Tag Archive for 'entrepreneurs'

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Why I like angel list

Feedback is now coming out about Angel list, a new service from the blog Venturehacks. It’s a simple concept: get a group of angel investors and promise you will send quality deal flow to them that’s been vetted; likewise say to entrepreneurs that all they need to do is fill out a form and they will get access to some of the smartest investors in Silicon Valley. It’s so simple that is hurts, and yet only people like Naval Ravikant and Babak “Nivi” Nivi would be able to pull it off as it takes serious credibility to get both groups involved. Venturehacks in my opinion is the number two blog on venture and investment in technology, after Fred Wilson’s blog.

Angel list is a special thing that I believe will transform Silicon Valley. Much like how Michael Arrington exploited the market dynamic to make TechCrunch the success it was, Ravikant and Nivi is doing the same thing by connecting entrepreneurs with investors. And not just any investors: the early stage investors that startups really need. Simply put, it’s reducing the costs of innovation in Silicon Valley – the ‘thing’ that has changed the world.

I really hope the industry rallies around this and collaboration opportunities with other high profile angels continue. Jason Calacanis for example is doing something equally impressive with the Open Angel forum, and I sense they both have equal motivations due to their annoyance at how other investor groups have abused their position in the industry. Even though I see them adding different value to the startup scene (they’re similar but different – and should stay different for maximum value creation), all I can say is “awesome – I want more”.

The Startup Bus – looking into this crazy experiment in innovation

What happens when you put 25 entrepreneurs on a bus from San Francisco to Austin? Well duh – six new startups of course! Since TechCrunch announced to the world about my crazy experiment, I frantically organised what has one of the more memorable experiences in my life. It was hard work to get sponsors, get people, get the bus – and even down to the wire, have WIFI. But I pulled it off, and now I’m ready to share to the world what happened.

I’m going to write a blog series that will answer the following questions:
* What worked?
* What didn’t work?
* What were all the ideas?
* What ideas got rejected?
* Who was on all the teams and what were there roles?
* Did people flake out before/during/after (and if so how did that get addressed)?
* What are the state of the projects now?
* Are we planning to do something like this again?
* Did anything crazy happen during the trip?

Below you’ll find links to posts I will write on the event (as I write them). Above the links, you will find a video of me explaining to the “buspreneurs” why I think this experiment is valuable, regardless of the outcome.

Relate blog posts:
Phil McKinney talks innovation to the Startup Bus/

This blog post is a series on the Startup Bus, an event that occurred in March 2010 that was powered by Alassian, mentored by the eStrategy Group and supported by several other very generous sponsors.

The Startup Bus

Well, I guess it’s happening now! TechCrunch just wrote about my latest crazy idea which is still only days old in my organisation. It’s a bus from San Francisco that travels to Austin with 12 strangers. The catch? Those 12 people need to conceive, build and launch three startups by the time they arrive, to a packed audience of real tech entrepreneurs.

The concept is to put a remarkable amount of constraints (moving bus, strangers, 48 hours, crappy connectivity, sleep deprivation) among a group of smart people (and the people so far asking to join, include people who have built million dollar businesses). In my experience with these things, real startups can emerge from these efforts (like OpenOnDemand.com/ or BinaryPlex.com, which is where the founders met), but the real motivation is to give a learning experience – and so I am structuring the program so that it maximises that as the experience. I guess you could say it’s like training, or as my friends Bart Jellema and Kim Chen coined for the Australian startup camps, “excercise for entrepreneurs”.

Leena Rao from TechCrunch makes an argument that these efforts can stir up emotions and controversy. But that’s exactly the point – in building a startup, you face obstacles. And if don’t deal with them – which include infighting, things breaking, and crazy pressure – then chances are, you’re not made for the startup world. Which is why these experiences are so valuable – you give people practice and exposure to these issues, and you end up developing better entrepreneurs.

As they say: good judgment comes from experience, but to get experience, you need to have made bad judgment. Here’s to developing entrepreneurs, so that they have better judgment with their real startups one day.

Huge opportunities for exposure for sponsors, which will fund this experience. Contact me for more.

Do entrepreneurs have an expiry date?

Startup’s that are built-to-flip (ie, sold early on) may be the best and dominant way to sustain innovation. How so? Because through observation of the brilliant people I’ve met in technology startup world, I’ve come to realise an important lesson: entrepreneur’s have an expiry date.

I just don’t care any more
I started writing this post sitting in my parents living room last week in Sydney, where I visited for the Christmas break to spend time with family. Chatting away with my parents, my father said something very startling but also very relevant. He was talking about his 73 years of life and the 47 years he’s had as a lawyer. Once a fiery dragon in the courts and of life, he’s now an aged playboy winding himself down. He said he’s thinking of giving it up and going into retirement, as he has been working these last few years purely for the passion. Why quit now, I asked: “I just don’t care anymore”.

I’ve got countless anecdotal examples (but none I can share specifically here, sorry). People I thought that were pushing to create global businesses, are now giving way to other priorities and looking to sell their very valuable company. People who have been involved with a startup for over four years, that’s only now exploding in growth, but feeling fatigued and ready to move on.

It’s not just entrepreneurs
A good friend of mine who has worked for five years at a big bank, is now looking for a change in employer. Several other friends, who have been in long-term romantic relationships for around 3-5 years, are now feeling the pressure of making a decision: get married or stop wasting her time. And sometimes it’s not them making the decision – but it’s what she’s probably thinking.

Passion, fire and ambition is needed to start something – whether it be a new job at a big brand company, a new company that disrupts the industry, or a partner that reinvigorates your life. But like life itself, there is a predictable pattern that follows. What gets born will also mature – and will die, one day. It’s just how life is; what goes up, will go down as well.

Build to flip: it’s a good thing
Bringing this back to the point of this post, I want to highlight that the obsession to build a sustainable business is actually not a normal thing. And I said obsession, because a few years ago I made a naive plea that that was the only way. Now that I’ve seen more, I’ve realised it’s a way but not the common way.

People that create businesses are creative. The same reason that makes them creative, is also the same reason that has them get bored when a process gets repeatable. The types of personality that start a company and battle during its pre-revenue days, are vastly different from the ones that help grow and manage a profitable business.

So the next time people criticise a company that doesn’t stay the course towards an IPO, and let’s itself get bought out – just remember, that sometimes, it’s because the people behind them just don’t care anymore. And that’s perfectly alright. Don’t fight it – it’s how it is.

Why I’m angry

Here’s why my blood is boiling: the Australian government’s Internet filter is getting the green light.

About two years ago, I got a whiff of a stupid policy by the newly elected government. So I wrote a letter to the Minister and complained. The Minister gave me a lame response six months later, and people in the industry didn’t think it was a big deal, like I did.

Turns out they were wrong. A year later after my letter, we received further word about the progression of this policy that would make us comparable to that shining beacon of democracy, China. So this time, I wrote a letter to all of Australia’s senators: http://www.siliconbeachaustralia.org/ruddfilter/.

My intended impact was successful: a group of senators holding the balance of power responded to me. What followed as the Silicon Beach community discussed it (which is an informal grouping of Australian tech entrepreneurs) was an uproar, that spilled into the mainstream media. It rattled the government, and so it should have – that’s how democracy works.

The government went into hiding, and now 12 months later they’ve now announced compulsory filtering of the Internet, despite its questionable trials. I’m embarrassed by my nation as this entire process has been a farce, and disgusted at the ignorant, corrupt, and politicking occurring by this government. And the most frustrating thing? Its been two years and this government continues with their lies. As I said nine months ago, this is a cancer that will slowly kill the Internet.. And two years on, its been proven there is nothing we can do but just sit back and watch.

How to become a global innovation centre

In May 2009, the Australian government asked me what should they be doing to build Australia’s technology sector. I responded by asking the 600 people who have self-identified themselves as technology entrepreneurs in Australia, and over several months wrote a paper in a crowd-sourced way, to send this formal submission to the government. Later this week Senator Kate Lundy will be hosting a public sphere event, which will be an influential event that could change Australia’s direction and government policy in technology.

Here is a video I was asked to do explaining the paper.

You can read the submission here, which I’m sure other countries may find useful – it may not be right, but it’s what a portion of Australia’s entrepreneurial community thinks.

Understanding entrepreneurs

Lachlan Hardy the other week was saying to Mick Liubinskas, myself, and others at the Sydney weekly Official Friday Drinks, that he doesn’t like “entrepreneurs” or at least people that call themselves that because he thinks it’s a silly term. We ended up having a lively debate and explored if there truly is value in an “entrepreneurs” degree. I thought I’d dig into what exactly an entrepreneur is because it’s an interesting term as Lachlan and the boys got me thinking.

Kid entrepreneur

I’ve had the label ‘entrepreneur’ slapped on me twice before without me even realising I was. The first time, I was 15 and lining up in the bank after school. The fat uniform shop lady from my school told me that she needed to get ahead of me, as she obviously had a lot more money to deposit over what she probably thought was me emptying out my piggy bank of $50 in coins. When it finally got to my turn, the bank teller remarked where did I manage to collect all that money (I think it was $5000). I told her I was organising my schools semi-formal, and I was collecting the ticket money. Just after I said that, the fat uniform shop lady waddled past me and quipped: “no – it’s because he’s an entrepreneur” and gave me a look and smile as if to say ‘you smart little bugger‘.

The second time I was called that was at work. In 2006 I pitched a proposal to have social media technologies implemented into the core operation of my rather large firm, which two years on, has successfully occurred. Early on, maybe six months into the roll-out, my home business unit (who would eventually use the technology but had no idea what I was doing behind the scenes in other parts of the firm) gave me an award in front of a few hundred people. As my skinny business unit leader described the story he said the “networking” award which I was being awarded is not appropriate, and instead should be regarded as an “entrepreneurs” award because that’s really what I am.

Weird eh? In the spirit of community, I organised a party for my school mates. Due to frustrations with my workflow, I attempted to make my workplace more efficient. Both those instances, were recognised as entrepreneurial. Fat lady called me an entrepreneur because I had a stack of cash in my hand; my stick-man boss’s boss called me an entrepreneur because I managed to convince senior management though contacts I developed to implement my idea.

What’s the common link?

What is this “Entrepreneur” that you speak of, sire?
According to WordNet, an entrepreneur is: “someone who organizes a business venture and assumes the risk for it“. Or the Oxford dictionary which states: “a person who sets up a business or businesses”.

This is very much in line with how people view the word – but there’s a problem with this definition. Let’s have a high-level look at the types of entrepreneurs.

Immrant entrepreneur

There’s the glorified king of them all – ‘The Entrepreneur’ – who starts a business and then lists on the stock exchange or gets bought out for one-hundred million dollars and makes it as Times person of the year. WordNet and Oxford definition’s through and through.

A second type, the intrapreneur, is an entrepreneur stuck in a big company but displays the same traits as a ‘real’ entrepreneur. The defining difference being they don’t take the same risk of capital loss as their ‘real’ buddies. And correspondingly, don’t get the same rewards.

A third type, is the social entrepreneur like my friend Donnie Maclurcan who started up Project Australia. This is an emerging type, but when people hear about them there’s a bit of confusion. I mean, how does a non-profit venture yield, um, profit – isn’t that what entrepreneurialism is about?

All the above are entrepreneurial, but they don’t match the definition because of a misguided understanding: we are using money to measure it.

Entrepreneurialism is more like a combination of a risk-taker (different from gambler) and passionate expert, who generates value in our society. It’s almost like a function in our society – some people are conductors, others are saxophonists, and others play the violin. Different people pick their specialty: the violinists are playing music according to their function and develop accordingly; the conductors similarly according to their function. Extend the definition with people that love to be employees, and others that love to be managers. There is a different skill class required, and quite often, people in one class don’t want to be in the other (like how some computer developers who love their trade, get pulled away from their passion into management which they call admin). An entrepreneur, like an bridge engineer, is someones who’s flagged ‘I’m on the lookout to build structures of value’ except the former is building structures for markets as opposed to the latter who is building structures for transportation.

The traditional definitions we use are inconsistent. How can you describe something using such a one-dimensional view as finance when really what we are describing are components to a job function or perhaps even a type of labour class. They are almost like an artist, trying to perfect the synthesis of the four factors of production: land, labour, capital, enterprise. With the rise of the corporation as the dominant institution in our society, we’ve forgotten that our society was built by individuals who would otherwise be called an entrepreneur: sole traders selling to a market. We now group ourselves in a collective (a company) for the apparent ‘economies of scale’, as we can minimise our transaction costs.

Here’s an illustration with how the definition is at conflict with how we use it from the “risk” point of view. Most family businesses, like the local fruit-shop when they started, raised capital in the form of a bank loan. They very much are taking a risk there (the risk of bankruptcy) – but we probably don’t spare a moment in thinking the risk they took makes them “entrepreneurs”.

Contrast that to people innovating in technology. Typically a college kid comes up with a great new idea, and he then goes and raises funding from angel investors and then venture capital. What’s the risk there? If the venture fails, the money does not get enforced on the entrepreneur to be paid. People simply pack up shop with low heads and that’s it. In the upside, sure the entrepreneur needs to share profits. But if the only loss they face is the feeling of disappointment and perhaps, the $2 in capital they contributed to start the company, does this mean they are not entrepreneurs?

A better definition
This definition is from my favourite Frenchman, or at least, the guy that made me stop hating the French – and that’s saying something! (Greek waiters and French chefs do not work well under the same roof!)
Twitter _ Loic Le Meur_ _entrepreneur_
Loic says it’s simply someone who moves resources from lower yield areas to higher yielding ones. The man that coined this was an admirer of Adam Smith’s “Wealth of Nations” but felt Smith underplayed the role of an entrepreneur in capitalism. So if you have a fan in your house cooling a room where no one is sitting, it’s moving that fan to the room where there are 20 people that are boiling hot due to the hot weather. It’s a person who has the initiative to reallocate a resource to where the demand and appreciation of that resource is. Bringing it back to economics, entrepreneurs are one of the major reasons our market economy works – and the market economy, despite it’s weaknesses in some areas, is a brilliant system at organising our society.

The WordNet definition is the typical interpretation of an entrepreneur in society, whilst the Loic interpretation is truer to the source of the word. Reconsidered in this light, I’ve now come to appreciate that as annoying entrepreneurs can be (it takes a certain kind- very much a me, me, me view on things; mavericks who upset the order – which sounds heroic but the reality is that they are a real pain in the arse; and the “shut-the-hell-up-Ive-already-heard-you-talk-about-that-idea-a-hundred-times” trait), we certainly shouldn’t diminish their role in society. And if someone identifies themselves as one, I would say they are simply flagging their place in the personality tree: don’t mock it, be aware of it.

The Wizards of Oz

The Internet has enabled a new world-order, causing people from the CEO down in almost every industry, an amazing amount of grief. The music industry, the newspaper industry, the telecommunications industry – heck, even tangible non-digital products like books – have been challenged at the core. However what these CEO’s have begun to realise, is that the Digital Age is no longer a threat, but a vehicle for growth.

Innovation is a key source of competitive advantage. And if you are an established company, innovation is hard. What takes six months of trying to convince the right people, jumping through hoops to keep internal stakeholders happy, and then finally releasing a half-baked product that is dramatically cut down from your vision – could be done by a bunch of college students in a garage over a weekend. Economies of scale is no longer an advantage in the Information Age – small, agile teams are.

In America – Google, Yahoo, Microsoft, News Corp, IAC and the rest – rely on acquisitions to fuel their innovation. An amazing amount of innovation is occurring on the web at the moment – not just new products but new business models. And the above mentioned companies have realised that acquiring a start-up early on, is a cheap way to innovate – as well as a great way to recruit.
But what about Australia?

Like America, we have a strong Internet industry with some clever entrepreneurs. But unlike America – no one is acquiring them. Could it be executives of this country’s leading companies just don’t know how much talent is available onshore? Well working in a professional services company that advises these companies, I am sure of it. Even a tech-savvy person like me is still discovering the amazing amount of talent and potential in my city, let alone country.

So here is to educating – both you and me – as I begin to start profiling innovation in Australia To make a suggestion for me to review on my blog, post it here