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How Not to Let the Crazy In Thisisgoingtobebig Dec 15, 2014

A friend of mine is starting a huge new project. She told me that 2015 is going to be the craziest year she's ever had.

I suggested to her that it will certainly be the busiest, but that she didn't have to let the crazy in.

We throw around the word "crazy" but in all seriousness, mental health is something that doesn't get much discussion in the startup world. There seems to be a blog post, book or boot camp for just about everything you could hope to learn as an entrepreneur, but no one really seems to focus on how to mentally survive entrepreneurship.

It bothers me that we just take stress as a given. Why does fundraising have to be stressful? You know the possible outcomes. You're either going to make it or you're not. You know what happens when you don't. You could go out of business. You won't die. You're not likely to become homeless.

Disappointing for sure, but does it need to twist your head into such knots that you get physically sick over it?

I can't say I stress out about anything. That's not so say that I don't care about things. I do care--deeply. I just don't get into the habit of experiencing anxiety or mentally locking up in the middle of the most uncertain or difficult times.

That's the key--it's a habit. I fully believe that habits and training can meaningfully impact your physical experience. They say that entrepreneurship is a marathon, not a sprint, but it feels like few people marathon train for it. If they did, they'd be a lot more focused on enduring--being able to last the daily wear and tear--than going as hard as they can all the time. That includes mentally. The more mental defenses and best practices you built up, the easier it will be to survive the journey over the long haul.

Here are a few things that have helped me:

1) Take care of your physical self.

Your brain lives in your body.

It's been proven that exercise, eating well, and getting sleep improves your mental state. It's simply something you have to [...]

What Future for Accelerators? Bothsidesofthetable Dec 14, 2014

Accelerators have had quite a good run the past 5+ year […]

A Few Funny Characters You'll Find In Silicon Valley

A Few Funny Characters You'll Find In Silicon Valley Onstartups Dec 15, 2014

The following is a guest post by Nathan Beckord. Nathan is co-founder and CEO of Foundersuite, a San Francisco-based company developing the ultimate collection of software tools and templates for entrepreneurs.

Congrats to Backupify! A Great Exit Story for the First Company I Ever Backed Thisisgoingtobebig Dec 11, 2014

Today, Backupify announced that it is getting purchased by Datto. It's a solid exit to a company that has lots of revs, is growing, and together will form a very formidable player in the data backup space--one that can definitely be a public company in the next couple of years.

I'm super proud of Rob, Ben and the whole Backupify team--and this is particularly special for me because Backupify was the first investment I ever made as a VC, and the first board I ever sat on.

In fact, my history with Rob and Backupify goes back almost ten years, well before the idea of cloud backup was ever a glimmer in anyone's eye.

I started reading a great blog called Business Pundit in 2004. It was written by a guy about my age down in Louisville, Kentucky. A former engineer, Rob was a great writer and a thoughtful student of management. I don't remember when I started talking to Rob, but I know it was before February of 2005, because I found "rob@businesspundit.com" in the contacts I ported over when I left GM and went to USV.

We used to chat a fair amount via our respective blogs about management and entrepreneurship. He was an interesting guy and I watched him throughout a bunch of interesting projects, like a complete open source business where all the employees got to make the decisions.

I didn't actually get to meet him in person until SXSW in 2007. That was the year Twitter took off.

I took this picture of Rob, Michael Galpert, and Danny Wen of Harvest. Even then, Rob was an optimizer, trying to map the best routes around Austin.

I liked meeting Rob so much that when I drove across the country that summer, I made it a point to go visit him.

We stayed in touch and I got to know a bunch of the Louisville startup and creative crew, like Todd Earwood, Matt Winn, and Ashley Cecil.

Rob messed around with some local video thing in 2008, which everyone but Rob thought was a pretty terrible idea. Later that year, I sent a tweet that inspired a company that in [...]

Ten Good Reasons to Take Venture Capital Money Thisisgoingtobebig Dec 9, 2014

Following up on my post from Monday that rang like "reasons not to take VC money" here are some reasons you should:

1) You really like the investor and believe they can add more value than you give up in equity.

2) You are growing, and if you don't raise, you won't be able to build the infrastructure required not to come apart at the seams.

3) You have the team in place or identified to build the product, you've done your homework by talking to customers that it is, in fact, the right product, and you're the best person to lead the effort, but you can't fund the build of the product yourself.

4) You've identified the best team, and while they're asking for reasonable startup salaries, you can't afford to hire them quite yet.

5) You've figured out how to get a sales funnel going, the flywheel is turning, you've got positive ROI on incremental salespeople or customer acquisition dollars and now you want to put gas on the fire.

6) You're on your way to building a network effect, you know how you'll likely make money because you've spoken to lots of potential sources of revenue, but can't monetize without critical mass.

7) You're making a ton of money at the company level, but haven't really ever made any money yourself personally. Might be time to let someone you want to work with buy your equity.

8) You're doing something disruptive that is going to have some regulatory or other kinds of hurdles that require human hours of changing the playing field.

9) You're doing something physical in the real world that just requires a certain amount of capital overhead.

10) You're doing actual science and R&D to build something that doesn't exist yet, but could have a huge outcome.

Ten Realities of Taking Venture Capital Money Thisisgoingtobebig Dec 8, 2014

If you take venture capital money...

1) You increase the chances that you may not be CEO of your own company one day--and that also might be the best thing for its long term success.

2) You are signing up to sell the company one day--to another company or to the public market, but definitely to someone.

3) You will almost certainly take more venture capital money after that.

4) You will almost certainly go cashflow negative, increasing the risk that your company will fail.

5) You now have the responsibility to report the progress of the company to others--and to consider their opinions and feedback.

6) You have prioritized growth and your company will be bigger next year than it is now.

7) Some of the people working for and with you now will not be suitable for a growth phase and will have to leave.

8) There are smaller exit opportunities you will not be able to take because your capital structure makes them financially unattractive.

9) You will own less and less of your company over time as you take on additional investment.

10) You will face more competition as venture investment signals that what you're doing may be attractive.

The Very First Startup Founder You Need to Invest in is You

The Very First Startup Founder You Need to Invest in is You Bothsidesofthetable Nov 30, 2014

  This week I wrote about obsessive and competitiv […]

Why I Look for Obsessive and Competitive Founders

Why I Look for Obsessive and Competitive Founders Bothsidesofthetable Nov 26, 2014

  Obsession. The drive to succeed at all costs. Wh […]

Why I’m Standing Today with My Black American Friends, Family & Colleagues

Why I’m Standing Today with My Black American Friends, Family & Colleagues Bothsidesofthetable Dec 4, 2014

. “It stops today.” I spent the entire day […]

If You Don’t Respect Your Customers You Won’t Be Successful Bothsidesofthetable Dec 7, 2014

I spend a lot of time with startups and thus hear many […]

Because the Domain Makes it Really Real Thisisgoingtobebig Dec 2, 2014

Three years ago today, I grabbed the domain name BrooklynBridgeVentures.com.

It's kind of a funny answer to "When did you start Brooklyn Bridge Ventures?"

What might be a more relevant date is May 22nd, 2007. That's the day I sat down for lunch at Coffee Shop with Henry Blodget, just six days after Silicon Alley Insider launched. Henry told me that I should start a fund--me, a 27 year old former VC analyst turned product manager with no MBA at a startup that wasn't really headed in any particular direction. It's probably the first time I'd really ever had the thought of starting my own fund.

So thanks for playing Inception, Henry.

I guess it's true what they say. It's easy to be right about market predictions eventually. It's just really hard to predict timing.

The stories we tell ourselves about how things get started are often much more linear than they actually happened. Who had what idea when? When did you actually commit to something?

Getting a domain name... I guess that's about as good a demarcation line as any, but that's never really the full story.

So when did I really start Brooklyn Bridge Ventures?

Well, I was born in 1979.

My godfather got me IBM stock right after that, so that's how I knew that a stock market and investing existed.

My dad brought home an IBM PS/2 in 1987.

I got an internship on the buy side at the GM pension fund in high school--in 1997.

I started a business newspaper in 1998 in college covering the stock market and the economy.

I got my first job in venture--at GM--in February 2001.

I tried to write a book for college kids in 2002-2003, couldn't get it published, so I started blogging in February of 2004.

I met Brad and Fred in the Summer of 2004, agreeing to join them later that year--my first job at a fund.

I started a company, failed at it, and joined First Round in 2009 to help them open up their NYC office. In the middle of that whole thing, I wrote a blog post about Foursquare that [...]

Some Rules for Marketplaces and Distributed Workforce Platforms Thisisgoingtobebig Dec 1, 2014

I've been getting involved with a couple of different models related to labor marketplaces and platforms lately. My interest dates back to my 2010 investment in chloe + isabel back when I was with First Round. I was still at FRC when we invested in TaskRabbit and Uber, even though I wasn't on those deals. I've also run about 30 Kitchensurfing dinners across NYC for tech and startup folks in the last two years. My two most recent deals involve a distribution of labor or direct sales, and two of my upcoming deals are similarly structured.

Yet, I'm quick to turn many of these types of deals down, too--and I've started noticing which ones I like and which ones I'm less interested in.

Here are my two main rules:

1. The labor supply has to get enough out of the platform not to want to go around it.

Your Handy cleaner is undoubtedly going to want to get paid directly if you seem satisfied with them for sure--and why not? Once you like them, you'll just want them to show up at the same time and day each week or every other week or whatever. The platform is providing little value after the initial intro.

This is highly unlikely to happen with your Uber driver, however. Who knows where they'll be the next time you need a cab, and you're not likely to use the same driver twice. In this case, it's not about the cash, but about their ability to replicate the volumes off platform.

Recently, I've gotten interested in two models where the marketplace was cutting the provider in for a slice of the sales, whereas they used to just get paid a flat, hourly wage. Being on the platform would be a huge boost to their net income.

2. You need to get a nice chunk of the transaction to make it worth it as a marketplace.

With some platforms, I can't help but think that a heck of a lot of human effort was expended to net the platform not a lot of cash. If you're only taking a small cut, you've got to have huge volumes to make up for it, and that just takes a long time.
[...]

The Day I Had To Wear Pants To Ring The IPO Bell

The Day I Had To Wear Pants To Ring The IPO Bell Onstartups Nov 20, 2014

It's #TBT. It's been a busy and exciting several months.

How VCs Think About Adding New Partners

How VCs Think About Adding New Partners Bothsidesofthetable Nov 13, 2014

Let me start with the news that I’m excited to sh […]

What Salary Means Thisisgoingtobebig Nov 24, 2014

When I was coming out of college, working in finance, I used to think a lot about my salary. I wanted the best offer out of my classmates. I wanted the biggest signing bonus. I liked maxing out on raises and I liked the feeling I got getting to a six figure salary.

The funny thing was that I didn't even particularly care about the money itself. It was, in my mind, what the salary meant. It was a way of measuring performance. It was score keeping.

I missed the bigger picture of the other things that should go into career score keeping--autonomy, growth paths, equity/revenue sharing, the ability to gain public visibility, opportunities for learning, network building, etc.

As an investor, I get very involved in the hiring process of some of my earliest stage companies. One thing that comes through consistently is that salary--specifically how someone goes about the salary negotiation process--can be a consistent predictor of performance.

Nearly every time a company I've seen has had to stretch to accomodate someone's base salary, the person hasn't worked out. When canidates have had the opportunity to choose between more equity and more salary, the people who equity greedy versus cash greedy tend to be better fits for a startup. And when things at a startup aren't going well, it's your best employees that show up first with offers to cut their salary.

That isn't to say that you should accept getting underpaid just because you work for a startup--but acknowledging the reality that, especially early on, dollars given to you shorten the potential lifespan of this company, is key to understanding how things work.

At the end of the day, we could all make a lot more money at hedge funds and banks anyway, right? But, we value other things. We score keep in other ways.

Founders, I think the best thing you can do with your earliest employees is to be transparent. Show your employees how their salary effects the finances of a company. If someone looks at tha [...]

In Defense of Uber: An Objective Opinion Bothsidesofthetable Nov 23, 2014

The story on Uber has been written about ad nauseam, wh […]

If I was an Uber investor... (besides the obvious fact that I'd be rich.) Thisisgoingtobebig Nov 19, 2014

I like Uber as a service. It just works.

I also like the fact that it seems to provide a lot of work for a lot of otherwise underemployed people. All of the drivers I've spoken to have said nothing but good things about it. They seem to like getting the work.

Do I think that all of the executives are bad people? No. In fact, I like all the people I know somewhat well who work there. However, it does seem like the company has a culture problem that results in bad incident after incident.

The culture seems to create a situation where bad ideas seem to fester--where "What's cool at this company?" results in very little hesitation around doing some pretty dumb things.

The press about it has gotten so bad that we may actually be getting to the point where you might not want "Uber investor" in your bio. Despite the fact that it's going to be a hugely successful company, current investors may be experiencing diminishing marginal returns for being associated with Uber.

For example, are we getting to the point where the Sarah Lacy incident gets so bad where female entrepreneurs, for example, stop pitching Uber's investors? Could we? If not, then what about when the next incident pops up--especially now that people are looking for the company to trip up. They're under a microscope now.

So what would I do if I were an investor whose name is now being dragged along in the mud with all of these things?

I'd bow out.

I'd negotiate a sale of my shares and then, without weighing in on the situation in detail, just say something really basic like, "We are no longer shareholders in Uber, but wish the company the best going forward."

Everyone would know exactly why I did it and I wouldn't need to say anything more.

What would be the fallout?

First, it would undoubtedly piss off Travis, Uber's founder--but what's the repercussion there? Statistically, he's not likely to start another billion dollar company later on--so if I don't get into his next thing, [...]

Why Entrepreneurs Should Be Respected More Than Loved Bothsidesofthetable Nov 17, 2014

One of the vivid memories I have from being a startup C […]

Valuing My Own Time and Saying No Thisisgoingtobebig Nov 17, 2014

The other day, I got a note asking whether I'd be willing to meet some "Head of New Things" at a big telecom.

That wasn't their actual title, but it was something like that.

You've met them before. They're new to the gig, super excited about all its potential, and getting out there selling founders hope for that one big gamechanging deal.

But I've seen this movie before, so here's how I responded:

"Hi!

To be honest, these meetings never really work out and I've decided they're just not worth spending the time anymore. There's so much corporate bureaucracy in telco, and they can never actually get anything done. They just move too painfully slow to work with startups.

I'm sure this is a lovely human being that means well, but it's kind of like getting an invite to a dance party in quicksand.

I like a good dance party, but... well... quicksand.

As always, I hope you are doing amazingly.

Charlie"

Funny enough, I ran into that person later that day and they said they totally understood and actually really liked the note. I think it encouraged them to say no more often.

The most precious commodity I have, especially as a one person firm, is my own time. That's really all I have to give to the founders I back. Sure, I write a check, but anyone can do that.

If I'm going to be effective, I have to be very careful about how I dole out my time and where it goes. Therefore, I've had to do a lot of saying no to requests for my time. Here are a bunch of things I don't do:

I won't do office hours anymore at incubators and accelerators. You know those meetings where you get this endless parade of companies sitting with you for 20 minutes each? I just don't think those are good for anyone. It skips the whole vetting process for me--so I wind up giving time to a bunch of companies whose business model I might find problematic from the get go. I'd rather get a list of all of the companies and then pick and choose who I'm actually interested in. [...]

The Silent Killer – The Company Your Community Never Created Bothsidesofthetable Nov 16, 2014

I was at a dinner recently in Chicago and the table dis […]

The Case for Optimism and Risk at Startups

The Case for Optimism and Risk at Startups Bothsidesofthetable Nov 5, 2014

Last week a company we enthusiastically backed, uBeam, […]

There are No Gatekeepers Thisisgoingtobebig Nov 12, 2014

One of the underlying dynamics I see in the venture capital, tech, and startup world--and where some of its worst behavior comes from--relates to underlying assumptions about power and influence. Founders put up with bad VC behavior because they think a check from a certain investor is going to make or break their company. VCs bend their rules with certain founders because they think this will be the one deal that got away--rules about oversight, governance, valuation, etc.

Even in the talent market, startup employees make too many consessions around culture and environment because they worry about what it will look like if they leave somewhere too early. Founders hiring top talent get desperate about it and make those same tradeoffs.

Let me be the one to say that there isn't any one single person in the entire world that you *need* to work with who is going to make or break your business or career--and certainly not at the expense of respect or your values.

You think VCs are important or influential? Bullshit. They sell you money, and there's lots of it in the world. If one VC or angel is willing to fund you then another one will. Don't be afraid to turn down money if you don't think you're on the same page with someone in terms of goals, values, or character.

I had an investor reach out to me yesterday--no intro, no context--just asked to meet. I didn't even know he was an investor because all he wrote was "I want to learn about what you're doing." Like, that's literally all he wrote--just demanded my time. Then he got annoyed when I asked who he was and how I could be helpful. "Well, if you bothered to look at the e-mail address, you could have figured it out."

Dude, really? I ain't got time for that.

I don't want to work with an investor who thinks that money should just open doors. My time isn't for sale. It belongs to my founders. The really great thing about my fund now is that my investors are absolutely wonderful, respectful people. I had [...]

Why You Don’t Want to Give Financial Information to All of Your Investors Bothsidesofthetable Nov 9, 2014

We all know that funding markets have changed for start […]

Why messaging apps are so addictive (Guest Post)

Why messaging apps are so addictive (Guest Post) Andrewchen Nov 4, 2014

[Andrew: This guest post is written by my friend and former Palo Alto running partner, Nir Eyal. Messaging apps have been a fascinating area within mobile, and the big reason for it is that the metrics - especially engagement - have been amazingly strong. I asked Nir to write a bit about why this might be […]

The post Why messaging apps are so addictive (Guest Post) appeared first on @andrewchen.

Why ADD Might Actually Benefit Startup Entrepreneurs

Why ADD Might Actually Benefit Startup Entrepreneurs Bothsidesofthetable Nov 3, 2014

This weekend I was reading the NY Times online and I ca […]

The Thin Skin of the Venture Capital Market Thisisgoingtobebig Nov 3, 2014

The other day, I saw that one of my favorite products, Slack, just raised $120mm at a $1.12 Billion valuation. The company is doing about a million a month in recurring revs.

Personally, I think it was kind of a bad idea--not necessarily because of the valuation, but because it seems like $120mm is way too much money for a software company at this stage, especially one that might even be cashflow positive right now. I think it's likely that it will unfocus the company and what it definitely does is eliminate the possibility of exiting for anything less than two and a half billion dollars. That is likely to lead to decisions that might not be in the best interest in the company or the users.

So that's what I wrote on Twitter...

Love Slack, but $120mm and a $1B valuation at this point will almost certainly lead to lack of focus and less than optimal decision making.

— Charlie O'Donnell (@ceonyc) November 1, 2014

And then I promptly got Twitter flack from one of the people who works at one of the company's investors. They seemed annoyed that I said anything in the first place.

What was said, who's right, etc., doesn't much matter. The fact is, it's just not cool to criticize the investing side of the venture capital market.

Which is why I'm sure the dude who picked apart the physics of the latest round of UBeam will undoubtedly get eviscerated in the tweet and blog world.

"...Here’s the problem. IT’S AN IMPOSSIBLE IDEA. Having done my share of ultrasound physics AND wireless charging work in the past, the first thing that struck me about the idea was that, to transmit any appreciable amount of energy through sound waves, those waves would likely burn you, or at least deafen you, and any other small animals in the vicinity. This is why charging is currently done inside copper wires surrounded by plastic - so you don’t get hurt!

I’m no physicist - oh, wait, I am..."

Now, I know the company and while I'm actually [...]

Here’s How to Do PR on a Budget Bothsidesofthetable Oct 27, 2014

Yesterday I wrote a post about The Silent Benefits of P […]

The Audacious Plan to Make Electricity as Easy as WiFi

The Audacious Plan to Make Electricity as Easy as WiFi Bothsidesofthetable Oct 30, 2014

When I first met Meredith Perry she was 24. That was th […]