Posts Tagged ‘Startup’

What Has Happened to Our Startup Culture?

November 7, 2010 1 comment

What has happened to our “startup culture”? We are hearing about how greed and focus on short term profit brought world’s financial system into the verge of a complete collapse but heard nothing about other financial institutions misbehavior. Although large banks and their bosses blamed for the problem and punished; better to say singled out, we see same symptoms in all other sectors of investment and business related echo system like VCs. As I mentioned before, VC world is also about to change. From early 2000 until mid 2008, VC industry transformed from a real vibrant business into a fat and blind profit driven industry. VCs were just throwing money into “potential” companies/ideas and wait outside the ring to see what is going to happen. It was not 80s or 90s and they were not Kleiner or Moritz who build the company with entrepreneurs. VCs were the real force behind exploding job creation during 80s and 90s, by supporting real entrepreneurs and creating real companies. Time is passed for partners who use pre-IPO family and friends options and huge bonuses to milk their own baby. It is time for LPs to take a close look at the VCs and really vet them. Clearly something went wrong in the last ten year in the VC industry, let’s fix it for the next ten years.


Good Idea versus Good Opportunity

July 5, 2010 Leave a comment

There is a big difference between a good “idea” and a good “opportunity”. Most; if not all, of successful companies have been created based on a good opportunity rather than a good idea. I have seen university professors with fantastic ideas, but because of their lack of inside industry visions, there is no platform for their ideas to translate into a real business opportunity. Real opportunities are rather simple ideas with a very clear vision toward a real product. You need to create a team to translate a good idea into a good opportunity at the end!

Start-up Culture

December 30, 2009 Leave a comment

Last night I was talking to one of my old friends. He is a serial entrepreneur; starting couple of technology companies and had nice exists. He asked me what comes to my mind when I hear the word start-up; how old, how many employees, etc. And I didn’t have a good answer for his question!

I have seen lots of two years old companies, with millions of dolor raised as a start-up but act as a hundred years old big corporation. CEO is sitting in an office far away from engineering group and the real actions. People are fragmented into different groups. There is no transparency. And the famous “all hands meetings” once in a while!!! When you are working in a company with less than 50 employees every working day should be an all hands meeting. Start-up is a culture, a way that you mange and run a company, a state of mind to be involved in every details and actions.  Size and years in operation are really secondary factors.

Start-up Management Tips

December 25, 2009 Leave a comment

A good manager needs to spend more time with her/his team rather than his boss or peers. I have seen many middle managers working long hours behind closed doors to prepare weekly reports for their managers and cut themselves from day to day operations. These folks rely on high level and brief interactions with their directors. They do not spend time themselves to go through issues and picture the reality.

This can be a bigger problem in smaller companies. Because of the size and limited resources, you need to be more involved as a manager in day to day job. In start-ups you do not have the leverage of a highly structural organization. There is no clear vertical isolation between different functions and groups. Confusion is part of the game! But it is natural to solve the problem at the spot rather than pass it to other people. In a small organization you do not have that leverage.

Categories: Management Tags: , ,

Bad Signs for a Start-up Company

November 27, 2009 1 comment

When your management team is underutilized in a start-up company, office politics will take over the whole operations. Like kids; they should be busy with good activities that couldn’t find time to think about bad stuff.

In a small company everyone should be utilized 110%; your VP of engineering is on the road with field engineers and your CEO is moving the furniture in the office and going to Staples to buy stationary to save some money. If your higher management sits in the office and you have directors who communicate with other employees, you have executive assistance for a 50 people company something is wrong. When people are not busy with real operations, they feel vulnerable and start justifies their presence by artificial activities. At this stage, the whole intent is to perceive employees, board and other investors just to drag the operations for couple of more months and receive the paychecks as far as you can. Do you watch Office; they don’t have anything to do!

Too Much Money and Ego; If you want to kill a Start-up!

November 8, 2009 1 comment

In his article, Paul GrahamFiancial Disaster mentioned 18 mistakes that kill start-ups. Among them, two caught my attention. Number one, Single Founder! How many times you have seen a founder who can not convinced any other to join her/him or ego does not let her/him to share the glory with others. “Single founder syndrome” marginalizes start-up culture by reducing true power of founder! It is a one man show, she/he against others (VCs and other board members).

Raising too much money and spending a lot is another recipe for disaster!  Once you raise several million dollars of money, the clock is ticking. If VCs fund you, they’re not going to let you just put the money in the bank and keep operating as two guys living on ramen. They want that money to go to work. At the very least you’ll move into proper office space and hire more people. That will change the atmosphere, and not entirely for the better. Now most of your people will be employees rather than founders. They won’t be as committed; they’ll need to be told what to do; they’ll start to engage in office politics and you know the rest!

Kleiner’s Laws

October 28, 2009 1 comment

KleinerEugene Kleiner was always my favorite VC! My fascination started when I was doing my MBA and read his famous ten laws:

  1. Make sure the dog wants to eat the dog food. No matter how ground-breaking a new technology, how large a potential market, make certain customers actually want it.
  2. Build one business at a time. Most business plans are overly ambitious. Concentrate on being successful in one endeavor first.
  3. The time to take the tarts is when they’re being passed. If an environment is right for funding, go for it. Eugene, more than anyone, knew that venture capital goes in cycles.
  4. The problem with most companies is they don’t know what business they’re in.
  5. Even turkeys can fly in a high wind. In times of strong economies, even bad companies can look good.
  6. It’s easier to get a piece of an existing market than to create a new one.
  7. It’s difficult to see the picture when you’re inside the frame.
  8. After learning some of the tricks of the trade, some people think they know the trade. This reflected some of Eugene’s own humility; he recognized that many venture capitalists thought they were experts when they had just a bit of knowledge.
  9. Venture capitalists will stop at nothing to copy success.
  10. Invest in people, not just products. Eugene always respected founding entrepreneurs. He wanted to build companies with them not just with their ideas.

After being around startups for more than ten years and dealing with couple of them I know how true they are! “Build one business at a time. Most business plans are overly ambitious. Concentrate on being successful in one endeavor first”. Let focus and be successful in one technology/product and then jump to the new one. For the first four to five years, your product is your technology and your technology is your product. Your CTO is your VP of engineering and your VP of engineering is your CTO! When you have not delivered your first product, there is no need for future technologies and products. Even if you have the best portfolio of patents, without a solid product and revenue they are worthless! Do not believe me, ask Irvine Jacobs from Qualcomm.

“Even turkeys can fly in a high wind. In times of strong economies, even bad companies can look good”.  This is the story for early 2000 and 2007! When companies were out to raise money and no one vet them based on “their” value and what they have and not based on what is the hype out there. Companies with positive cash flow can go through the present storm and come out more solid and successful. Companies need cash and looking for investors to come out of this storm; will come out diluted and weak!

“It’s easier to get a piece of an existing market than to create a new one”. If market does not exist and you plan for a “potential” product for a “potential” market; good luck!

And my favorite; “Invest in people, not just products. Eugene always respected founding entrepreneurs. He wanted to build companies with them not just with their ideas”. Guys, if you think the founders are not right people to run the company for first five to six years, you do not have a company! DOS was not successful; it was the combination of Bill Gates and DOS which was a success. Apple Computer was not successful; it was combination of Steve Jobs and Apple Computer which was successful. Intel RAMs/Processors were not successful; it was combination of Noyce/Moore/Grove and their RAMs/Processors which was successful.Kleiner