Category Archives: Startups

Company Soul

I read two things today about entrepreneurial failure.  One was a great long form piece by Alyson Shontell of Business Insider about Fab.com and one was by Tyson Ho about an unnamed diner in Manhattan which was shuttering.

They were both well-written and painted very different pictures of failure. The story of a Fab was one of bad economics, hubris, premature expansion and of investor/founder/employees selling a big vision and chasing the unicorn dream.

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Shark Tank – Squash You Like a Cockroach

Just watched Shark Tank with the wifey.  I still enjoy this show quite a bit despite it being somewhat predictable.  I’m always amazed at the businesses creative, ingenious people come up with.  Tonight had 3 brothers from Nepal pitching Yak treats for dogs. What you say?

Himalayan Dog Chew was the name of the company.

Yup. Exactly.

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Trust the Process

Hiring is hard. Our plans call for us need about an additional 20-25 folks this year. That means around 2 hires per month and this assumes zero voluntary or involuntary attrition (which is unrealistic to be honest).
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Garbage in, Garbage Out – Yes Indeed

Renee DiRasta had a good post talking about conflicting data about seed activity. I don’t think some of her assertions about the data sources being similar for data providers are that accurate which I talked about on Twitter (see below). I also commented on her post that the whole seed deals are falling narrative is laughable.  Here’s the comment I left on her post.

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Anand here from CB Insights. Great thoughtful post. Thank you.

Five reasons that came to immediately came to mind on why the whole seed is declining narrative doesn’t pass the most basic of smell tests. If I spend an hour thinking about this more, there are probably others.

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Solving Opacity in the Private Markets

Private markets are often described as opaque. They are.  The participants don’t necessarily want it this way, but because there is no central clearinghouse for information or data or insights, information ends up siloed – often in the heads of individuals in the market. With 4000+ clients ranging from investors to acquirers to bankers to lawyers to recruiters to biz dev people using CB Insights, we now have a community of folks who are incredibly knowledgeable about private companies, emerging trends and more.

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The God Metric

Evan Williams of Twitter is not someone I’d read much about before. But he’s been writing a lot more recently, and he’s well worth a read. His recent essay entitled “A Mile Wide, An Inch Deep” is well worth a read.

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Hatin’ on MBAs

A recent article in Fortune talked about Wharton, Harvard and other elite b-school ramping up their entrepreneurship programs. I have nothing against MBAs and am a Wharton guy myself (undergrad so I can still talk shit), but this IMO is one of those signs of things getting overheated in startup land.

Startups are becoming another career path or vocation as I talked about yesterday – raise funding, take a decent salary, get a call option on some upside and ultimately all for pretty low risk. These environments bring out the opportunistic. The real estate bubble saw a similar phenomena where everyone jumped in cuz it was easy money.  From the article on Fortune:

“Entrepreneurship is entering the mainstream in the economy and therefore it’s starting to enter the mainstream in the business schools,” Zoller says. “You’re starting to see people increasingly seeking out high-growth venturing as a pathway for their professional success.”

There is no pathway in entrepreneurship as far as I can tell. Or a very jagged zig zaggy one.

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No Risk, All Reward – The Startup Career Path

The Indie.vc post on Hacker News had some interesting comments.  Here’s one that caught my eye as pasted below (bold emphasis is mine):

The model is a fairly quick development cycle, fast early adopter sales, quick conversion to cash flow positive. Well, that’s a lot of things that have to go right all in a row with only $100k to start…. It may be enough to start some kinds of businesses, but many will require significantly more in startu pcapital to brave even an accelerated road to break-even.

As to the model, the question is does it fully factor in the risk level? The idea is lower the goalpost and manage the cash burn more carefully, to ultimately obtain a faster break-even and then ride growth through reinvesting profits, to some point in the future when you can actually start making distributions. The premise, possibly flawed, is that by not shooting for the stars you should be less likely the fail. They don’t need to win as big each time, because they will win more often?

Businesses need capital to grow. It’s that simple. $100k is a bare minimum startup fund for a sole founder for less than 6 months. It’s not a serious amount of money. You can’t expect that $100k to buy enough revenue to sustain full-time employees and also be paying out a meaningful dividend.

If the idea is to really, truly, avoid VCs and institutional investors…. I think you need to be able to seed about $2m. For example, structured as a Line of Credit, drawn over 48 months, but with warrants to convert into common stock at some ratio. The conversion ratio in the warrants adjusts to provide anti-dilution as needed.

That would provide a real amount of money for a 2-3 person team to potentially solve a real problem. And that would give the investors a meaningful percentage of the company and choice between a cash payoff or taking shares. That would be a really appealing alternative to VC funding which some strong founding teams might take notice.

Here’s my diplomatic’ish answer on HN:

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Indie.vc – this is exciting

So 2015 is off to a good start. I’ve rambled about revenue-based financing and other alternative models to fund tech companies a couple of times on this blog. And today, I saw something called Indie.vc by Bryce Roberts and the OATV team which is an interesting first step.  An alternate model to fund tech companies:

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Blog Comments

A lot of notable web publishers have turned off comments recently. I know people have strong opinions on both sides of the fence. One of the things I’m seeing on the CB Insights research blog are some posts with some really top notch, very smart comments.  We regulate comments pretty heavily so people who spam or who are just being a-holes get rejected.  We get comments pretty infrequently so it’s easy to do.

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