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

By Dharmesh Shah on January 2, 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.mastering the vc game

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.mixergy andrew warner

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.mark suster

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:

techstars, 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.ycombinator

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

By Jason L. Baptiste on December 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

300 competition startupsAlmost 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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