Month: March 2012

An Interview with Adeo Ressi (and why Founder Institute should be in Canada)

I’ve spent a lot of time thinking about incubators. Creating one, mentoring at others, visiting lots and being skeptical of several (I’m not saying which). You can decide for yourself if you think there is an incubator bandwagon being jumped on, but one incubator that marches to its own distinct drumbeat is The Founder Institute.

Here are two examples: 1) they don’t give you money and charge a nominal tuition fee, and 2) all founders who go through The Founder Institute get a share in a common equity pool. That’s pretty innovative.

Entrepreneurs already know Adeo Ressi, who is the founder of The Founder Insitute, as the man behind TheFunded.com. He’s also behind a bunch of other successful startups and is a bit of a renaissance man.

I spoke to Adeo recently about what makes The Founder Institute so different, why it works, and why Canada needs the Founder Institute. I think it’s a great model for talented Canadian entrepreneurs who don’t necessarily fit the ‘mould’ of the TechStars/YC genome. At the end of the post I’m going to ask for people to step forward if they would be interested in talking about getting The Founder Institute in their Canadian city. I know Adeo is interested, and so am I.

Here’s the interview:

You’ve built 8 startups, 4 of which were acquired. What’s the secret to your success?
Perseverance. No matter how bad things appeared, we struggled through the adversity to find the magic. Building a company from nothing to a few hundred or a thousand employees in a few years time is an immense challenge. The moment that you master one phase of growth, you are already onto the next. It takes a high degree of self awareness and perseverance to succeed. There is this meme that failure is acceptable. I prefer to triumph over adversity.

Your last two startups, TheFunded.com and Founder Institute, are about helping entrepreneurs. Is this philanthropy or business (or both)?
Entreprenurship is becoming harder, and I want to give back to the craft of entrepreneurship. A strong philanthropic mission can only endure with a solid business underpinning, so the Founder Institute is a for profit entity. I am turning over the for profit company stock to a long-term trust to guarantee the philanthropic mission for at least 100 years.

As I became more successful as an entrepreneur over the last 18 years, it became easier to build amazing products and harder to build great companies. When I started in 1994, about 1 in 100 companies were successful. Now, less than 1 in 1,000 companies are meaningful. The Founder Institute was designed to invert the startup failure rate, and our goal is to create 1,000 meaningful and enduring technology companies per year. We expect to hit this goal in 2012, less than 3 years after being incorporated ourselves.
There are a lot of incubators out there. What is different about the Founder Institute?
I am a huge fan of the programs being launched to help entrepreneurs. There is a renaissance going on. Most other programs help entrepreneurs that have a company, a team and traction. The Founder Institute looks for passionate people with a dream, and we help them create a meaningful and enduring technology company. I like to say that we mine diamonds, while others make jewelry.

We have chosen the most challenging segment, inception. Everyone involved in the Institute is a founder, and we create an equity pool that shares the upside created from the companies among everyone. So, if you graduate from the program and fail while a peer goes on to succeed, you will also see a return from your peer’s success.

Who should (and who should not) attend Founder Institute?
Everyone who has a dream to start a company should apply. We have absolutely no gender, race or idea biases, which also separates us from various other programs. The average age of applicants is 34 years old, and we have a 21% female graduation rate. Just due to our scale, the Institute is the largest female incubator in the world. I would eventually like to see our graduation demographics resemble the demographics of the working population.

What’s the greatest success of the Founder Institute to date, and why?
The greatest success of the Founder Institute is are helping thousands of people pursue their dream. We survey all enrolled Founders around the world, and nearly everyone would proactively recommend the Founder Institute. Some semesters are better than others and some locations have a stronger ecosystem, but the survey results are universally consistent.

What do you think Founder institute can do for Canadian startups?
The Founder Institute is a great asset for a burgeoning entrepreneurial ecosystem, like in Canada. We encourage successful entrepreneurs to help the next generation of companies and give them economic upside from the results. We help local Founders to launch meaningful and enduring companies. We provide a high quality stream of companies for other incubators, for investors and for various vendors. Ultimately, we are a value added player in the ecosystem, and we get along with everyone else.

You’re on the Board of the X Prize. Why are you so passionate about private space travel?
I am passionate about models to inspire innovation, and I believe that prizes are effective. As Chairman of the Strategic Committee when the Ansari X Prize was won in 2004, I pushed the foundation to expand the prize model into other categories, such as genomics, automative, medicine, etc.

There’s a great picture of you with President Clinton (http://www.adeoressi.com/about/). Seriously, how cool is he? What about Hillary?
In the photo, I am standing next Jeff Dachis as well, the Co-founder of Razorfish. I find that Founders are a much better bunch of people to spend time with than politicians, and I look forward to traveling around the world to meet aspiring Founders.

THE ASK

I think The Founder Institute would work really well in Canada. I think there are a lot more entrepreneurs than available spots at incubators and Adeo has really focused on what’s important for idea-stage startups. They’ve launched 415 companies in 20+ cities around the world.

I’m looking for interested parties to step forward if you’re interested in starting, running, mentoring or hosting The Founder Institute in Canada. Leave a comment or contact me directly.

March 28, 2012
Early stage companies don’t need money, they need customers
Note: This is cross posted from WhoYouCallingAJesse.com by Jesse Rodgers, who is a cofounder of TribeHR. He has been a key member of the Waterloo startup community hosting StartupCampWaterloo and other events to bring together and engage local entrepreneurs. Follow him on Twitter @jrodgers or WhoYouCallingAJesse.com.

Some rights reserved by wallyg

The popular belief in Canada is that the tech startup world has been fairly light on investment dollars relative to other industries in Canada. Because there is such a disparity in seed or angel round investment size in Canada vs the US people tend to point to that as a reason people go south. The perceived result of the funding problem (and likely the weather) is that there are 350 000 Canadians in the Valley. No one can argue the talent to build global calibre tech companies exists in Canada (or at least has Canadian passports) but you can certainly argue Canada lacks that certain something to keep them here.

Five years ago Paul Graham observed that the total cost to get a tech startup started had dropped dramatically and will continue to do so.

So my first prediction about the future of web startups is pretty straightforward: there will be a lot of them. When starting a startup was expensive, you had to get the permission of investors to do it. Now the only threshold is courage. – Paul Graham, 2007

There is a lot of attention around getting young people money but does that help them? Does that keep them in Canada? I would argue that the ones that do need and can use capital don’t pull up stakes and leave town for the investment. They leave town (or the country) because they are missing something more valuable than money — customers, mentorship that helps them get customers, and a network of peers.

Know thy stage

The problem with comparing funding deal levels in Canada and the US is that it ignores the stage the company is in relative to the stage of US startups raising money for the first time. The Startup Genome report 01 and the Startup Genome Compass offers startups an excellent way to measure themselves against a benchmark of over 3 000 startups. In the report there is a table (shown below) that gives you some overall averages for all startups.

From the Startup Genome Report 01.

In last seven years of being involved in the Canadian startup community (mostly in Waterloo) and in the last three years leading what is arguably the best student focused incubator in Canada while founding my own startup. I saw dozens of companies peek into the Discovery phase, a few move on through to the Validation phase.

What I have seen happen before the discovery phase:
- Talk of raising money is used to pull in a large group of talent.
- Focus is not on customers, it is on technology or raising money.
- There is little help by way of mentorship that takes the time to understand the dynamic of the group.
- Mentors focus on finding a way to get them money so they can work full time.
What founders fail to do:
- Define the problem.
- Find out what people are looking for.
- What else do they need in a system?
- Determine what they might pay for it by getting them to pay for it and talking to our customers.
- Measure, iterate, repeat.
Startups need to focus more on customer acquisition and growth in Canada, enough talk about raising money

There are so many business plan and pitch competitions one could make a career out of attending them. This gives a false sense of success because the ‘winner’ is determined on a lot of factors except their ability to actually get customers. The game becomes about (and has been it feels like) how to put together a report on an idea (business plan) and present in a way that makes you look confident.

The game is really about getting lots of people to give you their money because you provide value to them. What makes you better than others is that you are chasing a much bigger problem that will provide value to a full percentage of the world’s population. Bonus points if you change the world.

Note: This is cross posted from WhoYouCallingAJesse.com by Jesse Rodgers, who is a cofounder of TribeHR. He has been a key member of the Waterloo startup community hosting StartupCampWaterloo and other events to bring together and engage local entrepreneurs. Follow him on Twitter @jrodgers or WhoYouCallingAJesse.com.
March 27, 2012
Do Startups Need Community Managers?
Editor’s note: This is a cross post from Mark Evans Tech written by Mark Evans of ME Consulting. Follow him on Twitter @markevans or MarkEvansTech.com. This post was originally published in March 26, 2012 on MarkEvansTech.com.

Some rights reserved by leg0fenris

Do start-ups needs community managers to operate their social media activities…and a whole lot more?

It’s an interesting question. On one hand, social media is seen as a low-cost marketing and sales channel for lean and mean start-ups. On the other, every full-time hire is a major decision so start-ups need to decide whether having a community makes sense, or whether having another developer or salesman is a more pragmatic option.

If the right person is hired, a community manager can be a valuable asset for a start-up. There are, however, several important skills a community manager needs to possess. These include:
1. Have in-depth knowledge of social media strategy and tactics. It’s more than knowing how to tweet or post an update. It means knowing how to execute, when to get involved in a situation and when to lie low, and how to build relationships and connections.
2. Excellent communication and writing skills given so much of what a community manger does is engage and talk with a variety of people in a public forum. A good community manager has the ability to prepare blog posts, presentations, case studies, and speak at conferences.
3. Understand and appreciate the business development process. In talking with lots of people and consuming tons of information, community managers have the ability to discover, identify and nurture prospects, which can then be passed along to the sales team.
4. Provide top-notch customer service. It means having the knowledge and patience to deal with all kinds of issues and problems – big and small – that emerge. Some of them can be handled online, while some needs to be tactfully taken off-line.
5. Sell and, even, close a deal: There are potential customers who make it clear about the products they need. A savvy community manager will be all over these opportunities with the goal to complete a sale.
Like a stellar five-tool baseball player, community managers require a variety of skills to not only be effective but provide startups with maximum bang for the buck. They need to multi-task AND be good at all of the tasks that pop up during the working day.

Community managers who have these skills can completely justify their hiring and, in the process, serve a startup in many ways to support its operations and growth.

What do you think? Is there a right time for a startup to hire a community manager?

Editor’s note: This is a cross post from Mark Evans Tech written by Mark Evans of ME Consulting. Follow him on Twitter @markevans or MarkEvansTech.com. This post was originally published in March 26, 2012 on MarkEvansTech.com.
March 26, 2012
Nail it before you scale it
Editor’s note: This is a cross post from The Meaford Group written by Peter Smith (LinkedIn). This post was originally published in January 28, 2012 on The Meaford Group.

I love working with Robin Hopper, my co-EIR at the Innovation Factory, for the simple fact that the guy has more catchy cool acronyms and phrases that make me sound so smart when I repeat them. “Nail it before you Scale it” is one of his latest.

Put simply, too many start-ups try to scale their marketing and sales organization before they have nailed their value proposition and the sales story that goes along with it. The consequences can be disastrous. Over a beer, ask Robin about the story of how he blew through $3,000,000 in investment capital on one of his early start-ups because he expanded too early without really having the customer-compelling value proposition figured out.

Howard Gwin talks about the need for first time founders to create momentum and velocity in order to overcome the investor bias against funding first-time teams. (The Three P’s of a Technology Company). If you haven’t read his blog, do so now. He offers sage advice to wait before seeking VC funding until you have “proof points and a traction story that is damn near breathtaking”. Beyond that, don’t fall into the trap of trying to create that momentum before you fully understand why the market wants your technology and how you package it for consistent, reliable and predictable sales.

At the Innovation Factory, we work with many start-ups. Most go through one or more “Pivots” before they find the kernel at the core of their product or idea that will really sell. Unfortunately, some will never find it because even though the idea or technology was interesting or cool, the product will never be compelling to an intensely competitive marketplace. Good entrepreneurs figure this out fast and kill the idea but then move on to another.

I recently met one of these entrepreneurs. He built and sold his first company when he was 19 for $100,000. (It may not sound like much but I wish I had a hundred grand when I was 19). His second company was a professional services company. He built it, had success and then killed it because he realized he could never scale it fast enough to fulfill his dream. His third company was a software company and dealt with project management infrastructure. The idea and technology were good but the market was crowded and more importantly, the sales process would be long. There also were too many factors out of his company’s control in the value chain of customers getting value from his product. He had arranged Angel funding and was ready to launch but instead he listened to advice and killed the company before taking the investment. His fourth company looks like a winner. It is in a hot space, has uniqueness, has the ability to scale quickly around a solid value proposition and he has surrounded himself with a good team. He has also already pivoted at least once on his value prop in order to get ready for traction.

So, if you are early in your game, my advice to you is simple:
1. Figure out your value prop
2. Keep pivoting it and your company until you have proof points that you can create massive momentum and traction quickly
3. Use Friends & Family and Angel funding to keep you going through these phases
4. Then go talk to VC’s.
In other words, “Nail it before you Scale it.”

Editor’s note: This is a cross post from The Meaford Group written by Peter Smith (LinkedIn). This post was originally published in January 28, 2012 on The Meaford Group.
March 21, 2012
5 Steps to an Awesome Executive Summary
Editor’s note: This is a cross post from Massive Damage Inc. written by Ken Seto, founder of @Massive_Damage & @EndloopMobile. He is building @PleaseStayCalm, a location based game.. Follow him on Twitter @kenseto where he tweets about Apple, music, games, food, wine & movies. This post was originally published in February 21, 2012 on MassDmg.com.

We’ve finally decided to post our Executive Summary to share with other founders as we’ve always had compliments and great feedback from it.

Some folks wonder how best to use executive summaries.. basically you’ll give it to people who will be doing intros for you. That way, they can forward something that piques the interest of the potential investor without giving away the whole pitch. You don’t want your deck to do your pitch for you, you want to do the pitch.

Here are the following guidelines I followed to create ours:
1. Keep it to one page if possible, it’s a summary, not a pitch.
2. If you have no eye for design, hire one or get a designer friend to help out.
3. If you have metrics, put the good stuff front and center. Feel free to use vanity metrics for big impact but make sure you also have engagement metrics.
4. Leave enough room for your Team section. Use pictures and previous startups/accomplishments.
5. Include awesome visuals. Sure you can’t use zombies for every startup but give it some personality. Use bold infographics or charts.
Here’s our Executive Summary:

Massive Damage Executive Summary

View more documents from Ken Seto

Editor’s note: This is a cross post from Massive Damage Inc. written by Ken Seto, founder of @Massive_Damage & @EndloopMobile. He is building @PleaseStayCalm, a location based game.. Follow him on Twitter @kenseto where he tweets about Apple, music, games, food, wine & movies. This post was originally published in February 21, 2012 on MassDmg.com.
March 15, 2012
Work-Life Separation and Institutional Funding

I met with a friend this week who has a job. He’s working on a side project with a friend. They both hope to leave their jobs in the near future to work on this new side project full time.

Both partners in this side project have kids, young families. One of the questions he asked me was around fund raising. Specifically the concern that raising funds from institutional investors or angels may put them in a position where they’re being forced to work more than the 60 to 70 hours they’re currently working. Ultimately the concern being that they’ve seen people lives ripped apart by this.

Some rights reserved by WanderingtheWorld (www.LostManProject.com)

My response was reasonably simple. Product based businesses can, and likely will, consume you and everything in your life. Services based businesses are a lot of work, products are all consuming. If your personal relationships and your support systems aren’t strong, they will get ripped apart. You can’t blame that on investors or entreprenership.

Now for the good news. If your project does not consume you then you have the wrong project. Drop it and move onto the next one or go ask for your job back. Investors won’t force you to work long hours. If they need to, wrong project, drop it, move on.

I’ve said this before, I don’t believe in the myth of work-life separation. In fact, anyone who brings it up with me, I immediately know they have a job they don’t like. Work-life separation was born of the industrial revolution. You need it to shield that crappy job from your life. Now, full disclosure, I’m drafting this post at 4:21am while you’re cozy in bed. People often use that measure “are you excited to get out of bed and get to work in the morning?”. I use the measure, if you’re sleeping well every night then you may have a job.

My work is my life. My life is my work. I bring all of me to both. Work makes my family stronger, it makes my relationships with my kids stronger, they all feed off each other. The last time I had a corporate gig, my family suffered. That’s just me, I’m not suggesting it’s you.

If you have a great work-life separation today, I’m not advocating you change anything. If, however, you want to work for yourself someday then it’s time to start tearing down that divider. Start by bringing more of you into your work and more of your work home. Don’t worry about losing it or maintaining that barrier, start destroying it. It’s the only chance you have of success out there.

March 2, 2012