I will ignore the obvious reasons to blog, such as search engine goodness, brand building, etc. Instead, I’ll focus on why your startup blog matters to a VC.
If you are trying to raise venture capital, a blog isn’t a bad idea because:
A VC might find YOU via your blog. This is true – VCs just don’t sit on their butts and wait for new investments to walk in the door. In fact, some VCs actually know how to use Google… and during our research into your space might we just might stumble across your thoughts and then contact you.
Thought leadership/PR. If you are a really well known blogger in your space then you will potentially get quoted in press articles and/or asked to speak at events. Since most VCs can read (and a few can even listen) there is a chance that they will be so intrigued by what you’ve said that they reach out to you. Read the rest of this entry »
Pretend you are on the board of a startup. Unfortunately, this startup is not living up to its potential, and is failing to get sales traction as you and the team hoped. Why are sales not materializing? I had a brief, but insightful, conversation with one of my partners today. This partner (like most venture capitalists) is on several startup boards. Most of these startups are growing quite well; however, one of them is not.
The question is why? From a board level, it is quite difficult for a venture capitalist to determine the cause of the startup’s sales slippage. Is it the sales team? Or is it a market/product issue?
This is the quote Anand Rajaram, one of the co-founders of Pixily, used when being interviewed by Mass High Tech for their weekly journal. Christopher Calnan, the staff writer at Mass High Tech wanted to know how Cloud Computing was impacting hardware infrastructure for his article Cloud computing bursting on the corporate scene.
I think this quote captures the essence of what cloud computing is doing to hardware costs. I strongly believe cloud computing should be part of every entrepreneur’s technology strategy. Let me start by summarizing how open source has become part of a startup’s strategy before making a case for cloud computing.
The Olympics are almost upon us, and I’m sure there are about to be a ton of cliched articles and blog posts about how the Olympic Athletes can teach venture capitalists and startup CEOs lessons about achieving big/taking risks/going for gold, etc. But, there is another highly motivating athletic contest going on right now – and it’s a lot cooler than the Olympics. I’m talking about the X Games, and in particular the Skateboarding Big Air Challenge. This skating event starts with a 70 jump, and gets hairy from there… The key lesson I took away from this event was that you’re more likely to push yourself when you surround yourself with peers who are doing the same (my other takeaway was that these guys are are totally nuts). Most of the startup CEOs and founders I know who are pushing the boundries of innovation aren’t operating in a vacuum. Instead, they spend lots of time with other founders and collectively push themselves. While I’m sure some of them could do it alone, why would you? Being a CEO of a startup is lonely enough; find peers who can keep you going strong.
I doubt any of the X Games contestants would pull the caliber of tricks they do if it weren’t for the fact that they are constantly spending time with each other. Seeing the other skaters’ tricks leads them to think of new moves to invent. They also know how hard each of the other skaters worked to develop their skills, and thus know how much effort they need to bring to the table to prepare for and compete in these events. When one of the top skaters, Danny Way, took several hard falls but kept coming back for more he inspired the others to go for broke. The eventual winner, Bob Burnquist, pulled an amazing trick (an ollie 180 into an Indy 360 – landed backwards!) to win. When asked afterwards how he had the guts to try such an insane landing, he said “Every time Danny slammed, it was like, how can someone slam that many times and get back up? I skate with him all the time and I have seen him go down and he’s got this mind that is unparalleled, and I get inspired by it.” Here is a video of the medal winning runs, and also Danny Way’s insane falls (keep in mind these guys are jumping a 70 foot gap. *the video has been loading a bit slowly; it’s worth the wait*):
The cost to acquire new customer/users will change over time, particularly if you are using the web to acquire users. Companies I meet with often have difficulties projecting what their cost to acquire customers will be as they first launch their product. It’s a lot like riding a roller coaster in the dark. This is completely understandable – if you are doing something truly new you’ve got to make a number of assumptions based on really loose information. Experienced executives operating in their native industries can make very good guesses at customer acquisition cost, especially if their companies have a sales force component. Younger internet CEOs are often playing in a completely new environment, so experimentation is usually required to develop better visibility.
(I’ve gotten some feedback that a few of my posts are a bit long, so I’m going to break this one up into two posts. This is part 1)
I am lucky enough to work with a number of startups over an extended period of time and I get to see some pretty similar patterns emerging around customer acquisition costs. These patterns tend to be accelerated for internet companies but also seem to hold for other technology startups. I’m sure there are plenty of examples that do not fit into the framework I’m proposing below, and welcome comments from readers! I could also be ripping off some theory I was taught in business school – if so, sorry for restating the obvious. Since this is a blog about events early in a startups life-cycle, I’m talking about the cost to acquire a new customer during the time frame of a company’s early launch.
Knowing how to build your technical team when you’re founding a startup up but don’t have a technical background is challenging. I was reminded of this while I was having a few beers with Ariel Diaz, founder of YouCastr, a local startup focused on online sports broadcasting, and Todd Galloway, co-founder of Fafarazzi. Ariel is not a programmer or techie, but has managed to put together a solid technical team; Todd is technically solid and has also successfully hired several programmers. We were talking with another young CEO starting a business who had deep domain expertise and contacts, but who needed a technical person on his team.
When you are a non-techie starting a technology business, you’ve got two basic problems when you try to make your first technical addition to the team: 1) you haven’t got the network to easily find the right people; 2) you don’t know enough to evaluate the people you do find. (A third question is employee vs. co-founder, which I take a stab at below.)
Ariel’s basic advice was to acknowledge that you don’t know what you are doing, so you need to find the people who can help you. He aggressively networked with friends who were starting companies and he recommended using connections with schools you’ve attended (assuming they have a computer science department or an equivalent department focused on the technology you need.) If you’re luckly/good you can get them to help with both issues.
One thing you must do before starting a new business is to talk to potential customers. Make sure you can answer the question, “who is going to buy/use this?” Figure out as much about your potential customer base early in your startup idea generation and then apply that knowledge against what you are trying to accomplish. Sitting down with and listening to potential customers before beginning your startup can help you justify all the effort you are about to expend, can help you focus your development on the exact solution that the market needs and can help you understand how to create a the right product positioning.
For some reason some consumer focused startup CEOs like to tell venture capitalists, “even my Mom/Dad will use it!” Of course your relatives will use your product; they’re your parents! Your Mom is not a focus group. Use online surveys. Find expert or passionate bloggers in the space that you are targeting and speak with them. (Yes, these people will likely talk to you, and if you’re eventually going to talk to venture capitalists about funding your business, you’d better get to them first, because VC’s will make those calls while they are evaluating your opportunity…) Talk to sales people targeting similar users. If you’re selling to big corporations, have you reached the people who will be buying your solution?
The Startable blog has been started as a way for Prasad, a young entrepreneur (“E” said), and me, a young venture capitalist (“V” said), to share our ideas on starting new companies with the world, and hopefully for us to hear the opinions of smart, experienced people in the startup community. I’ll be writing from my perspective as a new(ish) venture investor. You should expect my opinions to change as I become more experienced and listen to your feedback.
The Startable blog was started by Prasad Thammineni, a Serial Entrepreneur and founder of OfficeDrop, an online cloud storage and Mac scanner software provider, maker of ScanDrop scanning software, and Healy Jones, who does marketing, business development and finance at OfficeDrop and former Venture Capitalist to share their ideas on starting new companies with the world, and hopefully to hear the opinions of smart, experienced people in the startup community.
Healy Jones | 
10 14th, 2008| 
In an earlier post Prasad Thammineni makes a thesis for why startups should blog. He also asks the question, “Do VCs care if startups have a blog?” As a venture capitalist, I would say, “yes, a startup blog is not a bad idea.”
