Fred Wilson put up a post today that grabbed a slide from a recent presentation Mark Suster gave at a Founder Showcase event. The chart (and Fred’s post) back up with numbers the qualitative argument I was making in my recent post on Pattern Recognition (I wish I had these data when I wrote my original post!). In my post I argued that while there is plenty of talk about a handful of high flying companies (Zynga, Twitter, Facebook, etc.) that vast majority of venture back companies can expect significantly more modest outcomes. In fact history suggests that a majority won’t even return invested capital to investors. All this talk about the stratospheric valuations of this small group of companies…
Category
Company Creation
The real bubble
While there’s been plenty of discussion and debate about whether we’re in some kind of valuation/venture bubble right now for early stage tech, there is one bubble that I’m pretty sure of. I’m seeing more great business ideas right now than I can remember seeing at any time in my 10 year venture career. We typically see around 1,500 business plans a year at Foundry (we actually see more than that, but this is the approximate number that are relevant to our investment focus). On average we’ll take a meeting with somewhere around 10-15% of these and hear a bit more than what was in the introductory email or initial business plan. And we typically invest in 8 (our Foundry…
HR as a core competency
In the world of start-ups, HR is at the bottom of the bottom of the heap of priorities most companies are working on. The vast majority of companies think about HR as a process and compliance function, outsource it to 3rd party providers (payroll, benefits, etc.) and doing their best to forget about it. If there’s any focus on HR as a function it is around recruiting (also typically outsourced and generally treated as very episodic). Sure – there’s plenty of talk about "culture" – of success, of working hard, of some other superlative that’s not particularly interesting or differentiating ("we want to hire great people and expect them to be hard working and successful!" duh) – but little real…
Boulder featured on Fox Business News
For a long time my hometown of Boulder, Colorado has been known as a great place to live but more recently Boulder is taking on a reputation as a great place to start a company as well. And the rest of the country is starting to take notice (see BusinessWeek, HuffPo and the NY Times). Today Fox Business News did a few live segments from Boulder highlighting some of the people and institutions that are helping create great entrepreneurs and great companies here. I was fortunate enough to be interviewed live along with Lijit CEO Todd Vernon (Foundry is an investor in Lijit). I have to say it was a little nerve wracking to be doing a live feed (this…
The Freemium Myth – more data
My last post with some thoughts on product pricing has received a ton of traffic, comments and email. Clearly this topic is one that a lot of entrepreneurs care about (and struggle with). A few people pointed me to a great post by Ruben Gamez of Bidsketch on the Software by Rob blog that talks about freemium plans and why, in Ruben’s view, they aren’t always drive the results companies are looking for. It maps well to my thinking (I directly called the freemium model into question in my pricing post). There’s some great data in the post – definitely read the full thing. Here’s a few that caught my eye: Bidsketch started out with a freemium model. Ruben carefully…
Rewarding failure
This seems like an appropriate topic against the backdrop of my recent post on becoming more of a data driven organization. When you expose data, you expose not just those areas of your business that are doing well, but also those that aren’t. And this brings up an interesting question: Does your organization embrace failure or only reward success? Specifically, do you encourage people to create challenging goals and give them credit for the work they did trying to achieve them, or do you (implicitly or explicitly) encourage people to sandbag and as a result “overachieve”? The answer to this question may be more nuanced than you originally think once you sit down to consider it. In fact, most people…
Your reality filter
One of the great joys of working with entrepreneurs is the energy, enthusiasm and aspiration they bring to their businesses. But don’t forget to consider your business for what it is, not what you hope it will be. Which is to say that there’s a balance between planning for the future and recognizing where you are today. And striking this balance is part of what makes a great entrepreneur – the ability to consider in all aspects of your business (sales, product development, engineering, etc.) the right mix of practical current reality and future aspiration.
Is your early stage business stretched? Good!
Most early stage companies feel stretched. While they don’t lack for ideas, they typically lack for resources (money, people, time, etc.). In my book this is a good thing. Scarcity of resources forces starker choices and ultimately results in better decision making. I sometimes joke with companies about the occasional over-funded competitor and tell them to use their relative lack of funding as a “competitive advantage”. What I mean is that lacking endless resources (or seemingly endless resources – in many cases even gobs of money eventually runs out) will force them to focus on what’s important, not what everything that’s possible, probable or half way interesting. To me this discipline results in better decisions and ultimately better companies.
What’s your business mantra
One thing that comes up early on in many of the companies that I work with is the question of how to build a framework through which to make decisions about product and business direction. Because it’s easy to get sidetracked (or just blinded by all of the possibilities out there) I often suggest to companies that they come up with a “mantra”. It’s oversimplified and doesn’t work for every situation (and of course needs to be revisited as the business changes over time) but the idea is to boil the key drivers of the company down to a sentence or two – maybe some broad categories that define they most important areas of focus or possibly something that looks…
dotting i’s and crossing t’s
Will Herman’s post yesterday on the challenges of co-CEO’s reminded me of something I’ve been meaning to get off my chest. Many businesses run loose and fast in their early days. And lets face it, the kind of people who are drawn to starting companies often aren’t process people – they are creative thinkers. While that’s part of the fun of early stage companies, don’t forget that there’s a side to what you are doing that needs to be properly documented and orderly. It’s not just Mark Zuckerberg who has founder problems – I’ve seen many business partnerships with the best intentions disintegrate, where their founders who were no longer seeing eye to eye, had to work out (or not…