Posts filed under 'Life as a Start Up'
We just discovered a site called D.I.Y. Startup News that allows for Twitter-esque posts about cool startup companies. How did we find them? They posted about ExpoTV as a destination to see products on video before you buy. Basically you can submit a post about any site and their editors will review for spam. Seems like a good way to spread the word, and the posts have a 240 character limit (like Twitter) so that they are easily viewed on-the-go with your phone/PDA/etc. We’ll be keeping our eye on D.I.Y.
July 30th, 2008
ExpoTV was honored to host a book party this week for Pete Blackshaw’s new release from Doubleday titled Satisfied Customers Tell Three Friends, Angry Customers Tell 3000. His book is all about brand credibility and word of mouth in today’s world of “consumer-generated media” - blogs, product review sites, social networking communities, etc.
The book party was a great success and every single copy sold out! We’re thrilled for Pete and would like to congratulate him on his accomplishment. We’re all looking forward to reading the book! Become a fan of Tell 3000 on Facebook and find out more info about Pete and his book at his website, Tell3000.com. And you can order the book from a number of online retailers, like Amazon and Barnes and Noble.
July 17th, 2008
‘Life as a Start-up’ is intended to be a resource for entrepreneurs, especially those going through the capital raising or early hiring stages. While we offer RSS feeds for updates to our full blog, there is no way to get just a feed for this ‘thread’ of posts and there’s no way to subscribe by email. If you would like to get email notifications of new posts just to this thread, please send an email to bill@expotv.com with the subject line, “Life”. Thanks!
April 9th, 2008
More and more entrepreneurs are asking me if they should raise seed money from VCs or angels. The honest, and perhaps surprising, answer is that I’d lean toward taking it from angels. Here’s why:
• once you take venture money, the clock is ticking. While some VCs, including ours, are patient and thoughtful, many others are not. They want to see progress immediately and daily. It’s not a good time to be having existential debates…but that’s often a big part of what gets done right after raising seed money.
• there’s a bit of an inherent trap. If you make some progress but not a ton of progress, the seed VC may decline to fund the A round (trust me, they aren’t sweating losing the $250,000 they gave you). So now you have to go out and try to raise that money from another VC. But let me ask: if you were a VC, would you fund a business that a currently invested VC was saying ‘no’ to?
• one of the great things about good VCs are the support, advice and connections that they give you. And while we all hate preparing for and sitting through the proctology exams that are also known as Board meetings, those exercises are actually extremely valuable brainstorming sessions. But, when a VC invests as a seed investor they typically don’t sit on the Board. And if they aren’t on the Board, they aren’t thinking about you as much. And if they aren’t thinking about you as much, you’re not getting the value you signed up for.
You might read this list and determine that your circumstances are such that it still makes sense to take your seed round from a VC. Many companies do & it’s a legitimate option. It’s also great to see VCs wading into this end of the pool after a period in the middle of the decade where early stage funds had practically dried up altogether.
Let me know your thoughts.
April 9th, 2008
A couple of weeks ago I recorded a podcast with my friend Steve Reale at Levensohn Venture Partners on how to raise money from angel investors. It’s here (you may need to scroll up or down, I don’t think there’s a way to link specifically to the one post). Hope you enjoy!
March 31st, 2008
This is another question that I get all of the time and a very misunderstood topic. The easy answer on how to value an angel round is that you probably shouldn’t, as strange as that sounds. The practice of not valuing the angel round has become very prevalent on the west coast and seems to be picking up steam on the east coast. From all appearances, it may be a trend that sticks. So, how does this work?
Instead of affixing a price to the capital, you give it an interest rate (7 – 10% seems to be pretty common at the moment) and allow that interest to ‘PIK’ (or payment-in-kind…it just means that you don’t pay it out in cash, but you allow the interest to be added to the principal amount and to grow the balance over time). At the time of a VC investment, the idea is that the ‘debt’, including all of the accrued interest, will convert into the round at a 10 – 15% discount to the VC pricing. This has several benefits:
a. aligns interests between all parties,
b. allows you to avoid a potentially difficult and time-consuming process with the angels,
c. provides additional assurance that the angels will not get left behind by the VCs.
If this is confusing, fear not. The next post will be a basic explanation of capital structure principles from an entrepreneur’s perspective.
May 30th, 2007
Here’s a link to a great post on early hiring by Luke Sontag that’s up at Found+Read. He focuses on passion as a key differentiator. It’s a great complement to my post below which focuses on leveraging skillsets. For me, the importance of passion in start-ups is that virtually every issue will look insurmountable at first. The appropriate response to “insurmountable” issues in a corporate context is to wait or to try a different direction…to methodically plot your course. In a start-up, you just need to smash blindly against those barriers with everything you’ve got and to enjoy the pain. If the guy beside you is doing it, too, well, that’s the rocket fuel that keeps you going. On the other hand, if one guy is pointing out all of the challenges and going home at 5pm, it can drain the energy out of the entire company. Great post, Luke.
May 17th, 2007
Hiring is hard. This is a topic that fills books. I ran into an old friend recently on a plane (public company CEO) and he put forward that the second biggest mistake you could make as a senior executive was to hire the wrong person (the first biggest mistake was not firing them as soon as you figured it out). When you’re a little company with limited resources, though, the temptation is to hire the first suitable candidate that walks in the door….your time is limited, the need to get help is acute and you may be feeling a bit humble about your place in the world (assuming your last name isn’t Andreessen or you aren’t funded by Kleiner Perkins). You may be tempted to hire someone who is more of a friend than ideal candidate (with the thinking, “I know them, I can trust them & besides, isn’t being able to make these decisions what having your own company is all about?”).
But this is also one of your first opportunities to show discipline and make a good executive decision. So who should you hire? Well, a key attribute of being an entrepreneur is knowing your own weaknesses. So, start with this hire. Map out the company’s next six months of challenges and hire someone who best complements you in the areas where you are weakest. While I would try to find someone who could stay for the long term, I’d worry less about whether they can scale into a senior position or will always be a role player. Just find that person who will give you the most leverage over the next six months. Someone who can own a set of discrete mission-critical (and everything you do should be mission-critical) tasks for the medium-term.
May 8th, 2007
There is a new blog called Found+Read that is a great resource for entrepreneurs. I’m going to try to make our sub-blog “Life of A Start-up” synergistic with theirs since they are building off an existing community and have a dedicated team working on on it. It will also allow me to focus more on writing about Expo’s business vs. some of the general blogs of late. Hope you like it
April 23rd, 2007
This is largely stolen from a buddy of mine who led me out of the entrepreneurial gate by several years. It’s the touch stone I’ve used at each step and it was very clarifying and calming. You owe your investors:
1. 100% of your effort. Your absolute everything to make the business work within the boundaries of legality and business ethics.
2. Honesty about the situation and your prospects (this is why you should absolutely put an angel investor representative on your Board of Directors).
From these two cardinal rules, there are a couple of things that I think follow pretty directly, namely that you should hear them out on pretty much any topic and, finally, even more than worrying about making them a billion dollars in the first year (which turns out to be surprisingly hard), you should worry first about protecting their capital by trying to make sure that there is more capital to keep fighting and by building something – a piece of code, a contract – that someone else would want even if they don’t want your company.
April 17th, 2007
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