SiliconHouse Launches, Provides Housing for Entrepreneurs

SiliconHouse_LogoI’ve hear more than once from startup founders that come to Silicon Valley that housing is one of the biggest challenges they face. Especially for those that only want to stay here a month or so to build their networks, make some presentations, and get back home. If ‘home’ is a foreign country, then the issue of housing is compounded by the fact that for many foreigners the Silicon Valley culture and way of life might seem weird and getting their bearings and learning how to best user their time is not easy.

With this in mind, SiliconHouse is trying to change the equation and provide not only a place to stay but also some guidance on how to navigate the Silicon Valley startup scene.

Check out my full post about SiliconHouse at the Startup Grind website.

How Important is Culture at a Startup

Charging for Coffee

I remember the day when a former senior executive from ATT came to talk to us at the MBA program and he had an interesting story. After a successful career at ATT he was asked to help turn around a struggling startup. They were bleeding money, had to cut their losses fast and either close shop or somehow convince the investors that there was a light at the end of the tunnel.

One of the first things he did when he arrived was to convene a town hall style meeting. All employees came to the cafeteria, and he and the senior managers stood in front of a microphone to take questions and communicate the coming changes. You could feel the stress in the air and cut the tension with a knife. The first question he was asked as about the vending machines. “What will happen to the vending machines” someone asked from the back. All eyes were on him. He knew that his answer would define him in the eyes of employees as a friend or foe. The CFO, next to him, was calm, she thought she knew the answer to the question. They talked before about the cost structure, where the money was going and what non-essential items would have to be cut. For the CFO this answer was a no-brainer.

“Right now, I don’t see a reason to remove or change anything related to the vending machines” he answered. The CFO almost choked as she looked at him with that “are you F… crazy?” look. But the employees were relieved and the rest of the meeting went well. In the eyes of the employees he was now OK.

What is Your Culture

Culture is not something you can buy, you have to build it slowly and consistently. Who you hire will help determine the type of culture of your company as will the policies, the benefits, and the perks you put in place.

Read more about startup culture and the right and wrong things to do in my recent post at Startup Grind titled Why Culture Matters, Even In Your Startup. I hope you enjoy!

How NOT to Market Your Startup

Money down the drainSo you’ve got a product that’s getting ready for prime time and now you need to drum up some buzz and get things ready to generate some sales? Great, so now what?

The Marketing Side of Things

A recent blog post titled “Why I Fired My Marketing Agency” by Brian Signorelli highlights some of the things I’ve seen happen with startups that don’t give marketing enough importance. People who fall in this trap are usually tech founders with no business or marketing experience and that bend to pressures coming from VC’s, the board, or they simply try to imitate their previous company or a competitor. Their plan typically goes something like this:

  • First, build prototype
  • Second, get beta users, feedback
  • Third, iterate and get product ready
  • Fourth, launch
  • Fifth, start marketing and generating sales

The problem with this thought process is that it won’t work. Or at least it won’t be as easy as you think it will. Rob Walling has written about why you should start marketing the day you start coding and Jason Cohen has done many great posts about startup marketing, including what not to do as you market your product. If there is ONE thing you must remember is that you should start marketing your startup way before you have the product ready to launch. 

Marketing Agencies and Your Startup

But I digress. Let’s go back to the problem Brian had with a marketing agency. It’s not that marketing agencies or consultants are bad, is that you have to understand how they work and, more importantly, what do you want to get out of the relationship. If more twitter followers are part of your marketing strategy, then go for it. If, on the other hand you need a demand generation plan, then make it clear from the get-go.

A common mistake startups and small businesses make when hiring outsiders (agencies, contractors, etc.) to help or run their marketing programs is thinking that you can outsource it just as you did with your payroll, HR, or tax preparation. Not having someone at your company that owns (i.e. is responsible and accountable) for marketing will cost you dearly. You need someone that clearly understands your product, history, value proposition, target audience, and that can tell your story. Yes, having a marketing agency, or marketing consultants can help get things done but don’t think you can just hire them and forget about it. You’ll just be throwing money away.

 

Why Founding Team Diversity is Important

Business Model CanvasThere’s a very interesting blog post on Harvard Business Review site, Reversing the Decline in Big Ideas, that talks about why we don’t see more startups tackling the “I want to change the world” goal.

One argument the author makes is the lack of diversity in the founding team, more specifically the lack of subject matter experts.

“The missing piece from the DNA in the founding teams of transformational companies is now the domain expert, who has deep insight into the industry they are trying to disrupt.” – Max Marmer

It’s interesting and I have thought about it for a while, why two startups competing in the same industry, having the same technology can have so different results. The answer typically lies in the business side of the equation (how they market the product, distribution, etc.). At every event I go there’s inevitably a handful of companies that tell me they are doing something I have heard a couple times before from other startup founders. What will make them succeed or what will be their pitfall? How can you tell which one has better chances of succeeding?

Don’t Ignore the Business Guy

In a time where developers are the most sought-after talent, the composition of the team sometimes shows a gap. You have a very strong developer, a great UI person, but the business guy (or girl) is often neglected. Well, unless you can find a developer or UI person that has deep industry/market experience, you will need that business person to help out. Without them, it’s unlikely your startup will succeed.

Embrace Your Weakness

What’s a startup to do when their weakness become visible? How do you take charge and revert the situation in your favor? Check out my recent post at Startup Grind and let me know what you think.

“Never forget who you are, for surely the world won’t. Make it your strength. Then it can never be your weakness. Armor yourself in it, and it will never be used to hurt you.” – Tyrion Lannister, A Game of Thrones

The Five Marketing Mistakes that May Kill Your Startup

I meet a lot of startup founders here in Silicon Valley, with all kinds of great ideas to revolutionize the world. They range from those who just started to get their startup going to those who have raised significant amount of VC money. Since my background is Marketing, I am always interested in learning how other startups are getting the word out about their products and how they are structuring their marketing processes.

Unfortunately, with a few exceptions, the majority of startups that have tech-heavy founders end up ignoring Marketing, thinking that having a website, creating a Twitter and Facebook accounts, and doing some PR is enough. As I thought about the common mistakes most startups make when it comes to Marketing, I came up with the list of the five most common themes I see out there. So here you go:

1. Waiting to start marketing until you are ready to launch

This is the most common mistake I see tech founders make. They focus so much on building the product that they forget that Marketing should start way, way before you are ready to launch. This means getting your website up, starting a blog, doing some active listening on Twitter, Facebook, LinkedIn and other social platforms, and crafting your ‘buyer personas’. If you start creating content from day 1 and generating interest, your battle for the minds of your potential customers will already be on its way. Thinking that once you launch you can just send out a press release and do some email blasts will get you nowhere and may kill your chances at surviving.

2. Mimicking marketing tactics of your competitors and other players

Typical of those who came from large organizations and are building a killer application to go head-to-head with the incumbent, I usually see this with B2B enterprise apps. The reasoning is usually something like: “Well, Microsoft goes to these 15 trade shows and so we have to be there”, or “At SAP we used to do [A] and [B] all the time!”. Just because something worked for a Fortune 500 company doesn’t mean it will have the same effect at your startup. Their budgets are different, their positioning is different, they whole go-to-market strategy is different. Spend your marketing dollars wisely, don’t simply copy what others have done.

3. Leaving marketing to the marketing team

David Packard, the “P” in Hewlett-Packard, once said “Marketing is too important to be left to the marketing department“. What this means is that if you think that by hiring a Marketing Manager at some point in your startup life, marketing will be taken care of, then you will fail. Get everyone on Twitter, ask people to blog, make sure everyone in your startup knows exactly what you are building, to whom, and why. Marketing is a job that starts with the sales person and goes all the way to technical support. There’s a lot we could talk about here, but just leave with one thought: Marketing is more than a function.

4. Placing all your bets on outbound marketing

You may not be familiar with the term “outbound marketing”, so let me explain. Advertising, cold-calls, trade shows, email blasts and many other marketing activities that push content and interrupt customers are the ‘outbound’ tactics. It used to be that you just had to have a great PR team, place great ads on selected magazines, and send a few direct mail campaigns to generate leads. Now, that doesn’t work. If you have only a limited marketing budget, then you should invest in “inbound marketing”, which means creating great content and works pulling customers towards your company by publishing content they are interested in. A combination of inbound and outbound is necessary for most businesses, and 80% of it should be inbound marketing, even before you start coding.

5. Thinking that your product is your brand

This is something brand strategists call “the product-attribution fixation trap”, or in other words “focusing on features of your products and ignoring everything else”. You see this all the time. Most websites talk about how great the features of the product are, and you can’t even understand what the product does. Or a company becomes known for one product they created and can’t make people realize they have other products as well. In some cases, people don’t even know the name of the company, they just remember the name of the product. If you have built your company around a product, then you may fail. Focusing only on product attributes will devalue your startup’s brand image, will  lock your efforts in the product and make you lose opportunities. It will also damage your company if you have to pivot and change the direction of your startup.

Where to Go from Here

Even if you don’t agree that these five key marketing mistakes may kill your startup, I beg you to at least think differently about the marketing role at your startup or company. A great way to understand some of these typical problems are expertly presented by Seth Godin in this presentation he gave at the Business of Software Conference back in 2008.

Seth Godin at BOS 2008

In What Do You Believe?

Before I decided to quit my day job, move to San Francisco and work on my startup I had many conversations with my co-founder about our beliefs. Maybe because we were both coming from a corporate culture that we thought was broken, or because we had aspirations of becoming a great place to work we talked about what we believed would  be the best way to treat employees, the right way to serve customers, and what was the pain we believed the market had and that we could solve with our product.

My recent post at Startup Grind, The Secret for Success: Believe, discusses these issues. Head there to read the full story and to contribute to the discussion.

The Little Startup That Could Have Been

While Dropbox and Box command the media attention and VC investment, Yousendit – the service that helped pioneer file sharing – is still alive and, for the time being, doing well.

The Year is 2004

Let’s go back to 2004 when Yousendit was launched. Sure, there was Kazaa, Gnutella, and others offering peer-to-peer file sharing, but if you wanted to send someone that huge Powerpoint or Photoshop file (without the risk of getting a virus) you didn’t have many options other than burning and mailing a CD.

At the time, your Hotmail account allowed you up to 2MB of file storage. You had to keep deleting old emails with attachments. Google’s newly released Gmail service giving 1GB of storage wouldn’t be publicly available until later in 2007 with about 2GB of storage (which would then prompt Yahoo to give unlimited storage to their Yahoo Mail users). And businesses running Microsoft Exchange servers limited users’ inbox size as well to maybe a couple hundred megs. I still remember our IT admin kept complaining that we were emailing files to each other too often and he needed more disk space.  And I got the “your mailbox is over its size limit” message every other week.

Enter Yousendit. The service allowed you to upload a big file, then email a link to whoever needed access. It was confidential (only the recipient with the link could download the file), fast (no attachments), and pretty affordable (files up to 5MB was free). Brilliant. Usage skyrocketed. What could go wrong?

The FORGOTTEN founder

I always wondered why Dropbox and Box, to name just two services, were able to become so successful so quickly while Yousendit seemed stuck in the past. Sure, Dropbox is not focused on file sharing per se, they promote “cloud storage”, but Yousendit could have taken the market leadership position easily. And only recently (2011) did they announce a “dropbox-like” feature giving unlimited cloud storage for their users. They already had the infrastructure, the product, the users. What happened?

My answers came in the form of a recent Inc Magazine article, The Forgotten Founder. It sheds some light into the company’s story, and helps explain why such a promising service was plagued with problems. Also shows how important it is to have a great team assembled and what mistakes we all should try to avoid. Was this the reason Yousendit didn’t evolve the service until now? I can’t say for certain but I bet it has a lot to do with it. Could Yousendit have become what Dropbox is today?

The future

Box and Dropbox are the darlings, attracting hundreds of millions in capital investment. But they are not alone… and there is always someone that can jump into this game and shake up the market. Check below a short list of similar file sharing / cloud storage services, their launch dates, and total VC investment in each company to date. Let’s see what happens next! 

File Sharing and cloud storage solutions

  • 2004: Yousendit ($48.7M)
  • 2004: SugarSync ($41.5M)
  • 2005: Mozy ($1.9M, acquired by EMC in 2007 for $76M)
  • 2006: Box ($159M)
  • 2006: Carbonite ($66M)
  • 2007: Dropbox ($257M)
  • 2007: Google Docs
  • 2007: Jungle Disk (Acquired by Rackspace in 2008)
  • 2007: Windows Live skydrive
  • 2008: Syncplicity ($2.35M)
Sources for the figures are Crunchbase and Wikipedia.
For a visual representation of the funding timeline for the key players, see the image below (click to enlarge).
Cloud Storage Funding Timeline

Funding timeline for key cloud storage players


Want to Get Funded? Attend LAUNCH

Startup founders know that every time they pitch their startup is an opportunity to either a) get funded; b) get press; or c) hire someone great. What if you could do all three at the same time? Well, the upcoming Launch Conference might  be the place to be.

Funding for Winners

Jason Calacanis recently announced that the LAUNCH Festival has just raised $269 thousand dollars in prizes. During the conference about 40 companies will have only a few minutes to present their ideas and wow the crowd and the judges. This is how it will work:

  1.  Companies present in one of two competitions (new product or improved/new release)
  2. A total of 10 companies are awarded winners
  3. TechStars will accept one of the companies into its next semester (valued at $118K)
  4. Venture51 will provide $51L to the winner of the 1.0 competition (new product launch)
  5. CRV will select one company to invest $100K

If CRV were to select the winner of the 1.0 competition, and that company joined TechStars, it would have $269k in total investment.

I’m blown away by the graciousness and support of our partners. This event would not exist without the huge support of a collection of people who believe startups should have a free, merit-based event to LAUNCH their innovations to the world. – Jason Calacanis

But, even if only one (or a couple) are the chosen ones for TechStars, Venture51, and CRV, based on last years event other startups are likely to get attention from eager investors (GreenGoose closed $500K, right after the event, for example).

This is Just Getting Better

The conference should be interesting not only for the startups attending, but also because of the man behind it. Calacanis is known for being outspoken and getting into heated arguments. Lawsuits, name-calling, nothing seemed to be off-limits to the founder of Mahalo in his dispute with Michael Arrington. But, things have cooled off a bit lately and some might say that “love is in the air“. Who knows?

In any case, attending the conference should be an interesting experience.

LAUNCH FESTIVAL 2012

  • When: March 7 and 8, 2012
  • Where: San Francisco Design Center
  • What: Launch 1.0 (new product), Launch 2.0 (existing companies with new products or new releases), and Demo Pit

You Are Right. VCs Don’t Know Shit.

On his blog, Lee Hower (one of LinkedIn founders) has an interesting post titled Making good decisions still means you are sometimes wrongin which he talks about the tough choices VCs have when deciding which startup to back. There are so many deals coming their way, they can’t possibly bet on every single one of them and identifying good opportunities, especially early stage, is really difficult.

I especially liked his link to Bessemer’s “anti-portfolio” web page where they show companies they declined to invest in and have great comments on why. Just goes to show that you shouldn’t feel bad after that meeting where the VC tells you the startup you have been working on and investing your life savings is not interesting to them. Maybe they are missing on the next eBay, Google, or PayPal. Just maybe. 😉