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Female Founders: What the numbers mean and what they don't Thisisgoingtobebig Apr 14, 2014

Last week, there was a Business Insider article measuring the percent of female founded companies that NYC seed funds invest in.

Brooklyn Bridge Ventures came in first, with a whopping 61%.

Lerer Ventures was second, with just under 20%.

So, clearly, I'm making some kind of a portfolio-wide bet there, right?

Nope.

Well, it's gotta mean something, right?

Nope.

The funny thing about stats is that you can basically come up with a stat to justify any argument or position--and the whole female founders in tech conversation has a ton of numbers that people put out there as various types of proof and justification, or blame.

You would probably be surprised on where my views are on some of those conversations.

Take the most widely used number--that way fewer women are getting venture funding than guys. That, statistically, is true. It also doesn't take into consideration many important factors:

One, venture backed companies are a tiny hiccup in the grand scheme of entrepreneurship. Most companies don't ever raise venture capital and they do just fine. I scratch my head over why raising venture is put on such a podium. Do we discount the billion dollar company that Sara Blakely built at Spanx because she didn't raise venture, instead opting to start the company with $5k of her own cash? That's just silly. If we look at the larger pool, women run around 30% of the businesses in the US, and they equally co-own just under 20% on top of that. So women own or co-own almost 50% of all the businesses in the US. That's a much better picture of female entrepreneurship than the 2-4% of venture capital dollars going to women.

The main driver of the skew towards men getting venture capital, statistically, is that far more men are pitching. Of course, you can take into consideration all sorts of things like encouragement, perception--like what would you think your chances were if you see that a firm has never funded a female--but the fact remains that onc [...]

This is How Startups “Level Up” After Raising Money Bothsidesofthetable Apr 10, 2014

One of the interesting things about being a VC is that […]

How to Make Better Reference Calls

How to Make Better Reference Calls Bothsidesofthetable Apr 7, 2014

Reference calls. We all have to make them. Whether you& […]

MA: Lets Nix The Non-Compete Here So We Can Compete Better Everywhere Onstartups Apr 10, 2014

The Boston Globe reported this morning that Governor Deval Patrick will propose today a sweeping legislation to make it easier for workers in technology, life sciences, and other industries to move from job to job by banning the non-compete agreements companies use to prevent employees from jumping to rivals.

I for one have been a proponent of just such a move — I think it's been a long time coming.

There's expected to be some conflict as large companies continue to try and maintain this antiquated model of limiting worker mobility despite the fact that there is clear evidence this hinders innovation and in the long-run doesn't help anybody.

California and New York, both regular members in the rankings of top states for venture capital and startup innovation made this change years ago and have been using it to recruit some of the best people from some of our best companies ever since. There's no evidence that abolishing non-competes has hurt them — quite the contrary.

Here are the reasons why we should support this proposal to kill non-competes in MA:

1. Companies should have the right to protect their intellectual property and their people. As it turns out, they already can with non-disclosure agreements and non-solicitation agreements neither of which will be effected by this change.

2. We're forcing innovation out. The best and brightest want to work in an ecosystem that maximizes the impact and influence of their work. By artificially constraining where they can take their expertise we are causing unneccessary friction. Friction that will cause more talent to leave for more innovation-friendly states.

Here's the irony: Non-competes do limit competition. They limit the ability of our innovation economy to compete with the likes of California.

3. Although some companies may think that non-competes are helping them, their value is questionable at best. Having a standard non-compete in place is one thing — actually trying to enforce it is ano [...]

Where's the seed? Thisisgoingtobebig Apr 7, 2014

The other day, I met up with one of my favorite investors. We talked about some deals we had done and this investor brought up how they weren't really doing true first money in anymore. Instead, they said that entrepreneurs should raise 200-300k on their own and get something up and off the ground first with traction and that they'd rather wait to see where that goes.

That was on the heels of another conversation I had with an investor whose firm was about to raise a larger fund. It was a big next step for them, but it also meant that putting 200k of 750k in a person and half a prototype wasn't going to be the kind of round they could do anymore. They were effectively out of the seed game.

I've seen this happen over and over again in New York over the last few years. Seed really doesn't scale--and like any good startup, VC firms themselves are looking for ways to leverage themselves and get to scale. Picking out the one great entrepreneur out of the sea of way too early startups is incredibly hard, requires a lot of sifting, and you can't put that much money to work anyway.

So why bother?

It makes sense, except when I square it with my own personal experience. Some of my best investments have been in this way too early stage. GroupMe was done right out of a hackathon. Canary barely had a prototype for just the hardware and hadn't done its record setting pre-sale yet. Tinybop was just a guy and an idea.

The interesting thing out of those rounds is that many of them either struggled at the time to raise or would struggle today. Many of the original GroupMe investors probably would see that deal as being too early if they were raising now--and the Canary and Tinybop rounds have a mishmosh of non-traditional investors and angels mixed in. The latter two firms don't have any other traditional seed funds invested in them in their first rounds.

The seed fund feels like a very temporary animal these days. No one wants to stay at this level. Many of the peo [...]

Helping Startups Understand Salespeople & the Sales Culture Bothsidesofthetable Apr 3, 2014

Most technology startups seem to be funded by product p […]

How to Deliver More Software Projects On Time

How to Deliver More Software Projects On Time Bothsidesofthetable Apr 2, 2014

There’s an old joke in software development, R […]

How You Know You’ve Got the Right Startup Model?

How You Know You’ve Got the Right Startup Model? Bothsidesofthetable Apr 1, 2014

If you’ve watched any industry in the last 20 yea […]

Why I applied to the Union Square Ventures analyst position Thisisgoingtobebig Apr 1, 2014

They say you can't go home again. I think "they" are wrong.

After much thought and consideration, I've decided that the best move for my career right now is a second stint as an analyst at Union Square Ventures. By the end of the day, I will have formally completed their analyst application.

Why now? Why go back to a job I first took nine years ago when things are going so well for me and I'm running my own fund, Brooklyn Bridge Ventures.

Well, that's part of it. Things *are* going *incredibly* well. After raising sizable follow-on rounds, both Canary and Floored have built, pound for pound, two of the best technical teams in NYC--especially around some really advanced computer vision work. Tinybop's Human Body and Makr's initial iPad version were recognized as some of the most well designed iOS apps of the past year--and both have incredible new products coming down the pipeline. SocialSignIn, just announced as one of the Techstars NYC companies in this cohort, is growing revenues and has their in-venue marketing solution operating across multi-unit chains, theaters and lots of other places where venue owners want a better relationship with their on location customers. Ringly, the most design savvy wearables company focused on fashionable women, recently graduated from the Highway1 Accelerator and I'm thrilled to see how beautiful their soon to be launched first product is. Versa has become the premier content marketing solution for real time responses to breaking news and trending headlines. Orchard is helping more and more institutions everyday build and gain insight into portfolios of peer to peer loans with cutting edge tools.

Given all that, I feel like I might as well quit while I'm ahead. Why bother making any new investments at that point?

I mean, sure, there are probably other interesting early stage investments to be made in NYC, across lots of different industries--and yes, I definitely could have raised another fund in the second half of [...]

Corporate Development 101: What Every Startup Should Know

Corporate Development 101: What Every Startup Should Know Onstartups Apr 2, 2014

The following is a guest post by Chris Sheehan. Chris is COO of TrueLens, an early stage startup in the social marketing space. He is also a board member, advisor and investor in many Boston and NYC startups. You can follow him on Twitter at @c_sheehan and his blog Early Stage Adventures.

What the heck is corporate development and why should I care?

Back in the first wave of the Internet, I was part of the team at BEA Systems that built up in-house corporate development. Our charter was simple: add significant market cap value through acquisitions, investments, and partnerships. Specifically our stated mission: “To support BEA becoming the industry standard ebusiness application platform by leading the process with senior management in developing and managing corporate-wide strategy, acquisitions, equity investments, and selected strategic relationships”

For entrepreneurs, I think its helpful to understand the role corporate development plays in larger software companies. Could be for potential partnerships — maybe an acquisition. Or, maybe you're growing fast enough yourself to warrant acquiring other companies. Regardless, it helps to have a basic understanding of what the corporate development team does.

What is corporate development?

- most public consumer and enterprise software companies (and increasingly many high growth private companies) have a person or sometimes a team in charge of corporate development
- the mandate varies from pure deal execution to a role that combines strategy, execution, and integration. Sometimes the charter includes strategic partnerships and minority investing
- for example, at BEA Systems, we adopted the former model. Each of us were embedded deep in a business unit, working closely with the product, engineering, sales, finance and marketing teams on overall strategy and how strategic alliances, investments or acquisitions could add significant value. Our team had a solid mix of backgrounds including investment b [...]

How to solve the cold-start problem for social products

How to solve the cold-start problem for social products Andrewchen Mar 27, 2014

Social products need mass before scaling growth I often write on the topic of how social products can scale growth, resulting in inbound emails to the effect of “how do I get my product to go viral?” The problem is, until you have a strong baseline of engagement, it’s nearly impossible to have a metrics-oriented discussion […]

Understanding the Power of Your Human Networks

Understanding the Power of Your Human Networks Bothsidesofthetable Mar 24, 2014

We all intuitively know how important human connections […]

How to Choose Your First VC Thisisgoingtobebig Mar 31, 2014

You've never run a company or raised money before. Sure, you've built little projects and there was that lemonade stand when you were little, but this is for real. Real money is showing up at your door and you're in the enviable position of getting to choose who you work with.

Even if you haven't gotten offers yet, your time is valuable and you can't pitch everyone. You feel like you have a decent shot of successfully raising, so you want to prioritize who to pitch to first.

Here are five things you should consider when selecting which VCs to take on, and who to pitch in the first place:

1) Work with people who focus on early rounds. Some bigger funds write lots of small checks and are great at it, others do it just as an exception. My belief is that the more you do something, you get better at it, and you want to get known to be good at what you do the most. If you slack on a seed deal and you rarely do seed, it's not a big deal, but to a pure seed investor, it's going to be of great importance. The early stage comes with its own unique set of challenges, so you'll want someone who specializes on them.

2) The earlier you are, the closer you want your investors. It's fine to have a few investors in your round who aren't local, but you should have some anchors in your own city. In my career, I've done 19 investments in NYC and 1 in Boston, and I'll admit that I felt like I couldn't help the Boston company nearly as much. Phone calls were no substitute for in person and when it came to hiring, my network simply wasn't as big up there as it was here.

3) Talk to entrepreneurs they've backed before to see who really adds value. There's a big difference in terms of impact between two investors in the same round. Some investors really roll up their sleeves and others disappear after writing the check. A lot of people market their value-add, but if you talk to multiple people that the investor is back, you'll get the real story.

4) Talk to investors who ar [...]

One of My Most Frequent Pieces of Advice: Be Politely Persistent Bothsidesofthetable Mar 30, 2014

One of the hardest things for most entrepreneurs to kno […]

How I Got the Monkey Off My Back – Today Was a Good Day

How I Got the Monkey Off My Back – Today Was a Good Day Bothsidesofthetable Mar 24, 2014

I become a venture capitalist in September 2007 – […]

Why You Shouldn’t Decide Anything Important at Your Board Meeting

Why You Shouldn’t Decide Anything Important at Your Board Meeting Bothsidesofthetable Mar 20, 2014

This article originally appeared on TechCrunch. There i […]

Creating Better VCs: An Accelerator for the Dark Side Thisisgoingtobebig Mar 24, 2014

These days, there are a ton of options for you if you're a startup seeking guidence. Every single topic about running a company has been written about ad nauseum, there are incubators, accelorators, mentoring programs, events, talks, etc. We've done a lot to make sure startups get all the help we can get--and it's leading to higher companies getting off the ground.

But what about investors? How are we supposed to get better?

Not every potentially good VC previously worked for Fred Wilson and Josh Kopelman. Not every VC used to get pitched by VC funds for a living and has seen hundreds and hundreds of VC pitch decks. Yet, even I wished I had more guidance when I was first starting out.

Venture capitalists play an important role in burgeoning ecosystems. They cross pollinate ideas--meeting with lots of different types of stakeholders. They're the only ones whose job it is to meet with the founders, lawyers, technologists, corp dev folks, media, professors, and talent all at the some time, not just to look for deal flow but to improve the quality of the ecosystem these companies are going into. Their guidance and network can also make these companies better. So if you want to make better ecosystems, and better startups, doesn't it stand to reason that you could help the situation by making better VCs?

So what about a Techstars-like program for new VCs? I'd love to be able to have Jim Breyer as my accelorator mentor now that has stepped away from the Accel day to day. In fact, there are lots of VC partners that are winding down their roles that have had very successful careers--where is their knowledge going? How can we leverage them to help create the next generation of VCs?

I'd love to be part of a program where the best VCs come in and share their knowledge on how they did their jobs and lessons learned. In particular, I'm always trying to improve as a board member, but their aren't any programs or classes for that.

Just like a startup accelorator, [...]

When Does Establishing a Good Startup Culture Outweigh Being Cheap? Bothsidesofthetable Mar 19, 2014

Almost every startup company starts off “scrappy& […]

A Tale of Two Fundraising Stories Thisisgoingtobebig Mar 17, 2014

Here are two contrasting startup stories I've seen firsthand.

With one company, a founder and his super inspirational, creative, and established buddy hatch a plan to build a very strong content brand that serves as a platform for a lot of diverse revenue streams--events, ecommerce, advertising. You could think of it as a spin on Thrillist. With the author staying close as an advisor, they build a real, cashflow positive business and start to think about where they could go with some outside capital.

One of the big opportunities for them is audience development--driving event attendees to the content, events to the readers, and doing some low-hanging fruit upgrades to their social strategy. They find a kick ass, experienced content person to advise them for six months and help them build out a team around this.

The fundraising will be for that content team, additional developers, and salespeople to leverage the unique brand they've built. Nice, tight story that makes sense. I certainly would have wanted to be an angel investor in Thrillist at the time.

The second startup came to me from a founder of a company that I only found out later wasn't fulltime. The first pitch I got was from someone who didn't intend on staying with the business as an employee. It's actually the first time that's ever happened to me, so I honestly never thought to ask. Everyone I've ever gotten pitched from can't wait to quit their other jobs to work on what's being pitched. When I found out, I was super disappointed--not because this person was even the right person for the business--but because I liked the first person I met, and then had to mentally extract him from the story arc of this business.

That wasn't the only stumble in the business. The team told investors they were hiring a C-level employee, and, upon diligence, it turned out that the person didn't want the job. Not only that, but they actually took that potential hire to a fundraising meeting with a VC--a VC th [...]

How to design successful social products with 3 habit-forming feedback loops

How to design successful social products with 3 habit-forming feedback loops Andrewchen Mar 17, 2014

Social products share a common ancestry and set of problems It’s been a decade after Friendster popularized the notion of the social network, and we’ve seen hundreds of flavors of social products. Many of them are very different from each other, showing that success can come from many variations. I’ve come to believe there’s 3 […]

Relaunching Both Sides of the Table

Relaunching Both Sides of the Table Bothsidesofthetable Mar 11, 2014

My blog had been looking tired for a year or two. The p […]

Here’s Why it Was an Epic Month for #LATech

Here’s Why it Was an Epic Month for #LATech Bothsidesofthetable Mar 11, 2014

A few years ago I started calling the local tech ecosys […]

How do I Really Feel About Anonymous Apps Like Secret?

How do I Really Feel About Anonymous Apps Like Secret? Bothsidesofthetable Mar 16, 2014

By now you likely know that Marc Andreessen weighed in […]

Congrats to my sis Ada Chen, who’s joining SurveyMonkey as VP Marketing

Congrats to my sis Ada Chen, who’s joining SurveyMonkey as VP Marketing Andrewchen Feb 26, 2014

I’m happy to congratulate my kid sister Ada Chen (@adachen) who joined SurveyMonkey as their VP Marketing this week. Awesome. Ada is exceedingly modest for a successful entrepreneur. She has two successful exits and a deep background in marketing (yes, it runs in the family!). After attending UPenn and joining Microsoft, she soon moved from […]

Conference Neighborhoods Thisisgoingtobebig Mar 10, 2014

Greg Galant of Sawhorse coined a term yesterday that captures perfectly what I thought of my 8th SXSW. We were having a discussion about big brands taking over the scene and he called it "conference gentrification". That's exactly what has happened down in Austin. The small startups and individual creatives were early to SXSW and created a great, authentic experience over many years--a "neighborhood" if you will--with a certain attractive vibe.

Brands, in search of interestingness, flocked to SXSW in search of the next cool place to be, like young executives moving into the big glass luxury buildings on the Williamsburg waterfront. What was once the GroupMe Grill--a stunt to buy out a little food shack across from the convention center that gained conference-wide attention--has become the Citrix GoToMeeting grill. Deloitte had a booth in the convention center where Twitter flat screens once stood seven years ago before anyone knew about the startup service.

I might sound like I'm shaking my fist saying "Back in my day!" and "Get off my lawn!" but this isn't necessarily all a bad thing. It's just different. New York neighborhoods that experience growth and change may lose that authentic feel, but they gain much needed economic activity while crime tends to drop. SXSW has become a fun way for lots of brands to interact with startups and creatives--different but not the same.

Every conference has its own neighborhood. The Collision Conference, for example, sold out right away because it comes from the same folks that put on The Summit. Those conferences feel a lot like a planned suburban neighborhood. They have no long organic history, but everything is beautiful and setup exactly the way you want it. A park near a lake, a school, and a three car garage--complete with Bill Clinton, Elon Musk and Snoop on stage prognosticating the future of civilization.

Other conferences will always feel like Red Hook--out of the way and tough to completely gentrify because [...]

Expectations vs. Reality: 8 Lessons From The First Year As CEO

Expectations vs. Reality: 8 Lessons From The First Year As CEO Onstartups Mar 4, 2014

I started working on Foundersuite in the Fall of 2012, and we launched our MVP in early 2013. Prior to this, I'd spent 10 years consulting to startups as a fractional CFO / BD / Ops guy, so I thought I had a pretty good idea of what to expect for my first real rodeo as startup CEO.

I was completely wrong. Here are eight areas where reality diverged the most from my expectations.

1. Identifying customer needs is only a fraction of the product-market-fit battle.

I'm a fan of the lean startup model and we are diligently striving to "build things that people want." But identifying customer needs and creating a solution for those needs is only part of the equation. The other half is removing the 1000 small friction points and barriers to adoption, which is in itself a Sisyphean task.

For example, we launched our Investor CRM product as a tool to keep track of investor discussions- it’s basically a way to bring some “order to the chaos” of fundraising. It’s a slick tool, built on top of APIs from AngelList, LinkedIn, Google Calendar, etc., and we were getting a lot of love-mail when users first signed up, but ongoing engagement was anemic.

It wasn’t until we probed deep via 1-1 calls that we discovered a lot of “blockers” to adoption—for example, many users already have lists of target investors they’ve collected in excel, so we needed to make an import function. As another example, people told us that since the CRM was an empty, blank slate, they didn’t know where to start; so we will soon be pre-populating it with “starter packs” of investors. It’s an ongoing process, but the good news is that every time we remove a major hurdle or friction point, we see a meaningful spike in adoption. Instant gratification!

2. Nobody gives a sh't about what you are doing (at least at first).

IMO, there's an entire generation of entrepreneurs who have a skewed perception that "a great product markets itself." That's bullshit. Sure, there are a few born-viral product [...]

How to Get into Venture Capital - An Update Thisisgoingtobebig Mar 5, 2014

About seven years ago, I wrote a post on breaking into venture capital and I continue to point the five or six people a week who ask me how to break into venture.

Today, I want to add two addendum to it, based on the work of two up and coming women in the NYC tech community.

Yesterday, Amrit Richmond announced her new employment at RRE as Director of Community & Platform. The key to her getting the job was that she had essentially started doing the job long before it ever got announced. She had been running social media part time for a smaller fund and had built up a following with her own tech newsletter. No one was paying her to write the newsletter, but most of the team at RRE was already on it.

When Amrit was applying, I told her she was a lock for the job. When she asked why, I said it was because if anyone was better qualified, we'd already know about them by now. The candidates for venture capital roles are already out there and usually in plain sight and there simply wasn't anyone out there doing what Amrit was doing who wasn't already fulltime at a firm.

Another case in point, Spark Capital just hired Kate Bolin--someone that had been interviewed at a portfolio company of theirs that had made a good enough impression that they labeled her as someone to stay in touch with.

If you need to introduce yourself to a VC firm, you're probably not getting the job.

The opportunities, however, are different than they used to be. At the early stage, the ranks of the non-partner investor are disappearing. VC firms are going back to being mostly partner driven shops, where dealflow and decisions stay up top. They are, however, staffing up with specialists. Like lefties out of the bullpen, VC firms now have recruiting partners, pr and marketing experts, technologists-in-residents--and USV even has an on board activist. If you can't walk into a firm and tout a specific skill that is a benefit to portfolio companies, you're going to have a very tough time [...]

Who's any good? Thisisgoingtobebig Mar 3, 2014

The NYC startup community maintains a positive, supportive atmosphere. We celebrate a strong effort.

However, that often makes it hard to tell who actually excels at their job and who just mails it in or got lucky. This goes for founders, employees and investors alike.

I was just noticing that a professional acquaintance of mine just changed jobs for the third time in two years--going from startup to startup to startup without, ostensibly, accomplishing much at any of the companies. They certainly didn't become huge successes. Yet, for some reason, everybody seems to think he's really good at what he does. Why?

The same goes for investors. There are a few obvious investors with great track records of repeat success, but when's the last time you really tried to value an investor's portfolio. That VC speaking on the panel, are the deals you know about really doing that well? They raised more money, but when? How long ago? At what valuation? Are they making real revenue? Are the exit prospects for the company any good?

Even if their record looks good because of that deal, was it really their deal? Did they lead it? Will the entrepreneur count that investor among their most helpful? Would the entrepreneur enthusiastically include them in the syndicate of their next venture?

There are a lot of founders with questionable records, too. If someone bought a company for $50mm after a year, before it became a business with actual revenue, what are you really crediting the entrepreneur with? Could you really call what they did building a business?

There's really no substitute for research. If you're going to pick an investor, hire someone or invest in a founder, you need to figure out what they specifically did to create value--and how what they did was something unique to them. Could anyone have done what they did, or do they have their own special way of creating magic?

We need to raise our expectation level--especially in the media, on panels, and in our [...]

A Sneak Peak at Some LA Startup Energy Bothsidesofthetable Feb 26, 2014

Mark. You disappeared? What the fork happened to you? A […]