StartupNorth

Tag: Startups

  • Is Code Written To Be Read?

    The other day I attended a tech talk hosted by Facebook. Their internal platform team was talking about how they manage the Facebook framework and code base.

    The presentation was titled “Code Is Written To Be Read”.

    Immediately my gag reflex kicked in. Code is written to be read??? Really??? I literally can’t remember the last time I sat there and thought “hmmm, how readable is this code, I wonder if so and so will be able to understand this”. Having said that, I think I was the only person from a startup in attendance, most were from Google, Zynga, and other larger tech firms. So perhaps I was the wrong audience for this topic.

    Whatever their problem is, it is not mine. In my world I have one reason to write code – TO SHIP.

    “Code is Written for Users to Use It” (i.e. just ship or shipping is a feature) – that is the startup equivalent mission statement.

    And this is where all the “maintainability” coding trolls come in and leave comments like “yeah, but it’ll be huge advantage if we can iterate quickly and get a v2 out and so on and so forth, thus we need code thats easy to maintain”.

    No.

    Here’s the reality – your product is likely going to fail, so if you wasted time and money making fancy abstractions, doing code golf, and focusing on elite coding craftsmanship… you blew it. You failed. You should have finished it 2-4 weeks earlier instead.

    You have to EARN maintenance as a problem. You have to EARN v2. You have to EARN the right to practice expert craftsmanship. If you get there, if you really get to the point where maintaining your code base is a problem for you where many other developers are reading your code… congrats! You’ve succeeded. Go nuts, rewrite everything. You deserve it!! Forget every word I am writing, and go attend the Facebook tech talk and take diligent notes.

    But for most of us, we are not going to earn that right. We are going to fail or pivot or leave or get acqui-hired or whatever. That code is going to get thrown in the trash never to be touched again. So how’s that clever FactoryOfTaskFactories abstraction feel now?

    And that’s why you probably don’t want to hire Facebook or Google engineers for your startup. And more so, if you are a new grad engineer who aspires to be a startup founder one day, that’s why you don’t want to join Facebook or Google.

    Look, it’s not that there is something wrong with those developers. I’m sure working at Facebook or Google is fantastic. It is the closest thing to a tenured prof position you can get in this field. The problem is that they operate under significantly different operating conditions than you do (unlimited money, unlimited time, lots of technical resources, working across massive teams, etc + MASSIVE scale problems, huge performance requirements,petabytes of data, etc). They learn a very different craft than you do.

    Your craft, the startup developer craft, is simple – “get things done”. The other parts of the craft, you have to earn.

    (caveat – if you are building a startup focused on platform or tools being used by other developers, your craftsmanship should be excellent)
    (disclaimer – I have nothing against facebook or google, they are full of friends of mine and other wonderful and smart ppl)

  • Meaningful metrics for incubators and accelerators

    Editor’s 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.

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    Attribution Some rights reserved by Nathan E Photography

    Incubators and accelerators are businesses just like the businesses they intend to help develop as they travel through the startup lifecycle. As with any business, there are indicators that they can measure to give them a better idea of how they are performing besides the big public relations buzz around a company being funded.

    You need to measure these numbers so that when a success happens you can hopefully gain some insights on how to help the other companies better. The problem is that even though the model of an incubator or accelerator is generally known, how to take 10 companies and have 10 successful growth companies come out the other side of the program is not.

    The issue of what metrics to use is an important but complicated problem to solve.

    Set the baseline at the application process (pre-program)

    There are far more applicants than slots offered in an incubator or accelerator program. However, it is at this point that a program is gathering it’s best intelligence. You need a baseline measurement at the start of the program that you can measure every team against. What you should be tracking:

    • Who applied to the program that you didn’taccept (this is your control sample)
      • Track their progress on Angellist, Crunchbase, and/or go back to their web site in 3, 6, 12 months.
      • Keep a ratio of who is still in business and what their status is.
    • Maintain, in a CRM system, information on the applicant founders and their team members.

    Measure the incubator/accelerator clients (in-program)

    At this point there are X number of startups with Y number of founders and maybe Z employees. What you want to measure are things that demonstrate they have improved (or not) and which are things you would expect to see improve as a result of the services provided by any incubator or accelerator:

    • Current customers and revenue per customer (for most that will be 0 at the start) that will work across revenue models: CAC, ARPU, churn rate.
    • Sales funnel – do they have leads? How many? Are they qualified leads? What are they worth?
    • Average user growth in the last month.
    • What mentors or advisors did they meet through the program? What role did they take with the company?

    Run these numbers at the start and at the end of the program. If you are a pure research focused incubator, ignore this section. You have a much longer time to see success – but few are truly research focused.

    Monitor the graduates: Alumni (post-program)

    This is a very important thing an incubator/accelerator can do — build and maintain its alumni connections. These folks not only help at every stage of running future programs but their success lifts the profile of the program, just like how alumni of prestigious business schools make the business schools prestigious.

    There should be reporting milestones at a set interval (probably financial quarter based) where you gain the following insights on the company:

    • Customer growth percentage: CAC, ARPU, and churn rate all expressed as percentage growth.
    • Sales funnel growth expressed as a percentage.
    • Average user growth in the last month.
    • What mentors or advisors are currently active with the company?

    Ideally you should have a position that is equivalent to a close advisor or board observer with the company once it graduates from the program.

    Defining success

    If an incubator or accelerator program is successful, the graphs should be heading up and to the right at a much faster pace than they would have been had startups not entered the program.

    The only baseline data I know of is from the Startup Genome. In their report they explain the stages and the average length of time it takes a company to go through them. For an incubator or accelerator to demonstrate that they work, I would expect a successful company to move through the stages faster than the average. I would also expect them to fail faster than the average.

    Tracking metrics puts a lot more overhead on an accelerator. It is likely more than they budgeted for to start. However, if you want to know if the program is successful it is worth the investment of an admin salary to track and crunch data. This is just a baseline, track more and figure out what the indicators of success are for you.

  • Not all founders are created equal

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    I was reading an excerpt from Noah Wasserman’s The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup (Kauffman Foundation Series on Innovation and Entrepreneurship) about Founder Dilemmas: Equity Splits and it struck home. Equity splits and distribution are often the key issues related to power imbalances, perceived injustice and tension amongst cofounders.

    In Noam’s dataset, 73% of founding teams split equity within a month of founding, a striking number given the big uncertainties early in the life of any startup. The majority of those teams set the equity in stone by failing to allow for future adjustments to equity stakes if there are major changes within the team or the startup…

    Setting the early equity split in stone is one of the biggest mistakes founders can make. With their confidence in their startup and themselves, their passion for their work and their mission, and their desire not to harm the fragile dynamic within the nascent founding team, cofounders tend to plan for the best that can happen. They assume that their early, high levels of commitment will last long into the future, rather than waning as the challenges of founding begin to sap their passion for the idea and for each other. They assume that no adverse events will change the composition of the team.They also tend to take a very short-term view of the factors that should affect equity splits.

    Sometimes it just doesn’t work out, and a founder will choose to leave the company or have the choice made for them. The question is how do you create a set of agreements that is fair to all of the cofounders. Often we think that standard employment and shareholder agreements cover much of the difficult situations that we can encounter with cofounders. But as cofounders it starts by really understand what you each are looking for, and then making sure your agreements cover the specifics of your situation.

    10 Critical Cofounder Questions

    1. How should we divide the shares?
    2. How will decisions get made?
    3. What happens if one of us leaves the company?
    4. Can any of us be fired? By whom? For what reasons?
    5. What are our personal goals for the startup?
    6. Will this be the primary activity for each of us?
    7. What part of our plan are we unwilling to change?
    8. What contractual terms will each of us sign with the company?
    9. Will any of us be investing cash in the company? If so, how will this be treated?
    10. What will we pay ourselves? Who gets to change this in the future?

    A couple of things. I think all founders stock should vest. I like it when founders purchase their initial shares with a one-time acceleration clause for a small percentage at purchase (3-5%). I like when founders’ stock reverse vests with a traditional one year cliff. The initial vesting acceleration is because things can change at 6 months and it seems fair to value the capital risk that each founder has taken at purchase. And the one year cliff because it is standard. What I’ve seen a lot is founders that don’t do the small initial accelerated vesting clause.

    The other thing I like to see is an Employment Agreement with Termination clauses, in particular, an acceleration on vesting regarding “Termination by the Corporation without Cause”. I like to see a single trigger acceleration with 6-12 months of stock vesting on termination without cause (I’m not alone). The goal is to be fair and to protect each cofounder and the corporation if things don’t workout.

    What tips do others have for equity splits? acceleration clauses? terms? That as cofounders we should put in our agreements.

    Other Resources

     

  • The Startup Backoffice

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    Scalabiity Inc

    StartupNorth contributor Ray Luk (LinkedIn, @rayluk) announced the launch of Scalability Inc. (@scalabilityinc). It’s a great service that provides backoffice services including bookkeeping, accounting, government filings, payroll, record keeping, and human resources. It’s the combination of tools and the people with the expertise to help with timing that can make a huge difference. Ray seems to have nailed a need in the marketplace with Scalability Inc.

    It’s great to see startups building these unsexy tools, and sharing their experiences. It’s particularly interesting to see how many Canadian startups are playing in the unsexy backoffice space. Scalability Inc., Wave Accounting (announced $12MM from Social+Capital), TribeHR ($1MM from David Skok at Matrix Partners), Shopify ($22MM from Bessemer), Dayforce (acquired by Ceridian), it seems like Canadians like critical business apps.

    @StartupCFO backoffice talk on oct 4 2011 at Founderfuel

    What are the must have tools that you are using in your startup’s back office?

    Sales & Inventory

    Analytics & Business Intelligence

    CRM

    Human Resources

    Accounting & Payroll & Expenses

    Invoicing

    Payments

    Legals

    Bookkeepers & Accountants

    What are you using in the back office? Who are the consultants and providers that we’ve missed?

     

  • How Rob Ford is Failing the Startup Ecosystem

    What has he done for us lately?

    I don’t often look to politicians to help out startups. Typically when they do, they mess it up and make it worse than it was before. And probably if I looked at Rob Ford’s track record of do-little-ness, I’d think even less of trying to push him to get involved in our just blooming, fragile startup ecosystem.

    But, being here in New York the last few months, I have seen Mayor Bloomberg involved in some helpful, innovative projects. In fact, in a fascinating report about the New York startup ecosystem titled “New Tech City“, on page 24, specifically outlines the “Bloomberg Effect” and some of the tactical steps he’s taken to bolster New York’s early stage, rising tech startup community.

    “New York’s tech sector has benefited greatly from an unprecedented level of support from Mayor Bloomberg and his top economic development officials.” –New Tech City Report

    I’d love to hear this said about any government entity at any level in Canada.

    Now I know some of you have distant (errrr… recent) memories of political thoughtfulness gone wrong (cough cough, the inadvertent disappearance of the entire angel investing class). The typical refrain I hear from folks in the tech scene is something like “Gov’t should provide money and get out of the way”. But I’ve seen the Bloomberg administration do a lot more, successfully.

    For instance, here are two extremely low cost areas where city politicians can help startups – promotion and their powerful networks. I’ve been at four startup events here in New York in three months, and Mayor Bloomberg has been at two of them.

    “He’s visited scores of start-ups, given major speeches at local industry events such as Tech Disrupt and the NY Tech Meetup, and last year installed a chief digital officer to help coordinate promotion efforts. As the “mayor” of City Hall on Foursquare, he’s even become an avid user himself.” — New Tech City Report

    The city hosts an event called NYC Big Apps. Basically the city has been opening up up more and more data each year and runs a contest to see who can build the best mobile apps based on that dataset. The event has about $50k of awards, the grand prize winner gets $10k. The event looks to be partially covered by sponsors (BMW’s venture arm seemed to be prominent at the event). Folks from NYC’s Economic Development Council are there en masse, helping facilitate introductions between investors, well networked folks & startups. If you are a winner, you’ll get a chance to pitch to some of NYC’s best investors (many of whom support the initiative and help judge the apps themselves) – Fred Wilson et al. Not only can you see Mayor Bloomberg at events the city runs, but you can see him at other big events in the city – Disrupt, NY Tech Meetup, etc.

    Wouldn’t you love to see cities get involved with key startup folks in the city (like say Howard Gwin or Boris Wertz) and run some interesting events akin to Big Apps. I’d also love to see prominent politicians supporting existing events like say Demo Day. How about hanging with Rob Ford at Startup Drinks?? Yeah, didn’t think so… but maybe a hipper, cooler city councillor?

    On top of that, politicians could easily use their followership and social media outreach tools to preach and promote local startups. I’d love to see Mayor Ford tweeting about reading his Kobo, or hear Vancouver’s local government talk about their usage of HootSuite. I’d love to see some city councillors buying a new shirt using Buyosphere. Anything really to show they know entrepreneurs exist and can use every piece of help they can give.

    Why Isn't Rob Ford Talking About Toronto Startups Like This?

    Less talked about in the NYC Tech City report is that NYC is overhauling their own contracting/vetting procedures so smaller startups can bid and have a chance on winning meaningful business with the governments. Why shouldn’t City Hall’s use Freshbooks for instance, or FixMo? Presumably it would offer some real cost competition vs the usual city hall tech vendors.

    Or better yet, how about introductions and biz dev help? New York’s Economic Development Committee actually runs events abroad (like in China), where they use their network to provide trade excursions for local New York startups. I know, because we participated in one of them (in China). We had the chance to meet lots of industry leaders in China and received meaningful business development introductions.

    And then there are the “dream-big” projects. New York has created a private-public partnership, providing millions in funding to build a new engineering school with Cornell, in New York City. Or how about a high school devoted to software? I mean we have high schools for the arts littered across Canada… and I’m pretty sure that a software oriented high school might have a bit better of a business case than say… the Etobicoke School For The Arts.

    Cornell's Proposed New Engineering School In NYC

    So, dear Canadian politicians, I dare you to be creative and get more involved. You can actually help startups out! Talk to influential key people in your local startup scene and ask them “how can we help?”. Use stuff created by local startups, evangalize and promote the crap out of them.

    And I’d love to hear more from our audience on ways that your local gov’t has helped (or has not helped) from within your own communities.

    PS – A weird corollary post might be titled – “How startups should get involved in government and politics”. When are some of you going to become city councillors and mayors? 🙂

  • Blueseed or Canada?

    I was recently asked to comment on Blueseed. And I have not been following the issue very closely. I have held a number of non-resident visas during my stay in the US as a student, employee and entrepreneur. I have held at various times during my time in the US an F1 visa, H1B visa, TN-1, B-1 and been an applicant for permanent residency. So I understand the intricacies of working with INS and making sure that I hold the appropriate entry documentation at all times. So I understand for many foreign entrepreneurs the bureaucracy that drives an initiative like Blueseed and the reforms for the StartupVisa initiative when trying to get access to the US.

    But why do Canadian entrepreneurs care? If you can’t get into the US on an appropriate visa, should you care about an offshore community.

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    For Canadian entrepreneurs and founders looking to immigrate to Canada, we have a number of very similar benefits to the US, and we are probably an even better place for most people to live. There are a number of benefits just based on our proximity to US cities with strong startup ecosystems.  Vancouver is in the same timezone as the Bay area. Toronto, Waterloo, Montreal are in the same timezone as Boston and New York. I think that Canadian startup ecosystems are amazing and I’m not alone (see Startup Genome’s report and their methodology). Toronto placed #4, Vancouver #16 and Montreal #25. We have strong story of investments (Hootsuite, WaveAccounting, Fixmo, ScribbleLive, Kik, Wattpad, TribeHR, Achievers, etc.) and exits (Dayforce, Rypple, Varicent, Postrank, PushLife, Bumptop, SocialDeck, Cognovision, Radian6, etc.). The next 5 years look like a great time for startups in Canada.

    Canada is a great place to live

    Mercer cites Vancouver (5) followed by Ottawa (14), Toronto (15) and Montreal (22)  as having the best quality of living. The Economist cites Vancouver, Calgary and Toronto as #3, 4 & 5 best places to live (see http://en.wikipedia.org/wiki/World’s_most_livable_cities). We have a ways go to improve compared to places like Norway (Canada #20 on best place to be a mom). All in all, the quality of life in Canada is amazing. The access to health care, education, culture, capital, security, is unmatched (in my opinion). Sure it’s a little cold but man it just makes patio weather so much more valuable.

    Connecting beyond Canada’s borders

    We have a growing expat support community with The C100. With strong ties in the Bay area, NYC, Boston and now the UK. We have a Canadian government that is starting consultation on a new “startup visa” for new immigrants.

    Canada is an awesome place to be an entrepreneur. And we offer a high quality of life. I can’t imagine being anywhere else.

  • What makes a startup “disruptive”?

    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 April 17, 2012 on MarkEvansTech.com.

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    Attribution Some rights reserved by Kevin Krejci

    I had coffee recently with a VC who talked about how “disruptive technology” was a key part of his firm’s investment approach.

    On the surface, it makes sense. After all, “disruptive” is impressive because it sounds like something that could make a difference and, in the process, attract a lot of users and be worth a lot of money.

    But after thinking about it, I began to wonder what “disruptive” really means and, in particular, what makes a startup truly disruptive. Is it a product that leaps ahead of the competition in a major way? Is it a product that solves a problem or a need in a new or different way? Is it a product that’s easier to use or less expensive than what exists?

    • Is Wave Accounting, for example, disruptive because it launched a free online accounting service into a market in which most players were offering a fee-based service?
    • Is 500px disruptive because its elegant and service displays photographs so beautifully.
    • Is Engagio disruptive because it offers a “social inbox” at a time when people are getting messages from multiple sources.

    In many respects, “disruptive” can be defined in many ways. This makes it an alluring but, arguably, difficult creature to discover and identify. For one investor, disruptive may be one thing but it entirely different from another investor.

    The problem with “disruptive” is it’s a sexy term for entrepreneurs and investors to throw around. Suggesting your product is “disruptive” is easy to do and get away with because it can be difficult to argue otherwise because “disruptive” is so slippery. How many times have you heard an entrepreneur proclaim their technology is “disruptive”?

    The reality is we love “disruptive” because it’s elusive, multi-faceted and difficult to pinpoint until a startup enjoys success. Then, everyone can confidently say: “I know Instagram/Pinterest/Path, etc. was disruptive when I first saw it”.

    So, how do you define “disruptive”?

    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 April 17, 2012 on MarkEvansTech.com.

  • 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.

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    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.

  • 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.

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    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.

  • Toronto Startup Heatmap

    Joe Greenwood is directing a new project that pulls together data to track Ontario’s startups. One of the first data sources to be tapped was the StartupNorth Index, which in conjunction with MaRS client data has been crunched into a heatmap of 670 startups across Toronto. Not surprisingly, the ideal office is inexpensive, accessible by transit, and close to good coffee. How can you help fill in this map? Build an amazing startup of course.