Do More Faster
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Do More Faster

Techstars Lessons to Accelerate Your Startup

Brad Feld, David G. Cohen

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eBook - ePub

Do More Faster

Techstars Lessons to Accelerate Your Startup

Brad Feld, David G. Cohen

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About This Book

Practical advice from some of today's top early stage investors and entrepreneurs

TechStars is a mentorship-driven startup accelerator with operations in three U.S. cities. Once a year in each city, it funds about ten Internet startups with a small amount of capital and surrounds them with around fifty top Internet entrepreneurs and investors. Historically, about seventy-five percent of the companies that go through TechStars raise a meaningful amount of angel or venture capital. Do More Faster: TechStars Lessons to Accelerate Your Startup is a collection of advice that comes from individuals who have passed through, or are part of, this proven program. Each vignette is an exploration of information often heard during the TechStars program and provides practical insights into early stage entrepreneurship.

  • Contains seven sections, each focusing on a major theme within the TechStars program, including idea and vision, fundraising, legal and structure, and work/life balance
  • Created by two highly regarded experts in the world of early stage investing
  • Essays in each section come from the experienced author team as well as TechStar mentors, entrepreneurs, and founders of companies

While you'll ultimately have to make your own decisions about what's right for your business, Do More Faster: TechStars Lessons to Accelerate Your Startup can get your entrepreneurial endeavor headed in the right direction.

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Information

Publisher
Wiley
Year
2010
ISBN
9780470948798
THEME 1: IDEA AND VISION
Most people think that the core of a startup is a singular amazing world-changing and earth-shattering idea. It turns out that this idea is almost always completely wrong.
It has often been said that most successful startups started doing something else. In our experience at TechStars, we know that many of the companies that have gone through the program are now working on something very different from their original idea. Some of these are in the same general domain but a completely different application or product area. A surprising number of them are unrecognizable from the description of their business on the original application to TechStars.
When Alex White of Next Big Sound showed up at TechStars he was immediately confronted by a chorus of “We love you but your idea sucks.” Jeff Powers and Vikas Reddy spent the summer working on some sort of image compositing software before landing on the spectacularly successful RedLaser iPhone app that eBay recently acquired. We aren't even sure we remember what Joe Aigboboh and Jesse Tevelow of J-Squared Media were working on when they showed up at TechStars but we had a feeling they were awesome, which they then demonstrated by launching a series of successful Facebook applications on the heels of Facebook's F8 launch. Each of them landed in very interesting but unpredictable places.
Startups are about testing theories and quickly pivoting based on feedback and data. Only through hundreds of small—and sometimes large—adjustments does the seemingly overnight success emerge.
Trust Me, Your Idea Is Worthless
Tim Ferriss

Tim is the best-selling author of The 4-Hour Workweek (New York: Random House, 2007) as well as an angel investor and an entrepreneur. Tim has been a TechStars mentor since 2008 and is an investor in several TechStars companies, including DailyBurn (the premier fitness social network for detailed tracking, online accountability, and motivation) and Foodzie (an online marketplace where consumers can discover and buy food directly from small artisan producers).
Earth-shattering and world-changing ideas are a dime a dozen. In fact, that's being too generous.
I've had hundreds of would-be entrepreneurs contact me with great news: They have the next big thing, but they can't risk telling me (or anyone else) about it until I sign some form of idea insurance, usually a nondisclosure agreement (NDA). Like every other sensible investor on the planet, I decline the request to sign the NDA, forgoing the idea, often to the shock, awe, and dismay of the stunned entrepreneur.
Why do I avoid this conversation? Because entrepreneurs who behave this way clearly overvalue ideas and therefore, almost by definition, undervalue execution. Brainstorming is a risk-free, carefree activity. Entrepreneurship in the literal sense of “undertaking” is not. Strap on your seat belt if you're signing up for a startup. It's a high-velocity experience.
If you have a brilliant idea, it's safe to assume that a few very smart people are working on the same thing, or working on a different approach to solving the same problem. Just look at the number of different travel apps on your iPhone or the number of diet and exercise sites on the Web for an example of this.
Overvaluing the idea is a red flag, particularly in the absence of tangible progress. Sure, I miss out on investing in some truly great ideas with this attitude, but that's okay with me: I don't invest in ideas. Nor does Warren Buffett. I'll lose less money than those who do. I can largely control my downside by investing in good people who, even if they fail this go-round, will learn from mistakes and have other fundable ideas (ideas I'll likely have access to as an early supporter). I do not have this advantage when investing in ideas.
One popular startup dictum worth remembering is “One can steal ideas, but no one can steal execution or passion.” Put in another light: there is no market for ideas. Think about it for a second: have you tried selling an idea lately? Where would you go to sell it? Who would buy it? When there is no market, it is usually a very sure sign that there is no value.1
Almost anyone can (and has!) come up with a great idea, but only a skilled entrepreneur can execute it. Skilled in this case doesn't mean experienced; it means flexible and action-oriented, someone who recognizes that mistakes can often be corrected, but time lost postponing a decision is lost forever. Ideas, however necessary, are not sufficient. They are just an entry ticket to play the game.
Don't shelter and protect your startup concept like it's a nest egg. If it's truly your only viable idea, you won't have the creativity to adapt when needed (and it will be needed often) in negotiation or responding to competitors and customers. In this case, it's better to call it quits before you start.
Your idea is probably being worked on by people just as smart as you are.
Focus on where most people balk and delay: exposing it to the real world. If you're cut out for the ride, this is also where all the rewards and excitement live, right alongside the 800-pound gorillas and cliffside paths. That's the fun of it.
David didn't beat Goliath with a whiteboard. Go get amongst it, and prepare to bob and weave.
What about all those great ideas we fund at TechStars? Well, about 40 percent of the companies who go through TechStars describe themselves as “substantially or completely different” in regard to the idea and product they're building after the three-month program ends. When the founders of Next Big Sound applied to TechStars, they had an idea around music and social networking. We loved the founders but hated the idea. They were already contemplating changing their idea when they arrived in Boulder in the summer of 2009 but were nervous about what our reaction would be. They quickly heard that we believed in them, not their idea, and aggressively changed course. Alex White, the CEO of Next Big Sound, talks more about this in the chapter “Fail Fast.” The willingness to change your idea based on data is the sign of a strong entrepreneur, not a weak one.
Tim Ferriss (second from left) hanging out at the St. Julien hotel in Boulder with Vanilla, Next Big Sound, and Graphic.ly during the summer of 2009.
1. Yes, there are a few exceptions, like licensing IP, but IP is “property,” as distinct from an unprotectable thought.
Start With Your Passion
Kevin Mann

Kevin is the founder and CTO of Graphic.ly, a social digital distribution platform for comic book publishers and fans. Graphic.ly raised $1.2 million from DFJ Mercury, Starz Media, Chris Sacca, and others after completing TechStars in 2009. Kevin also recruited Micah Baldwin, a TechStars mentor, to join Graphic.ly as CEO in the fall of 2009.
I am a huge comic book fan and I started my company because of my own frustration and disappointment.
A few years ago, I read about the release of a new “Dead@17” story and I was excited to find that for once my local comics bookstore actually had it. I bought the first three issues and loved them. I couldn't wait to pick up the fourth and final one.
On the day of the release of that fourth issue, I ran to the comics bookstore. I looked at the new release shelf only to find that it wasn't there. I asked the store owner about it. I was told that because of budget cuts he had to stop buying a bunch of titles and this was one of them. However, he said his sister store in Newcastle had it.
Newcastle was a 100-mile round trip and at the time I didn't drive, so I knew the journey was going to suck. I headed off to the train station and I took my iPod along to make the journey bearable. A couple of hours later I arrived at the Newcastle comic store only to discover that the fourth issue of Dead@17 was sold out there!
On the train on the way home, my frustration and anger boiled over. I kept thinking that there had to be a better way of buying comics. And then it dawned on me. That morning I had purchased a movie from iTunes, which I was watching right there on the train. Why shouldn't buying comics be just as easy? Why did I have to travel over a 100 miles and waste the better part of a day, all for nothing?
I realized that I had two options. I could quit buying comics or I could quit my job and build the iTunes of comics.
That's how Graphic.ly started and my enthusiasm for comics has now transferred to a business I love being a part of. Every single day I am excited to go to work. I get to create and innovate in a sector I love. Ultimately, I'll solve a problem that was ruining something very special to me.
If you're not passionate about what you're doing, it won't mean enough to you to succeed. Startup founders choose an insanely difficult path, so passion is a prerequisite.
Many entrepreneurs start a company to “scratch their own itch.” Kevin is a great example of one such entrepreneur as you just read in the story of how he came up with the idea for Graphic.ly. Kevin and his business partner, Than, got right down to building a demo during the TechStars program. They quickly produced a beautiful piece of software for rendering comic books on the web and on an iPhone. One of their mentors, Micah Baldwin, fell in love with the idea and Kevin recruited Micah to join the team as CEO at the end of the summer. Micah, Kevin, and Than quickly raised a seed round of investment from VCs and angels and began building out the team and the product.
One of Graphic.ly's goals was to produce comics with amazing graphic clarity regardless of the platform the comic book was rendered on. They also wanted to innovate in the user interface to add a social component to the comic book, allowing fans to interact with the comics in a deep and engaged way. At the same time, they started building out a library of comics with several of the larger comic book publishers. While there is always a chance that existing e-book vendors will start focusing on comic books, Graphic.ly believes that their single-minded focus on comics gives them a big advantage over other companies.
Kevin also shares the honor of being one of the TechStars Boulder 2009 founders who inspired Brad to co-found the Startup Visa initiative (see startupvisa.com). The goal of the Startup Visa initiative is to make it easy for non-U.S. entrepreneurs to get a visa to start a company in the United States. It turns out to be surprisingly difficult to do this, as Kevin (a U.K. citizen) and Than (a French citizen) discovered. As of July 2010, there are now bills in the U.S. House of Representatives (sponsored by Jared Polis (D-CO) and a co-founder of TechStars) and in the U.S. Senate (co-sponsored by John Kerry (D-MA), Richard Lugar (R-IN), and Mark Udall (D-CO)) and the Startup Visa initiative has continued to build momentum as a grassroots effort.
Look for the Pain
Isaac Saldana

Isaac is the founder and CEO of SendGrid, an e-mail service that solves the problems faced by companies sending application-generated transactional e-mail, which raised $5.75 million from Highway 12, SoftTech VC, and Foundry Group after completing TechStars in 2009.
I have always been interested in solving complicated problems and am naturally passionate about scalability and complex engineering problems. I enjoy using technologies such as Hadoop for massive data analysis, Memcached for distributed caching, and Twisted for event-driven programming. Early in my software engineering career I landed positions as CTO in multiple startups. The more I dealt with engineering problems, the less I wanted to be engaged with users or any other nontechnical problem. I strongly believed that my time was best spent on solving really difficult technical problems instead of dealing with all those pesky customers.
One day I was in the process of moving our static files to Amazon S3 to solve some scalability issues with our web site when one of those annoying users notified us that the e-mails that our application was generating were not getting through to his Yahoo! Mail inbox. Off I went to solve this seemingly trivial problem.
After a few tests I realized that Yahoo! was flagging all of our e-mails as spam. Since this was out of my control, I contacted Yahoo! to solve what I thought would be a trivial nontechnical problem so I could go back to my fun and complicated Amazon S3 project. Yahoo! replied to my request warning me that our company was not following well-known standards to deliver e-mail and that certain content was consistently triggering their spam filter.
I researched this and looked for solutions. But the available solutions were not straightforward. Ultimately, I spent weeks understanding the issues, fine tuning our servers, altering our code, and working with ISPs. I kept thinking about how lucky my company was that I was an experienced and motivated software developer with extensive systems administration experience. Most of the people who were being affected by the problem didn't even know it!
One weekend I thought about how ironic it was that a solution to one problem (spam filtering technology) had introduced another critical problem. Spam filters were filtering out most of the spam e-mails but legitimate e-mails were also being filtered! I wondered how many other subtle problems relating to e-m...

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