Archive for April, 2010

Geek ‘n Rolla: Love & Money?

April 23, 2010

Love was defiantly in the air at this years Techcrunch Geek ‘n Rolla. The tech event, on its second year, had a strong focus on Venture Capital and real world startup experiences. The talks highlighted VC’s love of huge exits and startup entrepreneurs love of making great things. Unfortunately, these two paths to love don’t always meet. But often they both need each other to survive and grow. If you want a full debrief of the event Inma Martinez , Joao Belo and of course Mike Butcher at TechCrunch, have great detailed writeups.

In Tommy Ahlers‘s talk he compared a startup exit  to finding love and Eden Ventures described engaging with VC’s as romance. Tommy went on to say “don’t build a startup to sell out.” I’ve heard this before – if you just focus on the money you won’t get anywhere. In the subsequent panel discussion Saul Klein of Index Ventures went onto say “Most entrepreneurs are not looking for an exit, they’re looking to create a great product and change the world in some way”.

Jason Trost reminded us how much startups are “rollacoaster of a ride” and “to be ready for the hard knocks”. He also quoted the cold fact “that 7 out of 10 startups fail”. So why are startup founders willing to throw life savings, time and a personal life at an idea. It’s because Entrepreneurs love doing what they want to do! They love the freedom to create

The startup new product pitches of the day were: Cortexica;; Decibel; DriveK;; Gigaboxx;; iGlue;; Musiio; Pownum; SongHi; and Stripped Finance. Well done guys for have the passion to follow your dreams. And congratulations to Cortexica for winning over the judges and for the audience vote. Tamlin Magee has a great write up all the pitches.

Most of these startups have spent many months, or years,  and much money building their  products. Love of startups is why the speakers,  the pitchers and several of the audience were willing to drive across Europe for this event when all the planes had stopped. Well done Mike Butcher for making it these events such a focal point for European tech startups!

In Ewan McLeod’s talk on “The disruptive opportunities for startups in mobile, and getting traction fast” he pleaded with mobile phone app startups to stop their love affair with iPhone app development and look at the market measures.   “But love is blind and lovers cannot see, the pretty follies that themselves commit; For if they could, Cupid himself would blush” (William Shakespeare, “The Merchant of Venice”). This is where the VC’s kicks in!! They have to see the reality of money or at least the potential of it. “We’re looking for exit values of $300-400million dollars” Katie Turner, Eden Ventures.

However software startups are not about the money at the beginning. They can’t be – There is no money.. only an idea, a massive loss and very few customers, if any! Employees tend to focus on monthly paychecks but startup founders have to draw their strength and measures from elsewhere. Ultimately you have to do what you really love to do. Startup founders really have to enjoy and relish the startup challenge.  “I love sales” said the charismatic and slightly wacky  Morten Lund in his entertaining talk.

Without a rush of customers throwing money at a product startup founders have to deal with the VC devil to grow  their startup and continue to create. They then have to dance to the pipers tune and move towards a liquidity event. The good news is that once a VC is onboard they’re on the entrepreneurs side, just as long as the founders are moving towards that big exit 😉


Business plans: Fools errand or building blocks?

April 8, 2010

Conventional wisdom says write a business plan. However, many voices are now saying don’t! As a startup founder what do you do? I’ve written several plans before – at our web monitoring startup, on my MBA and in my past jobs. They take alot of time and effort, which distracts you from the job in hand – making stuff to sell and selling stuff to customers. However plans  have a purpose, but make’em short (one page), make’em short-term (one year’ish) and have a single clear objective. Also, have your hockey stick sales graph, if you have to have one, grounded in reality i.e. based on real customers/prospects (difficult in pre-launched mode).

There’s an increasingly voice in the UK/US for short or even no business plans in a startup. The fundamental idea of a business plan is to help re-risk a venture through pre-examination of a market opportunity. However we all know startups are a full-on risk scenario. There’s no escaping that. And almost as soon as the ink has dry on a plan the market has changed.

There are two distinct For and Against business plan camps. The anti camp say: “The very idea of ‘planning’ is ridiculous”, Jason Cohen; Brian Halligan argues it’s a fool’s errand” for start-up founders to create a business plan.” And ever the counter culture, 37Signals, are anti business plans – “What’s the point of a business plan if it’s obviously a fantasy that has nothing to do with reality?”. Two guys, David Sloly and Ian Sanders, have even created a website dedicated to the annihilation of business planning.

The pro business plan campaigners say: “A strong business plan is essentially the cornerstone of your business, and yet many entrepreneurs drag their feet when it comes to writing one”, Colleen Debaise, The Wall Street Journal; The goal is not to get a VC to read your plan.  The goal is to get a VC to invest so you can build a successful company.”; people like Tim Berry has even made an entire business our of business plans: Think of your start-up business plan as a matter of blocks; pieces.”

Taking a look back through history including philosophers and the military the value of planning is clear: “In preparing for battle I have always found that plans are useless, but planning is indispensable”, Eisenhower; Prior Planning and Preparation Prevents Piss Poor Performance (time honored British Army saying); and  “Let your plans be dark and as impenetrable as night, and when you move, fall like a thunderbolt.”, Sun Tzu

So, why all the fuss over putting your thoughts down on a bit of paper.. It’s the time, or more precisely the waste of this precious resource which startup are so short of. Our market economic cycles are becoming increasingly rapid, especially in tech. Therefore a young company has to move  faster than ever before and excessive analysis can drain reaction time. The difficulty is acting purely from the hip or gut without much forethought brings a short-term reaction.

I think the Greek philosopher Publilius Syrus (a slave) got it right 2100 years ago when he said It is a bad plan that admits of no modification.” They key is modification i.e. change and adaption. Like evolution – stuff changes. This point meets both  For and Against camps. A plan must change. It is not a static thing, in war or in business.

A complete lack of planning is unwise but excessive long/in-depth analyst is folly. Detailed planning only delays getting into the market and in gaining real insight (tactics) into customer needs. JFDI (Just Fricking Do It)! What really matters is having a grounded insight and measure in the core aspects of a plan within a business case. This detail fits nicely on a napkin or back of a cigarette packet  😉