Are You Captain of Your Destiny?

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Returning to quickly skim my blog reader 1,000+ after two weeks’ head-in-the-sand, I see ‘Pownce acquired,’ and ‘Yahoo’s Chief of Insights Joins Bunchball.’ My spin radar immediately starts blipping, because I know that behind the ‘good news,’ guts are wrenching. Decisions are being made for people, and that never feels good. Yet another reminder that all the sacrifices may well be worth captaining your own destiny.

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Sustaining yourself with a small business doesn’t make headlines. Money-raising has been the mainstay of startup news since venture capital exploded on the scene in the ’80s. ‘Huffington Post Nabs $25M.’ And why not? It was validation that the company ‘has arrived.’ It was the Big Show. But ask any CEO what changes when investors step in. Everything.

No, they’re not (necessarily) evil. They’re just bound and determined to turn your company into a successful exit. It’s their job, in fact. It’s not about you, or even your technology.

Chances are, your primary mission is not to achieve successful exit. (If it is, you’re probably going to fail.) For most of you, it is about you — your passion for your technology, or your customers, or what you do.

If it sounds like that’s at odds with investors, well it often is.

So when Bunchball (the Silicon Valley company that applies gaming mechanics to making sites stickier) announces its new ex-Yahoo CEO, I hear a founder’s gut wrenching. When crafts-aggregator Etsy announces former NPR Digital head Maria Thomas taking the helm, I hear a gut wrenching.

Often from the outside, the decisions seem right. Geeky founders often don’t make the transition to leadership — ubergeek Bill Gates is an exception — and Heidrick & Struggles and CTPartners (formerly Christian & Timbers) and the like make a lot of money plucking SVPs out of big companies and placing them in VC-funded startups. (The genealogy of silly titles can actually be traced back to CEOs being made to step down — where do you think Chief Product Officer, Chief Strategy Officer, Chief of Insights, and other staff titles came from?) But then, investors aren’t all-wise. Gross blunders are made at the highest levels. (Remember when Pepsi head Sculley was brought in to run Apple? Not to mention Gil Amelio . . .)

There’s really only one way to avoid decisions in your company being made for you: captain your own destiny.

That usually means going slow, growing customer by customer, often staying small. If you want to go ‘big’ — and not everyone does — you’re most likely to find yourself at the investment/management crossroads. As an ambitious technologist/hard-core developer, you might decide to bring in someone to run the business. (Hey, it happens — sometimes founders themselves honestly recognize the need for new leadership.) That bespeaks true wisdom on the part of tech founders. Eric Schmidt’s install at Google was a coup — not a coup d’etat.

In his blog post, ‘10 Tips for Building a Profitable Business,’ Dogster CEO Ted Rheingold’s entreated:

So constantly ask yourself, are we spending 50% of our time selling? I bet you’ll always realize you’re focusing too much on the product and not enough on finding customers that want it.

Any of us who’ve consulted know that hard truth: love doing the work, hate hustling to get it. If that’s you, and you find yourself running a company, you either need to embrace being the CEO (read: chief salesman) and quit coding, or find someone who’s a good complement to you to do that job and leave you to program (or design, or write, or do whatever it is that you really do best.)

Once you’ve piloted your ship (to belabor the metaphor) past the shoals into the smooth waters of profitability and solvency, and feel the need to raise cash, get big, and pull away from your competition, the dynamics of a deal with a VC changes radically — you get the money on your terms. Still el capitan!

I’ve observed a lot of folks in charge of their destiny lately. (In the month of November, 533,000 who were not, had their ships sunk for them — so much for job security.) Software, the Interwebs, automatic ads, SEO, and (yes) social networking have made it a greater possibility than ever — unlike the previous waves of semiconductors, PCs, and computer networking. It’s akin to the artisans of the Renaissance — with skills, there’s always work. Entrepreneurs today can be captains of their destiny.

And I truly admire you folks. The ones scrapping it out, making a living, while they build their business, serve their customers, and develop a following. Those of you who eat, drink, and sleep (not much) your startups.

Remind yourself this at the end of your crappiest days: You’re the one making the decisions. Go make some really tough ones.

Working the Workshops


Web 2.0 Expo New York 2008

There are tons of informative sessions at Web 2.0 Expo. I especially like the Day 1 workshops. Maybe it’s the no-break, three-hour block . . . the fewer tracks . . . or the reduced traffic, since a good many folks opt out of Day 1 to save money. Shame.

If you’re a coder, there are solid technical workshops. But even though I’ve started up several companies, today I made a beeline for the startup and financing workshops. Why? Mainly because the scene/climate is constantly changing. But also because, just as with a pitch meeting, you always come away with some useful nuggets.

At the Web 2.0 Expo in San Francisco in April, it was ‘Starting Up: Strategies for Financing & Growing Your Web 2.0 Startup,’ put on by Rob Hayes of First Round Capital and Jeff Clavier of Softtech VC. Today, it was ‘Casing the Startup Joint: Real Life Examples of Startup Opportunities, Issues, and Strategic Decision Making,’ presented by Albert Wenger of Union Square Ventures, along with Charlie O’Donnell of Path 101 (Charlie was formerly an analyst with USV).

[Fellow East Coast startups take note: Both USV (New York) and First Round (just outside Philadelphia) are early-early stage VCs. Both are on my radar for CHALLENJ -- but despite what First Round says about investing on Powerpoints, I don't plan to approach either until our app is built; USV makes it clear they want something working.]

Here are a few random nuggets from today:

- Shift from hard-coded documents to live ones Although crafting a clear (if not pretty) business plan is still advised (if for nothing else, it gets everyone in the company on the same page, so to speak), VCs would rather see your competitive analysis in a wiki. “It also tells us that you have an ongoing process for tracking competitors,” according to USV’s Wenger. And if your .ppt deck doesn’t change nearly every time you deliver it, by definition it’s stale.

- Reduce your risks before applying Be mindful of the four buckets of risk before you approach any investor: 1) Team, 2) Technology; 3) Market; and 4) Capital Requirements. Says Wenger: “We can handle one — maybe two — but that’s it. (I’m working on my team — any killer PHP coders out there?)

- Rejection by one VC firm has no reflection on your business Suck it up. Firms like USV do fewer than 20 investments a year (and some of them are later stage). If they pass — presuming you’ve been sufficiently persistent — move on. (The corollary to this of course is, if 40 firms pass on your deal . . . it’s time to retool.)

- State of angel investment The thin g to remember — and it’s good news — is that the number of angel investors is 10x the number of VCs. But you have to work a lot of venues to find them, since most don’t hang out a shingle with wings on it — uncles, friends of the family, doctors, they all count. The bad news? When Wall Street flails (as it’s doing right now), even the wealthy get skittish. As O’Donnell puts it, “The rich tend to write fewer checks when they feel less rich.”

Lastly, it’s always interesting to hear the war stories from other startup CEOs. To be honest, I’ve made enough mistakes that I don’t learn all that much in these ‘true-confession’ sessions . . . but there’s something comforting in knowing that really smart people also did some dumb things.