1. brentgrinna:

    image

    There has been a lot of commentary recently stating that MBAs, and Harvard MBAs specifically, aren’t very good startup founders.

    Only 12 of the 39 companies had any MBAs within their co-founding teams…only three had at least one co-founder who went to HBS.” – Dan Primack of Fortune

    “I would bet a large amount of money that the overwhelming majority of us would not look favorably on a company started by one of you” - Chamath Palihapitiya on Harvard MBAs

    Yes! Fantastic data… and while VC fundraising isn’t necessarily a sign of business success, given the status of several of these companies growth and revenue wise, odds are there will be at least a few good outcomes in this batch. And kudos to b-schools for adapting their teaching and curriculum in recent years to promote more “non-traditional” MBA careers such as technology and entrepreneurship.

    -cch

     
  2. Insightful post by Dave McClure here: VC (r)evolution, geeks got next.  If you are involved in the start-up/innovation ecosystem, this is mandatory summer reading!  Not sure what the VC version of the above is… got to think there could be a few great tries on Draw Something. 
-cch

    Insightful post by Dave McClure here: VC (r)evolution, geeks got next.  If you are involved in the start-up/innovation ecosystem, this is mandatory summer reading!  Not sure what the VC version of the above is… got to think there could be a few great tries on Draw Something

    -cch

     
  3. Here is a nice post that my buddy & fellow HealthTech enthusiast @Geoffclapp wrote about the healthtech incubator Rock Health in tems of what it strives to do as a program and what he has experienced as an engaged mentor. It’s a rebuttal to a very interesting and uninformed post by MedCityNews the other day disparaging what startup incubators as a whole, and HealthTech ones specifically such as Blueprint Health, Rock Health, and HealthBox are doing to promote innovation and entrepreneurship. Worth the read - but bottom line is that sharing means caring. If you’re really passionate about innovation, you are welcome to trade ideas and participate in pushing this community forward. Everything isn’t peaches and cream and certainly there are many things everyone can do better and there will be hiccups and failures. But don’t sit from the sidelines and be an arm chair quarterback and critic - get in the game and help improve healthcare in this country.

    -cch

     
  4. Entreprenuer magazine

    There’s been much buzz the past few years around tech startups, including young tech entrepreneurs.  This push towards innovation and startups in the technology sector has been awesome, and the media and blogosphere have been quick to profile and praise young entrepreneurs, the magazine cover above being just one example.  It seems every other week there is a publication identifying and praising young entrepreneurs, such as the Top 25 under 25 or Top 30 under 30 list, and most of these lists pop up during this time of the year (end of year/holiday season).  However, research like this report from Harvard professors around Education and Tech Entrepreneurship suggests indicates that U.S. tech entrepreneurs typically aren’t youthful such as this guy, but actually tend to look more like this.

    Some interesting findings from the Harvard report:

    • 2x as many U.S. born entrepreneurs start tech ventures in their 50’s than those in their early 20’s
    • A larger proportion of tech founders are middle-aged and well-educated in business or technical disciplines

    So… if you’re young and interested in technology and starting your own business?  Research shows it might be in your benefit to 1) get and complete your college degree and then 2) work and learn from an established company in the tech space.  Of course, there are exceptions to all rules…. but maybe our parents, grandparents, and teachers are wise to encourage and push us to stay in school, cherish the time, and get an education! 

    -cch

     
  5. Tech cartoon funny

    This is an excellent treasure trove of videos from some smart tech entrepreneurs and investors. Definitely worth checking out - a variety of topics covered here by a range of individuals, perhaps the most comprehensive (VC, startups/entrepreneurship, the tech industry, etc.) by Marc Andreessen at Stanford. 

    A lot of good content here - but be wary, this definitely can be a time sink!

    -cch

     
  6. Behind the scenes of a virtual health & tech incubator (& other thoughts)

    Below is my guest post on Pulse & Signal (a public health blog) from Sept. 14, 2011 as part of the 2011 Data, Design, Diabetes (DDD) Challenge which I was a mentor for.  The post was originally written in advance of the DDD demo day, after which two of the five semi-finalists were selected as finalists to continue with the Challenge with the chance to win the main prize (the winner will be announced in the next few weeks).  The post is meant to crystalize and explain the experience of the DDD incubator, which was in many ways similar to some of the tech accelerator/incubator programs out there, but in other ways different.  In any event - it was a fantastic program and all five semi-finalists had great ideas for innovation in diabetes involving design and data.  Congrats to all, and good luck to the remaining two finalists for the $100k prize: Chewable and Ginger.io.   And stay tuned for more exciting things in health & technology innovation through incubators and accelerators this winter, with the launch of Blueprint Health's and Startup Health's 1st program classes in New York in January, along with Rock Health's 2nd program class in San Francisco.  Oh - and it should be noted that all of these health & tech organizations (including Startup Health thanks to a friendly reminder from Unity Stoakes) have some tie to Boston/New England, mainly through the great universities there.  Just sayin. :)

    -cch 

    Laptop writing

    It  is an exciting time to be an entrepreneur these days.  President Obama earlier this year launched aStartup America initiative to promote entrepreneurship in America, citing the need for the US to maintain its competitiveness in international business through tech innovation and superiority in particular.  For those that are tech enthusiasts, i.e. those in Silicon Valley, the importance of technology start-ups and entrepreneurship isn’t a new fad.    Start-up technology accelerator and incubator programs, such as TechStars and Y-combinator, have been around since the mid 2000’s to help entrepreneurs grow businesses from ideation to product development and launch.   Thanks to President Obama and Congress, who passed the HITECH Act in March 2009 and Affordable Care Act in March 2010, there is now also great interest in the intersection of health and technology innovation, aided by the billions of dollars earmarked for technology adoption by health care providers and health insurance companies.  This interest in “healthtech” is further evidenced by the recent creation of health technology specific incubators all across the country such as New York’s Blueprint Health, Chicago’s Healthbox, and San Francisco’s Rock Health.

    It should be noted that established health care and life science companies are also re-thinking how they innovate beyond their own four walls to better leverage technologies that aren’t native to their industries, such as mobile, digital and social media, the Internet, cloud-computing, etc.  The 2011 sanofi-aventis U.S. Innovation Challenge: Data, Design, Diabetes (DDD) is such an example of a life science company spurring innovation through a public and crowd-sourced challenge with financial rewards and a virtual incubator that was previously introduced here.  The challenge was announced on June 9, 2011 in DC, and has a Demonstration Day for five semi-finalists in New York this Thursday, September 15 in NYC (anyone interested in health and technology innovation, particularly diabetes, is welcome to attend the DDD Demo Day, as it is free and open to the interested public).

     There are seven core components of these start-up incubator programs:

    1. Application
    2. Guaranteed fixed funding (for those start-ups who are accepted)
    3. Physical co-location
    4. Limited program timeframe
    5. Rapid iteration and innovation
    6. Close mentorship and guidance
    7. Demonstration (“Demo”) Day upon program culmination

    I will touch on each of these seven components as it relates to DDD, but will expound a bit deeper on the last three components, which I would argue are the more exciting elements of the program (in particular the upcoming Demo Day). The DDD challenge incorporates virtually all of these elements with one exception outlined below.   Regarding the first component, the competition accepted applications via its website July 1 through July 31, and five semi-finalists were chosen from the pool of applications and announced August 5.  The second component (fixed funding) of DDD is explained simply here on the DDD homepage, but the total prize money to be awarded is $210,000. The third component is the only element not fully incorporated within the DDD challenge, as the program is a virtual incubator and did not provide physical office space nor require that the five semi-finalists be co-located together in New York.  A limited time frame, or the fourth component of incubator programs is an attribute of DDD, as the five semi-finalists and mentors collaborated from August through September in the virtual incubator, and a detailed timeline of the overall challenge can be found here.

    Rapid Iteration and Innovation: Any accelerator or incubator program encourages very rapid development of product or service prototypes.  This is partly because these programs are a fixed and limited duration (i.e. typically 12 weeks from program start to demo day).  Teams therefore need to work long, hard, and fast to get to Demo Day.  While start-up life truly is a marathon, these programs are intended to be sprints and as anyone knows, you can’t sustain sprints for a long duration of time.  Therefore, rapid development of prototypes is encouraged.  Perfection isn’t always achieved nor desired within this complex time frame – but quick trial and error is a goal.  This core tenant of lean start-ups is endorsed by Eric Ries, who has written several books around “Lean Startups”, as evidenced by a recent blog post of Eric’s called “The Power of Small Batches” (which is borrowed from his most recent book).

    The DDD teams I’ve interacted with over the past few weeks as a mentor all have a fairly robust and long product development wish-list or roadmap.   What they have all had to do throughout this program is:

    • Determine which core product features they could reasonably develop  for their platform or service offering in the time available prior to Demo Day
    • Prioritize those core features
    • Rapidly develop those core features
    • Test those features

    Close mentorship and guidance:  It is true that the barriers to starting a company, particularly a technology based company are very low these days.  Not only is it financially easier to say, start and launch a business website and build mobile apps, but there is an abundance of free or low cost knowledge and resources such as coder and hacker communities, seed/angel/VC investors, entrepreneur/start-up communities that can be accessed in real life or online by leveraging the Internet. As a result, there are those that question the value of start-up accelerators, but to be clear – they are not intended for every entrepreneur, they do not guarantee overnight or ultimate success for the start-up, and aren’t required to launch and grow an innovative and meaningful company.  Most incubators are intended primarily for young or first time entrepreneurs.   However, it should be noted that the DDD challenge and its virtual incubator model is slightly different than pure tech accelerators, in that it was constructed to encourage broad innovation in diabetes through the combination of data and design, and encourages all entrepreneurs, young and old, to endeavor in this important area.   What the DDD challenge and tech accelerators do share is the reliance on a strong mentor community to help nurture the start-ups in the program. The quality, accessibility, and diversity of mentors define and distinguish how valuable an experience is going through one start-up accelerator versus another.

    David Tisch, the Managing Director of TechStars NYC and I have shared conversations around what is the right metric of success for Managing Directors or Partners of accelerators – and ultimately it’s whether the entrepreneurs think they got value from the program, not so much in terms of the actual financial capital they received (and whether it was dilutive or not from an ownership perspective), but from the guidance they received from mentors, from the development and growth of their start-up during the program, and whether it was simply time well spent.  Mentors can’t and won’t do everything for your start-up to succeed, but can help you think through the pros and cons of business or product strategy, link you up with other domain experts and potential investors, and push you and your team to work smarter and faster.  At the end of such an accelerator program, if the program has been developed thoughtfully by its managing directors or partners (usually these accelerator programs are run by seasoned entrepreneurs with significant domain expertise and/or early stage investors) and the assembled cast of mentors do their job right, the graduating start-ups will provide testimony to the benefit of the accelerator; they should be fanatical ambassadors for that program’s brand and attest to its value.  They and their business will have found their way in a much shorter period of time than if left on their own to figure things out.

    Demo Day: This is the graduation ceremony for the start-ups of an accelerator program.   It is the culmination of weeks of hard work and long hours.  It is a celebration, whereby the companies show the world the progress they have made in the past few months of the program.  An audience of journalists, investors, start-ups, and other people and companies interested in start-ups and innovation will be in attendance to learn more about these start-up companies who up until that point, might have been in stealth mode or have been figuring out the right product mix, business partnerships, go-to-market (GTM) strategy, and business model.  Each company gets a few minutes (5 to 15 minutes typically) to present to the audience, and share two main things:

    • Business plan: this should be similar to the quick elevator pitch or investment deck as if the company were pitching seed, angel or VC investors.  It is not intended to be an exhaustive fifty page opus in Word, but a quick summary presentation around:
      • Team
      • Market/Problem
      • Solution/Value proposition
      • Competition
      • Business model
      • Launch/financing plans
    • Demo of their actual product: ideally there will be a live product demo shared at Demo Day.  Think of it as a show & tell from your elementary school days, but in reverse.  At Demo Day – you typically tell first what you’re working on, but then you should follow-up and show.  Most tech investors (VCs primarily, but also super-seed and super-angel investors) typically won’t invest with just only a business plan, formally in Powerpoint or written on the proverbial cocktail napkin.  Proof of not just a business opportunity, but in product development and traction typically are table-stakes these days when a start-up is raising a serious round of financing (loosely speaking, anything above/over $150 – $200k).  If a live demo can’t be shown, at least a staged demo should be provided so people can get an appreciation of what the technology and product looks and feels like from a design, UI/UX perspective.  If neither a live or staged demo can be shared, some proof that there isn’t a significant technical and engineering hurdle can help assuage investors.  Or in other words, some testimony that the “D” associated with R&D can be completed.  It’s easy to tell a story and present a business case, but if you’re planning on raising more financing to support your company, build a team, and launch and develop a robust product, investors will want assurance that there isn’t technical risk (i.e. is it theoretically possible) risk or engineering risk (i.e. it’s not just theoretically possible, but this team or resources assembled can make what is theoretically possible into reality in a given timeframe with finite resources).   Usually for popular tech accelerators, Demo Day is a frothy period of time where investors and journalists alike attempt to woo the hottest start-ups and build exclusive relationships, particularly in sexy verticals such as (for now) “social” or “deals” or “photo or video sharing”.   It can be a long day for start-ups, as they prepare and rehearse their Demo but also longer story to be shared with the outside world, but it should be a celebration and a public announcement that they’ve made it through the program, and are ready to take on the world…. And who knows, perhaps raise a Series A(wesome).

    While Demo Day typically marks the end of typical accelerator programs, DDD is slightly different in that it is primarily a challenge first, and then an incubator second.  The challenge doesn’t stop on Thursday 9/15 at the DDD Demo Day in NYC.  Judges at Demo Day will pick two finalists from the five current semi-finalists who will then each receive an additional $10,000 to help pilot their prototypes in community uptake exercises in October.  This will be a great opportunity for the finalist companies to not just talk the talk, but walk the walk in terms of actual live implementation of their product or service in the field so that they can continue iterating and enhancing their value proposition.  A final challenge winner will be selected after the community exercises are conducted and receive the $100,000 final grand prize in November to further accelerate their company’s growth.  They will also have an opportunity to further incubate at the Rock Health health technology app accelerator for a month.   I am sure I speak for not just myself, but all the DDD mentors in that we are impressed in how much has been accomplished in a short period of time, and eagerly await not just Demo Day this week, but the further development of several health tech companies this fall.

     
  7. As a soccer aficionado (youth, college, and current player - guess which one is me in this photo above of my HBS team… and a former and hope-to-be-soon-again youth soccer coach, camp counselor, and referee) I think this post is spot on. And entertaining. I’m overdue for a blog post about startups vs VC life, which I’ve been noodling on for a while and will finish this week thanks to some extra motivation and creative insipriation such as Bryce’s post, but it will also involve a sports comparison (the seeds of this got started a few weeks ago when I was talking with myself, the other Charles Huang). Stay tuned…. and yes… Let’s get more people in America interested in both soccer & startups!!! -cch

    brycedotvc:

    When you have as many kids as I do, you spend a lot of life on the sidelines. This weekend was no exception. One of the perks of Saturday morning soccer is that when my kid is out of the game, I can let my mind wander. Being that I have a hammer, nearly every scene I process looks like a startup…

     
  8. image: Download

    Def believe more women are needed and we should encourage them in business, from start-ups to Fortune 100’s.  Studies have shown that women are more practical with money and running businesses, and tend to have a lower default rate on loans (particularly microfinance in developing countries, the theme for today).  
Here’s an interesting article that was recently published in Forbes highlighting efforts and some stats to get more women involved in start-ups, particularly tech accelerators.
-cch
taylorlorenz:

fastcompany:

 
Women-Led Startups Are The Key To New Job Creation

Hear that ladies? Now go!

    Def believe more women are needed and we should encourage them in business, from start-ups to Fortune 100’s.  Studies have shown that women are more practical with money and running businesses, and tend to have a lower default rate on loans (particularly microfinance in developing countries, the theme for today).  

    Here’s an interesting article that was recently published in Forbes highlighting efforts and some stats to get more women involved in start-ups, particularly tech accelerators.

    -cch

    taylorlorenz:

    fastcompany:

    Women-Led Startups Are The Key To New Job Creation

    Hear that ladies? Now go!

     
  9. Shall We Dance?
Some thoughts on approaches by VCs vs entrepreneurs to getting a deal done
I’ve been spending a bunch of time recently with both other VCs and entrepreneurs around what constitutes success in terms of all the coffees, lunch meetings, and pitches we go through.  I’d define ultimate success for all as getting a deal done or in other words ending up together (a VC and a start-up) in a relationship.  There is a process I think, which is not too dissimilar to a middle school dance that investors and entrepreneurs engage in that hopefully ends in a steady relationship.  Stay with me as I tease this out (and go down memory lane).
Most of us can remember those middle school socials, where guys and girls congregate at the decorated gym with teachers and parent chaperones monitoring behavior.  It can be awkward since this is the age where teens are starting to figure themselves out but also trying to figure out the opposite gender while maintaining a sense of cool.  The crowd is standing around the dance floor that is split between the tribe of guys on one side of the gym and the pack of girls on the other side.  Bold emissaries run back and forth to engage in diplomatic conversation that might lead to a dance (usually it’s not a direct negotiation, it’s through friends - my buddy Ryan will go talk to Jessica’s friend Chrissy and see whether Jessica might be amenable to a dance not with Ryan but with me).  Eventually through prolonged efforts, a few adventurous couples actually venture out to the middle, slow dancing to the “in” Roxette song while others gossip and giggle (ok, depends on what song was “hot” when you were in middle school, I happen to recall this song from a distant, albeit specific memory, so I’m of course dating myself).   Anyway - so what’s the rub?   
I think no matter whether you’re an investor or start-up, your ultimate goal is to get to that steady relationship right?  You attend these socials not because you enjoy clip-on ties and blazers, but to check out the scene and figure out whether your style matches with anyone else’s.  This isn’t a 0 to 60, you generally need to have a few dances (or more), figure out how not to step on toes or how to lead with the same person or even with others, before you progress further.  If you’re still with me, hopefully you’ll agree that having a plan, a strategy, an approach thought out ahead of time helps, right?  And so - I’d suggest that just like no matter if you’re a guy or girl looking to get on the dance floor in the hopes of an eventual relationship, the ideal approach by VCs/investors or early start-ups to these meetings is not too dissimilar if all parties are optimizing for success.  
I’d posit that there are three main elements that comprise the approach:
FOCUS - when you’re at the middle school dance, you need to have some type of focus to act as a filter.  You can’t and shouldn’t chase everything in sight!  If you’re the 6th grade guy with braces, you’re probably not going to have success with Laurie, the 8th grade field hockey star - better to stick with the other newbies in your grade.   Focus is key for investors - it’s impossible to be passionate (and knowledgeable) about every single sector out there.  You simply can’t know everything about the cleantech, healthcare, commerce, digital businesses, education, and financial sectors at a deep level.  Focus is likewise key for the entrepreneur - your time and resources are limited, so not only must you be sector focused but from a growth and development perspective you need to prioritize core development versus nice to have features. 
PERSPECTIVE - after focus, one needs to have a perspective or point of view.  So you’ve honed in on your fellow 6th grade cohort, but if you’re the 6th grade guy with braces who spends 50% of his waking life multiplayer gaming in Quake, you probably won’t have too much in common with Tori, your fellow 6th grader who spends 50% of her waking life in ballet classes and dreams of being the lead in Swan Lake one day.  Tori probably would not understand, less appreciate your perspective on whether bunny hopping or strafe jumping is more ideal for quick maneuvering in Quake map 8.  Similarly, you probably would not be able to contribute meaningfully to a conversation where she opines about the stylistic differences between neoclassical versus contemporary ballet.  So if you’re that Quake gamer guy, it’s best for you to connect with someone who not only can appreciate the blaring Trent Reznor sound design that accompanies the game, but also has an opinion on why Trent/Nine Inch Nails should focus on its own original industrial music albums such as the Downward Spiral instead of producing soundtracks for movies such as Natural Born Killers.  Similarly, if you’re a consumer health entrepreneur with a passion for the health sector, you need to have a deeper perspective on why a subscription based revenue model makes sense for your B2C play versus a 1x up front payment model, and whether it makes a difference if it’s a web based vs. physical product you’re offering.  You need to be able to communicate this point of view with a potential investor, and debate the pros and cons in a rational manner.   It’s not enough to say: I’m focused on health/wellness because that sector is hot right now.  You must articulate why you’re interested in that space, what gap in the marketplace exists for a company to enter, and how an optimal strategy can be executed upon to win. 
JUDGEMENT - so, after the dance, you should take time to reflect on how you think it went.  You will likely get some feedback from your friends (unsolicited or not) on how they thought the dance went, in addition to other comments to consider.  Ultimately though, you need to ingest a bunch of information and then take the time to reflect and decide whether it’s worth continuing. It can be another dance to get more chemistry or it can be asking your dance partner to go catch a movie together.  This decision on whether to pursue an opportunity further boils down to your judgement.   You need to determine whether there is a fit, whether you like that person enough to consider taking it to the next level.  Note - while most of this decision can be rational (she’s into Quake, she likes Nine Inch Nails, she’s cute, etc.), some of this can be irrational too (for some reason I get this funny fuzzy feeling in my chest when I’m with her).  And just like as it applies to guys and girls in middle school, it’s the same for investors and entrepreneurs - it takes two to tango.  VCs can be focused on a specific sector and have a clear perspective on how the market might shake out over the next few years and meet with start-ups that share this interest area and point of view.  Yet not all discussions advance to the next level of a relationship and getting a deal done.  An investor must judge each opportunity and filter out rationally (does one NewCo versus another have the drive and passion to execute on a vision, does one start-up versus another have the right team assembled for this market, etc.).  Likewise, a smart entrepreneur should also look for a good investor partner, someone who ideally not only brings capital but true additional value to a relationship, through their direct experience or through their network of complementary portfolio companies.  
Of course, every situation is unique and has particular context which colors this process; you often hear veteran investors/VCs say “I’ve seen this movie before, and I know how it ends…”, but when you involve human emotions from two parties, there is no exact duplicate - the outcome will always be slightly different.  However, I think in general, it’s two sides of the same coin in terms of approaches by VCs and entrepreneurs to getting a deal done and ultimately working together for the reasons outlined above.
And yes, I did have braces in the 6th grade… but I have never ever played Quake, and that’s the honest truth. :)  Now get out there and shake a leg… happy dancing!
-cch
ps. many thanks to Matt, Ben, and Wayne for their contributions (direct and indirect) to this post.  
pps. Do dance safely.

    Shall We Dance?

    Some thoughts on approaches by VCs vs entrepreneurs to getting a deal done

    I’ve been spending a bunch of time recently with both other VCs and entrepreneurs around what constitutes success in terms of all the coffees, lunch meetings, and pitches we go through.  I’d define ultimate success for all as getting a deal done or in other words ending up together (a VC and a start-up) in a relationship.  There is a process I think, which is not too dissimilar to a middle school dance that investors and entrepreneurs engage in that hopefully ends in a steady relationship.  Stay with me as I tease this out (and go down memory lane).

    Most of us can remember those middle school socials, where guys and girls congregate at the decorated gym with teachers and parent chaperones monitoring behavior.  It can be awkward since this is the age where teens are starting to figure themselves out but also trying to figure out the opposite gender while maintaining a sense of cool.  The crowd is standing around the dance floor that is split between the tribe of guys on one side of the gym and the pack of girls on the other side.  Bold emissaries run back and forth to engage in diplomatic conversation that might lead to a dance (usually it’s not a direct negotiation, it’s through friends - my buddy Ryan will go talk to Jessica’s friend Chrissy and see whether Jessica might be amenable to a dance not with Ryan but with me).  Eventually through prolonged efforts, a few adventurous couples actually venture out to the middle, slow dancing to the “in” Roxette song while others gossip and giggle (ok, depends on what song was “hot” when you were in middle school, I happen to recall this song from a distant, albeit specific memory, so I’m of course dating myself).   Anyway - so what’s the rub?   

    I think no matter whether you’re an investor or start-up, your ultimate goal is to get to that steady relationship right?  You attend these socials not because you enjoy clip-on ties and blazers, but to check out the scene and figure out whether your style matches with anyone else’s.  This isn’t a 0 to 60, you generally need to have a few dances (or more), figure out how not to step on toes or how to lead with the same person or even with others, before you progress further.  If you’re still with me, hopefully you’ll agree that having a plan, a strategy, an approach thought out ahead of time helps, right?  And so - I’d suggest that just like no matter if you’re a guy or girl looking to get on the dance floor in the hopes of an eventual relationship, the ideal approach by VCs/investors or early start-ups to these meetings is not too dissimilar if all parties are optimizing for success.  

    I’d posit that there are three main elements that comprise the approach:

    FOCUS - when you’re at the middle school dance, you need to have some type of focus to act as a filter.  You can’t and shouldn’t chase everything in sight!  If you’re the 6th grade guy with braces, you’re probably not going to have success with Laurie, the 8th grade field hockey star - better to stick with the other newbies in your grade.   Focus is key for investors - it’s impossible to be passionate (and knowledgeable) about every single sector out there.  You simply can’t know everything about the cleantech, healthcare, commerce, digital businesses, education, and financial sectors at a deep level.  Focus is likewise key for the entrepreneur - your time and resources are limited, so not only must you be sector focused but from a growth and development perspective you need to prioritize core development versus nice to have features. 

    PERSPECTIVE - after focus, one needs to have a perspective or point of view.  So you’ve honed in on your fellow 6th grade cohort, but if you’re the 6th grade guy with braces who spends 50% of his waking life multiplayer gaming in Quake, you probably won’t have too much in common with Tori, your fellow 6th grader who spends 50% of her waking life in ballet classes and dreams of being the lead in Swan Lake one day.  Tori probably would not understand, less appreciate your perspective on whether bunny hopping or strafe jumping is more ideal for quick maneuvering in Quake map 8.  Similarly, you probably would not be able to contribute meaningfully to a conversation where she opines about the stylistic differences between neoclassical versus contemporary ballet.  So if you’re that Quake gamer guy, it’s best for you to connect with someone who not only can appreciate the blaring Trent Reznor sound design that accompanies the game, but also has an opinion on why Trent/Nine Inch Nails should focus on its own original industrial music albums such as the Downward Spiral instead of producing soundtracks for movies such as Natural Born Killers.  Similarly, if you’re a consumer health entrepreneur with a passion for the health sector, you need to have a deeper perspective on why a subscription based revenue model makes sense for your B2C play versus a 1x up front payment model, and whether it makes a difference if it’s a web based vs. physical product you’re offering.  You need to be able to communicate this point of view with a potential investor, and debate the pros and cons in a rational manner.   It’s not enough to say: I’m focused on health/wellness because that sector is hot right now.  You must articulate why you’re interested in that space, what gap in the marketplace exists for a company to enter, and how an optimal strategy can be executed upon to win. 

    JUDGEMENT - so, after the dance, you should take time to reflect on how you think it went.  You will likely get some feedback from your friends (unsolicited or not) on how they thought the dance went, in addition to other comments to consider.  Ultimately though, you need to ingest a bunch of information and then take the time to reflect and decide whether it’s worth continuing. It can be another dance to get more chemistry or it can be asking your dance partner to go catch a movie together.  This decision on whether to pursue an opportunity further boils down to your judgement.   You need to determine whether there is a fit, whether you like that person enough to consider taking it to the next level.  Note - while most of this decision can be rational (she’s into Quake, she likes Nine Inch Nails, she’s cute, etc.), some of this can be irrational too (for some reason I get this funny fuzzy feeling in my chest when I’m with her).  And just like as it applies to guys and girls in middle school, it’s the same for investors and entrepreneurs - it takes two to tango.  VCs can be focused on a specific sector and have a clear perspective on how the market might shake out over the next few years and meet with start-ups that share this interest area and point of view.  Yet not all discussions advance to the next level of a relationship and getting a deal done.  An investor must judge each opportunity and filter out rationally (does one NewCo versus another have the drive and passion to execute on a vision, does one start-up versus another have the right team assembled for this market, etc.).  Likewise, a smart entrepreneur should also look for a good investor partner, someone who ideally not only brings capital but true additional value to a relationship, through their direct experience or through their network of complementary portfolio companies.  

    Of course, every situation is unique and has particular context which colors this process; you often hear veteran investors/VCs say “I’ve seen this movie before, and I know how it ends…”, but when you involve human emotions from two parties, there is no exact duplicate - the outcome will always be slightly different.  However, I think in general, it’s two sides of the same coin in terms of approaches by VCs and entrepreneurs to getting a deal done and ultimately working together for the reasons outlined above.

    And yes, I did have braces in the 6th grade… but I have never ever played Quake, and that’s the honest truth. :)  Now get out there and shake a leg… happy dancing!

    -cch

    ps. many thanks to Matt, Ben, and Wayne for their contributions (direct and indirect) to this post.  

    pps. Do dance safely.

     
  10. Very interesting read about entrepreneurship, innovation, imitation, technology and culture.  

    And it’s not just China copying the US (Renren and Kaixin copying Facebook), it works both ways (Zynga’s Farmville copying Kaixin’s Happy Garden).

    From Fast Company.

    -cch

     
  11. Well, it’s official.  POTUS Barack Obama has declared Friday 11/19 to be National Entrepreneurs Day.  Here is a well done video that was created to help the grassroots campaign.  Definitely worth a few mins of your time for inspiration. And the music is great (reminds me a bit of the Truman Show, which is one of my fave movies) and happens to tie into my post last week about - remember when you were a kid? I feel like a lot of good entrepreneurs still face problems and challenges like kids - with a sense of fearlessness, stubbornness, and can do attitude.  And while a kid’s perspective is often very simple, it’s a shame to not think and dream big… so keep on dreaming!