Seth Levin of the Foundry Group has a very good post on the transition of a startup from the product focused company to a sales and marketing focused company. I can truly relate to this, I have been associated with a couple of startups that are going through this process. It is a difficult transition, because it is quite easy to hunker down and get into the maker mode i.e Design, Build, Test repeat cycle. Most founders come from the Product side and it is easy to see they struggle with the transition. But it is critical to get out of the Product mode to Marketing and Sales mode, it defines the survival of a startup. I have written about Sustainability, getting cash into the business is a economic sustainability necessity. All the hard work of building something beautiful and useful amounts to hill of beans if you are unable to get it into the hands of people to use it and get paid for it.
The last 7 months have been very interesting for me because I have never been a CEO, this is my first time on the job (for those reading this blog for the first time, I took on the role of CEO of GreenQloud the worlds first cloud computing company that is powered entirely by renewable energy). I can see the challenges of the product team looking at the marketing and sales team as this Evil that is polluting the pure thing that was created by them. It is understandable, we even refer to the Marketing team as the Evil Marketing team for fun in the team standups.
I have been on both sides of the table, i.e built products and solutions and sold products and solutions. There is nothing harder than convincing someone else that what you believe is worth their time. It takes a lot of effort, positive attitude and chutzpa. There is a reason why very good sales people are paid top dollars because they can bring cash into the business. I once heard from Gunnar Holmstein the CEO of Clara, that “Sales is not Rocket Science but it is much harder”.
In addition, people confuse the difference between Marketing and Sales. Even Fred Wilson wrote a very controversial post and changed it with a Bug Report. Fred has a post from Rand Fiskin (who BTW was suppose to participate in Startup Iceland 2013 but due to schedule conflicts could not make it, maybe we will get him next year :)), about Marketing and the Bubble where Rand has a great picture.
This picture illustrates the need for focus, what happens in early teams is that you are strapped for resource so you basically need to put all your emphasis in finding the Product to Market fit and to make it a Minimum Viable Product, once there is a glimmer to light in that direction you need to have someone else focused on the Sales and Marketing focus. This is hard if you are one man team, unless you know how to do it. I have also written about building killer startup teams. The trick is always to make sure you surround yourself with the people with the right focus to execute. Knowing when to swing the pendulum within your team is an Art, but the signals are usually very clear.
As we are starting the preparation for Startup Iceland 2013 (have you signed up and marked your calendar yet?), one of the elements of building startup ecosystem is to bring more investors into venture investing group. I think there are many avenues for Entrepreneurs to get started like Startup Weekend, Startup Reykjavik, Innovit Incubator and the University Startup Weekend class etc in Iceland, however, there is not a lot of activities that are centered around investors. I have been searching for model that we could adopt here in Iceland and I finally found someone who is doing this in Seattle – John Sechrest. You can read about John here.
Seattle Angel Conference
The biggest challenge in Angel and Venture Investing is not RISK, there I have said it it is not about Risk it is about not being able to devote enough time for the amount of capital that one invests. Just to give you an example, a typical angel investor may invest from $10000 to $100000 per company and in order to really spread the investments one needs to take 3 to 5 companies. Given with Angel investing one needs to spend 6+ hours a week for every company, investors need to spend considerable amount of time for a small size of the investment. In addition, one cannot make a living doing this, again there I have said it. If you think you are going to make a living doing Angel Investing or Venture Investing, the truth hits you quite harshly across the face when you are starting out. The pay window if you are successful in Angel Investing or Venture Investing is nothing less than 5 years, you could get lucky but that is kind of the average and the returns are lumpy ie you don’t get a steady stream of returns but one or two lumpy payments if the companies you invest in gets an exit. So, why would someone go through all this pain to make a living… well, the same reason why an Entrepreneur goes through all the pain to start a company and build things of value. There is a reason it is called Angel Capital :)
Back to practical matters, John shared with me a template for a conference that he has organized in Seattle, called the Seattle Angel Conference. I think it is a sensible model that could work to bring new investor groups into the world of Angel investing and Venture investing. For everything we need a few good women and men, and John has assembled that group in Seattle. I have invited him to come and share his experience in Startup Iceland. The gist of Angel Conference is pretty simple:
- A group of Angel’s come together form a Limited Liability Company (LLC or ehf in Iceland)
- Each of the members commit capital ie $5000 each
- LLC Manager is elected
- 6 to 10 weeks of due diligence is conducted by the group that came together
- 5 to 10 companies are picked to pitch during the conference
- A subset of the companies are funded by the LLC and all members can participate as mentors or advisors to the companies that were picked
This is an incredible value for Angel investors, a seasoned group can guide new Angel investors into the world of venture investing. This model is very similar to the Mentorship driven accelerators that have become so successful. Of all the things that have been said and done, everyone can learn when we collaborate and work together. I am big believe that bringing diverse group of people together and throwing a challenge to them and providing the right incentive can facilitate solution to any problem. I think Iceland needs a better class of Investors, other than the posers! we need someone really committed to building the startup ecosystem. koma svo!
Saw the documentary “Something Ventured – The Risk, Reward and the Original Venture Capitalists“. It was great! loved it… it was so much fun to see or rather to get transported to a time when it all started and all the challenges that the industry veterans like Arthur Rock, Tom Perkins and Don Valentine talk about when they started. It is actually quite interesting to see the background of those who basically started the industry of Venture investing. Arthur Rock came from the Investment Banking business, Tom Perkins was an Engineer and Don Valentine was a Marketing and Sales Executive. The common theme that just got reinforced for me is that all these smart people almost 60 years ago faced the same questions and challenges.
The language that they use is quite reveling, for example “I was an accidental entrepreneur”, “We really did not know what we were doing”, “There was enormous risk when we started”. It would be even more interesting to see all those who failed miserably in this business, because that is the nature of this industry. We have a survivorship bias, ie only those who survive tell the story.
Someone had to see the opportunity, but none of them knew where it was going. And it is also very interesting to me that when they all ventured to raise capital they all got a LOT of NOs… that is how VC capital raise works.
The summary of the documentary for me was something very profund and simple, Entrepreneurs are the leaders without Entrepreneurs there is no VC business. To the credit of all the VCs who survived long enough to tell the story is that all of them were extremely hands on ie. they helped entrepreneurs in every and all ways they could. They brought in mentoring, expertise, business networks, business relationships etc. Even the Steve Jobs of Apple had to learn management, marketing and sales and distribution from Don Valentine and Mike Markkula, Marketing Manager at Intel and Don Valentine used to be the Marketing person in Fairchild Semiconductors. There is a huge body of knowledge that gets missed when we look at Entrepreneurs who have been successful, there are a number of people who help them, mentor them and guide them to reach that vision. That in my view is the art of Venture Investing.
All the VCs worked with the companies to build them and many of the VCs passed on opportunities. The classic quote was by Nolan Bushnell, the founder of Atari – “I could have had 1/3rd of Apple for $50.000… big mistake”, ‘cos he passed on the opportunity! Not just that, even Don Valentine passed on Apple until Mark Markkula took over Apple as its President and CEO and built a very powerful board with experience and expertise to guide the company. A lot of that information gets lost when someone looks at the shinny new iPhone. End of the day it is always People who make things happen and putting the right team together is an Art. Successful VCs know how to do it and when to do it and what is needed. It is not taught in School but through their life experiences. If you are a VC or an investor, ask yourself are you doing the same amount of work that these people did? and if you are an Entrepreneur ask yourself do you have the right board and advisors and investors who can help you to execute and achieve your vision.
Here is the list of pioneer VCs interviewed in the movie.
||Early investor in Fairchild Semiconductor, Intel, Apple and Teledyne
||Founder of Kleiner Perkins Caufield & Byers, early investor in companies linke Genentech and Tandem
||Founder of Sequoia Capital; early investor in companies like Apple, Cisco, Oracle, Electronic Arts and LSI Logic
||Founder of New Enterprise Associates, investor in companies like PowerPoint, Juniper Networks, Macromedia and Dallas Semiconductor
||Founder of Institutional Venture Partners
||Founder of Sutter Hill Ventures; Founder of Draper Richards
||Co-founder of Draper and Johnson Investment; Founder of Asset Management Company
||Founder of US Venture Partners
||Founder of Bryan and Edwards
||One of the early developers of the venture financing structure still in use today
The WordPress.com stats helper monkeys prepared a 2012 annual report for this blog. Thank you to all our readers and guest blogger.
Here’s an excerpt:
4,329 films were submitted to the 2012 Cannes Film Festival. This blog had 27,000 views in 2012. If each view were a film, this blog would power 6 Film Festivals
Click here to see the complete report.
We have started the preparation for Startup Iceland 2013. While the full blow website is getting ready to be launched, I have created a Sign Up page. If you are already signed up for Startup Iceland 2012 and this blog, could you please sign up again and share with your network? We have created an Executive Summary for the Conference, check it out. We are going to have some very interesting speakers and discussion on Building Startup Communities and Ecosystems. Those who are part of the mailing list will get the updates and the journey. I plan to document the journey leading up to the conference just like I did last year.
We have confirmation of participation from:
- Brad Feld Managing Director of Foundry Group
- Jason Mendelson Managing Director of Foundry Group
- Ryan McIntyre Managing Director of Foundry Group
- Helga Waage Co-founder and CTO of Mobilitus
- Angela Jackson, Managing Director of Portland Seed Fund
- Howard Lindzon, CEO of StockTwits, Angle Investor and Twitter personality
- Alex Torrenegra, CEO of VoiceBunny and a lot more check out his LinkedIn profile
- Rebeca Hwang, CEO of YouNoodle
We may have cancelation and updates to this group but we will have more mentors as the momentum builds up. We will have them in different roles for their participation as Speakers, Mentors and other activities. As I mentioned in my previous post, we plan to have an Unconference Event the day before the lectures, where some of these participants will play the role of mentors so everyone who is going to participate in the conference gets a chance to block time with them to ask them any question and pick their brain. So if you are not into listening to lectures then you may want to participate to meet these people one on one and build your network.
As more details role out, you should get updates on a regular basis leading to the conference. We have some wonderful Sponsors already and they are in the order they have signed up:
- U.S Embassy in Reykjavik – Ambassador Arreage and his Team have shown true leadership in signing up to be the first sponsors of Startup Iceland again. I would like to thank them at the outset. I will do a more detailed profile of each sponsor like I did last year in subsequent blog posts.
- Reykjavik University – Rector Ari Kristinn Jónsson, Kristine Helen Falgren, Kristinn R. Thorisson and Björn Þór Jónsson have been extremely generous with their time and resources to support any effort that helps the Entrepreneurship and Startups in Iceland.
- Icelandair Group – Icelandair group has always been a great sponsor for our initiatives. I would like to thank Addy Olafsdottir and Bogi Nils Bogasson and the whole Icelandair team that supported us with travel arrangements and accommodation last year. They have once again shown leadership and have agreed to do more this year. We are very excited to have them as our sponsors once again.
- WEDO – The Web design, development and marketing company is sponsoring the design and development of the website. I would like to thank Gudmundur R. Einarson (GRE), Orri Helgasson and Charles Christie for their support, participation and commitment
- GreenQloud – The Startup Iceland 2013 Conference website will be hosted in GreenQloud. I think building sustainable antifragile startup and entrepreneurial ecosystem should use sustainable energy sources to run the infrastructure. I would like to thank the GreenQloud team for sponsoring and helping with this initiative.
- 2013 – A New Beginning (startupiceland.com)
- Startup Slovenia (startupiceland.com)
- StartupVille (startupiceland.com)
- Tolerance, Inclusion and Prosperity (startupiceland.com)
Picture taken in Reykjavik by me
2012 was eventful. The Startup Community in Iceland is starting to thrive, we are seeing green shoots everywhere. More optimism, courage and eagerness to start and build things of value. I have been quite off-line from the blog-sphere due to my current role of building a new company. It has been a very interesting last 6 months. However, Startup Iceland is live and kicking. We will organize a bunch of events starting with the Startup Iceland 2013 – A Conference on Building Antifragile Startup Ecosystems in the first week of June, more specifically June 1,2,3 and 4th. I have adopted the word Antifragility thanks to Nicholas Nassim Taleb. I have written a lot about his work and I do believe his latest book on Antifragility is his best compilation yet. This years conference is going to be a 4 day event. We will have a hackathon, an Unconference Event and a TEDx like format day of talks and lectures. The website is under development and should be launched soon. All the details, how to sign up etc will be shared through the website. I am really excited to start the new year with so much momentum based on the work the community here in Iceland has done the last year. If we look back, here are all the Startup Related Events that happened in Iceland in 2012.
- Startup Weekend – more than 10 startup weekends were organized by Innovit with sponsorship from Landsbanki
- Grass root book club and entrepreneurship discussions organized through Hugmyndaráðuneytið – Lean Startup was the book we discussed. I blogged about it most of the meetups.
- Startup Iceland 2012 – Conference that brought Brad Feld, Brad Burnham, Ted Zoller and many other entrepreneurs from around the world to Iceland. Here is a summary of the event. If you missed the event here are the videos.
- Startup Reykjavik 2012 – First mentorship based accelerator launched in Iceland and the first class graduated
- Seed Forum – has been happening in Iceland for quite sometime but the level of participation and the quality of speakers and investors took a turn for the better this year.
I believe through this blog I have documented all the major things that have happened in Iceland the past year. I will continue to do that in the coming year. There are very few thoughts that fundamentally change how you view the world and this year, my focus in on Antifragility i.e how we can become stronger by having an affinity towards the random, uncertain events. I believe that is the world we live in and I have embraced it. There are a few principles that I want to live by and Brad Feld wrote a very interesting post on LinkedIn about it “Give before you get“, I have always lived by this philosophy and I will continue to do more in the coming year. Startup Iceland is built with that principle. There is no transaction involved in all the effort that I have and a number of other volunteers put in to building this ecosystem in Iceland. It is a testament to the power of Giving.