Underdelivered VC cliche: Roll up our sleeves

October 31, 2007

Fred Wilson (a NY-based VC) highlights how most VCs talk a good game about rolling up their sleeves to help out their portfolio companies but few deliver. Fred makes a good case why he strives to be an exception. I’ve observed the exactly same thing. While I think most VCs have the best intentions, they simply don’t have (or make) the bandwidth to really roll up their sleeves (between wading through their deal flow, board meetings, etc. they run out of time). This leaves an opportunity open for venture consultants like Altus Alliance. We’ve consistently found that entrepreneurs are willing to have venture consultants earn sweat equity by rolling up their sleeves whether it’s to play an acting executive role such as a VP of Business Development/Sales or CFO. There’s often a point where the founders are overwhelmed yet the time isn’t right (or the funding isn’t there yet) to hire a full complement of staff. In addition, the talent that is willing to work at a company at that stage is usually less experienced than what a strong venture consulting firm can offer.

Mistakes & missed opportunities: Conference speaking opportunities – 6 Tips for Vendor presenters

October 31, 2007

Save This Article for the Next Time You Give a Presentation

Unfortunately, I’ve seen countless mistakes and missed opportunities made by vendors who are given the privilege of presenting at a conference. I consider speaking opportunities to fall under the PR umbrella. I’m a strong believer in the value of PR (not advertising) for young businesses especially those selling to other businesses. PR is much more than issuing press releases despite what you observe. Some of the more effective PR tactics include blogging, speaker placement, bylined articles as well as traditional tactics of press releases, media tours, video/audio news releases, etc. The first mistake startups make is not focusing on getting speaking engagements. Just about every market niche has numerous speaking opportunities that can not only help raise awareness of a company but have ancillary benefits such as employee recruiting and creating a perception of industry leadership that will lead to future speaking opportunities, being quoted in the press, etc. Unfortunately, a good strategy poorly executed can have a negative impact. I recently attended the iMedia Brand Summit and saw both best and worst practices in action. Here are some of the best/worst practices I observed:

  • Avoid a sales pitch. One of my favorite book titles is Clues for the Clueless. I’m blown away how many clueless company execs make the mistake of turning their presentation into a pitch. Potential buyers can obviously hear a sales pitch anytime so they don’t take time away from their busy schedules to come to an event (and pay in many cases) to hear sales pitches. They are many, many ways to avoid the sales pitch by demonstrating an understanding of their challenges, the direction of a technology/market, etc. without having to get into pitching their own product. The byproduct is scorched earth for companies that do get it as they face resistance from conference organizers who’ve been burned. Most conference organizers are happy to provide feedback in advance of a conference. One thing I’ve observed is some companies think they aren’t pitching when they really are. One way this happens is the exec delegates the presentation/speech development to an underling who wants to make the exec happy by including glowing praise of their own company so the presentation is geared towards the exec rather than the audience. An exec should take ownership when they get the opportunity to present in front of dozens or even hundreds of people and ensure they aren’t just making a pitch.
  • Know your audience (duh). This includes knowing the knowledge level of the audience so you don’t patronize them or go over their head. When using examples or sharing stories, what is appropriate for one audience may offend another. If you are trying to sell yourself to a person/company, offending/insulting them isn’t the path to success. That said, humor is a great way of keeping the audience’s attention. For example, a conservative company like P&G exploring a new ad medium might find case studies with salacious images or raw language disconcerting. Unless that represents what the medium is all about, there are usually other examples that can show impact without causing them concern.
  • Put yourself in the audience’s shoes. What obstacles will they have to carry your ideas back to their organizations? If you turn them into believers, make them effective advocates by giving them tools they can carry forward. Making it explicit is even better (e.g., 3 things to tell your CMO).
  • Make the conference organizer’s life easy. Pulling off a conference well is a major accomplishment. The organizers have a ton of details to keep track of. Constantly having to badger a speaker to meet deadlines is a pain. Voltaire has one of my favorite quotes – “Common sense isn’t all that common”. Why would a conference organizer want to invite someone back that has been a pain in the rear to deal with? There are a few people who are worth the grief but don’t flatter yourself to think you are one of them unless your name is Steve Jobs.
  • Make it easy to for the sneezers (influential people who spread “ideas” such as new products, services or theories – Seth Godin’s Unleashing the Ideavirus book goes into great depth on this) and Connectors, Mavens, and Salesmen that Malcolm Gladwell discussed in The Tipping Point to share your insights/leadership to multiply the impact. Most conferences post presentations given at the conference. I’ve never understood why a company that will give a public presentation (typically blogged and videotaped these days) won’t share their presentation after the fact particularly when there are ways to write-protect files. If the company’s viability is threatened by a presentation that is shared, I’d question their ability to survive in general. That’s not much of a competitive barrier. A simple thing like listing your email address at the end asking for feedback and letting them know you will send them the presentation is effective.

Build up and Follow-through. A company can do a lot to raise the visibility of an execs presentation before and after the event. Too often, they think of it as a discrete event as opposed to something they can get great leverage out of. This includes highlighting the speech to customers and prospects in ongoing communications, timing the writing of bylined articles around the event, and being aggressive about gathering feedback on the presentation so that they can be better the next time around. It’s also nice to thank the conference organizers for the opportunity.

Naturally, there are other important things such as being coached on giving public presentations but the list above gives you a good start.

 

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5 screw-ups and 10 Rules from a startup CEO

September 30, 2007

Liz Gannes recaps a talk on a high-flying startup whose CEO was remarkably candid in a recent speech. What’s particularly interesting is this same CEO wrote a much reach piece entitled Ten Rules for Web Startups (see excerpts below). Here’s the list of screw-ups…

Williams went through a tidy list of the top five Odeo screw-ups:

  1. “Trying to build too much” – Odeo set out to be a podcasting company with no focus beyond that.
  2. “Not building for people like ourselves” – For example, Williams doesn’t podcast himself, and he says as a result the company’s web-based recording tools were too simplistic.
  3. “Not adjusting fast enough” – The company thought its comprehensive web-based strategy would win out over the competition, primarily Apple, in the long term. “It turns out long term is not soon enough for a startup if you’re trying to get a foothold.”
  4. “Raising too much money too early” – Williams seeded the money with $70,000 of his own money, and after the TED excitement added another $100,000. After he tied up over a million in angel funding, a term sheet came through from Charles River Ventures at three times the angel round valuation. They took the money.
  5. “Not listening to my gut” – “When you’ve got a bunch of money and you’ve hired a lot of people and you’re talking to your board and you’re talking to reporters, your gut can get drowned out.”

Ten Rules for Web Startups

The following are the ten rules with a couple of samples of his rules. Click here for the details behind each.

#1: Be Narrow

Focus on the smallest possible problem you could solve that would potentially be useful. Most companies start out trying to do too many things, which makes life difficult and turns you into a me-too. Focusing on a small niche has so many advantages: With much less work, you can be the best at what you do. Small things, like a microscopic world, almost always turn out to be bigger than you think when you zoom in. You can much more easily position and market yourself when more focused. And when it comes to partnering, or being acquired, there’s less chance for conflict. This is all so logical and, yet, there’s a resistance to focusing. I think it comes from a fear of being trivial. Just remember: If you get to be #1 in your category, but your category is too small, then you can broaden your scope—and you can do so with leverage.

#2: Be Different

 #3: Be Casual #4: Be Picky #5: Be User-Centric #6: Be Self-Centered #7: Be Greedy #8: Be Tiny #9: Be Agile

You know that old saw about a plane flying from California to Hawaii being off course 99% of the time—but constantly correcting? The same is true of successful startups—except they may start out heading toward Alaska. Many dot-com bubble companies that died could have eventually been successful had they been able to adjust and change their plans instead of running as fast as they could until they burned out, based on their initial assumptions. Pyra was started to build a project-management app, not Blogger. Flickr’s company was building a game. Ebay was going to sell auction software. Initial assumptions are almost always wrong. That’s why the waterfall approach to building software is obsolete in favor agile techniques. The same philosophy should be applied to building a company.

10 Commandments of Venture M&A

August 31, 2007

Bill Burnham has an excellent post on the Top Ten Commandments of Venture M&A. I’ve picked my top 5 below. Go to his post to read the details on these 5 and the rest of the “commandments”.

  1. Thou Shall Not Give a Strategic Investor a Right of First Refusal, Right of First Offer or a Protective Provision that Enables Them to Block a Sale.
  2. Thou Shall Write All Customer Contracts And Partnerships Such That They Can Be Transferred to An Acquirer And/Or That Such Contracts Can Be Terminated With Reasonable Notice.
  3. Thou Shall Not Enter A No-Shop Without Hammering Out All of the Key Terms and Conditions of a Sale First.
  4. Thou Shall Not Allow A Buyer to Interview Employees Until At Least An LOI is Signed.
  5. Thou Shall Discuss Exit Expectations With Management and Board Members Prior to Funding and At Least Twice a Year After That.

Andreesen’s take on what life as a startup founder is like?

July 31, 2007

Marc Andreessen (founder of Netscape) nails it describing the good and the bad. Here’s a taste of his post

    First, and most importantly, realize that a startup puts you on an emotional rollercoaster unlike anything you have ever experienced.You will flip rapidly from a day in which you are euphorically convinced you are going to own the world, to a day in which doom seems only weeks away and you feel completely ruined, and back again.Over and over and over.

    And I’m talking about what happens to stable entrepreneurs.

Entrepreneur’s view of VC investments

June 30, 2007

Tom Evslin provides a succinct set of lessons on taking VC investment that’s worth a read whether you are an entrepreneur or a VC. These links are to part 1 and this is to part 2.

BigCo fishing expeditions

March 31, 2007

Since most exits are acquisitions, not IPOs, one has to seriously consider overtures from BigCos. That said, some companies use fishing expeditions to learn more about your business with no serious intention of ever making a legitimate offer. Ed Sim lays out a set of questions you should ask BigCo as well as ask yourself that is a useful list. Having been on the BigCo side of this equation, I can tell you that the fishing expedition often isn’t intentional. One set of people inside BigCo might be completely serious about their overtures but get blocked by some other person/team in BigCo. This is more likely to happen at BigCo if they don’t have a structured process for acquisitions. Thus, one additional question I’d ask BigCo is “how does BigCo’s acquisition process ensure that there is internal buy-in before getting into deep discussions with SmallCo?”

Venture 2.0

March 31, 2007

Peter Rip’s post on Venture 2.0 is worth reading. In the first part, he does a preamble on Venture 1.0 that’s worth a read to better understand the current landscape. Here’s his intro to the series…   This the first in a series of posts on the idea of “Venture Capital 2.0.”  I thought it was appropriate to first set the stage of Venture Capital 1.0 as the point of contrast.  This first post is obvious stuff to those of us who have been in the business for a while, but less so for the casual observer.   It will be interesting to see if he comments on the implications of fund sizes on the current landscape. In a nutshell, most Limited Partners (“LPs”) don’t want to invest less than $10M at a pop and don’t want to own more than 10% of any given fund. This makes the minimum fund size $100M. A fund can only manage so many deals at a time due to board commitments, etc. thus they typically need to invest $5-10M at a pop. That figure is no issue for some sectors but it is overkill or premature for others leading to unnecessary dilution for founders and current shareholders.  

Top 5 Tools For Generating Sales Leads

March 31, 2007

Top 5 Tools For Generating Sales Leads

From a podcasting news site, this talks about the top 5 sales lead generators.

When asked, “Which offers are ‘very effective’ for generating high-quality leads?” marketers in all three areas studied – technology services firms, and business software and hardware – put Blog and the Podcast in the top five.

The information comes from Marketing Sherpa’s annual survey of business technology marketing executives. About 1,900 responded to the survey.

Top 5 Tools For Generating Sales Leads

·         1. Free Trials — Business software marketers ranked free trials extremely highly, with 54% calling trials very effective.

·         2. Webcast — At 41% this was another favorite for software marketers, however technology services and related hardware firms also ranked webinars at 33% and 31% respectively.

·         3. White paper — All business technology marketers rated white papers fairly evenly, giving white paper offers ratings ranging from 31-36% ‘very effective.’

·         4. Blog — 35% of software and ASP marketers rated their blog as very effective, as did 33% of technology services firms. However, just 19% of hardware companies felt that a corporate blog was effective. This may be because general business executives are more likely to read a blog, while IT staffers may not.

·         5. Podcast — Last year the concept of a podcast was barely on the technology marketing map. By June 2006, 22% of software marketers who’d given a podcast called them ‘very effective’ lead generation tools. Perhaps IT professionals are more likely to be in an early adopter community that might listen to a podcast.

Source: Marketing Sherpa (PDF)

Most startups should avoid venture funding, not pursue it

November 30, 2006

At least that’s what Greg Gianforte, CEO of RightNow Technologies, thinks. I don’t think it’s that black & white but the points he makes are good.

Here are some links to past posts about fundraising and venture capital that can shed additional light on the issue:

If you do end up fundraising, check out this series on deal terms, etc.