BY L.A. LOREK
Founder of Silicon Hills News
They don’t sugar coat their messages.
And that’s refreshing in a startup environment where everyone seems to have something to pitch and everything is going to disrupt and revolutionize an industry.
Derek Anderson, the founder of Startup Grind, kicked off the first full day by laying down the rules. The two-day conference taking place at the Computer History Museum in Mountain View, Calif. is about making relationships, making friends and not just contacts, Anderson said. It’s not about pitching and collecting as many business cards as possible, he said. The key is to give and don’t take and then reap the rewards of helping others, he said.
A year ago, StartupGrind had only two other cities participating in its network of startup talks. Today, StartupGrind has 35 sites including 15 countries. Austin has a StartupGrind chapter led by Andi Gillentine, co-founder of Whit.li. She was at the event helping coordinate the volunteers.
Here’s some of the highlights from the speakers in the morning sessions at Startup Grind 2013:
Jared Allgood, CEO of Juxta Labs, gave an insightful talk on “Wait. Don’t take the money.”
Before taking any money, a startup needs to nail its product market fit, Allgood said.
Raising money does not make you a rock star, he said.
“You don’t know if anyone is going to buy anything you’ve got,” he said. “If you take the money, it starts a clock ticking down. That clock is just ticking down until the time you run out of money.”
Allgood recounted how he founded ClassTop in response to teacher’s pain with using Blackboard’s technology platforms in schools. He sent out cold e-mails to several school IT directors and 56 percent of them responded. So they created a product to solve their problems.
But first they got feedback from all the decision makers and users. They also figured out how much money they were willing to pay for it. And they scaled back the product to give fewer features and they got a greater reception to it, Allgood said.
Customer interviews will lead you to the holy grail of product market fit, Allgood said. One of the most important things you can do in the early stage is get out of the building and talk to customers, he said.
Next up, Paul Ahlstrom of Alta Ventures Mexico gave an overview of the state of the incubator market. He said we’re in a bubble. In 2005, only one accelerator existed. Today, 150 accelerators and incubators exist and only 13 percent have had a company exit, he said. He predicts 95 percent of the incubators and accelerators will fail. He compared this time to the Dot Com bubble. He also said many VC firms will fail and only the top tier VCs will remain.
But Dave McClure, founder of 500 Startups, and the next to take the stage, totally disagreed with Ahlstrom.
“We are at the very beginning of incubators and accelerators,” McClure said.
No one complains that there are too many business schools, he said.
At one point in his talk about “Why Incubators Hate Your Startup,” McClure yelled at the audience that most of the entrepreneurs in the room would fail.
And the number one reason why they would fail is that they would not be able to figure out how to acquire customers at a reasonable cost, he said.