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Startup Data Companies

Startup Compass raised $3M in Series A Oct 2014.  Mattermark closed their Series A in Dec 2014 at $6.5M.

Both will fail.  I have already been through both of these and know the flaws in each of their strategies.

Mattermark will coast on investor backing for awhile, but will eventually be overthrown by new market entrants.  The first to market is always overthrown.  The company is too transparent with their information, too many weaknesses (which is part of the problem with making private company data public & why most entrepreneurs are against it).  The hard part will be for new market entrants to take their customers, seeing as though many of their customers are also their investors.  It protects them to a certain degree.

Startup Compass, is tackling Mattermark’s core weakness: the fact that they are just reorganizing data.  It’s not new data.  Startup Compass will end up failing though because A) they’re simply repacking the data for investors, and aren’t being shy about it B) Most failure occurs before a startup is a real “startup”.  Startups don’t produce data yet to benchmark against other startups.  This is pretty obvious.  Between 0-20 employees, you’re just winging it through your internal networks.  You don’t really get “tested” by the market until it comes time for you to venture outside your safety zone (network).

Most entrepreneurs are smart enough to know this.  It’s truly not rocket science.  Those are the one’s who are going to be building high growth companies to begin with.

Another startup popped up, called Signl.  They’ll die too because you can’t rate companies based on public social data.  I know high growth companies pushing $10M in annual sales their second year, with only 300 likes on Facebook.  What would this company score, an F?

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It’s Only Spilled Milk. Managing ADHD in Women and Business.

People with ADHD are 3x more likely to start a business.  They thrive in disruptive situations.  Often ignore details.  And 80% of those diagnosed are men.  It’s lonely being an ADHD woman in business.

Even out of that 20%, why do so few women make it into business if we are born for entrepreneurship?

Most of our issues lie in societal roles, and I think this is why I love the team I’ve joined (there is no societal role because geeks don’t understand roles anyway lol).  The symptoms of ADHD, are typically male oriented symptoms:

  • Aggressive
  • Persistent
  • Risk Taker
  • Big Pictured
  • Provider
  • Impulsive

Women with ADHD are no different, regardless of our vaginas.  We often exhibit the exact same traits as the men, except they are “toned down” a bit in comparison to our male counterparts.  We’ll probably be more careful with money.  We’ll probably think twice before making that investment.  People often first see what appears to be a shy, quiet day dreamer.  Only to find a big risk taker and emotional individual full of ambition and vivid imagination, under the surface.  Point being, there’s a lot of opportunity that’s overlooked in us.

Men with ADHD on the other hand, are typically encouraged to build support systems around them so they can utilize their skills.  I’ve watched many men with ADHD build themselves into multi-millionaires simply by having a support system in place.

In society, however, women are typically called upon to BE that support system.  This is why women with ADHD have a harder time achieving success then their male counterparts.  Not only this, but other women often don’t like women who aren’t support systems in their roles.  People look at you funny if you have to hire another woman to help you take care of your kids & home.  Egotistical…I believe, is what someone called it?

Kathleen writes in ADHD in Women (it’s the best article I’ve seen yet on this), “Don’t hang around other women who don’t understand your problems”.  I guess the same can be said for anyone though.  

In an article I was reading on Women 2.0, they were speaking about “women in business” problems.  And in the comments the female entrepreneurs, one woman says “I can sum up all your research into one sentence: the problem is men don’t take care of their fucking kids”.  Well, at least we’re blunt 🙂

So how do you manage us?  You manage us just like an ADHD male:

  • Don’t obsess over corrections and details.  We have to delegate it.
  • You can’t offend us.  Because we forget the next day anyway.
  • Don’t ever lead with control.  ADD people are highly sensitive to being controlled.  Rebellion will ensue 🙂
  • We speak in an abstract language, not literally like our aspie cousins.  But we also struggle with social issues, fitting in.
  • Contrary to popular belief, we don’t like to control people.  As long as we’re healthy minds, our purpose is always to GROW, build, delegate to competent people, move forward, and have more playtime.  We can’t get more playtime by controlling everyone.
  • We feel at peace when things are crazy and changing.  When they’re slow and detail oriented, we become frustrated and shut-down.
  • Some of us do appreciate rules and routines.  I would say “flexible rules and routines”.
  • Depression?  It happens with ADHD.  Usually about once every few years, and will last 1-6 months until a big enough change occurs that will shake us out of it. 
  • When teaching, don’t lecture.  We’ll zone out.
  • Ask questions.  Lots of questions.  We’re curious people, who are stimulated by new experiences and exploration.  A question forces us to ponder things because it’s an open ended statement.
  • It is extremely hard to stimulate yourself with ADHD.  Aspies do stimming, ADHD people do stimulating.  Probably the first 2 hours of my day are spent solely trying to stimulate myself (excersising, swimming, eating protein, drinking coffee, visual stimulation, videos etc etc).  While it seems like pointless playtime, this is required to activate my brain.

That’s all I got for now…

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Why people with ADHD become entrepreneurs

There is a guy on YouTube who self proclaims as ADHD.  His name is Jerry.  At first glance, he looks like a hipster who’s constantly bouncing around from subject to subject.  He says “ADHD people are never bored!  If you are, you don’t have ADHD!”  Looks at his popcorn “everything is interesting to me, even the popcorn…yum yum yum”.

He’s obviously an unconventional hyper, overstimulated kid, yes.  But I would doubt Jerry has real ADHD.  He likely is suffering from excessive dopamine, where everything interests him and captivates his motivation. He’s probably been misdiagnosed.

Real ADHD is just the opposite.  It’s a motivation disorder.  A real “ADHD’er” wouldn’t even have the motivation to make this video, because the payoff wouldn’t be large enough.  ADHD is medically defined as a chemical imbalance in the brain, known as low dopamine.  This is why scientists developed stimulants for it.  The surge of ADHD cases in the US is caused by a false label that hyper or extroverted= ADHD. 

Low dopamine kids are actually usually always bored, often appear lazy/unmovitated, and have trouble finding anything that will interest them enough to sustain their attention.  Yes, that excluded popcorn, Jerry. 

The classic ADHD kid is squirming on the floor, frustrated, saying “I’m so bored Mom…”.  Mom says “well go find something to do, play with your toys, go outside”.  ADHD kid says “I can’t”.  And continues to lie on the floor frustrated.

They truly can’t. It’s because it’s not stimulating or challenging enough to increase their dopamine levels.  Without a boost in dopamine, it’s not even motivating enough for them to go do it.

This is why people with real ADHD gravitate toward high risk entrepreneurship.  The risk and opportunity is what triggers enough dopamine to actually motivate us to go do it.

Russell Barkley explains what really happens.  ADHD is also not a mood disorder, like Bipolar.  It’s not a lack of ability to see things from anothers perspective, like Aspergers.  It’s a mood regulation disorder.  The emotions they experience are very real, and justified.  They just don’t filter them.  It’s emotionally impulsive.

“Everyone else thought in their mind to throttle the supervisor following an insult.  The ADHD person actually did it, and got fired”.  Ha.  Now that’s, ADHD.

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Why Women Entrepreneurs Aren’t in Venture Capital. It’s Probably not why we think.

Does anyone else notice how the studies coming out will just say something like “only 3% of VC backed companies have female founders”?

Why don’t they ever calculate how many female founders are actually looking for VC funding, and then out of those…how many of those businesses actually are attractive to venture capital?

I do believe these ladies stories about bad experiences.  That makes sense to me because there is a supply and demand theory in play.  If there’s not a lot of women out here, the likelihood of an incident is high because supply is low.  Nothing more then statistics and common sense to come to that conclusion.  If you’ll notice in one of the articles I posted, a woman said “I was the only woman at the event…”.  Had there of been more then one woman, her odds of being targeted would of been greatly reduced.

Noticed quite a few other statements in the articles as well: “I met him at a NY angel event”, “entrepreneur & investor”, then the guy who’s emails where plastered all over Tech Crunch was posing as a “mentor” for these young ladies at accelerators and incubators.

These statements all indicate these aren’t really VCs.  These are inexperienced investors and middlemen posing as “mentors”.  Kind of like pedis haunting the playground is exactly what it reminds me of 😉

In a way, I feel very badly for these women.  When “investors” are approaching them about their “business”, it makes them believe they have fundable companies.  When in fact, they may not.  They may never realize that their companies or ideas really need to make a pivot or gain more traction in order to be “fundable”.  “Investors” approaching them acts as validation.   

For example, one of the company’s raising money was a “kids event app”.  I’ve seen women pitching pet shop apps, and the like.  In that same article, they say “VC’s often only invest in companies they can relate to.  VC’s can’t relate to these companies”.

No, they invest in companies that can make real money, with big markets.

It seems to me what needs to happen, is simply learning how to do due diligence on perspective investors.  This is something not alot of people talk about.  They need to make sure the person they’re going to meet can actually fund that company.  This problem is crucial for females to learn:

  • How large the fund is
  • When the fund was raised
  • Is the fund active
  • How many companies have been invested in out of that fund
  • What is their reserve ($2 for every $1 invested?)
  • What other companies have they invested in
  • What do those portfolio CEO’s think of that investor

These are all basics of due diligence on investors that will tell you whether or not you’re wasting your time.  Also many investors look for deal flow before they close their new funds.  If their fund is looking maxed out & they’re taking a meeting with you, they might be getting ready to close a new one.  Usually they’ll tell you, if they don’t ask what quarter they plan on closing.  If it aligns with your capital needs, then go.  If not, then move on to someone else.

As a whole, investors are pretty good about giving you signals to let you know where the gaps are.  If you can get their attention, they reward you with a Linkedin Connection.  If they like your one-liner, they reward you with a “send me your deck”.  If they like your deck, they reward you with a “you can meet me”.  If they fall off at anytime during this process, for example, they don’t like you’re deck, they won’t progress you to the next step.  This should be a clue to you that’s where your problem is.  And many of them will review your team and market before even speaking to you in the first place.

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CEO Brain Transplants.

Steve Blank writes a really good article on the differences between founders, founding team, and founding CEO’s.  He states:

What sets them apart from the rest of the team is that they can project a fearless reality distortion field that they use to recruit, fundraise, pivot and position the company.

While the rest of the team is focused on their specific jobs, the founding CEO is trying to solve a complicated equation where almost all the variables are unknown – unknown customers, unknown features that will make those customers buy, unknown pricing, unknown demand creation activities that will get them into your sales channel, etc.

The CEO role is most often times lonely.  It is the nature of the beast- I like to call it market facing leadership.  Alone in front of the world.  You’re never truly involved on the inside of the company.  Yet you have to maintain a constant involvement in it- to marry the external with the internal.  You are alone in your chaos, your goal is to return back to your team with a clear and definite path. 

The founding CEO’s role is never really just to fundraise.  And it kinda bothers me when people think this.  That would be a consultant.  A founding CEO’s role is actually to search for, identify, and scale a repeatable business model.  This is different then product and technical innovation (but yes, there are fantastic product CEO’s as well!  You can always identify a product CEO because they always have the VP of Product nearby). 

With the realization and achievement of this business model, then brings investors and employees who beat a path down to that company’s door.  That does involve recruiting, fundraising, pivoting, and positioning the company…yes.  But it is again, merely an off shoot of the CEO’s core focus which is the business model.

So a founding CEO’s role…

  • Search for, and scale repeatable business model.
  • Recruiting
  • Fundraising
  • Pivoting
  • Positioning
  • Moral Authority
  • Management of investors

Bringing in a new startup CEO is in many ways, similar to a brain transplant.  Understandably very painful.  And leaves many wondering…how does this even work exactly?  Of course everyone beats their heads up against a wall…we’re transferring brains.  The strong persist.

The transfer of knowledge so the CEO can lead with Moral Authority, absolute certainty, and long term commitment.  These are the specific advantages founding CEO types can offer a startup over professional CEO types (re Reid Hoffman).

The willingness to trust, risk, and embark on a long term commitment with a new CEO though, must always come from within the founders.  It is not something that can, or should, ever be forced upon by external investors.  There must be trust- and commitment established   beforehand with CEO’s and their teams, to prepare for external negotiations.  Without this, founders will always be left in a position of questioning the motives of others.  They should never have to do that.

That’s all my thoughts for today.  Happy Tuesday and day-in-the-life-of-entrepreneur 🙂

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The $5 Challenge

So much can be achieved when you can read between the lines…

What would you do to earn money if all you had was five dollars and two hours? This is the assignment I gave students in one of my classes at Stanford University, as part of the Stanford Technology Ventures Program… Each of fourteen teams received an envelope with five dollars of “seed funding” and was told they could spend as much time as they wanted planning. However, once they cracked open the envelope, they had two hours to generate as much money as possible. I gave them from Wednesday afternoon until Sunday evening to complete the assignment. Then, on Sunday evening, each team had to send me one slide describing what they had done, and on Monday afternoon each team had three minutes to present their project to the class. They were encouraged to be entrepreneurial by identifying opportunities, challenging assumptions, leveraging the limited resources they had, and by being creative.

What would you do if you were given this challenge? When I ask this question to most groups, someone usually shouts out, “Go to Las Vegas,” or “Buy a lottery ticket.” This gets a big laugh. These folks would take a signifi cant risk in return for a small chance at earning a big reward. The next most common suggestion is to set up a car wash or lemonade stand, using the five dollars to purchase the starting materials. This is a fine option for those interested in earning a few extra dollars of spending money in two hours. But most of my students eventually found a way to move far beyond the standard responses. They took seriously the challenge to question traditional assumptions—exposing a wealth of possibilities—in order to create as much value as possible.

How did they do this? Here’s a clue: the teams that made the most money didn’t use the five dollars at all. They realized that focusing on the money actually framed the problem way too tightly. They understood that five dollars is essentially nothing and decided to reinterpret the problem more broadly: What can we do to make money if we start with absolutely nothing? They ramped up their observation skills, tapped into their talents, and unlocked their creativity to identify problems in their midst—problems they experienced or noticed others experiencing—problems they might have seen before but had never thought to solve. These problems were nagging but not necessarily at the forefront of anyone’s mind. By unearthing these problems and then working to solve them, the winning teams brought in over $600, and the average return on the five dollar investment was 4,000 percent! If you take into account that many of the teams didn’t use the funds at all, then their financial returns were infinite.

So what did they do? All of the teams were remarkably inventive. One group identified a problem common in a lot of college towns—the frustratingly long lines at popular restaurants on Saturday night. The team decided to help those people who didn’t want to wait in line. They paired off and booked reservations at several restaurants. As the times for their reservations approached, they sold each reservation for up to twenty dollars to customers who were happy to avoid a long wait. As the evening wore on, they made several interesting observations. First, they realized that the female students were better at selling the reservations than the male students, probably because customers were more comfortable being approached by the young women. They adjusted their plan so that the male students ran around town making reservations at different restaurants while the female students sold those places in line. They also learned that the entire operation worked best at restaurants that use vibrating pagers to alert customers when their table is ready. Physically swapping pagers made customers feel as though they were receiving something tangible for their money. They were more comfortable handing over their money and pager in exchange for the new pager. This had an additional bonus—teams could then sell the newly acquired pager as the later reservation time grew nearer

Another team took an even simpler approach. They set up a stand in front of the student union where they offered to measure bicycle tire pressure for free. If the tires needed filling, they added air for one dollar. At first they thought they were taking advantage of their fellow students, who could easily go to a nearby gas station to have their tires filled. But after their first few customers, the students realized that the bicyclists were incredibly grateful. Even though the cyclists could get their tires filled for free nearby, and the task was easy for the students to perform, they soon realized that they were providing a convenient and valuable service. In fact, halfway through the two hour period, the team stopped asking for a specific payment and requested donations instead. Their income soared. They made much more when their customers were reciprocating for a free service than when asked to pay a fixed price. For this team, as well as for the team making restaurant reservations, experimenting along the way paid off. The iterative process, where small changes are made in response to customer feedback, allowed them to optimize their strategy on the fly.

Each of these projects brought in a few hundred dollars, and their fellow classmates were duly impressed. However, the team that generated the greatest profit looked at the resources at their disposal through completely different lenses, and made $650. These students determined that the most valuable asset they had was neither the five dollars nor the two hours. Instead, their insight was that their most precious resource was their three-minute presentation time on Monday. They decided to sell it to a company that wanted to recruit the students in the class. The team created a three-minute “commercial” for that company and showed it to the students during the time they would have presented what they had done the prior week. This was brilliant. They recognized that they had a fabulously valuable asset—that others didn’t even notice—just waiting to be mined.
Source: The $5 Challenge! |What I Wish I Knew When I Was 20: A Crash Course on Making Your Place in the World: Tina Seelig

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Why I Love Sindhya Valloppillil Kalghatgi

VC’s think my boobs needs algorithims” girl.

Everyone is scared of her, but I just love her.

She wrote a new article again.

“Startup funding is not charitable donations for VC cronies!  Stop funding your cronies!“

You only hate her because she pointed it out.

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Week 2 of Squatting

I’m much more productive in the new office, but feeling a bit like a squatter. I ate 2 pieces of candy from their candy bowl. It’s given me a sense of normalcy and routine though.

Meanwhile spoke to a consultant and she was able to analyze various angles in about 15 minutes. I’ll likely be involving her frequently over the next few months as we relaunch.

This week my goal is to build out the model, and break it down into roles/goals.

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The CEO War: Sprint vs T-Mobile

Has anyone else been watching the Sprint CEO Marcelo, and the T-Mobile CEO John, battle it out since the buyout collapsed?

It’s HILARIOUS.  John coined the twitter hastag: #sprintlikehell and Marcelo has been counting the numbers of customers they’re stealing from T-Mobile.

Go Marcelo!  WIN that business!  Further evaluation is needed, but John seems to be taking the douchebag approach thus far:

I kinda want to root for John.  I did get him though, when he got up on that stage and said the F word, bullshit, etc.  When the media looked shocked, he said “I’m relating to my customers!”  That was kind of funny.  Ok, so one point for him.

On the other hand, there was the FTC investigation and the failed deal.  Alright, yeah, let’s keep voting for Marcelo.

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Prophecy Science confirms: I am an entrepreneur.

I have lol’d.

Have you guys taken that Prophecy Sciences test yet?  Look at my results:  I “play like an entrepreneur”.  Whew 🙂 I was beginning to think I was an attorney…send me yours so we can debate our accuracy.

image

It says: “Entrepreneurs are 23% more likely to have highly variable decision times, whereas athletes – and people with very competitive personalities in general – are 22% more likely to have invariable, almost mechanically consistent times.”

Has anyone gotten a VC or scientist result?  I’ll finish taking the tests.

On Choice, I got Venture Capitalist with 760 points.  71% Risk Appetite and 76% Value Maximization.  After a win, I have 2.9 seconds till recovery.  After a loss, I have 3.4 seconds to recover.  So according to this, the variable is caused by the gut trying to reevaluate the game.

“The time you spend making your decision depends on lots of things: how similar or different the options are, whether you’re trying to do math in your head, or maybe what your gut is telling you. They might even change following wins (when you scored the higher number in the spinner) and losses (when you scored the lower number). Mathematicians and lawyers have the least variability in their decision times, while entrepreneurs and venture capitalists have more variability.”