Startups

Highest and Best Use (HBU)

I meet lots of entrepreneurs all of the time who are working on startups that are really cool, but after getting to know the individual I sometimes realize that their talents are being wasted or at least under utilized. It is almost impossible to find an appropriate way to tell someone that you think they should be doing something else. When you start a company you need to realize you’re going have to spend the next three to five years completely engrossed in the development of the company. Entrepreneurs only have time to start three or four companies during their careers if they are lucky – you better be spending your time on the ones where you can make the biggest impact. Real estate investors call it a property’s ‘highest and best use’.

Gabriella-DraneyMore than six years ago Dan Owen and I began talking about how Dallas needed an early stage accelerator like TechStars or YCombinator. Our first discussion centered around who would run the accelerator. Dan suggested I should do it, but truthfully I knew we needed someone else – someone better suited to the task. I immediately thought of Gabriella Draney. My father had introduced us a while back when she was in graduate school and more recently she was working a boutique investment fund. I knew right away she would be the best candidate and I suspected her skills were being wasted at the small boutique investment fund. We invited Gabriella out to dinner, pitched the idea and she picked up the ball and ran right past us (literally) and created Tech Wildcatters. Fast forward to today and I think everyone will agree we were right.

When I heard that Gabriella was looking to step down as executive director of Tech Wildcatters I realized I knew the perfect candidate my business partner, Molly Cain. Slightly more than a year ago I had convinced Molly to leave her VP position at a Fortune 500 bank to join my latest startup, ViewMarket (formerly Haul). I was a little reluctant to recommend her for the position since we had just executed two important contracts with major broadcasting companies. We needed her expertise to get these deals across the finish line not to mention all of the other projects she was responsible for. But at the end of the day few of us are in the position to nudge a friend, colleague or partner in a direction that could have as important an impact as I believe Molly could have on Tech Wildcatters and the Dallas startup ecosystem. I knew Gabriella would NEVER attempt to poach Molly so I reached out to her and gave her the green light to recruit Molly.

molly-2*600xx4368-2912-0-0Initially, Molly was reluctant to even consider leaving ViewMarket given all of the good stuff we have going on but after thinking about it she realized I was right – Tech Wildcatters would be a once in a lifetime opportunity for her. It is a rare opportunity to be in a position to help someone find their true calling – their highest and best use – in this case I really believe taking the helm at Tech Wildcatters is Molly’s highest and best use today. We’re REALLY going to miss her at ViewMarket and, of course she’s still our co-founder and partner. Oh, by the way, if you are a bad ass like Molly we’re hiring.

P.S. Since I’ve recommended BOTH of Tech Wildcatters Executive Directors shouldn’t I get a referral fee?

Update on ‘TEN’ my Mentoring Program

Ten-Logo-2Back in April I announced my mentorship experiment I called ‘TEN’. The plan was simple, find ten entrepreneurs and spend a year working with them on their businesses. The idea was that by spending MORE time with FEWER entrepreneurs I could make a more significant impact AND have more time to work on my own startup. Time for an update.

After announcing the program I had more than 40+ applications and quickly selected the first ten with plans to bring them on over three months. To date I have ‘turned up’ five entrepreneurs, had three drop out before starting and had one fire me. The companies include:

  • 3 Tech Startups (two seed funded)
  • 1 Medical Startup (seed funded)
  • 1 Real Estate Business (going concern)

I’m charging $1,000 a month (12 month commitment) and ask for a modest ‘advisor’ stock option. Next week I bring on the final entrepreneur from the original ten and I’m not sure if I will try to replace the four open slots. If someone REALLY wants to get in I will consider opening one of the slots, but its definitely going to be on a case-by-case basis.

As for the entrepreneur who ‘fired’ me? As Kevin O’ Leary would say, “You’re dead to me!”

d38m5pp

In all seriousness, I only spent an hour or two talking to the entrepreneur and we discussed the various options. He was convinced he wanted to raise more capital and ‘run’ his company. When I found out he had an offer to buy the company for a REAL number I made the case that he could do BOTH – i.e. take his money off of the table and run the company. He thought about it for a week or two and decided to take my advice. He then informed me that he didn’t really need anymore help. My only thought? KARMA IS A BITCH. Seriously, if you’re about to negotiate a seven to eight figure deal isn’t that the moment when you’d actually want some advice – especially advice that only costs you $12,000! I have attempted to buy and sell several companies – sometimes I was successful and sometimes I wasn’t – but in each case I came away with useful experience. Anyway, I got my ego bruised a little bit on this one, but life goes on.

Announcing ‘TEN’

For more than five years I’ve been actively involved in the Dallas startup community. During that time I have advised scores of entrepreneurs; however, I’ve often wondered how valuable my advice really was. For example, in the last thirty days I have ‘touched’ almost 100 different entrepreneurs. Touches include emails, voicemails, texts and face-to-face meetings – 100 unique connections over 30 days. I’m giving advice, making suggestions, referring employees and investors, but there is no way I have enough information about 100 entrepreneurs and startups to give any sort of valuable advice and I wonder how valuable my referrals are? What do I REALLY know about these people/companies? Truthfully, I have no idea. Additionally, I am spending a LOT of time providing this potentially dubious advice – maybe 20 hours a month. I decided that something MUST change so I am starting what I am calling TEN.

Ten-Logo-2My plan is to select 10 entrepreneurs I will spend one year coaching, advising and supporting. These entrepreneurs will be hand selected by me based on just a few factors including: how well I think we will get along, how coach-able they are, how relevant my experience would be for their business and how bullish I am on their endevour. Here is the plan:

  • 1 group meeting per month (2hrs+dinner, think EO, YPO, Vistage)
  • 1 one-on-one meeting per week (1hr)
  • 4 quarterly trips to Silicon Valley, 2-3 day (vc/angel networking)
  • 1 graduation retreat, Fri-Sun (city/venue selected by group)

The focus of these meetings will be on:

  • building teams, advisory boards, and BoDs
  • developing products and services (mobile, web, infrastructure)
  • raising capital
  • selling
  • marketing and pr

Interested? I’m going to charge you, a LOT. I’ve learned that people rarely value anything they get for free. I don’t plan to take on a single company that I don’t think I can add at least a million dollars in value within twelve months so hopefully you will be able to stomach the deal. The monthly fee for the engagement will be $1,000 (compare to a typical board member at $40,000/yr) plus a small equity component (whatever you are giving advisers). The term will be 12 months with a termination clause. If you do not want to continue for any reason you must pay the remaining term at 50% or find someone to replace yourself in the group that a majority of the group will approve. So basically you pay $12,000 for 100 hours of my time – a pretty great deal if you ask me.

I’ll be putting the first TEN class together in the next couple of months. If you are interested let me know by applying here: TEN APPLICATION

 

Is Aereo legal but doomed?

BVG1KrxCAAAfQI6This afternoon the folks from Aereo invited me and several other early adopters to lunch at the Ritz for their Dallas launch. The company has found a perfectly legal way of retransmitting over-the-air television via the internet to subscribers. The company is facing legal challenges by content providers, but they have successfully fought back each one time after time. The bad news? Content providers don’t make money when Aereo sells subscriptions to consumers.

My business partner at HAUL, Robert Bennett, met with Chasey Carey the COO at FOX who indicated that they will end over the air broadcasts if they can’t protect their over the air broadcast rights. Over the past decade content creators’ business models have changed whereby their revenues have transitioned from advertising to broadcasting rights. Content creators don’t make any money from OTA and make all of their money from OTT. What does this mean? If companies like Aereo make it easier for consumer to fire Time Warner, Comcast and Direct TV – over the air transmission will end. Ouch.

The good news is the Aereo has built an amazing product – basically a cloud based DVR for TV consumers. Basically TIVO without the box. To exist longterm they will simply need to enter into licensing agreement for content. The bad news? The service will cost more – likely driving down the cost of cable and satellite TV. In the meantime? Enjoy low cost content. I’m considering firing Time Warner. Maybe as soon as this month. I’ll let you know.

When should you raise money? NOW! [updated]

Garrett Camp, the co-founder of Stumbleupon, recommends, “Stay self-funded as long as possible.” I think I have been quoted saying the same thing, but over the past few years I have come to realize that you can wait too long to raise outside capital.

When I founded LayerOne I raised money first and then built the company. Since then I have been starting companies using my own money including my last company – ShopSavvy. Our investment strategy was to look at the company each month and determine if it makes sense to keep investing. While we had the resources to grow the business, there was a limit to those resources and I think we should have raised outside capital to increase the pace of growth. Ironically our success in user growth and engagement made it more difficult to raise money from early stage investors. It was not uncommon to hear a VC suggest that he wishes he talked to us earlier.

We grew a lot on a small amount of money, but sometimes I wonder if it would have been smart to raise outside capital earlier. Raising outside capital provides credibility to your business giving you instant access to the blogosphere (TechCrunch, VentureBeat and so on) and access to potential employees who pay attention to what deals investors are betting on. Using your own money doesn’t win you any access, credibility or friends.

The upside to not raising outside money? You don’t have to raise money, period. Tim O’Reilly said, “Money is like gasoline during a road trip. You don’t want to run out of gas on your trip, but you’re not doing a tour of gas stations.” Raising money makes me feel like I am visiting LOTS of gas stations – usually not getting any gas.

Now that I am doing it all over again with my latest startup, HAUL, we have decided to go ahead and raise a small amount of money ($750K) from a few smart angels (Dave McClure, Christine Tsai, Dave Matthews, Joel Fontenot). These early investors are valuable for a few reasons a) potentially ability to refer clients, b) potentially able to refer potential hires, c) potentially able to make referrals to VC firms for the Series A and (perhaps most importantly) d) social proof that the deal is smart. Within a short period of time, perhaps 6 months our plan is to raise a $5M series A investment from one tier one firm (perhaps with a co-investment from a strategic). The idea is to get everyone in the same boat together until it makes sense to raise the huge round or do a strategic deal.

When I was updating this post I realized that I wrote on this topic last year in November in a post titled, “When should you raise money?” (hmmm, I’m not too creative with titles). I suggested that when I started my next deal I’d do a few things…

  • participate in an early stage accelerator
  • raise a small angel round from Dave McClure
  • raise a series A from First Round, Benchmark or Andreessen Horowitz

Turns out we did the first two. After the holidays we will try to do the third. Go back and read that post (it was a lot better).

HAUL Update & Help Wanted

Haul-New-LogoIt has been a big week here at HAUL. We are firmly ensconced in the now open DEC (Dallas Entrepreneur Center) and have a team of five (along with a gaggle of contractors). We received noticed that we were accepted into an early stage startup accelerator (they have yet to announce so I won’t steal their thunder). Finally, we were selected to represent the Dallas startup scene at the Grow Conference being help in Vancouver next month to compete in their startup pitch competition.

We are now beginning work on our MVP – a marketplace for haulers and we need to start beefing up the team. For now we are working with third-party contractors, but we would love to bring design and development in house. If you are looking to join a fast growing startup lead by experienced entrepreneurs (Robert Bennett, Molly Cain and me) let me know and we’ll see if there is a place for you on the team. At HAUL you’ll get to work with hundreds of really talented video content creators and celebrities – think Hollywood meets the Valley meets QVC – and it all will be happening right here in Dallas.

Open positions include:

  • CTO (strong experience with agile development & building teams)
  • Developers (PHP, iOS, Java, Git, agile) (4)
  • YouTube Experts (SEO, API, OAuth) (1)
  • Designers (UX, UI, Dribble) (2)
  • Project Managers (scrum, agile) (1)
  • QA Analyst (1)

If you would like apply please send me your LinkedIn profile (required), your Github account for developers and your Dribble account for designers. Email to amuse@startupmuse.com. Thanks!

 

 

 

 

One Word: Video

In the Graduate Mr. McGuire told Ben, “I just want to say one word to you, just one word, PLASTICS. There is a great future in plastics…” Here is the clip for those of you who missed it the first time:

Assuming Mr. McGuire were alive today I suspect he would replace plastics with video. Video is huge and it is getting bigger, fast. The statistics from just last month are simply staggering. More than 180 million Americans watched more than 41 billion online videos last month (that is 85% of the total US Internet audience)! Online video advertising is exploding as well with more than 15.8 billion video ad views last month (53% of the total US population saw an average of 96 video ads). Also, if you think all if this is attributable to YouTube you might be surprised to learn that YouTube only represents about a third of the market. In fact, YouTube isn’t the biggest ad platform – BrightRoll is with 2.6 billion ad impressions last month.

 

Video Production Coworking Space in Dallas

Yesterday I sent out a very informal Tweet and Facebook message asking if anyone would be interested in being a part of coworking facility with studio space for video (green screen, whisper room, edit bays). Basically a place where you could have rent a few desks AND access video production facilities. Located in the Dallas Design District. Much like YouTube’s Space:

The interest was overwhelming. We are considering a few options including building something on our own or partnering with an existing coworking facility (The DEC, Common Desk or WELD). I got all of your FB messages and DMs indicating your interest, but I need a little more information. How about sending me an email with the following information:

Send to: amuse@startupmuse.com

1. Level of interest: 1-10 (1 being keep me posted and 10 being I am definitely moving in)

2. Production facilities needed: (please describe what you would need in the facility)

3. Office space needed: (please describe if you would work from the space full-time or just when you were using the production facilities, would you need an office, a permanent desk or a common desk – please indicate number of humans you will have working in the space)

4. What is your monthly budget: (how much could you afford to pay if you got the facilities and space that you needed to operate)

5. Other: (anything I should know, would you be willing to loan the facility any equipment – lights, cameras etc)

6. Name of Company

7. Phone Number

I’ll create a mailing list to keep you in the loop on the status of the idea. My goal isn’t to run this facility – it is simply to find a space that is affordable and fun for my own startup (HAUL). If you are of a like mind let me know.

 

QVC x YouTube = HAUL?

everutjomgIn this month’s edition of Vanity Fair Bruce Feirstein suggests that ‘Everything old is new again’ and provides the following historical analysis. What did he miss?

Valpak Coupons + Internet Explorer = Groupon

Scrapbooking x iPhone = Pinterest

The Sears Catalog + A mouse = Amazon

The Rotary Club x Fiber-Optic Cable = LinkedIn

Pearle Vision + Broadband = Warby Parker

Christmas Newsletters X Giant Server Farms = Facebook

Filene’s Basement + Email = Gilt

Your “Artsy” Cousin Mae x Wi-Fi = Etsy

QVC x YouTube = HAUL

Note: I added the last one… :)

Boulder Startup Week

BSW-2013-200pxEach May the startup community in Boulder hosts a 5-day event called Boulder Startup Week in an effort to showcase the unique startup culture found in this tiny Colorado city. This year I was invited to attend and spent the last three days taking in all that Boulder could offer. It was an amazing experience – truly inspiring.

The best part of my trip was the Startup Crawl. In less than four hours we got to visit 22 startups in their own offices. Hearing about a startup is great, but seeing where and how they work is really fascinating. I took a lot of pictures (as seen on my Facebook page) and met a LOT of entrepreneurs. Some of the companies I visited include: Trada, Simple Energy, Revolv (formerly Mobiplug), PivotDesk, Birdbox, Sendgrid, Applied Trust, Orbotix, Pivotal Labs, Linksmart, Precog, Flixmaster, Roundpegg, Quickleft, Vacation Rental Partners, Mobile Day, Kapost, Rafflecopter, Napkin Labs, Mighty Fudge Studios, Mocavo, and Victor and Spoils.

I can’t wait to talk to my startup peers in Dallas to see if we could pull something like this off in Big D. Big thanks go out to Erica O’Grady who initially invited me and provided housing – THANK!