Tag: Startup Grind

Making It Through the Valley of the Shadow with Reid Hoffman

Founder Silicon Hills News

Running a startup is like running a marathon, entrepreneurs need to know they are in for a long race and they’ve got to give it everything they’ve got.
“Startups are walking dead,” said Reid Hoffman, co-founder of SocialNet, PayPal and LinkedIn and partner with Greylock Partners.
“The classic metaphor I use for that is throwing yourself off a cliff and assembling a plane on the way down” Hoffman said. “The reason for that is to understand the mortality part and at all times compression matters. And a financing round is only a thermal draft. So you really need to get the plane built.”
Greg Tseng, co-founder and CEO of Tagged, interviewed Hoffman at Startup Grind 2014 at the Computer History Museum in Mountain View, Calif. Tseng asked Hoffman about maintaining a balanced life. Tseng recommended that startup founders get sleep, eat right, exercise and live a balanced life.
“In Silicon Valley, there’s this lore of 14 hour days and sleeping under the desk, almost like there’s a badge of courage around that,” Tseng said. But he said having a more balanced life makes an entrepreneur more effective at work.
Hoffman told Tseng that Tseng does better at that than himself. But he is working on it. He also said leading a balanced life as a startup founder is far more nuanced in Silicon Valley.
“Simply clocking hours is dumb,” Hoffman said.
But startup entrepreneurs who aren’t working six to seven days a week regularly are not going to succeed, Hoffman said.
“It’s not balanced,” he said. “It’s run hard and work hard and intelligently.”
A lot of smart people start companies these days to make money, to be famous and to be cool, Tseng said. “If you are doing it primarily for external reasons, you will not stick with it when the times are tough,” he said. “You have to feel intrinsically motivated by it.”
Hoffman said entrepreneurs can have, as part of their plan, the desire to become famous, cool or rich, but they do have to be driven by something more.
“99.99 percent of all startups go through a Valley of the Shadow – where they think why did we think this was a good idea? Why did we think this was going to work?” Hoffman said.
If you’re really doing it to say hey this is my pay day, that can work with a small company, he said.
“To build a real company, something that is transformative, to do that you have to have some commitment to the vision.”
In August of 2000, PayPal burned through so much money Hoffman told his co-founder that if they were standing on the roof throwing off wads of $100 bills they would not be spending money faster than PayPal was doing it. They spent $12 million in one month, he said.
“You’ve got to have a reason you’re in and that you’re playing through,” Hoffman said. “That doesn’t mean you have to be pure.”
Every startup Hoffman has been a part of has had a Valley of the Shadow moment where they thought they might die at any moment.
“People talk about taking risk – taking a bet that if it doesn’t work, it hurts,” he said. “Don’t try to hedge your bets too much. Part of it is you have the people around you helping you.”
It’s also good to be flexible and have plan A and plans B-Z, Hoffman said.
Google started out as an enterprise search company, but things change, he said.
Another key to success is to know when to hire people to take over the tasks that you’re not passionate about, Hoffman said.
“You’re never world class at anything you’re not passionate about.”
It’s also important to talk about your ideas to smart people and to gather intelligence and feedback, Hoffman said.
Forming a “really rich tribe around you and having great alliances is really important,” Hoffman said.
Mentors can help too, he said. But mentorship happens naturally and depends on shared objectives, personal connections and having a shared tribe, he said.
“The thing mentors are most useful for is solving key problems and crises. For that to work, there has to be a pretty strong alignment of values.”
Also, entrepreneurs think their ideas are super special and should remain secret, Hoffman said “That’s almost always a mistake,” he said.
Entrepreneurs shouldn’t publish their idea, because that doesn’t add any value, Hoffman said. But they should talk to as many smart people about their ideas as possible.
“Try to get as much input from your network as you can,” he said. “In order to measure what are your key problems.”
Pivoting early is also important.
“In the early days, it’s much cheaper to change,” Hoffman said. “There’s a huge expense to going out on the wrong path.”
Most startups fail, Hoffman said
“All entrepreneurs think they’ll out do the averages,” he said. “Take seriously the prospect that you may fail. Do something that you love to do. Make sure this is a good use of your life as you’re doing it.”

Six Tips from MC Hammer on Entrepreneurship at Startup Grind

Reporter with Silicon Hills News

Known as an entertainer, entrepreneur and humanitarian, M.C. Hammer also adopted social media tools early on.
Hammer tweeted before most celebrities knew Twitter even existed.
During meetings with Twitter’s founders Evan Williams, Biz Stone and Jack Dorsey, Hammer explored the emerging world of micro-blogging with his fans. He also began meeting with Google more than 10 years ago when the search engine had just a few thousand employees in Mountain View, Calif.
Mary Grove, now head of Google for Entrepreneurs, remembers those times. On Tuesday, Grove interviewed Hammer before several hundred people at Startup Grind 2014 held at the Computer History Museum.
Hammer lived on the cutting edge of technology and adopted new tools early, Grove said. Entrepreneurial from a young age, Hammer sold baseballs in the parking lot of the Oakland Athletics baseball team. Earlier than that, he ran a fruit stand and an ice cream business in Las Vegas, Hammer said.
A lot of similarities exist between rap, hip-hop music and startups, Hammer said.
“I brought my entrepreneurial skills into hip-hop,” he said.
Hammer noticed that the best Oakland As baseball players got the best deals. For example, Reggie Jackson got the Reggie candy bar and he also had a deal to represent Puma shoes.
Hammer decided that a baseball player only plays baseball once a day but a song comes on every hour. So with the increased visibility, he wanted more money from sponsors for his music deals.
Here are six tips for entrepreneurs gleaned from Hammer’s Startup Grind talk:

1. Never be discouraged by the naysayers.

“You just have to keep going,” Hammer said. The first time Hammer started tweeting hundreds of naysayers, primarily public relations people, told him that entertainers and artists shouldn’t do their own marketing.

2. Embrace new technology and tools.

“First thing I say to an artist today – be honest and make the music you want to make – use all new tools to get your music to the consumer,” Hammer said. He’s also a fan of Pinterest. Some naysayers say that “no men are on Pinterest,” Hammer said. “Yes they are. Smart men are on Pinterest. And if it’s all ladies, a smart man like me, should be there,” Hammer joked. But as a marketing tool Pinterest is phenomenal, he said. “The possibilities of what Pinterest can do are actually scary.” He has a page on Pinterest: XX320. He’s also excited about the possibilities of tools like Snapchat.

3. Enjoy communicating with others on social media.

“Tweeting, if you don’t approach it right, is labor,” Hammer said. “It’s never labor to me.” It’s easy to build an influential network on Twitter, he said. In real life, people spend years and pay a lot of money to make relationships with reporters and other tastemakers, Hammer said. The Twitter platform makes it possible to have direct conversations with your fans and others.

4. Give back.

Someone who has less income is as important as someone who has a billion dollars, Hammer said. Treat people well and inspire hope. Adopt Marc Benioff, founder of SalesForce.com’s 1-1-1 model, he said. Spend 1 percent of the company’s equity helping others, donate 1 percent of the employees’ time and donate 1 percent of the products and services to charity. “That model effectively allows you to create a culture for your company of giving back,” Hammer said.

5. Empower People

Previously, Hammer was a control freak. He used to micromanage. Now, he gives his employees power to create and make mistakes. “Delegate authority and allow people to do what they do. Pick great executives and a great team to do that.”

6. Work hard and hone your skill set.

“Silicon Valley, the tech world here, is like the NBA,” Hammer said. “You’ve got a lot of players who look good on the playground on the weekend. They dream of playing in the NBA, but they are not prepared or they are not good enough or they don’t have the skill set to play in the NBA.” When he sees someone who has skills he does everything he can to help them. But they have to work hard to get there. “Do I think that the doors should just fly open and everyone should come in, of course not,” Hammer said. “They have a filter and a vetting process. And what we see in the NBA is the best of the best.”

Startup Grind Features Graham Weston of Rackspace

mqdefaultGraham Weston, co-founder and chairman of Rackspace Hosting, grew up in the greater San Antonio area.
At his first job, he worked in his dad’s cookie plant balancing the books from delivery drivers and occasionally packaging cookies. His dad owned Grandma’s Cookies and later sold the company to Frito Lay.
Weston’s first venture into entrepreneurship in grade school involved selling organic pork from his family’s ranch through advertisements proclaiming “Go Hog Wild” in the local newspaper. He also ran a photography business in high school.
In college, he would drive back and forth from Texas A&M in his VW Diesel Rabbit listening to get rich quick tapes in his cassette player.
His junior year at Texas A&M, Weston launched a successful real estate venture while going through college. He successfully protested his family’s property tax appraisal and then figured that there might be a business doing that for others. He founded a company that protested commercial property taxes.
Because of his property tax business, Weston was well positioned to see opportunities in real estate during the financial crisis of the late 1980s.
After school, Weston ended up buying one of the tallest buildings in downtown San Antonio, later named the Weston Centre at the age of 27. The building had fallen into foreclosure and then bankruptcy during the Savings and Loan Crisis of the late 1980s. He wanted to buy the KCI Tower, but wasn’t able to do it. Later the former National Bank of Commerce building came open. It was way more than Weston wanted to spend. But he raised more money and then bid against real estate mogul Sam Zell and won.
The Weston Centre later contained one of the first data centers for Rackspace. It housed some of the first websites on the Internet for YouTube and HotorNot and other Internet pioneers.
Rackspace, now a multi-billion dollar company, had a humble beginning.
Weston and his partner, Morris Miller, met three college students who bid to wire the Weston Centre with high-speed Internet access. The students didn’t get the contract, but Weston and Miller liked them. They asked them what else they were working on. That’s when Pat Condon, Dirk Elmendorf and Richard Yoo told them about their hosting business, which would later come to be known as Rackspace.
Weston recounted how they invested $1 million and in less than a year another company wanted to buy the business for $20 million. That deal fell through. But they knew they had a solid business, which was making money every month. They grew Rackspace by adding more servers and data centers and in 2001 they planned to take the company public, but the dot com bust occurred. They went through a few tough years, but they were able to persevere and succeed where many failed largely through Rackspace’s focus on providing “fanatical” customer support.
In 2008, Rackspace went public at $12 a share. Its stock closed Wednesday at $37 a share. The company has a market capitalization of more than $5 billion.
Today, Rackspace has more than 5,000 employees worldwide and is San Antonio’s largest high-tech employer with close to 3,000 employees in Central Texas. Rackspace also has an Austin office.

Phunware’s Alan Knitowski Calls it Like He Sees It at Startup Grind Austin

Reporter with Silicon Hills News

20131028_185814Alan Knitowski calls it like he sees it, letting fly his controversial perspectives that: Austinites bootstrap too much, entrepreneurs interested in work/life balance need to “grow up” and he would happily rail on the entire group of investors at Austin Ventures to their faces.
The investor, serial entrepreneur and CEO and co-founder of Phunware spoke at Startup Grind Austin Monday night, giving his audience of about 30 people a fast lesson in how to reach entrepreneurial success, Knitowski-style.
When he founded Phunware in 2008, he said, he knew that peoples’ mobile devices were going to be their main screens and that the perfect convergence for future endeavors was SaaS, the Cloud and mobile. So he created a company that’s Mobile as a Service.
He wanted to help companies with apps accomplish:
• universal login and data capture
• advertising content management
• media and hosting alerts and notifications
• high margin loyalty and rewards
• location tools
• analytics and business intelligence
“Nobody wants 12 partners for procurement with 12 sets of hardware and 12 people pointing fingers when nothing works,” Knitowski said. He wants Phunware to do it all.
Knitowski grew up in Arizona to economically disadvantaged parents. Until he was 19, he said, he was 5’2 and weighed 110 pounds. So he got tired of being told what he couldn’t do because of his circumstances or his size. He admonished the budding entrepreneurs in the room “If you don’t live life as a victim and you get off your ass and work, anybody can do anything.”
He got his bachelor’s in industrial engineering from the University of Miami on an ROTC scholarship and his master’s from the Georgia Institute of Technology. He served as a ranger with the U.S. Army Corps of Engineers, and spent part of that inspecting nuclear facilities in Korea before getting his MBA at University of California at Berkley. That launched his years in Silicon Valley.
His first business model, he said, was annihilating Nortel because the company tried to pull funding from his MBA.
“Hell hath no fury like a serial entrepreneur with a crap load of capital,” he said.
Austin entrepreneurs, he said, think in terms of building a customer base in Austin, then Central Texas, then Texas, then the world. Silicon Valley entrepreneurs, on the other hand, think in terms of taking on the world with a revolutionary idea. Austin entrepreneurs love stealth mode; Silicon Valley entrepreneurs, and Knitowski himself, readily share their ideas, he said, because they know that just because someone knows your business model doesn’t mean he can execute it. And Austin entrepreneurs are so wedded to bootstrapping that they miss the opportunities that well-funded companies get from influxes of cash. Gowalla, he said, not Foursquare, should have dominated that market, but they were too dedicated to bootstrapping their business and Foursquare won.
Knitowski had a whole series of points for the entrepreneurs present:
• Always be honest and always be transparent. We send reports to investors every month. Too many people never talk to their investors until they want money again. Your investors will fight to the death with you if they trust you.
• Cash flow is the only thing that matters. Make sure you know, every day, how much you have coming in and how much you have going out. What’s your burn rate? We have a current asset report every week.
• Use reputable lawyers, auditors and other professionals. If an investor asks who your auditor was and you mention a low budget firm, they’ll have to do the numbers all over again. If you say Price Waterhouse Coopers, that’s a question answered. He gave a list of recommended firms.
• Raise money before you need it.
• If you want a lifestyle business, that’s fine. But if you take a dollar from anyone, you have to let go of the idea of work/life balance or leaving every day at five to attend a kid’s sporting event. “Stop fooling yourself. Being an entrepreneur is an immense sacrifice and I can only do it because I have an amazing wife. She shoulders crazy burdens with our four kids.”
Phunware is slated to have $23 million in revenues this year and aiming for more than $100 million by 2015. It has received $20 million in several rounds of funding and is planning to take its first institutional investment soon to expand the company globally.
There will be no Startup Grind Austin event in November. The next event is Monday, Dec. 2 and features Robin Thurston, co-founder and CEO of MapMyFitness.

Startup Grind San Antonio Launches Featuring Interview with Jason Seats

images-3Startup Grind, based in Mountain View, Calif. seeks to foster entrepreneurship through storytelling.
Derek Anderson founded Startup Grind, which now has chapters in 40 cities and 20 countries around the world.
One of the latest chapters is Startup Grind San Antonio.
The values of Startup Grind are important ones to foster an entrepreneurial environment.
“We believe in making friends, not contacts. We believe in giving, not taking. We believe in helping others before helping yourself. We are truly passionate about helping founders, entrepreneurs and startups succeed. We intend to make their startup journey less lonely, more connected and more memorable.”
The first Startup Grind San Antonio event takes place on April 23 at Geekdom in downtown San Antonio and features a one on one interview with Jason Seats, cofounder of SliceHost and managing director of the TechStars Cloud. The TechStars Demo Day for its second class of 12 companies is Thursday in San Antonio. Seats has helped to launch 23 TechStars Cloud companies. He is also an active angel investor.
Startup Grind also has a chapter in Austin, headed up by Andi Gillentine, co-founder of Whit.li. She launched that chapter last year and has held several successful events at Capital Factory. The next one is April 29th at Capital Factory featuring an interview with Mellie Price, founder of Source Spring and Front Gate Tickets. Startup Grind also has a Dallas chapter.
Geekdom is sponsoring Startup Grind San Antonio and Vid Luther with ZippyKid, a WordPress hosting site, is also sponsoring the event.
Startup Grind San Antonio will kick off at 6 p.m. with pizza and beer. The interview with Seats will take place from 7 p.m. to 8 p.m. and will feature an interactive question and answer session with the audience. So please sign up now and get your tickets, which are limited.
Startup Grind San Antonio’s May speaker is David Spencer, founder of Onboard Systems and Startup Grind San Antonio’s speaker for June is Pat Condon, cofounder of Rackspace.

In February, I was lucky to attend Startup Grind’s annual conference at the Computer History Museum in Mountain View. The speakers were fabulous. Here’s a video that shows some highlights from that event.

Lessons for Startups from Startup Grind 2012

Founder of Silicon Hills News

Photo by Kai Diekmann

Photo by Kai Diekmann

At Startup Grind 2013, the entrepreneurs and funders tell it like it is.
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.

Startup Grind Meeting July 26th Featuring ATI Director

At the SXSW Panel Picker meetup earlier this week, I met Andi Gillentine. She’s cofounder of Whit.Li, a startup focused on mining social networks to compile personality reports.
Gillentine is also director of Startup Grind Austin, which has a meeting on July 26h featuring Isaac Barchas, the director of the Austin Technology Incubator at the University of Texas. The discussion focuses on the ATI and how it supports local startups.
The meeting kicks off at 6 p.m. with networking and pizza followed by a fireside chat, questions and more networking. Register here.
The Startup Grind is a monthly speakers series focused on entrepreneurship.

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