OnStartups

Startup Tribes: Tips on Roles and Recruiting

Posted by Dharmesh Shah on Fri, Jan 27, 2012

The following is a guest post from John Greathouse. John is an entrepreneur and investor.  He currently blogs at Infochachkie where he provides practical startup advice.

You may not realize it, but your adVenture's Core Team, the senior executives who make the key decisions which drive the company's strategic direction, is akin to a primitive tribe.

Primitive tribes and your startup both entail a small number of people banded together to battle an uncaring, hostile world. Like the tribe, your company's survival is always in question and never guaranteed. Success depends upon everyone pulling together for the common good and striving to accomplish common goals. Everyone's efforts must initially focus on survival

before the tribe can prosper and eventually evolve into a thriving, self-sustaining community.

Tribes are effective societal structures, as evidenced by man's ascension to the top of the food chain. Understanding the tribal organizational structure is vital to gaining an appreciation of the various roles played by your Core Team.

In partnership with Docstoc, I created the following video, in which I discuss the various roles in a tribal startup. You can watch the embedded video below or at YouTube: http://youtu.be/o_nEUIPS60U

Tribes and startups thrive when labor is efficiently divided. Long before Meyers met Briggs, people in tribal communities migrated to those roles which best suited their personalities, proclivities and skills. The key roles in tribes and startups are identical: Hunter, Skinner, Shaman, Chief and Tribal Elder.

Hunter

The Hunter provides for the tribe and literally brings home the bacon. These individuals are highly autonomous, independent and thrive on frequent recognition. When they have a successful hunt, they want everyone to know about it.

The Hunter is generally not a visionary. However, once they are pointed in the right direction, they are clever enough to improvise a tactical plan to achieve a strategic objective. They do not want to be told how to take the hill, just which hill needs to be taken.

At your adVenture, the hunter is the rainmaker, in the form of a Business Development Executive, VP of Sales or Corporate Development Officer. Once they are told the type of deal that is needed, they are capable of autonomously devising the appropriate tactics to get the deal done.

A typical Hunter's characteristics include:

• Work hard
• Driven to do right thing
• Fast and furious
• Under communicate - do not like to confer with or answer to the group
• Excel under pressure
• Emphasis on achieving goals - second guess their tactics at your peril
• Deliver quantity over quality - close enough is okay
• Work well outside the box

Skinner

The Skinner makes the Hunter look good. When the Hunter brings back the kill, it is the Skinner who dresses the meat, tans the hides and preserves whatever is not initially eaten for the tribe to subsist upon during lean times.

The Skinner at your adVenture will likely take the form of the VP of Operations, VP of Professional Services or Chief Operating Officer. They ensure that your company delivers on the Hunters' promises by exceeding your partners' and customers' expectations.

A typical Skinner's characteristics include:

• Work correctly
• Driven to do things the right way
• Slow and careful
• Service oriented - want to meet stakeholders' needs within the organization
• Over communicate - encourage meetings and agreement regarding goals
• Quality over quantity - do things by the book
• Work well inside the box

Shaman

Shamans invent new tools and processes that improve the overall quality of life within the tribe. For instance, the Shaman will spend his days thinking of a better fishhook, a new tool for cleaning skins or searching for new medicinal plants to cure the tribe's ailments.

At your adVenture, the Shaman is often the Founder. They may also take the form of Chief Technical Officer, VP of Engineering or VP of Product. By whatever name, the Shaman is the person who devises and develops the innovations upon which your business is based.

A typical Shaman's characteristics include:

• Work differently
• Creative visionary
• Communicate differently - requires careful listening
• Seek a better way
• Create quickly and freely
• Tripped up by details
• Prone to devise complicated solutions
• Prize a solution's technical elegance over its functionality
• Are unaware that a box exists

Chief

Every tribe needs a Chief, just like every adVenture needs a CEO. The Chief defines and communicates the tribe's strategic direction, such as a new valley to forage or a mountain retreat to escape the heat of summer. The Chief listens to the opinions of the other tribal members, makes decisions that impact everyone and ensures an adequate level of acceptance of such decisions to facilitate their ultimate success.

A typical Chief's characteristics include:

• Work together
• Shepherd the team toward its strategic goals
• Slow and connected
• Communicates clearly and supportively
• Driven to maintain cohesion within the team
• Indecisive
• Prone to being railroaded
• Defines the box

One of the best CEOs I worked with exhibited nearly all of the above characteristics. As a Hunter, I was frequently frustrated, as he was often slow to act. In his effort to keep harmony within the Core Team, he seemingly agreed with everyone, even people who held diametrically opposed opinions.

In retrospect, I now realize that his ability to sincerely empathize with everyone's respective positions, especially on difficult issues, was imperative in keeping our Core Team together during the numerous challenges we encountered on our road to a successful exit.

One of his favorite sayings infuriated me at the time, but I now appreciate its underlying wisdom, Some of the best decisions I ever made were the decisions I never made. Despite my Hunter-driven frustration at his hesitancy, more often than not, his resistance to making a snap decision proved to be prudent.

Tribal Elders

Tribal Elders spend their time sitting by the fire dozing and recounting the tribe's history. They cannot be counted on to do any heavy lifting nor are they in a position to execute the day-to-day tasks necessary for the tribe to thrive. However, they occasionally offer bits of sage advice that allow the tribe to avoid hardships and reap windfalls. As such, the wise Chief knows when to solicit their counsel and when to allow sleeping Elders to lie, as described more fully in Free Advice.

At your adVenture, the Tribal Elders are represented by your Board of Directors and Advisors. The Board Members likely have a varied and broad business history upon which to draw. They may be able to provide general guidance at certain pivotal points during your adVenture's journey. However, as noted in Your VC Is Not John Lennon, do not heed their advice blindly, as it is impossible for them to have your level of insight into the operational details of your adVenture.

Pop Quiz

Question: Which Tribal member is the most important?

Answer: All of them.

Without the Hunter, the Shaman's ideas would never be put into practice. Likewise, without the Skinner, much of the Hunter's efforts would be wasted. He might be able to feed himself, but he would not be able to sustain the tribe on his own.

Without the Shaman, neither the Hunter nor the Skinner would have the tools necessary to carry out their respective roles within the tribe. Without the Chief, the tribe would wander aimlessly, fighting among itself until the group eventually dispersed and the individual members were melded with other tribes with healthier cultures and a more focused sense of direction.

Balance is the key to a successful team. Thus, every member of your adVenture's Core Team is the most important member. Your Core Team is your startup's most important asset. Respect man's evolution and heed the tribal lessons of old. If you do, you may just end up on top of your industry's food chain.

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Startup Branding: A Practical Guide for Entrepreneurs

Posted by Dharmesh Shah on Fri, Jan 20, 2012

The following is a guest post by Mike Troiano. Mike is a former New York ad man turned venture-funded entrepreneur, now a Principal at Boston-based Holland-Mark. You can follow him on Twitter at @miketrap, and connect with him elsewhere through About Me.

1. What does startup branding really mean for an early-stage company? Is it just picking a name and a logo?

"Brand" is one of those words everybody uses and nobody really understands, so I'll start with a definition.

It's important for entrepreneurs to understand that their "Brand" is the collective emotional response to their product or service. A brand is not a logo, and it's certainly not a URL. Those things are the stimulus, while the brand is the response. It's something out there, in the hearts and minds of the people you hope to sell to.

So... Do I think it's important for startups to be thoughtful about the nature of the emotional response that might serve their interests, and try to build a graphic identity designed to elicit that response? Abso-freaking-lutely.

2. Any favorite startup examples that they think are particularly clueful about brand and drawing out the right emotional response?

Sure, a few come time mind right away:

Zipcar a brand we've played a role in since the beginning - isn't about urban lifetstyle, or being green, or collective commerce, really. From day one it's been about Freedom, from both the hassles of car ownership and car rental (Wheels when you want them.) Focus on that emotional value proposition has guided everything from brand identity to vehicle selection at the company, and Zipsters around the world have responded with not just loyalty, but advocacy.

Path 1.0 was a decent execution of an interesting idea, that you could derive more value from a smaller social graph of actual friends than you could from Facebook's comparatively industrial-sized cohort. Problem was, there wasn't anything in the original UI to inspire an emotional response, and the service foundered. While much has been made of the radical turnaround in user experience for v 2.0, for me the result of those improvements is a kind of easy intimacy on the mobile device, something that distinguishes Path from other networks, and is the root of user's newfound enthusiasm for the product.

Instagram is interesting because they got it so right in the product, and so wrong in the messaging. Does anybody really love Instagram because it offers Fast, beautiful photo sharing on the iPhone? Really? I think Instagram helps us notice and share more of what we find beautiful in the world. And I know that promoting it that way would help them grow faster.

3. Speaking of names, how do I pick a great name for my startup? Does it really matter all that much?

I've always thought it matters less than people think.

10% of names are great and that helps a business at the margin, and 10% of names are crap and that hurts a business at the margin. The implication is that 80% of names are not a material driver of brand impact or business success, so sometimes it's just best to get on with it.

For proof of this, there's a great story George Lois once told me, about the first time he heard about a client called "Xerox," in the 60's.

"It sounds like a Chinese laxative," he said. I bet it did to most people, and they did OK.

The point is you can make just about any name mean something to people with great product execution over time. Spend some time getting the tactical fundamentals right - url-friendly, sticky, distinctive, that kind of thing then pick something 3 of your cooler friends think is decent, and move on.

4. What about logos? Can I just hack something together? Use a crowdsourcing service like 99Designs? Or is that a waste of time?

I think logos and the graphical identities of which they are a part matter a lot. They're something the West coast and NY-based guys seem to care about and do way better than Boston-based startups, and that's always bugged me.

Look... in the early going perception is reality for a startup. So is it worth investing a little dough to encourage the perception that you're professionals; that this is a serious and professional undertaking; that you care about design and brand response? I guess there are a few businesses where it isn't. But for the vast majority I'd say it absolutely is, that it's worth investing in a professional identity.

If you're among this vast majority, you want to work toward something smart, not just something pretty. What I mean by that is you want to start by being thoughtful about your brand meaning the emotional response you want your product to elicit as well as any practical ideas or metaphors that will help people understand what you do. Armed with that you should sit down with a reasonably-priced freelance designer to brainstorm some treatments, and keep at it until you hit on something you and others seem to like.

In my experience great design comes from the collaboration between someone with a clear vision for a problem (a thoughtful entrepreneur,) and a professional with the talent and craft to create something great (a real designer.) You just don't get that interaction using the crowdsourcing guys, which is why I think you get what you pay for there.

5. Any tips on where to find a great freelance designer for a startup logo? And, what would you consider reasonably priced?

Try checking the portfolio sites, like Carbonmade. Find someone whose work you admire, then call them to talk about your project. Look for someone with whom you have chemistry, who can bring ideas to the table and not just pictures. And take theiry're advice when they offer it they do this for a living.

Expect to pay $50-75/hour, and to be glad you did.

6. How do I decide what category my startup falls into? Is it better to find an existing category, or blaze the trail of a new one?

The short answer is, it depends, but on balance it's better to pick a category that already exists.

From a marketing communications standpoint, a category is a frame of reference for the buyer. If you think of it that way the value of one becomes clear, as does the time, hassle, and expense of creating your own.

That's not to say that sometimes it doesn't make sense to create a new category, and I've used HubSpot as an example of a company for which it was necessary. For entrepreneurs enamored of that idea, I often follow my HubSpot observation with the question, "So how's your book coming?" That question is usually met by a blank stare, but the truth is that level of commitment to IP is what it's going to take to create a category.

If the opportunity cost of doing that is too much for you, just hold your nose, pick a category, and focus on communicating your distinction within that category in a way that resonates with your target.

7. How much does good branding matter when trying to raise capital? Is smart money really fooled by that kind of this? Will I look foolish for having invested in brandinged in one?

I'll say it again: Perception is reality for an early-stage startup. One can argue  that the world would be a better place if this were not so, if Excel drove more decisions than PowerPoint. But that argument is a waste of time, my friends.

VCs invest in the companies that win over their hearts and their minds, usually in that order. If you're trying to raise money it's important to remember this, and to invest the time and energy you need to court a little loving, and not just a good first look scorecard.

And the same is certainly true for customers, so sooner or later you're going to need to spruce up a bit and look like a brand they want to be a part of. Why not start now?

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7 Lessons On Startup Funding From a Research Scientist

Posted by Dharmesh Shah on Mon, Jan 16, 2012

The following is a guest post by Ty Danco. Ty is an angel investor and startup mentor. Read more of his thoughts at tydanco.com.

My wife isn't in business, but she is wise in the way of funding. Just as I have experience on both sides of the funding table (as an entrepreneur and as an angel), so does she. As a research scientist, she gets her own grants and also reviews grants from others. While she doesn't talk in startup lingo (pivots, minimum viable product, etc.), she has taught me that many of the issues we face as entrepreneurs have a corollary in science. Here's what I've learned from her.

1. Always seek funding from the best people, even when you have easier alternatives.

Before the bootstrappers hang me, I didn't say that you have to raise a lot of money or that you should be working fat. But consider this story: my wife was slaving away writing one particular National Institutes of Health (NIH) grant knowing that the funding rate was ~5%. Why not look for a less competitive foundation to underwrite it instead, I asked. I figured that this could save her time and trouble, and that she could proceed with her experiments that much faster.

That's not how it works, she replied. That's like self-publishing a paper instead of getting it peer-reviewed. If she couldn't convince sophisticated research centers to part with their dwindling cash, she continued, obviously the project wasn't good enough. If it's not good enough to get other people to write a check, it's not good enough to be spending time on. Startup corollaryjust as a paper published in an inferior journal has less impact than the same paper in a good one, when you go for funding, get it from great people. If you have to take dumb money, you're doing it wrong.

Personal application: I'm temporarily self-funding my new startup, FX Aligned, but I'm pitching it to the best East Coast VCs who understand the space. The same logic appliesif I can't convince people who see 1,000 deals that my idea is worth funding, it isn't worth doing.

2. Proposals are always stronger once edited.

Nothing beats peer review, especially from people with deep expertise.

My chat with one VC surprised me. He thought our initial target market was too small. And upon reflection, he was right. At the same time, I was talking to another VC, and I explained to him that we intended to go after that smaller market first, get established, and then work closely with our alpha clients to find solutions to their real pain points. He quoted his senior partner, whose rule was if a new startup is counting on a two-part process to make money, don't fund it. This is exactly the tough love I needed to hear, and it saved me months to time I would have lost if I had self-funded and drunk my own Kool-Aid. We didn't need to do a two-step dance to discover the real market opportunity.

3. If the specific aims of your experiment (company) undergo too many major changes, that's a sign that you haven't thought through the issues yet, and it's too early.

No scientific grant ever makes it from start to finish without changes. Similarly, no VC or angel should be so nave to think that business models turn out perfectly on the first try. However, when a fundamental concept keeps shifting as the idea evolves, there is a problem.

My new company has gone through one major change as we search for product-market fit. However, our edit did not change the core concepts. Our pivot came as we realized that our solution for our original market would, with some minor systems tweaks, serve not only our target market of public pension funds, but now solve an industry-wide problem faced by all institutional managers buying and selling foreign securities. The aim — giving our clients a means to quickly, cheaply, and more efficiently transact foreign exchange without getting ripped-off remains the same, but now the same basic company has a far bigger potential market.

If your concept is not robust at its core, no iteration will help. Before you pivot, ask if the underlying ideas are still valid. If they are, take your time and get the change right.

4. Don't keep it secret.

Scientific grants and paper submissions are kept confidential during the review process to allow for brutally honest feedback, but generally that's the only time of secrecy. The point of science is to advance knowledge, which is done through sharing. Even before a paper is published, preliminary results typically are presented publicly at conferences and ideas are exchanged before the lengthy process of publication. These public discussions can bring in new collaborators, just as startup events can introduce co-founders to each other. Don't hide, network!

Initially I was reticent to talk to angels too much. While my angel friends were good at giving me feedback on presentation matters, none I knew had expertise in fintech, which is where my new company fits in. So I initially wasn't getting a lot of strong commentary. Thanks goes out to James Geshwiler of CommonAngels, however. While he didn't have expertise in my field, he sent me to two angels who did. One of those two angels is now on my Advisory Board, and the other is giving me solid advice on a technical matter that is critical to the company, but outside of my own expertise. What's the result? A lot less risk in our prospects. And besides, as Dharmesh says, stealth mode is for fighter jets — not startups. Read “The Real Reasons Startups Don't Talk”

The more you discuss your idea, the luckier you'll get. Never miss a chance to pitch your idea, but then keep your ears open, especially for the chance contacts that can turn out to be key.

5. It's easy to get funding in trendy areas, but focus more on impact.

I've tagged along to dinners with my wife's scientific colleagues, and once heard a story about zebras grazing. Those zebras that want to play it safe in the middle of the pack can get by, but the juiciest grass — and the greatest danger of being eaten is out on the edges. While it's tempting to go where the funding is, science is about more than just getting another grant.

Find a problem worth solving, not just something convenient for funding. And hopefully, that will be something different. The world doesn't need yet another daily deals aggregator.

By the way, no one should go through the rollercoaster that is startup life unless they are a) certifiably crazy, or b) intending to go big. (See Don Dodge on Google Dreaming BIG.) If you're pitching something, make sure it has potential to change the world.

6. Don't even think about pitching a project without preliminary data.

Scientific grants rarely get funded without substantial preliminary data. It's not just about feasibility, i.e., showing that the method can work; in addition, enough data needs to be submitted to statistically demonstrate the likelihood of the project's success.

This one is a little harder in my case, because it will take a few months to crank out a minimum viable product. However, that doesn't mean we can't test out the markets. We're talking with as many institutional investor customers as we can to get their input on what they need.

This is just customer development 101, a la Steve Blank. For startups, customer data is the best data.

7. The first funding is the hardest.

In science, like in startups, the experienced team always has it much easier rounding up backers. That's just the way it is.

That's one reason why I suggest that people who want to start their own companies begin by working for some rocketship company first. Your own startup becomes more bankable because you'll slowly be absorbing experience that will stand you in good stead in your own future startup. Whoever writes a check wants to see a return on that money, be it in science or in startups. You increase your chances of funding success when you de-risk your venture, especially when a team (or lab) has had time to gel previously.

Thankfully, the team at our new company has had success together before. And that, probably more than anything else, makes it easier this time around. Not that this stuff is ever easy

And a bonus, once you have that funding:

Always be running little experiments on the side. Especially those that can surprise you. For more on this, read Eric Ries' book, The Lean Startup. And while you're doing those experiments, make sure that they are sufficiently well-designed to give you answers.

Any other funding lessons from the lab I missed? Please leave a comment.

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The Big List: The Best and Worst Startup Stuff In 2011

Posted by Dharmesh Shah on Mon, Jan 02, 2012

The following is a guest post by Ty Danco.  Ty is an angel investor and startup mentor. Read more of his thoughts at tydanco.com.  Or, check out his recent article "What To Do If You Don't Have An Idea"

It's time to review the past year, so without apology for personal taste, here's my list of the best (and a few of the worst) of 2011.

Best Startup Book of 2011: Mastering the VC Game by Jeff Bussgang of Flybridge Capital

I keep a loaded Kindle copy of this book on my iPad, and I'm constantly showing it to startups raising money. The money chapter: When the Dog Catches the Bus: Making the Pick and Doing the Deal tells you what YOU should be checking out about VCs.

Runners-Up:

The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses, by Eric Ries. Had to rethink my whole approach to my startup after reading this. And I'm going to re-read it again soon.

Venture Deals: Be Smarter than Your Lawyer and Your Venture Capitalist, by Brad Feld and Jason Mendelson. A little dry, but will save you a ton of headaches.

Running Lean, by Ash Maurya. Pragmatic and quick.

Honorary Runners-Up (read by me this year, but written pre-2011):

Inbound Marketing, by Brian Halligan and OnStartups.com's own Dharmesh Shah. Simply put, a seminal book that gets you traffic.

Do More Faster, by David Cohen and Brad Feld. Really fun.

Pitching Hacks from Naval and Nivi of AngelList.

Best Interview Podcast/Webcast Series with Entrepreneurs: Andrew Warner's Mixergy

If James Brown was the hardest working man in music, Andrew Warner must be the same in startup journalism. He cranks several hundred of interviews a year, so you can't expect every show to be pure gold, but he's produced more good ones than any three other people combined in 2011. A big differentiator: he spends a lot of time looking at failures as well as the easy success stories. You can search through transcripts quickly to see if you want to download the interview, either in audio or video modes. A few favorite interviews from the last half 2011: Joel Spolsky of Trello and Stack Exchange; Sarah Prevette of Sprouter talking about rising from the dead; Eric Ries on Lean Startups; Naval Ravikant on AngelList; David Friend of Carbonite; and for me, the one that hit closest to home, Harley Finkelstein of Shopify talking about biz dev.

Runners-Up:

This Week in Startups, with Jason Calacanis. Jason remains the master entertainer, and he invented the startup webcast genre. You either love him or hate him, but believe me, you'll have an opinion. Cranking out 2 shows a week.

Founder Dialogues, with Eric Paley of Founder Collective

Founder Stories, TechCrunchTV with Chris Dixon of Founder Collective

While Founder Dialogues features lengthy, in-depth interviews, and Founder Stories is cut into smaller segments, the shows are similar: Eric Paley and Chris Dixon are both VC partners at Founder Collective, both have started and sold multiple companies, and both host shows featuring great guests.

Best Intervew Podcast/Webcast Series with Investors: Mark Suster's This Week in Venture Capital. It's hard to pigeonhole this showMark's guests include both entrepreneurs and investors, but, like the sister show This Week in Startups, he gives a lot of advice on how to work with VCs. I tend to prefer his earliest shows, which featured more VCs and less entrepreneurs, but regardless there's something to be learned every time.

Upset pick for Runner-Up: The Frank Peters Show Frank's audiocast is not aimed at entrepreneurs, but rather to his fellow angel investors. He covers the nuts and bolts topics that no one else does, such as best practices for angel due diligence, and different techniques to value companies. (Disclaimer: I've been on his show twice, including this time in 2011.) A good example of Frank's work: his 4 part series All About Angel Investing. If you're looking to hunt down angel money, you should understand your prey. The best way to understand angels other than sitting in on an angel group is listening to a few of his shows, although entrepreneurs can skip the international shows or the stray episodes devoted to cycling.

Best Startup Blog: This, the most hotly contested award goes to Both Sides of the Table by Mark Suster. OnStartups already tracks the most-read startup blogs, and you should check them out. Many are great. So why did BothSides get the nod? Well, in sports, not only do you have to perform day-in, day-out during the regular season, but you need to raise your game in the playoff. And my favorite blogpost in the last week of December is this one on profitability, so Suster takes the prize--but he cranked out many equally good in the regular season throughout 2011.

Runner-Up:

David Skok of Matrix Partners' For Entrepreneurs. Every piece is gospel.

Ben Horowitz of Andreessen Horowitz's Ben'sBlog.

I go for quality, not quantity. All three write fewer, but deeper, articles. Funny how almost all of the best VCs started out as entrepreneurs, by the way.

Best Startup Answer Sites Other than OnStartups

Three-way tie between Venture Hacks, Quora, and AsktheVC.

Favorite Blog posts of 2011:

For sheer density of learning, the verdict was already delivered by early January: Tom Eisenmann of HBS posting his startup curriculum for his coming class.

Best blog post by an entrepreneur:

A tie between this postmortem by Justin Hall about Gamelayers, and

Rand Fishkin on how a funding round got screwed up.

Runners-up: Jason Baptiste talking about how to kill it on DemoDay (which he did.)

Best blog post on an unknown backstory goes to Lee Hower's post on raising Series A for LinkedIn in 2003.

And from the personal side, my favorite blogpost I co-wrote was:

Raising Money On AngelList: 21 Tips From Two Active Angels which was co-written with Dharmesh. That post received more views in 3 days than the other 49 posts (including the companion piece on AngelList hacks for angel investors) I wrote on my own blog for the whole year. You gotta hand it to him, Dharmesh knows how to get those inbound eyeballs.

Best Communication from a Startup to its Investors: From Objective Logistics as described in this blog post. I kick myself for not investing in these guys. Talk about the right attitude.

Best Accelerator Structural Innovation:

, for coming up with the HackStars program. It sticks together massively talented hackers who want into a great startup with the killer companies that make it into TechStars. The result: a serious increase in global startup mojo.

Runner-Up:

500 Startups, for providing Designer in Residence help. Almost all of the companies accepted already have a hacker and a hustler onboard, but not all of them have (although everyone needs) some serious design. Dave McClure gives UI, UX, and beautiful design its proper due, but having not just great mentors, but trained staff in design gives a big boost to his companies.

Best Accelerator Financial Innovation:

This feels like ancient history now (it happened in January 2011), but Y-Combinator, the big Daddy of them all, wasn't resting on its laurels when it announced that Yuri Milner and SV Angel were combining to offer every YC company a $150k uncapped, no-discount convertible note. Angels and VCs gasped, but it was great for the startups on the receiving end.

Runners-up: Thomas Korte's AngelPad, TechStars and 500 Startups for following up with similar deals. Like Y-Combinator, the original AngelPad funding came from 2 entities. TechStars spread it out wider amongst its network of VCs. Both firms were reacting to Y-Combinator, (hell, every accelerator is a reaction to Y-Combinator), but both quickly reacted and recognized the merits of the program. Lessons to startups: never be afraid to copy a good idea.

Funniest Twitter Feed in 2001: @fakedavetisch. He was only active for two days, but what a great two days!

Best business card execution: Any business card from moo.com that has a face with it. If you want to make a solid impression, you should consider these heavy, slightly different-sized, super high quality cards.

Runner-Up: Jeff Clavier's business card has a wordcloud that totally describes the types of companies he's looking for. It's a perfect summary of his investment interests on a tiny card.

Best business card app: CardMunch. With one iPhone snapshot, get all data entered into your phone and get connected via LinkedIn. (Also, my favorite angel investment of 2010 and the fastest exit I'll ever have.) Thank you Manu, Bowei, and team.

Best present for an Entrepreneur:

A T-Shirt or Poster from Fake Grimlock.

Best Bank for Working with Startups:

Silicon Valley Bank

Runnerup: Nobody. Almost every startup I've invested in (plus the one I'm in now) use SVB.

Best app I can't live without: Video Skype

I pitch my company with it, entrepreneurs pitch me on it, I talk business on it nearly every day. It saves time, money, everything. And you can archive and edit it. Runnerup for telemeetings: GoToMeeting. Never fails.

Best big push by a city to build a startup ecosystem: Montreal.

From very little in 2009, the startup tribe there has launched a new incubator last year(FounderFuel), gotten big institutional and government support from the province to create funds to match angel investments and subsidize programmers, built the largest angel group in Canada soon to be one of the largest in North America (AngesQuebec), hosted a successful first international startup festival, pulled off a successful startup competition, and created a vibrant co-working space (Notman House). And it keeps on going.

And now for the flipside:

Worst Spat of Two Co-Dependents:

Arrington and Calacanis. You're both rich, you're both successes, you don't need to piss all over each other. Guys, work it out and play nice, or even ignore each other. Just leave us out of it.

Worst Meme:

Comparing Silicon Valley to anywhere else. OK, we know it's great there. Yes, it is still on top. Yes, you can build a great business anywhere. Next.

Runners-Up: We are in a tech bubble.

VCs Suck.

Worst Upgrade since Windows Vista: iOS 5 on my formerly trusty iPhone 3GS. Buggy, crashes, mysterious data losses, I could go on. I promise from now on to wait to hear others' stories before installing updates.

Worst startup launch viewed from afar: Color.com. But don't ask me about it, ask the Scobleizer, who also wins a related Best Rant for his review of their launch.

Worst startup mistake: Having a big burn rate.

Runner-up: Procrastinating by reading (or writing) blogs. Excuse me, I gotta get back to work.

Who did I miss?  Anyone you think deserves a shout-out (or a call-out) for being the best or worst in 2011?  Please leave a comment.  

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13 Ways To Think About And Crush Your Competition

Posted by Jason L. Baptiste on Tue, Dec 27, 2011

A few weeks ago, there was an article that came out called "Google Currents, Onswipe's Nightmare?". I'm also preparing for our first board meeting with newly elected independents and one of the points we are talking about happens to be competition. As you start to grow competition becomes a healthy thing to think about. Here's how I think about competition as a cofounder and CEO of a growing venture backed startup:

Don't Worry About Google

Almost every growing startup comes to a point where they have to worry about "what if Google does it." If it is a market worth getting into, then Google or someone else as large as them will almost certainly get into the market. What you aren't remembering is the fact that it is probably going to be a smaller effort with little or no budget inside of the larger company. The main focus of any large company is their main profit driver, which is almost certainly not your startup's experimental business model. Microsoft, Google, and every other large company lacks the main asset of a startup: speed. By the time that a larger company really puts momentum and force behind competing against you, then the game is most likely over for them. Google took over seven years to truly compete against Facebook, which had 800 million users at that point. Everyone heralded Facebook Places as the end of Foursquare forever and that they should pack up shop. A year later, Facebook Places has faded into obscurity while Foursquare's traffic has soared. When a large incumbent comes into your space, largely ignore them and use the press for validation.

Find A Giant As An Ally

The enemy of my enemy is thy friend. If a giant such as Google comes into your market to compete against you, odds are one of the other giants are taking notice as well such as Amazon, Yahoo, Microsoft, Facebook, etc. . They might be planning to come into the market as well or already exist in the market with a flawed product. You should see this as the opportunity to partner with one of the other larger companies out there. You get massive distribution and they get the benefits of being in the space without a loss of speed or manpower. This route can also be one that leads to an acquisition at the end of the road.

Copycats don't have the roadmap

Before someone like Google comes along to compete with you, a slew of copycats will spring up. We recently had this happen with Onswipe as an unoriginal 100% ripoff popped up using our name to gain press with a shoddy product. Along the way, a copycat will constantly try to play fast follower by copying your latest and greatest feature. The problem is the fact that, copycats are always one step behind and often stay that way. They never started out creating the company as a problem they wanted to solve, but as a way to capitalize on the great opportunity that you shed light upon. The copycats will create confusion in the marketplace, which should be your greatest worry. Potential customers may ask how you are different than them. The way to combat this is to sell more than just the current snapshot in time, but the longer term vision. Since the copycat does not have your startup's longer term vision, you can out sell them.

Mis-education creates false competitors

If you are similar on the surface to another company, the press and potential partners may be fast to label you competitors. Many people think of Flipboard as a direct competitor to Onswipe. This happens because we both provide beautiful interface on the iPad, but our businesses are entirely different. The same false competition between Facebook and Twitter happened many years ago as both were thought of as Social Networks. Over time it has become very clear that Facebook and Twitter are two very different companies. To combat mis-education in the market, you should have a simple and clear 2-3 sentence reasoning of why you are different. Over time as both companies in a space mature towards their individual visions, it will become apparent to anyone the difference between the two companies. Up until that point, it will likely take a mix of explaining the difference to the market while having many one on one conversations.

Don't try to win on features

Competitors will try to constantly battle you by adding an incremental amount of features. It's tempting to want to constantly play a game of one-upping a competitor with features, but that usually results in a product that no one wants. It's the path that many tablet makers have taken when competing against the iPad. There is a constant game of one-upping on features like processor speed or 3D screens, yet nobody has even come close to overtaking the iPad in the tablet market. Why is this? Everyone is trying to BE Apple, not BEAT Apple. When it comes to features, march to the drum of your own roadmap and vision.

Price wars are a race to the bottom

Many entrepreneurs think that a competitor will come in and beat them on price. You may lose some customers, but in the long haul, a competitor can't be you by just being cheaper. If a competitor does come into your market and competes solely on price, do not be tempted to constantly lower your price to beat them. Instead you should fight on product quality and the true return on investment for the user. When it comes to a competitor that comes into your market and offers a product for free that you have charged for, then you may have a problem depending on what type of business you are building. If you are building a company built upon fast growth, then your business model may be flawed in the first place. If it's not, then you should dig in deeper as to why the competitor is offering the product for free. They will eventually have to turn a profit, whether it is by charging YOU or someone ELSE.

Speed wins

Larger companies are often slow, though large in size. They may ENTER your market, but they will often not have the speed to STAY in the market. Speed comes in a few different varieties when competing against a large company like Google or Microsoft. The first variety of speed is iteration. How fast can you iterate on a product after market feedback? A large company is going to have to stick to a much larger roadmap and won't be able to turn a ship on a dime. The second variety of speed is feature addition. Large competitors won't be able to add features as fast as you and will most likely be trying to play catch up to what you already have.

Focus on the normals

Pinterest has become a huge success and has < a href="http://allthingsd.com/20111222/pinterests-growth-hockey-stick-would-make-a-great-craft-project/">grown tremendously over the past year. The largest part of Pinterest's success story has not been its adoption by the inner circle of Silicon Valley or sex crazed college students, but those of women from Middle America. Most competitors will come into the market and try to create buzz amongst the early adopters of the tech community. Instead of falling into this trap, try to attract the normal users of the world ie- women in the midwest or a teenager that wants to find new music. It's hard to reach this audience and once you have a grasp on it, it will be hard for a competitor to come in and compete against you.

Cash matters when scaling

If you have started to grow and a new competitor comes into the market, it's wise to have enough cash on hand to really ignite your growth. Everyone thinks that products take off and that it's all taken care of. There are always financial barriers in place when rocket fueled growth kicks in. If you are lucky enough to hit that point, you want to make sure that you have the cash to leave your competitors in the dust.

You are your biggest competitor

You are often your biggest competitor. You should not completely ignore your competition, but the biggest battle happens inside of the four walls of your startup's office. Startups come down to pure execution of a strategy on a daily basis and maintaining the faith for the long haul. Most startups don't lose to competition, but because they lose the will to fight.

Avoiding the build versus buy problem

Many startups will not be competing with other startups, but with the internal development teams of their larger customers. Moveable Type lost the blogging wars to Wordpress by not moving themselves towards being a fully flexible platform. Instead of having conversations that are a build versus buy scenario where it's either your startup or your customer's internal development team, you should be positioning yourself into a build OR buy scenario. In order to do this, your product needs to become a platform that others can build upon to meet their needs. This will let you grow overtime to meet the needs of any customer without sacrificing your own roadmap. This will often require you to sacrifice some short term gains for long term sustainability. Any and all changes you make to your software have to be applicable to the greater good of the platform. That means no custom development and no bending to the wills of customers crazy demands.

Bring traffic to the table

The largest successes of the past few years have been audience driver. Twitter and Facebook have been killing search as a referral source, while YouTube has opened brought forth a new audience for professional and amateur creators alike. Tumblr has seen widespread adoption by major publishers due to the viral nature of the platform. Pinterest is getting adoption by mainstream fashion brands due to its ability to drive more traffic than Facebook. If you can bring traffic to your users, then they are going to be addicted to your service like crack cocaine. Once network effects kick in, a publisher is very unlikely to leave your service.

Bring money to the table

Most partners want two things. The first thing I touched on before, which is traffic. The second and most important is M O N E Y. If you can make partners money, then they are likely to side with you and stay when a competitor comes along. Cash is a powerful force and if your company can be a direct or indirect way for people to make money, then you are going to be hard to unseat. Everyone thinks that Google won the search wars by having JUST the world's best algorithm. They had a great product, but they gained distribution by powering search for publishers. With this, they were smart enough to make money for publishers and win the search wars. How have you dealt with competition in your space? Another interesting angle that I wish I could analyze is, what it is like to enter the market as a competitor to an existing incumbent. Whatever the scenario may be, the most important of the 13 lessons above is to remember that you are your own competitor. Keep fighting the fight and be prepared for the war, not just the battle.

You Should Follow me on Twitter: http://www.twitter.com/jasonlbaptiste, Friend me on Facebook: http://www.facebook.com/jasonlbaptiste, Email Me: jbaptiste@onstartups.com

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Visiting The Valley: Why It's A Special Place For Startups

Posted by Dharmesh Shah on Mon, Dec 12, 2011

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Insider Tips From HubSpot's Launch of Marketing Grader

Posted by Karen Rubin on Tue, Dec 06, 2011

The following is a guest post from Karen Rubin.  Karen is a product manager at my company, HubSpot.  I asked her to write this article sharing some of our "playbook" around launching new applications.  She loves getting new twitter followers: @karenrubin

Today, HubSpot announced the launch of a new tool called Marketing Grader. Like our other Graders, Marketing Grader is a free application.  It asks you to enter a website URL and returns a comprehensive report on your marketing efforts.  

The team has been building Marketing Grader for a number of months, and it is our most ambitious free tool since Website Grader debuted in 2006. The team knew it was important not just to build an awesome product, but to get the message out there, and to do it right. These are the tips and guidelines we followed to keep the launch on track.

Stay Focused & Simplify

Like many startups, one thing we never lack at HubSpot is ideas. As the team started brainstorming the launch campaign, there was talk of many different approaches we could take to announce the new tool. We could write a series of Top 10 lists or reveal the Top 100 Marketers. We could create personalized videos á la the Old Spice Man. We could somehow involve the HubSpot unicorn.  The list of possibilities was endless (as it often is in a good brainstorming session.) We spent a couple of weeks tossing ideas around and trying to figure out which would make the biggest splash and launch the tool to the most fan fare.

But a couple of weeks into the planning, we realized that the main message we wanted to get out, namely, that HubSpot was launching an AWESOME new tool to grade your entire marketing funnel, was getting lost in all the other cool things. Top 10 lists go really well with Marketing Grader (since the tool can be used to build and analyze such lists).  But were people just going to remember that we were doing new lists? Or that those lists were backed by a super cool new tool called Marketing Grader?

We decided to take a step back and regrouped around the idea that the launch of Marketing Grader was the real message, and that we needed to simplify in order to effectively communicate that message -- especially in the first month. It doesn’t mean we won’t try our other ideas (some of which are a bit crazy) in the future, it just means this month everything we do is laser focused on our top message.

Making Our List, Checking It Twice

Once we focused on our message, we had to think about what tools we were going to use to get the message out there. Some were easy; we’d use the blog, our email list and the other Graders to drive people to Marketing Grader. Others needed some more thought.

For social media, we could tweet about the new tool and post its launch to Facebook, but we thought that this wasn’t enough to get the message out there. So we put a plan in place that included personalized tweets to influencers as well as previous users of the Grader tools. We are also planning to participate in multiple Twitter chats, a new mechanism we have recently started experimenting with.

When planning a campaign, it also helps to think of people as tools (we mean that in the nicest way possible.) We came up with a list of bloggers and journalists with whom members of our team have relationships.  We then identified the best people to reach out to them personally, introduce them to the new tool, and answer any of their questions. We also planned ways to get our customers and partners involved with using and sharing the tool.

It Takes An Entire Company To Um, Raise Launch A Product

Lastly, we realized it wasn’t enough for just the few of us working on the tool to promote it during its launch; we needed to get the entire company on board. We sat down with the marketing team and brainstormed ways to get everyone involved. This includes writing special blogs posts (like this one), creating infographics, running competitions for our partners, integrating the message with other campaigns and making related videos to promote the tool. By including the company in the campaign, people thought of new and innovative ways to get the message out and implemented these ideas on their own.

We trained our consulting, support, and sales teams on the tool so they can start using it with customers and prospects. We also came up with a sales contest to encourage the sales team to share the tool with as many of their leads in their funnel as possible. The day of the launch, we sent an email to the entire company reminding them of the launch and giving them some lazy tweets to share with their networks.  For the twitter rookies out there, a "lazy tweet" is when you provide a sample tweet, fully written, so that someone who is inclined to help you, but a tad lazy/busy, doesn't have to think.  They can just copy/paste the tweet or retweet an existing tweet.  The easier you make it to help you, the more people do.

Launching a new tool like Marketing Grader takes blood, sweat, and tears, but the result is a tool that you’re so proud of, you want the whole world to see. That result makes the process of properly launching your new tool all the more important. we wanted to give Marketing Grader every opportunity to get out there to the public and be a rocking success. Staying focused, using all your tools and resources, and leveraging the skills of everyone in your company are great ways to get your new tool the publicity it deserves.

Here are answers to some questions we think you might have.  

Why the big hoopla over the launch this time?  Usually, HubSpot trickles out grader tools with an inocculous tweet from Dharmesh.

You're right.  In the past, we've been much more subtle and measured when we launch a new grader product.  This is largely because our new grader tools are often a crazy experiment -- we're not sure whether the market actually wants it or not.  By avoiding a big launch, we avoid a big "unlaunch".  In the case of Marketing Grader, we've had lots of evidence from our customers and friends (who have tried the tool) that it is super useful.  We've made a big investment in this app, and we wanted to match it with some marketing.  And, like all things at HubSpot, this is an experiment too.  We wanted to see if we could reach people beyond our co-founder Dharmesh's twitter followers (which admittedly, is over 100,000 now).

How did you build your media contact list?  What tool did you use to manage it?  We try to keep things simple at HubSpot.  Our media contact list is a simple Google Spreadsheet.  The people on the list are a combination of folks that we know individually and someone on the team has some relationship with.  Now that we've got another twitter celebrity (Laura Fitton, aka @pistachio) who happens to know just about everyone, our VIP list was bigger and better than ever.

Why use Marketing.Grader.com on its own domain?  Wouldn't the SEO have been better to put it on HubSpot.com?  We basically had three choices when picking domain names for our free tools.  We could use HubSpot.com -- which has advantages, including brand-building and SEO.  By launching on HubSpot.com, the Marketing Grader page would get some SEO authority relatively quickly because of the power of the main domain.  Another option would be to put it on a completely separate domain, like MarketingGrader.com.  But the option we picked is to use Marketing.Grader.com (so, make it a subdomain of grader.com).  This approach has a couple of advantages.  Getting a sub-domain of an established main domain to start ranking is much, much easier than a completely new domain.  And, since we use this model for our other free tools, our users are already used to it.  (But, of course, either domain will work -- one simply redirects to the other).

What's the difference between getting all of these efforts to happen on the same day?  Couldn't you have easily just "spread them out" over time and gotten he same level of overall usage?  This is a tricky one.  For the most part, you are right.  Rather than have 20 things happen all on the same day (which is a challenge to orchestrate) we could have spread the news out over days and weeks.  The advantage to trying to "compress" some of the news into a smaller window is that there's the potential for the news to hit a "tipping point".  If news of the launch hits several different channels, all around the same time, it gets "noticed" by other channels that we didn't have direct access to.  Those people then might write about it, causing more people to see it.  We get a snowball effect.  Doesn't always happen, but it's much more likely that it will happen if we can get some strong media pickup all on the same day.

 It's not fair!  You folks have a reach of millions.  How can my tiny little startup match that?  It's a good point.  We do have exceptional reach, across many different channels. That makes our jobs much, much easier.  It's fun to be able to put something new out there and know that it's going to get some attention.  Our advice to you would be two-fold:  You don't have to have a massive reach to get attention.  (We had some great successes even when we were a struggling young startup).  The key is to be remarkable and even more importantly, create useful content.  For example, if this article were written like a standard marketing schpiel, it would never have gotten posted to OnStartups (despite the fact that Dharmesh is one of our founders).  By wrapping the "nugget of news" in a nice, useful layer of tips, tricks and lessons learned, the article becomes something people (hopefully) want to read.  Maybe even share.

Does Karen Rubin actually exist or did Dharmesh just conjure up an attractive, charismatic persona as part of some weird A/B test he's running?  Attractive and charming?  Oh, Internet reader, you flatter me so (batting eyes in best impersonation of Scarlett O'Hara).  But rest-assured, I do actually exist.  What you don't know for sure is what parts of this article were part of my original submission, and what parts are late-night edits from our crazy co-founder.  I'll leave that as an exercise for the reader.

So, what questions do you have?  What can we tell you about the HubSpot marketing machine and how we do things?  What lessons have you learned launching your own apps?

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Cult of Product: Marketing Isn't Just For Losers Who Pay For Sex

Posted by Dharmesh Shah on Wed, Nov 30, 2011

The following is a guest post by Mike Troiano. Mike is a former New York ad man turned venture-funded entrepreneur, now a Principal at Boston-based Holland-Mark.  You can follow him on Twitter at @miketrap, and connect with him elsewhere through About Me.

Product, product, product. More focus on product was at the center of Brad Feld's comments at last week's Silicon Valley Bank CEO event, in response to a question about what he'd do differently if he had it to do over. More focus on product is at the core of the Lean Startup Revolution we're all getting behind, and in the spine of the Steve Jobs bio we're all reading, and in the frequent posts of the startup bloggers we all pay attention to.

And it's all true. Product is the key, at the very center of building a viable business from nothing. And by implication, marketing is so 15 minutes ago. Marketing is for products unworthy of passionate advocacy, a crutch for nice-to-have startups who invest in sprawling web sites and launch parties like losers with no choice but to pay for sex.

I spend a lot of time fighting this perception, talking about the difference between the kind of strategic marketing that can corrupt your vision with the external reality, marketing communications, which consists largely of the promotional sham-ware of the mid-twentieth century.

But you know what? I'm giving all that up. I'm going to take another approach, one I think will resonate more clearly with the Cult of Product sub-culture which seems to be sucking all of the oxygen out of the shill-o-sphere.

Ready? Here it is: You should focus on the desired response to your product, not just on the product itself.

Why must you focus so intently on your product? Isn't it because you want people to respond to your product in ways that propel your businesses to greatness? Isn't your product, then, a means to an end? Isn't it a stimulus hoping to evoke the right response on the part of the customers who buy it?

In a very real way, I'd argue yes. More than that, I'd argue that the primary dimension of product response that propels businesses to greatness is emotional response.

What do great un-advertised, Billion-dollar brands like Dropbox, Facebook, and even (until recently) Google have in common? We love them. They make us feel respectively Liberated, Connected, and Empowered in ways that enrich our lives. They make us grateful, make us want to share with others. A brand is nothing more than an emotional response out there in the world, but building brands with products instead of print advertising doesn't make them any less important, or any less worthy of early focus, thoughtful strategy, and effective execution.

It's becoming a cliche to say your product is your marketing, in an era where customers trust each other more than they do media. Well if that's true it might be time to bring a little more marketing into your product, in the form of treating the softer science of brand development with the same respect you give the harder sciences of product management and engineering.

What do you think?  Where do you stand on the Cult of Product? Would love to read your comments.

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12 Things Entrepreneurs Should Be Thankful For

Posted by Dharmesh Shah on Wed, Nov 23, 2011

A simple thanks to all the people that have made it possible for me to be an entrepreneur.  There are few more fulfilling things in life than finding one's calling.  And, for millions of entrepreneurs around the world, that's precisely what it is.

A special thanks to all the people that have joined existing startups and small businesses.  Joining an existing effort requires risk and a degree of selfnessness.  You are all entrepreneurs in my book for one simple reason:  You're crazy enough to join a merry band of misfits even though it makes absolutely no sense.  You're my kind of crazy.  Cheers.

12 Things Entrepreneurs Should Be Thankful For

1. Customers.

2. Getting to pick the exceptional people we work with.

3. An opportunity to add value, big or small, to people's lives.

4. Not having to ask permission to try something crazy.

5. The patience and understanding of our family and friends — especially when we likely don't deserve it.

6. Receiving payment for value delivered. There's no feeling like it.  

7. The joy of seeing a sliver of light after some dark, dark, days.

8. The freedom to change what's not working. It's sometimes painful, but at least it's possible.

9. Not having to rationalize to your family and friends why you took that Wall Street investment banking job.

10. Day 2,743, when the world celebrates your “overnight success”

11. The pleasure of helping team members create memories and experiences that will last a lifetime.  Most of them good.

12. The chance to try. To fail. To try again and flail around. Then, with some luck, to flourish.

Your turn.  What do you think entrepreneurs should be thankful for?

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DON'T start a company...yet

Posted by Dharmesh Shah on Mon, Nov 21, 2011

Instead, go join someone else's early stage company as employee #3-50 (or so).   The experience you'll get over the next few years will be invaluable, and you'll be in a far better position for success when you decide to leave and start your own company.  You'll see many processes (e.g. fundraising, product management, leadership, etc.), you'll learn from mistakes (yours AND other's), and you'll build a great network of contacts.

There's just nothing like learning on the job, in context, from those with more experience than you.  There's a reason why the apprenticeship system has been the dominant method, for over a half-millennium, to pass the experience of a trade or craft to the next generation.

I sometimes encounter startup teams that are thrashing on basic things, and it's almost always because they're lacking experience.  Skill is a combination of (a) knowing what to do, and (b) knowing when/where/how to do it.  The Internet is a seductive source of "what", but isn't a substitute for judgement.   Reading someone's blog post on their Agile development principles is helpful, to a point.  But remember:  these anecdotes are necessarily simplified and abstracted, and are missing important bits of context.  Someone else's experience may not translate to your situation.

I am not an astronomer, but I long ago remember reading the fastest way to grind a good 12-inch telescope mirror was to first grind a 6-inch mirror.  Few builders are successful grinding the larger mirror as their first project, and that's sound advice for startup entrepreneurs as well.

What do you think?  Is better for would-be entrepreneurs to just "jump in" or is there value to spending some time learning the ropes at another startup first?

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