Startable - Healy Jones’ & Prasad Thammineni’s Blog

Techcrunch is reporting on Facebook’s new “opener” API. Facebook is trying to encourage outside developers to create tools and applications that play off of the status update on Facebook, similar to how developers have embraced Twitter and created many useful tools like TwitterBerry and Twhirl. 

I can remember how, about a year ago, a typical venture capitalist question to web startups was “what is your Facebook strategy?” That irrational Facebook exuberance has been replaced by an understanding that FB and Twitter are more of marketing tools than anything else for most web companies.

I feel that Twitter’s status updates are evolving into more of a useful marketing channel than Facebook. I’m not personally sure if it is because of the differences between the two services’ APIs… My theory would be that Twitter is benefiting by the different type of relationship that the service fosters. While Twitter encourages simple, very public interactions between people with little to no off-line (dare I say “real?”) relationships, Facebook is based on dialogs between more deeply connected individuals. Thus, I follow people on Twitter I would not have a relationship with on FB (such as IBM’s Center for Social Software, ctr4socialsoft - sorry IBM, you can’t be my Facebook friend). 

Would love to get other people’s opinions!

Returning to the theme of pretty much useless tips for the entrepreneur pitching their startup to venture capital funds:

VC Pitch Tip #6 - Bring a USB drive with your pitch saved on it

For a first pitch with a VC you will probably walk through a fund raising presentation. It is likely that the venture capitalist will have a screen onto which you will project your slide deck. Usually getting your laptop to interact with the screen is pretty easy… but occasionally its not. Recently an entrepreneur was meeting with me, and despite the best efforts of this CEO, our tech guy and several administrative assistants, we couldn’t get the laptop to be recognized by the projector. 

Thankfully, this entrepreneur had his presentation on a USB drive and was able to quickly get us the deck to print. This made it much easier for us to learn about his business and hear the pitch. (A different time that this happened we used the drive to transfer the presentation to a random laptop we had and projected from there.)

This doesn’t happen very often; I’d say every few months - and we see many, many startups per month. So, the probability of this problem happening is very low but the downside is pretty large. You only have one shot to make a first impression, and who wants to be nervous/struggling with a stupid projector when you are supposed to be getting the room excited about your business?!? A USB drive is good insurance against technical difficulties, doesn’t rely on you having to connect to the internet to email/share your presentation and is easily understood technology by the person who will likely be doing the printing for you at the VC’s office.

Not a huge surprise, but a recent BDO Seidman (an accounting firm) survey of 100 technology CFOs revealed a pretty dour view on technology companies’ prospects for 2009. While most early stage (seed and series A stage startups) investors’ companies probably don’t even have full time CFOs, the attitudes of larger technology companies’ CFOs are quite telling.

Some pretty obvious findings, including a prediction in a drop in revenues for 2009. Others, such as the aggressive steps already taken to reduce head count are a bit more shocking:

As a response to the financial crisis, almost two-thirds (61%) of CFOs state that their company has restructured operations, including reducing their workforce.

Wow! What does this mean for the technology startup entrepreneur? That there is talent out there! Engineers without jobs, and also technologists + sales people within large organizations not feeling great about their current position…

I was recently turned onto an academic post on the the “Success of Persistent Entrepreneurs.” Two HBS professors have recently concluded that repeat entrepreneurs who have been successful in the past are substantially more likely to have success in their second venture than novice or previously failed entrepreneurs. This study centered around entrepreneurs whose first startup raised venture capital: 

“Successful entrepreneurs in the study had a 34 percent chance of succeeding in their next venture-backed firm, compared with 23 percent for those who previously failed and 22 percent for first-timers.”

This is something that venture capital firms have been acting on since … well, since I know about! (Of course, I haven’t been doing this long enough to really know when it started, but I’m pretty sure VCs have always preferred to work with previously successful entrepreneurs.) Given a choice between two equally affable, competent seeming, well regarded founders with similar business plans, VC’s will pick the previously successful entrepreneur to back every time. 

So what can you do if this is your first time as a startup founder and you are looking to raise venture capital funding? (Or I guess if you’ve failed at your first?) Attract a successful entrepreneur to your team! VCs LOVE LOVE LOVE getting involved with successful entrepreneurs’ projects, so go get yourself a successful entrepreneur! While it would be best if you can get them to join your management team - and by best I mean what the VC would like best, maybe not what you would like best - you can still get some of this successful entrepreneur pixie dust by having this person join your board or by having them as an active advisor to the business.

How do you meet a successful entrepreneur? Hopefully you can easily network to one in or around your particular industry. Conferences, industry networking groups or trade associations, or even lawyers can help you. Some of the young startup founders I’ve spent time with have literally cold called successful entrepreneurs and gotten them to become advisers of their startup. If your idea is good enough, and if you can explain it well enough, you should be able to attract the right people to your side.

I came across this HBS blog post from Darmesh Shah’s twitter feed (OnStartups) - I’d suggest you follow him, as he comes across some pretty interesting stuff.

Suddenly two venture backed technology companies have filed to go public – after a very long drought. This is a very hopeful sign, as the filings indicate that perhaps (perhaps!) the stock market is settling down enough to allow new IPOs. 

The two companies, OpenTable and Medidata Systems, both have some legit venture capital backers who historically have had numerous exits from IPOs. (Bessemer and Insight, for OpenTable and Medidata, respectively.) 

Some interesting take aways from these filings (I have no inside info or anything at all on these companies or their offerings, so am basing the following points on the company’s S-1’s):

• Bankers need market stability to get an IPO priced. Public market investors, such as the mutual funds who take big pieces of companies when they go public, are too skittish to buy into an IPO when the market is jumping up and down by huge % swings on a daily basis. These investors don’t want to look stupid if they catch a falling knife and get caught with too big of a chunk of a hard to trade new issue if the market is dropping. So, the bankers on these IPOs must be confident enough that the market is stable enough to get these deals prices. Let’s hope they are right.
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