Archive for the ‘Start ups’ category

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It's Not About Seed Money – It's About Smart Seed Money

July 14th, 2010

The last few weeks saw a surge in posts about the phenomena of seed funds. I especially liked Fred Wilson post on the topic. In it Fred is talking about the fact that although startups today need less capital to start and get traction, they still need bigger amount of money in order to grow into profitable and large businesses.

I totally agree with this notion. In the last month or so since I left Live Person (the company that acquired my startup) I experimented in rapid development, curios to see what I can come up with. The results were amazing. It’s simply stunning to see what can be done in less than 24 hours.
I truly believe that a group of two or three developers plus a great graphic designer can build amazing products in less than a week. Will these products be the most stable and scalable products ever created? Of course not. But that’s not what’s important at this stage. What’s important is to have something out there that you can start and get feedback upon and actually see if you are up to something big.

So if this is the new reality why anyone ever need traditional VCs? Why do you ever need to raise more than a couple of hundred thousands? Why can’t everyone become the new angel/seed investors?

The answer is simple: It’s all about time and experience.

Building a prototype of your idea is cheap and fast. But getting enough traction in order to now raise your next round (in a higher valuation) takes time. For most startups it will take at least a year if not more. It means that you need to know how to grow your business, get real traction, build a brand and do it all in a very lean way. This is art. This require a lot of experience. Thinking back on myself when we just started NuConomy, there is no way I would have known how to do that. I simply lacked the needed experience.

This is why, especially for new entrepreneurs, it’s not just about the money. It’s about getting smart money. When you take seed investment from First Round Capital or Union Square Ventures you don’t just get money. You get access to very smart people who can help you control your budget and understand your next steps. Taking the same money from your rich uncle will simply won’t be enough.

This is an extremely important point to think about as when raising seed money, you don’t have much room for mistakes. If you raised 5 million dollars and after six months found out you are in the wrong direction, you still have enough runway to make a u-turn. But if you raised just two hundred thousands such a mistake means the end of your startup.

From that same reason, when talking with new entrepreneurs I recommend other them to put some work on building the right advisory board from day one. Surround yourself with smart and experienced people who are willing to give you more than a name, but also time. Ask them a lot of questions and share your thoughts all the time. The right people on your side are worth any equity you will give them.

So to sum it up – I’m a big believer in raising smaller amount of capital in the early days. With the right help it can take you very far and put you in a better position when going for the 5+ million round.

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Posted in Start ups, VC, Web 2.0

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The Love For Music

July 2nd, 2010

When I’m thinking about my next venture I think a lot about the music industry. Yes, I know it is one of the toughest industries to play in, but still I can’t help it. I always loved music. Always attracted to it. I’m a die hard fan of live performances. I try to go to as many concerts as possible. I love discovering new voices and sounds and I try to listen to as much as new music as possible.

But it’s not only my personal love that attract me to this field. It’s the universal appeal music had on people.
Music touch people. It makes them feel things. It can make you pull up your hands in the air while dancing the night away, and it can make tears coming out from the sides of your eyes.
Music is the ultimate expression of human feelings. Of love. Music is the one universal language of the world and it is a thing that will never die.

Being part of something like that sounds to me simply magical. But there is also the business side. The music industry is changing fast. It’s a multi billion dollars industry that leaking revenues every single day. It’s an industry that has a winning product that everyone wants, but not sure how to market it and to to generate revenues from it.
To me, this sounds like the best ever startup scenario.

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Posted in Music, Start ups

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The End of The Internet As We Know It Is Coming Soon?

June 21st, 2010

An article in the NY times today claims that Google is about to sign a deal with Verizon that will give priority to Google content delivery tom consumers.
Basically this deal means that Verizon (An ISP in the US) subscribers will get Google content faster and in a more reliable way than any other content on the web.
It’s important to remember that Verizon is also one of the leading mobile carriers in the US and speed of data on mobile is key for winning consumers.

It’s hard for me to think on many worse things that can happen to the web.

Let’s put aside for a second the fact that it gives such a deal gives Google unfair advantage over their big competitors like Microsoft or Facebook and focus on startups.
When you start a startup most people will tell you not to go head to head with Gorillas like Google and Microsoft. Most of the time they will be right. It’s very hard to compete against such companies who has unlimited amount of money and big technology advantages (especially regarding scale). Trust me, my last company tried to do exactly this and it was a very tough experience.
But if no one will ever challenge the big guys, we will also won’t see any innovation. We have Google today because Google went after giants such as Yahoo and Microsoft. We have to encourage startups to innovate and try to win even on top of the big guys.

If the NY times is right, as much as it is hard to compete with the big companies today, it will just get harder going forward. Google will have an unfair advantage delivering better user experience to their user base. No startup will be able to pay Verizon enough money just to be able to compete on the same level.

If this deal will went through we will see the end of the Net Neutrality and maybe the start of the end for innovation on the web.

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Posted in Google, Internet, Start ups

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The Startup Way

February 1st, 2010

It’s in our human nature to get used to the bad but also the good things in our lives. This is why we tend to miss the small and little things around us that makes our world beautiful.
Working on a startup is a very stressful way of life. It’s very easy to fall into a routine of 18 hours work day, bad fast food and an emotional roller coaster. You sometime ask yourself if this is the right way to live. If this choice we made is worth everything we need to give up for it.

Last week at the end of the DLD conference I managed to stand still for a moment and really look around. What I saw filled me with a very special feeling.
Around me I saw hundreds of very special people. People who really want to make a change. To build something. To do something that will have an affect on the world and the lives of all of us.
Living in the startup scene it’s very easy to get used to this kind of atmosphere and surrounding. It’s easy to forget how special it is. In three days in the DLD conference I had the real pleasure to meet more people like this than most of my friends will meet in a couple of years.

It’s this kind of special energy that surround us in the tech scene in the bay area, Tel Aviv and other places. A special feeling that everything is possible and that our dreams can and will always come true. It’s what drives us to go out and try to make a difference and it’s what make me know that there is nothing else I rather do and no other place I rather be.

I want to say thanks for all the great people I met in the last few years and to remind us all to sometime stop, look around and don’t forget not to take everything around us so for granted.

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Posted in Internet, Start ups

Five Biggest Mistakes That Entrepreneurs Make

August 18th, 2009

Great talk by Jerry Kaplan about the top 5 biggest mistakes entrepreneurs mostly make.

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Posted in Business, Start ups

On Leadership and Capability

August 18th, 2009

Check out this short video of Carly Fiorina (Former CEO, HP) about the most important capabilities a business should have.

One of the more important things she say is “Customers not always can tell you what they want, but they can always tell you what’s wrong”.
This is indeed something that every startup out there should carve on its office walls.

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Posted in Business, Start ups

The Open Business Concept

August 6th, 2007

Fred Wilson wrote this week about the need for an open social network, one where the users have complete control on their information.
Sean Ammirati wrote about the possible creation of an open ad network. An ad network where publishers get the all cake of the advertising budget (instead of the Google and rest of the ad networks way where they take a big cut of the advertising money).

It all brings me back to an old vision I had when I started my company NuConomy.
Back in the early days of 2006 when I just started to roll the idea in my head I thought about what was back then an absurd idea – do rev share with the end users. I thought about businesses like YouTube where millions of people are producing and uploading every day (basically doing all the work) and in the end Google (back then it was still YouTube) takes all the money.
It sounded very unfair in my head. I had a vision of a web where the people who produce the content gets not just the glory but also the money. I decided to develop a system that can measure the end user contribution to the business in order to decide how big his cut of the cake should be (I got to admit that today running incentives programs is just a feature in our system. The platform itself changed its focus to next gen analytics).

In my head I even envisioned totally new structure of business. Something I called “The Open Business” (taken from the concept of open source).
Imagine a business that his owned by its employees and ran completely by its employees. Everyone share of the business is decided by their direct contribution to the business.

Lets take for example the idea for an open social network.
You take an open source platform and start a new social network with a business model around advertising. Each user who joins the network gets a status of a virtual employee of the network and a shareholder of the company. How many shares does he gets? Depends on his exact contribution to the business.
Users that has more friends, upload and write more high rated content, invite more friends and drive more page views or clicks on ads gets bigger cut of the revenues every month.
It’s that simple. In the open business the users are the shareholders. They are the employees. They not just own their information, they own the business itself.

I also gave a lot of thoughts about how this concept of open business can help drive the open source community.
Think of an ad based open source project, where all the developers that contributed to it gets a cut of its revenues. How you decide how much each developer will get? By their exact contribution the project. You can measure stuff like number of created/solved bugs, number of developed features, rating of features, spent hours, etc.
I know that most people who participate in open source are doing this for the community and not for profit, but can the open business be an open enough model that the community can actually embrace?

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Posted in Internet, Programming, Start ups

Connected Innovators

June 22nd, 2007

I’m sitting right now in the connected innovators showcase of the supernova conference. The showcase features 20 companies chosen by Techcrunch to demo and talk about their new products.

While listening to some great products, I just have to wonder why there are just two hours dedicated for this kind of showcase from a full 3 day conference.
I mean, lets face it, most of the sessions in most of the conferences are quite boring. You keep hearing the same things that you already know again and again.
In the last hour I learned (and enjoyed) much more than I had in the all supernova and Web 2 Expo conference all together.
I would like to see a conference where the people on stage will actually be the young and unknown faces that work on the still unknown startups. Than, maybe we will finally hear and learn something new.

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Posted in Start ups, supernova2007, Web 2.0

Transparency

November 23rd, 2006

In his blog Jason Calanis pointed to the CEO and co-founder of Wesabe, Jason Knight, who declared in the company web site, that all users can call him directly between 12 to 4 PM.

Loved it. This is exactly the approach a modern CEO should take. Complete transparency. Understanding that your customer is the center of the business is something we should all embrace.

From day one, when we launched our company web site, I put my direct mobile phone there. Yes, talking with customers can be time consuming, but it’s also one of the best uses of my time.

As someone who need to direct this company, I want to be as close as possible to our customers. I want to hear what are the pain points for them. I want to learn what we could do better and what they expect from us in the future. I want to simply give them the opportunity to teach me about our business, because in the end of the day – they are our business!

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Posted in Start ups

A Start Up Dream

October 13th, 2006

Wow. 1.6 billion dollars. Again – 1.6 billion dollars. That was how much Google paid to acquire YouTube.
The amazing fact is that it took Chad Hurley and Steve Chen, the founders of YouTube, just 19 months to get to this point!
That’s the wet dream of every guy and girl who ever dreamed about opening its own business.

The really cool thing about this is the fact that when you look at YouTube today you got to ask yourself, how the hell no one has done it before…
I guess that was the thing that always fascinated me about the Internet, even (and maybe more) in the early days. The fact that a person with a good idea and notepad has the potential to change the world. What other industry can give you this chance??

In a personal note, I got to admit that I’m sorry it was Google and not Yahoo that acquired YouTube.
I think that Yahoo is one of the only “big guys” that actually understand the new community concept. Their new products like Yahoo Travel and Yahoo music are just awesome, and they really know hot to get the social networking concept to work for them.
Meanwhile, as much as I appreciate Google as a search engine, I’m disappointed from all the other applications the company has developed.
It seems that Google is trying so much to shoot to all directions, that no one of their products is really getting as good as it should have been. Too many times they lunch something new and exciting and then “forget” to update it for months.
Even Gmail, which I use quite a lot, stayed almost the same for such a long time. I hope that the fact that YouTube should stay independent will keep them from going on the same lane.

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Posted in Google, Internet, Start ups, Web 2.0