthwhile.
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admin | June 24th, 2011
Hey folks,
Our last event was a blazing success! Less than a month after our handpicked crowd gathered, superstars Elizabeth Knopf and Jim Morrison decided to take the plunge and start a company together. Best of luck to the new venture!
FounderDating is back in the Bay Area just in time for you to meet your co-founder and take him/her to Burning Man for an intense creative experience…
If you excel at what you do, have a passion for innovation, are ready to take start your own company, but just need the right partner, apply now!
FounderDating brings together high caliber entrepreneurs. We handpick superstars from the serial founders to the best talents of top companies. We bring together technical and business innovators so you can build solid, complementary teams, ready to create the next big thing.
Apply by August 12th. Drinks are on us, just bring great ideas. Rock stars only, please!
See you soon!
Sophie-Charlotte
Note: FounderDating events are by invitation only. Application does not guarantee participation. All information is kept confidential.
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admin | March 24th, 2011
Do you excel at what you do? Are you passionate about innovation? Are you ready to take the plunge and start your own company, and just need the right partner? Apply now to join FounderDating! Our next SF event is around the corner.
What makes FounderDating different is the extreme quality of its members. We handpick superstars, from the serial founders to the best talents of top companies. We bring together technical and business innovators so you can build solid, complementary teams, ready to create the next big thing now.
Apply if:
* You have a killer idea and need the right partner(s)
* You’re a superstar, ready to join a founding team for the right opportunity –it’s ok if you don’t have an idea yet
Apply by April 15th. Drinks are on us, just bring great energy. Rock stars only please!
Note: FounderDating events are by invitation only. Application does not guarantee participation. All information is kept confidential.
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admin | November 5th, 2010
OnStartUps recently published an article entitled “The 11 Harsh Realities Of Being An Entrepreneur.” Certainly all of them hit home for anyone who’s ever tried to start a company.
So a few of the 500 Startups founders decided to share real examples to back up each of these harsh realities. With all of the splashy headlines, stories, and buzz surrounding startups, very little of it serves to shine a light on the heaps of blood, sweat, and tears that go into building a company from scratch. 
How there are probably many more failures and mistakes than the media makes it out to be. How un-glamorous startup life really is.
If you’re feel discouraged after reading this, don’t be! Rather, take comfort – especially if you’re a current founder and going through some tough times or struggling. You’re not alone!
Without further ado, here are some real stories from 500 Startups:
Your First Iteration of an Idea Will Be Wrong
“We launched at TechCrunch50 with a product focused on disposable email addresses which was far too narrow. But that led us to our Organizer product which has very broad appeal. It took too long to admit we were wrong.” (Joshua Baer, OtherInbox)
Your Friends And Family Won’t Understand What You Do
“My mom keeps asking, when I will get a “decent dayjob” 
” (Kris Hiiemaa, Erply)
“It’s not always that they don’t understand, it’s the unsolicited advice that gets me! When you have a little startup, every last person *without* startup experience seems eager to give you their 2 cents… it’s often completely off topic or downright obvious. So I made a kind of obnoxious but useful resolution to be upfront and say “I only take business advice from people who have already been there and done it.” (Robert Laing, myGengo)
You Will Make Less Than Normal Wages For A While
“I only realized how little I had earned during the first year of our startup when my wife and I were trying to rent a new apartment. My taxable income for 2009 was… $4,000. I was pretty shocked I had managed to survive for 11 months on basically nothing.” (500 Startups Founder who will remain anonymous)
“Upon graduating, I turned down offers to make 3 to 4 times what I get paid as a founder. To be within budget I slept on a futon and had most of the furnishings for my apartment donated to me — even still I cut into my savings and began taking on debt. One year later I still make less money on an hourly basis than the interns who get internships through InternMatch.” (Nathan Parcells, InternMatch)
Everything Takes Twice As Long…If It Even Happens
“I remember working on a ‘two week’ project which was a Q&A section of our site… 18 months ago. It’s going to launch at the end of this month. Haha.” (Robert Laing, myGengo)
“Shipping the WakeMates… ’nuff said.” (Arun Gupta, WakeMate)
Titles Mean Nothing. You Will Be a Janitor
“In the almost two years that we’ve been building EcoMom, I’ve been the CEO, loading dock worker, fund raiser, legal clerk, delivery guy, trade show set up guy, purchasing guy, accountant, graphic artist (barely), credit card puller outer, food getter, vendor schmoozer, customer service manager, blog network coordinator, and many other titles. Each day brings a new role, to add to all of the others. And when someone calls for customer service and I say “this is Jody” there is almost always a long pause, which lets me know they were expecting a woman to answer the phone (makes sense since our company is called EcoMom and we serve mostly women). Some people might complain about all of the work that is outside of their job description, but I don’t really think about that. I think about what it takes to get the job done and having done all of these jobs, I know what others are capable of and it makes it easy to hire for these positions, have empathy for the people who are taking on these roles, and allows me to pitch in when things get overwhelming.” (Jody Sherman, EcoMom)
“As the weakest-nosed member of Estately’s founding team, I was de facto Chief Janitorial Officer (in addition to CEO) in charge of taking out the trash 48-72 hours after it had fully matured. I also vacuumed our old offices every 3-6 months to conserve cash (because you need a break from mental work every so often). I also paid myself as much as a non-unionized janitor, but union wages are now here to stay!” (Galen Ward, Estately)
“Everyone in our startup takes out the trash on weekly rotation. As CTO, I must make the phone-call to order the custom municipal trash bags when we run out (this is Japan…).” (Matthew Romaine, myGengo)
There Is No Silver Bullet
“Pitching to investors and customers puts you in this mode of explaining everything away as a total breeze… “Oh yeah we’ll use AdWords, we’ll get $2 back for every $1 we spend” etc. Bullshit. I can’t actually think of anything that was easy. But at least you know it’s just as hard for your competitors.” (Robert Laing, myGengo)
Customers Will Frustrate You
“We were once on a video call with a customer who pointed a .44 Magnum at his head and then at the screen after a comment we made. He ended up being our first paying customer.” (Gagan Biyani, Udemy)
“Our market is in Korea and cultural differences completely permeate the web culture. We were frustrated to discover that Korean web users don’t actually know the URLs to their most-used web services; they go to a Korean search engine and search for it *every single time.* Ranking on Korean search engines costs a *lot* of money, so we don’t rank. Some of the early users of our service who signed up never came back because they could never find it again.” (Darien Brown, YongoPal)
You Can’t Do It All Yourself
“After getting rejected by Y Combinator in 2008, my soon-to-be co-founders couldn’t take on the risk. I decided to do it myself, and ran out of steam (and moral support) after about 12 months and decided to fold.” (Sid Viswanathan, CardMunch)
“Anyone can delegate stuff they don’t like doing. What’s hard is delegating things you *like* doing.” (Robert Laing, myGengo)
“We have had extraordinary support from friends, family and mentors who believed in us and our company from very early on. Some chose to make introductions to people at the top of their network before we even had a landing page and which propelled our company forward, others lent us their homes and cars as we came to work in a new city. All have given us the motivation to push through the challenges and scary moments while building InternMatch from the ground up.” (Nathan Parcells, InternMatch)
Building A Team Is Hard
“The phrase ‘Good people are hard to find’ is quite an understatement. I spent three years going through ten people and two founding teams before finding a set of co-founders who really clicked. When that happened, the difference was like night and day. There’s no more valuable asset for a startup than its founders, and it’s worth doing whatever it takes to find the right people.” (Ryan Damico, Crocodoc)
“When I was bootstrapping, I was overjoyed to find a human being that would support me. But the skills and attitude you need from someone very early on are often completely different from the skills you need to build a business long term. You realize quickly that people who may have been instrumental in the early stage of the company can actually become dead weight when you reach a certain size, because they haven’t changed with the company. It’s really painful to remove them, but necessary for the company.” (500 Startups Founder who will remain anonymous)
Finally, this wasn’t part of the original OnStartups list but it was contributed by one of our founders as #12:
You will LOSE all of your money that you ever earned, and then a bunch that you still have not earned. If you’re not prepared to put it all on the line, you’re not prepared for a start-up.
“The economy tanked, we ran out of money, and still didn’t have the “right” model figured out. The whole team of ten had already gone more than two months without any pay, vendors were waiting for payment, and still no funding in sight. Thanks to the disastrous economy, the real estate market collapse, and my unwavering (some say foolish) personal support of the business, my prior seven figure personal net worth had been reduced to $30,000, which I had stocked away in cash in a safety deposit box. Already on the brink of personal bankruptcy, I said “F&%* it”, and brought all $30,000 in one day (in cash) and handed it out in envelopes to the entire team evenly to get us through the next six weeks. Just over one year later we’re rapidly closing in on profitability, have signed half a dozen game changing partners, and are on track to build what I believe will be at least a $100MM company.” (TJ Sassani, Zozi) v
This is republsihed from the 500 Startups Blog…
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admin | October 13th, 2010
This FounderDating Guest Post was written by Dan Martell for our new series: FounderDating Blog: Founder Talk – the Real Story.
Dan is a co-founder of Flowtown, a social marketing platform focused on helping small businesses achieve real results in the world of social media. He’s a serial entrepreneur, and a technologist by background who’s learned about startup business and marketing by being hands on, having founded his first web company at age 25, selling it four years later in 2008.
This is a new, Q&A format. We asked him some questions related to his experience as a two-time founder, and technologist turned general startupper. He gave us very honest answers.
Q1: As a technologist without “formal business training” (as in your bio), what do you think about the concept of the “ideal” startup team being a technical and business team? True?
A1: Totally disagree. There’s no ideal situation. I know engineers that can out sell MBA’s, and some folks who can’t deliver on what they sell.
Startups win because of attitude, not initial skill sets.
At the end of the day, you need to be able to build the product and iterate for free. This usually means a technical co-founder. If you incur cost ($) to iterate and learn, then you’re in big trouble. There’s a high probability that you’ll be wrong with the initial version.
Companies fail because they run out of time before they figure it out .. either building the wrong thing, or not being able to find a repeatable business model (i.e. customer / sale).
Q2. You were a technologist who “did it yourself” (no biz co-founder) with Spheric, your first startup. What were the benefits and what were the costs associated with that? What would you say to a technologist thinking about “going it alone”?
A2: You need to learn how to sell. I remember right from the beginning at Spheric I started reading books on sales & marketing. I probably read over 30+ books on these topics. I made it part of my job.
So, yes you can do it alone but it does mean you’ll need to learn these skills.
Q3. With Flowtown, you do you have a co-founder (Ethan Bloch) who is not a technologist by training. Why doing it this way this time?
A3: Ethan’s a freakin rockstar. Most people don’t know this, but he taught himself Ruby / JS / CSS so that he could contribute and push code (sometimes with negative side effects 
.
The reality is that when we started Flowtown, I wanted a co-founder who played at the things I worked at. Ethan’s background is finance and he’s very detailed. I’m not. He focuses on the parts of the business that I don’t enjoy, and he loves. I think that’s the best type of co-founder regardless.
And this goes back to what I said above about attitude. Ethan’s the kind of guy who will just grab ahold of whatever needs to be done, at the time it needs to be done. It’s that attitude first that’s so important. Skills can be learned.
Q4. What’s the 1 piece of advice you wish you got sooner or wish you got and why?
A4: My answer to that question will be a bit of meta-advice–advice about advice: only take advice from someone who’s already done what you’re trying to do. I wish I had learned that a lot sooner. A lot of people are smart enough to match patterns part of the way, and reason their way partway to a solution that they haven’t implemented. But there are always gaps, and that sort of “knowing-doing” gap can lead to big, big problems.
Q5. What are the two pieces of advice you got that you’d now ignore and why?
A5: Well, related to the above, advice from folks who have not done the thing that you’re trying to do. When you’re building a company, you get so many people, for good or for bad, trying to guide you–it’s really important to be able to separate the wheat from the chaff. And this is one way that I’ve found really works.
You can follow @danmartell
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admin | September 22nd, 2010
This FounderDating Guest Post was written by Manu Kumar for our new series on the FounderDating Blog: Founder Talk – the Real Story. Manu is the founder and Chief Firestarter at K9 Ventures – a seed stage fund in Palo Alto, CA. Manu is an entrepreneur turned investor who previously founded two companies, both of which had hugely successful exits.
I’ve been a big fan of Founder Dating ever since I first heard of the concept from Jessica Alter. While I haven’t attended any of the Founder Dating events myself (apparently investors are not allowed, which I think is a good thing!) I have recommended several people for the event and continue to do so.
Picking your co-founder(s) is probably the most important decision when starting a company. I don’t say this just to turn up the pressure on an already stressful activity, but because it really is true. Ultimately, the three most important things in a startup are: 1) People, 2) People, and, 3) People. Yes startups are about technology, and business, and all that jazz, but who builds the technology? Who figures out the business model? Who buys your product? Who sells your product? Who invests in your company? Who do you get advice from? Who do you partner with? I think you get the idea — at the core it all boils down to one thing: people.
Going it Alone: As someone who started my first company as a solo-founder (not by choice), I can say that one of the best things you can do to improve your chances of success is to have a co-founder. Doing a startup solo is hard for many reasons. You can wind yourself up in a loop of circular logic where you become impervious to good reason. It is important to have tempering factor–a sounding board–someone who can play devil’s advocate. I was fortunate to have had some excellent advisors who helped fill this role for me in my first company.
Being a solo-founder is also hard because when you’re going through the ups and downs of the roller-coaster that is startup-life, it helps to know that there is someone else there with you. Otherwise, it’s easy to get disillusioned and fall off the wagon. There may be times when one person is down, and the other person helps to keep morale up and keep things going.
Being Friends First: When I was starting my first company, SneakerLabs, Inc., in 1996 I tried really hard to recruit some of my friends and classmates from Carnegie Mellon as co-founders. These were people I knew. I’d already worked with them for a couple of years on various projects, I knew their strengths and their weaknesses and most of all we respected each other. However, we were also friends. I found that despite my best efforts, I couldn’t convince my friends to join me. The lesson I derived from that (or at least how I justified it to myself!) is that it is hard for people who know you as friends to transition to someone you can work with (the converse however is a lot easier and several of my friends today are people I worked with). This is especially true if you’re taking a relationship of peers and changing it to one where one person is in-effect becomes the boss.
Two’s Company: The highest chance of success is for founding teams of two. Three founders is okay too, but two seems to be the ideal number. Look at some of the most successful companies out there: Apple (Jobs and Woz), Google (Brin and Page), Microsoft (Gates and Allen), HP (Hewlett and Packard) — notice a pattern?
Any more than three founders and it’s usually just a mess, and there’s bound to be a shake out in the future. A solo founder is a special breed and only those people who have the determination and strength of will to hold on to the roller-coaster can make it as a solo founder.
Trust and Integrity: Founding a company together is really the most intense relationship you can have. You will be spending more time together than you will be with your respective significant others. You eat together. You drink together. You work together. And in some cases, even sleep in the same office — usually under a desk, or on a couch! So you’d better pick someone you can get along with, someone you can trust implicitly and someone who’s integrity is unquestionable.
The Dating Game: The best founding pairs can predict how the other person will react to a situation. Heck, they even know what the other would order for lunch. This is probably why some of the best founding teams are people who have worked together or been friends before but have come together to go after a common goal/vision in building the startup. (Yes, I know this is contradictory to the section on Being Friends First, but I’ve seen both play out).
If you’re teaming up with someone you don’t know — don’t rush into it. Get to know the person well. Do tons of reference checking — not just first hand reference checking, but indirect reference checking. Ask people who else you can talk to — very often people may not want to say something negative, but they’re more willing to refer you to someone else who can give you the real skinny.
Finding Un/Common Ground: Founders must respect each others abilities. There will be times when you will disagree. When that happens, the only thing that will help to keep the team together is if you have a level of mutual respect that can transcend differences of opinion. The best founding teams will also have complementary skills and/or complementary interests. If there is too much overlap in skill set you will end up stepping on each others toes. If you do have a founding team that has similar skills, they must have complementary interests — where one person truly wants to be the behind the scenes person building the product, and the other person really wants to be the public face of the company. Having two people who both want to be the CEO is not a good recipe to start.
The Talk: Whatever you do, have the equity discussion amongst founders early. The worst scenarios are when people start working together and think that they’ll figure out the equity split later. I’ve never seen that play out well. It becomes a case of divergent expectations and it’s harder to make/keep everyone happy.
I firmly believe that an equal splitting of equity (50-50 or 1/3-1/3-1/3) is very rarely justified. Typically, there is always a person who is playing point. I also believe that the buck should stop with one person. So I always advise founders to consider their equity splits very carefully and that equal splits are usually a sign of someone feeling they’re compromising and others getting more than they deserve.
If you have co-founders you *must* have vesting — that’s the rule. Remember it, and follow it. You don’t want to find out a month into it that a co-founder’s decided to leave and he/she walks away with a big chunk of equity. Or worse yet, that someone isn’t cutting it and you need to make a change to the founding team, but can’t because there’s no way to take back the equity. As a corollary to founder vesting — you will probably also need to file 83(b) elections within 30 days of issuing founders stock, but I’ll leave that to your legal counsel to grill you on that.
If you’re looking for more startup advice, check out the slides from my recent #20tweets talk which gives 20 tweet-sized bites. If you have questions or comments, you can reach me on Twitter at @manukumar.
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admin | September 15th, 2010
This FounderDating Guest Post was written by Elad Gil (founder of MixerLabs) and is the first in a new series on the FounderDating Blog: Founder Talk – the Real Story. We’re aiming to have entrepreneurs share their stories – the good and the bad – give an honest perspective and helpful advice.
Huge thanks to Elad, for getting things rolling!
Startups are, by their nature, extremely stressful. At a large company, the company itself has momentum. With a few exceptions, if one person (or team of people) were to suddenly disappear, the company will continue to coast for (potentially) multiple years before the effects may become evident.
Thought experiment – imagine if the (multi hundred person (?)) Microsoft Office product and engineering team suddenly disappeared (kidnapped by aliens?). The sales team could keep pushing the existing product for many years without customers noticing. Microsoft could still generate ridiculous amounts of cash off of the product, with no one actually working on it.
In contrast, at a startup as the entrepreneur if you stop pushing, everything immediately comes to a halt.
There are times when you need to push much harder then others to get over a hump that reminds me of activation energy from chemistry. Early on these events can be exhilarating, but with time some of these high anxiety / workload moments can really wear you out. They may include things like:
- Hiring the first employee
- Raising money
- Getting the first N users
- Pivoting
- Getting N users for the new product
- Figuring out a business model
- Etc. etc.
As a friend of mine put it, if a year into your startup you are not an alcoholic, you must be doing something wrong.
So how to deal with all the stress? At Mixer Labs (a company I started that was acquired recently by Twitter) I tried to do the following:
- Make it fun for everyone. Startups are hard work. Find key things to celebrate – e.g. for Cinco De Mayo we bought a pinata. We created our own day off in April called Numa Numa day. We did team hikes. We worked from a pub (with wifi) and drank Guinness every few weeks on Friday afternoons. We rented out a ski cabin in Tahoe for a week and did half days snowboarding and half days working. Everyone on the team was working really hard, so we wanted to make sure we found simple, cash conservative ways to reward everyone while also creating a fun environment for ourselves.
- Change context to decompress. After a while, working 7 days a week is exhausting. Make sure to take a weekend off to go to another city with your significant other. Or, go see friends and do a long walk. Changing context (even e.g. walking through San Francisco Chinatown if you are in SF) will help you take a break from the constant focus and worrying entrepreneurs face.
- Do your best to maintain key relationships. I had to cancel a pre-planned family trip with my girlfriend in order to work. She was super understanding, but the startup lifestyle can really stress relationships. Try to find ways to connect with loved ones on a regular basis as their support will help get you through tough times – and will help with decompression! Buy your girlfriend flowers or take your boyfriend to Sausalito. Find a way to connect and be with one another.
- Get sleep. This is self explanatory. Try going without caffeine for 30 days – it will make a BIG difference and force you to sleep when tired.
- Exercise. This will help you decompress and clear the mind.
- Have a hobby. This may be hard if you are working maniacal hours. However, even something you do 20 minutes a day can have a huge positive impact. By making progress on something other then the startup, you can feel like good things are happening in life even if work is especially tough.
Startups are stressful but very rewarding. If you don’t find ways to cope with the stress you will burn out or blow up and the work environment will deteriorate rapidly.
What do you think? Any ideas for how to decompress or deal with startup stress besides alcoholism? Let me know in the comments section.
You can follow Elad on Twitter here and see his personal blog here.
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admin | May 13th, 2010
We had an amazing FounderDating event in April with really awesome people. We are now taking applications for the next San Francisco event scheduled on June 22nd at 7:00pm. Apply now. Deadline June 8th. Rockstars only, please!
NOTE: FounderDating events are invite-only. Participation is based on merit & peer recommendations. All information will be kept 110% confidential.
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admin | May 13th, 2010
We are excited to share with you that we have our first Seattle match!
Full Story in XConomy.
“Dodson, a game design expert previously with Tenacious Games and Divide by Zero Games, then met Bito, a software developer, in February at the first FounderDating event in Seattle.”
Congrats to Scott Dodson, John Bito, and Eric Eastman!
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