Friday, April 29, 2011

Update

It's been a busy week out in the Valley--lots of meetings, a missed flight, and random encounters with investors. Throughout the week I've narrowed and refined the pitch and found my sea legs--I'm almost swaggering with confidence (not overly so). 


Earlier this week I met with 3 VCs, all of which are now tracking, which means they're intrigued, not saying no, but not whipping out the term sheet just yet. 

I've also met with the heads of a number of startups and large-company divisions. This morning I met with the founder of Keyhole (Google Maps)--great guy, and as you usually find here, very smart. It's great to get that kind of exposure and conversation level about your stuff, if only to practice the pitch, though I always learn something. 

At the end of next week I hit NYC for investors presentations there. 

I added an advisor as well--someone with deep experience in mobile search who now heads a research lab. 

This is the true beginning of the formal fundraising process. I've done this 6 times or so before. Typically the process is this:
  • Intro of some sort
  • First meeting by phone or in person
  • Follow up in email thanking for meeting
  • Follow up when something significant happens--beta release, traction, deals, etc. This is the key post-meeting trigger for future meetings. 
  • Follow-up phone call and request for next meeting. 
  • Next meeting is usually with other partners--gotta be on my game (I am already). 
  • They then make a go, no-go, or track decision. Sometimes it's hard to get a clear indication because there's internal disagreement. 
  • Term sheet. It takes 6-8 weeks to close the deal after the term sheet. 
That's the typical process, which can take 2 to 6 months, but there are angels that can write the check and get it done in a day. That's relatively new for the startup world--lots of active, cash-rich angel investors. 

In the meantime, our small amount of angel investment moves things along until we get a revenue engine going. 

It's important at this time to focus on measurable progress: quality and scalability of the app, UI, and UX, then number of active users, revenue, traffic, press, etc.

This means it's time to clean things up, stabilize, and launch the beta. I want to be code complete within 10 days, testing over the following week, and launching beta within 17-20 days. 

Every time I do this it feels like I'm making it up as I go, but this time around I'm really enjoying the process. And the weather--can't beat the weather this week. 

The Flow of Capital

I'm sitting in a cafe in Mountain View, if you can call Starbucks a cafe. I'm biased; if it's not independently owned, it's not really a cafe, it's just a place that serves coffee and feels comfortable.

A cafe to me is more of a community. Starbucks is that in this location because it's right between a couple of upscale apartment complexes, but this place is ripe for a real cafe.

Like Coupa in Palo Alto.

I spent the afternoon there on the advice of Steve Blank, who mentioned it in his blog. Everyone here in the biz knows Coupa, but I didn't. Then again, they don't know Chestnut Hill Cafe in Lancaster.

Coupa is a community. Yes, the salad was great. It looked like the baked goods (to which I bid adieu weeks ago in a serious attempt to regain some semblance of my pre-movementless self; 14 lbs so far) were amazing.

But the community was striking. Stanford kids hammering out homework. Founders hammering out business models. Angels and VCs shooting the shit about companies X and Y (they looked like VCs. Some of my favorites don't look or dress at all in the uniform).

This particular community is part of a startup, innovation, aspiration, and investment community. The ecosystem is large, thriving, full of capital to fuel the engines, and complex in a positive way.

The most prevalent and powerful capital is social capital, though. People trade their networks like pork belly futures. Everyone seems naturally helpful. I've know this for a long time, but it's always striking to me when I'm in the think of it.

New York is evolving its ecosystem, which is smaller but smartly concentrating around parts of Brooklyn and Manhattan (maybe from 30th down to Canal; I'm re-learning the geography and scene there so forgive me if I don't have it quite right). It's a long way from my time there in 2000-2002.

So when I hear some governor somewhere talk about creating the next Silicon Valley, I cringe. You can't. It's not something you can export, because you can't give your region another's history. It takes time, and the ecosystem evolves for cultural and business reasons that aren't the same as your regions.

Lancaster, which will always be my hometown, has its own ecosystem. It is not a startup haven, though we have some startups there. The capital still flows like molasses, as I said in 1997. (For which the state Treasurer at the time blasted me in an op-ed, protesting that PA was a great place to build a business, yadda yadda. Yeah, but I wasn't just building a business, see...oh nevermind).

Philly has a small but newly thriving startup community--the energy there is great. It's one of 4 places I'm considering for Jawaya (which we'll likely rename). The others are obvious: the Bay area, New York, and Philly.

You can build software anywhere, you can do video conferences and online demos from anywhere. But you can't accost Ron Conway on his way into a cafe in Lancaster, or visit 95% of the world's venture capitalists in Philly, or hire top talent out of top companies simply because they want a nice change of scene and a cool new challenge unless you're in the Valley.

Now, there are downsides: cost, for one. But you can factor in cost. Capital is cheap these days out here; I'm almost certain there's an East Coast premium on most deals, perhaps 20-30% over the price of money in the Valley.

Traffic. Everyone drives here, it seems. And with your ecosystem spread out over a 60-mile region, you pretty much have to drive unless you're willing to spend a lot on last-mile cab rides.

But there's a compelling case to be made for relocating here where the deals are done, the connections made, the competition fierce, and the weather, well I'm just enjoying these blue skies.

I love local, I love the hometown. We'll see what happens.

Thursday, April 28, 2011

Why Founders & CEOs Need Executive Coaches

Jerry Colonna has been my life coach since 2006.

Make Your Own Breaks

I can build a company without any outside investment, and very little of my own. In fact I can build a company with nothing at all--I've done it before and can do it again.

But when you want to accelerate something great, and the market's converging on your space and starting to educate the public on your behalf, it helps to have a great team already in place.

So I'm out on the West Coast this week meeting with people, from investors to advisors to potential team members. It's so refreshing to talk to so many sharp people in such a concentrated period of time. Lancaster's got a lot of smart folks, but there's something to the pace and intensity of the Valley that I really love.

When you try raise money, you fail regularly. You get rejected. Rejection sucks. They pass judgment on you, your work, your dream, your vision, your future, and most of the time, the answer is no. Or the VC variation of no, which could be "we don't invest in this space"  or "let us know when you have traction".

Yesterday I had three great meetings. Nobody said no--explicitly or in VC-speak. They were interested, engaged, interactive, smiling, and I walked away feeling great about the time I spent with them.

Usually I learn something; sometimes I get good feature ideas. I don't remember that kind of interaction from the late 90's outside of Steve and Warren from DFJ, who were both makers prior to joining the dark side.

These days it's incredible--tons of capital, lots of smart people, an industry-wide adoption of non-participation  (liquidation preferences can be a bitch), founders openly talking about their struggles, tons of competitive companies...it's great!

It's happening in New York too, and I suspect in other places.

But the rejections, when they happen, are valuable too. And it's painful, because even though I'll nail the right deal, I'll wonder just what it was that didn't convince each VC in each firm.

I realized something this week: I want to win every time. Every single time. It's an incredible amount of drive and ego somewhere in my psyche that makes me want to win everyone over, but I do and I think that's part of my tenacity.

But you have to take the good with the bad, and rejection is part of the process. If you're smart, you take notes, learn from each meeting, don't place too much weight on any of them, and keep plugging away, building your business, making your own breaks.

These next 4 weeks are going to be amazing.

Office Hours--Now

http://ohr.me/lxnfaU

I'm sitting a Coupa in Palo Alto if anyone wants to come by to chat. Unexpected extension to my trip...missed a flight (nice!).

Will do the same Friday as well--would be great to meet you.

Monday, April 25, 2011

Monetizing Excess Capacity

I'm out in the Bay area this week for Jawaya meetings--it's nice to get a different view of the world. I love the plane ride out for productive brainstorming time, and once out here, well it's just great to see tons of great organic restaurants, community gardens, mass transit, and of course good friends.

The Bay offers a lot of potential for plaigerism. Steal what you can. Many of the ideas that seem so novel to us in Lancaster have been in practice for decades around here.

So steal them. These ideas are free, and just take a commitment from Lancaster to embrace them.

Fortunately our city of late has become relatively progressive, especially around green infrastructure, which said a different way, is cheaper, safer, cleaner, and better for us and our downstream neighbors. Danene & Fritz at Live Lancaster have really brought the city along through guidance and grants, and plain persistence.

The city administration has done more than go along for the ride; Gray, Hopkins and the team there have clearly embraced these positive long-term changes.

Hoepfully SDOL will embrace change as well--it's being forced to. We build LEEDs-certified building by requirement.

But with budget cuts, there's a new kind of solution available: Free. The power of We.

What can we do for Free? What's valuable that's not worth paying for? Well, money is in short supply, but capacity is not.

Here's an example. I booked my room using AirBnB.com. The site gives home-owners a way to monetize their excess housing capacity. In other words, you can turn your house into an informal Bed and Breakfast, get paid for it, and meet  new people in the process. People are given recommendations by their Facebook friends, so there's some security in doing so.

LooseCubes.com gives me my traveling office space--I'm headed to one of the spaces today. For businesses, Theaters, and nonprofits with core services (wifi, printers, HVAC) and empty desks, it gives a way to monetize excess office space.

We need a LooseCubes for School Districts--a simple but efficient way to book excess capacity. We have computers, classrooms, auditoriums with stages, lights, and sound. Gyms, libraries, desks. Tons of land, including farmland behind Wheatland.

We have fiber to the Internet. When it comes down to it, we have everything it takes to create a startup incubator right on the top floor of Carter McRae admin offices. Or at McCaskey. Or at the Scheffey building.

The hurdles? Bureaucracy. Embracing an idea and executing on it is harder in public education, and harder when it also involves a cultural shift. But I know the district is open to all things.

You identify the opportunity, list the obstacles, and go one by one and knock them down. That's the entrepreneurial process, and frankly, the district has been very entrepreneurial in recent years and does just that when there's a commitment to do it.

It's time for districts across the state to get creative around funding and revenue. The public has invested in what is now excess capacity.

We won't fund all of public education by monetizing excess capacity, but it will help the community get the most out of its investment, and help the district fund things that really matter, like Pre-k, Kindergarten, Libraries, and professional development for teachers.

Saturday, April 23, 2011

Back Online

Well that sucked.

Jawaya is back online after Heroku & Amazon finally got things fixed. It's an early lesson about reliability; we all know we need to have a backup plan, but early in a startup we're focused first on finishing the core app.

Well.

It's in our plans now.

Jawaya has a few new subtle but helpful features, so let us know what you think. Click on Following so see the streams of those you follow. It updates in realtime, effectively.

Tired and packing for SFO tomorrow. Have a great weekend!

Thursday, April 21, 2011

Amazon Down, so Jawaya Down

We use Heroku to host Jawaya. Heroku uses Amazon Cloud services, which has been down for quite a while. If you've tried Jawaya today and it doesn't work, that's why.

It's also why you might see an error message when you visit sites, because the plugin checks Jawaya for each page you visit and search you perform.

Hopefully Amazon will be back up soon, but in the meantime I'm pushing Jawaya to another hosting provider that doesn't have the Amazon dependency.

Thanks for your patience!

Tuesday, April 19, 2011

On Boards--a Repost

I posted this in November but have been thinking about it recently. Here it is again:

http://diggingintwo.blogspot.com/2010/11/boards.html

I am amped!

I've been working on this vision for about 6 months, with the typical ups and downs, a change in platform, UX issues, team building, etc. 

The original idea set my brain on fire, and the possibilities really got me amped. 

Over the weekend, I got amped again, because one of the key parts left the idea stage, where it's been for six months, and entered the alpha. 

Burnout, which I am not suffering from but have in the past, is a state of mind. You lose the passion that drives you through the toughest stuff, the obstacles--both external and internal, both the company's and your own. 

I love the passion stage. Sometimes it lasts for years, and the types of things that kill passion have little to do with markets, products, or ideas. It's about people, and the people who have your back. If you lose that, burnout will follow, and stay, until something changes. 

I love this stage.

Sunday, April 3, 2011

Your Life's Work

I just posted a comment over at Fred's blog; his post was about going out on top. The rest of this post is mostly from that comment.

Retiring from software crosses my mind from time to time. I used to imagine doing something else, so I tried. It didn't work so well.

I don't think the question is about going out on top. It's about what your life's work is. The perception or reality of whether you're going out on top or not isn't nearly as important.

A few years ago, the Times ran a story in the Sports section about a guy named Chongo. He's an artist and a writer, but mostly he's a crazy expert climber. And homeless. He lived in Yosemite, mostly stayed out of trouble, and climbed the cliffs around the park with equipment he either made himself or collected from his climbs.

You have to read the entire article to come to the conclusion I did: this was his life's work.

http://www.nytimes.com/2008/09...

(incredible article, well worth the read)

I asked myself, "what's is my life's work? Software? Fucking software?" At that point I was burned out and driving the company into a brick wall, so I was also cynical. I wanted to do something more meaningful, I thought.

Turns out my life's work is helping people. And I love doing it through software. Software is  only the context, but I really enjoy life most when 1) the bills are paid 2) I'm helping other people and 3) I'm able to spend time with people I care about and who care about me.

Yes, I love the win, I love creating things, and I love creating a huge amount of value. But I'm only happy when I'm doing it in the context of helping people. I'm happy to be working on something that will help a lot of people, if even in a small way.