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Everything around you that you call life was made up by people that were no smarter than you and you can change it, you can influence it, you can build your own things that other people can use.

— Steve Jobs

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One key to entrepreneurial success is to get a great group of people around you who believe in your idea.

— Richard Branson

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“It takes humility to realize that we don’t know everything, not to rest on our laurels and know that we must keep learning and observing. If we don’t, we can be sure some startup will be there to take our place.”

— Cher Wang, CEO of HTC

How to join a startup if you can’t code. My 3 Secrets.

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salesmen-coder-startupI was reading Kyle Wong’s post on LinkedIn titled, “Making An Impact At An Early-Stage Startup If You’re Inexperienced And Don’t Code“. His points are good, but I think he is missing the real point. If you want to join a startup these days you need to do one of two things:

  1. learn how to code
  2. learn how to sell

I’ll tell you my first secret, learning how to sell is MUCH harder than learning how to code. Many developers will likely argue with me, but I can let you in on my second little secret – my 13 year old learned how to code in two languages by the time he was 10. Coding isn’t rocket science – it is something you can learn over the summer. There are scores of online learning resources and with new languages like Apple’s Swift there are more and more opportunities to become an expert within months. My advice? Learn how to code iPhone apps using Swift and start your own company or join a startup. It will be a lot easier than starting a company as a non-technical founder or joining a startup as – well whatever inexperienced non-coders call themselves.

My third little secret is that people who know how to sell make a LOT more money than people who only code. The people who had sales skills at each of the startups I founded got paid more than me – a lot more than me. Selling is a LOT of work, but its a lot of fun. And you CAN learn how to sell. Selling skills translate throughout a startup. For example, when you are recruiting new employees or raising money from investors you’re really just selling them on the vision of the company.

The best place to learn how to sell? The BIGGEST company you can find. They will invest tens of thousands of dollars in you in an attempt to teach you how to sell. Some of the biggest telecom and internet companies in the world spent hundreds of thousands of dollars teaching me to sell. They made HUGE investments in me and I sold millions of dollars of stuff before I left to start my own companies. Take three years and REALLY learn how to sell. It is a BIG investment of your time, but along the way you’ll make a lot of money AND obtain a skill that is very hard to learn.

Most VCs look to hire a CEO who can sell when looking for your replacement. Be that guy/girl from the start. Selling makes everything else possible. Good luck!

Startup Quandary: Quitting or Pivoting

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startup-pivot-quittingThe other morning I had a heart to heart with one of the entrepreneurs I advise about whether or not he should pivot or quit. His startup had raised a few hundred thousand dollars and managed to build an MVP, but struggled to secure customers and additional investment. His investors weren’t impressed by his inability to get customers to sign up for their service and were unwilling to invest additional capital. The question? Should he come up with a new idea and pivot the company or should he shut the company down and come up with a new idea and start over with a clean capitalization table?

What do you think? What would you do? Have you ever faced this sort of quandary? Love your comments. If I get a few comments I’ll share my own experience with this issue and the advice I shared with the entrepreneur. Cheers!

Focusing is the hardest part of being an entrepreneur

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pieter-levels-startup-focusYou know you’re an entrepreneur if everything you hear or read makes you want to start a new company. If you’re not careful you’ll end up starting a new startup every month like Pieter Levels. Ten months ago he declared to the world that he was going to start 12 startups over the next 12 months. In my experience the hardest trait, but most important trait in an entrepreneur, is the ability to say NO to ideas. Instead, I believe, commitment to a single idea for at least 13 months is key to achieving any level of success.

I have a new idea for a startup almost every morning while I’m in the shower. For example this morning I was listening to NPR and was shocked to hear that the demand for rescue dogs is outstripping supply. Shelters are having to import ‘rescue dogs’ from other states including Puerto Rico. It occurred to me that I could build an online service for shelters to list all of their available dogs. The underlying rescue dog search engine could be embedded in the shelter’s website in an iFrame allowing for a more perfect way to match potential owners and pets all over the country. I went so far as to actually talk about the idea several times today until I realized that I was ‘stealing’ mental energy from my BIG idea – ViewMarket.

Startup ideas are fragile. They need 100% of your mental and physical energy to come to life. Pieter’s idea to start 12 startups in a year is ‘cool’ but it is unlikely to create a ‘hit’. I’d love to do ‘a’ deal with Pieter, but I’d be hard pressed to commit my time to working with him if I knew he was ‘cheating’ on me with 11 other startups. Commit. Pick. Focus.

Update: Pieter reached out via Twitter and suggested that “you need market validation before focus”. I agree completely. You need to validate your ideas before spending the next 13 months of your life trying to bring them to life. BUT, make sure you’ve invalidated your first startup before starting the second startup.

Startup Bridge Loans Suck

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startup-bridge-loanIn the startup world S.O.S. means ‘save our startup‘ and the most common life saving device is a bridge loan. Typically a current investor will pony up just enough capital to get the company to either breakeven or the next funding event. But more often than not bridges are simply a way to allow a CEO to stay in a state of denial hoping that a magical solution will present itself. Worse yet, bridge loans send a VERY bad signal to future investors. Fred Wilson explains it:

“So bridge loans are often bad investments made defensively. And so they are red flags to other investors. When a new investor looks at a company and sees a bridge loan in place, they will understand that all is not well… And it will make closing a financing more challenging.”

It takes a startup about six months to raise a major investment round. If you haven’t made significant headway during the first ninety days it is time to take a good hard look at your burn. Your most important job as CEO is to save the company. It may be painful, but you must start cutting costs – renegotiating agreements with employees and vendors – whatever it takes. You need to get your burn rate down so that you can cut it completely if you end up running out of runway.

Of course, most CEOs (including me) don’t start cutting deep or fast enough to prevent the need for a bridge loan. Ironically, VCs know that the bridge loan is almost ALWAYS a bad idea a ‘bridge to no where’, but they can’t help themselves. So if you need to take that bridge loan make sure can find a way to ensure that it buys you the time you need to save your company. Oh, and start looking for a new role within the company or a new job because your days are numbered. The best way to explain the need for a bridge to a new investor is to introduce him to you – the soon to be former CEO – they will only consider the investment if they can convince themselves that you were the problem.

How to maintain control of your startup

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maintaining-control-of-your-startupWhen you launch your first startup and raise your first round of venture capital you should simply feel lucky. Only 1% of companies seeking venture capital actually receive any funding at all. But by the time you’re raising capital for your second startup you should really start thinking about securing control. Far too many of us have raised venture capital only to be encouraged or forced to make silly decisions by our boards or investors. You don’t have to believe me, take it from my of my current investors, Dave McClure who suggests,

“Most VCs Are Stupid, Insufferable, Arrogant And Terrible At Making Money.”

Once you have one or two or three startups under your belt you’re FAR more experienced than most venture capitalists at running an early stage startup. Don’t let them ruin your company. Find a way to stay in control. If they don’t want you running the company FOREVER they shouldn’t invest and you shouldn’t regret not taking their money.

The very best way to maintain control is to issue the founders Class F shares. These common shares possess some powerful rights. First, they should allow you to keep board control by offering 2 votes for every director appointed by the class. Second, they should magnify your shareholder voting power by 100:1 or 10:1 depending on the number of shares issued. Finally, you should consider adding provisions to your employment agreement that outline the minimum fully diluted share percentage you’re willing to accept – in the event your ownership drops below, say, 15%, the board is required to gross you up. There are a million ways to keep control. The goal is to keep you in control so you can execute on your vision without worrying about getting fired or replaced.

At the end of the day, if your investor accepts the fact that you’re in control for better or worse you know you have a great partner.

The last 30 days has been crazy. You won’t believe what the DBJ wrote about it!

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30-days-of-insanityThe last 30 days have been crazy. Seriously, crazy. First, the Dallas Business Journal reached out and asked me if we had acquired CultureMap. I was under a confidentiality agreement so all I could say was that we had NOT acquired the company as was being reported by other outlets.

Report: Muse’s ViewMarket in talks to buy CultureMap; serial entrepreneur says no deal yet.

Of course, we were working on the deal, but it was taking forever as I explained in this post. Of course when we finally did close on the acquisition on April 8th I reached out to Danielle Abril and gave her the scoop. She wrote about the deal in a story that was picked up by the Houston and Austin Business Journals.

Exclusive: ViewMarket buys CultureMap in deal valued at $15M.

Just a couple of weeks later the news began to leak that we were working on a deal that would put CultureMap retail stores in each of the major Texas airports. The Dallas Business Journal was all over the story.

Exclusive: CultureMap to take over Hudson News, shops at Houston airports.

Then just this week we were closing on another round of venture capital lead by 500Startups and the Dallas Business Journal profiled one of our investors in a story titled:

Dallas angel Terry Kearns: Why I’m investing in ViewMarket/CultureMap for a third time.

Since then I’ve been making a statewide tour of each of our Tastemaker Awards – first in Austin on Tuesday, then in Houston yesterday and Dallas today – more than 1,500 of our readers getting together to celebrate the best chefs and restaurants in each city – truly an inspiring event series, but exhausting. Who knows what is in store next month, but hopefully I’ll be able to read about it in the Dallas Business Journal! 😉

 

David Beckham Interview from Talks at Google

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