Your Product Is A Distraction

  Distraction

Magicians know all about the use of distractions. Flash something shiny over here, while they change something over there. Like lemmings we, the audience, stare at the flashiest thing in sight, unable to see the dull and mundane.

Here's the problem. Your product is flashy. No matter how drab the colors, the pupils of your customers, partners, and investors will feel the gravitational pull of your product in any conversation where it's present.

Want to talk strategy? Well, you better hide your product under your mattress. If it glimmers into the consciousness of your audience, you'll have to revisit strategy another day.

Products are so distracting that once they rear their lovely head, your audience will have trouble re-focusing on another topic.

Once upon a time, I tried to brainstorm with my investors about contacts that they might have in particular customer segments. Foolishly, I sought to warm them up with the latest view of my product. Two hours of feedback on colors, buttons, and approaches ensued. No matter how hard I tried, they would not let the product leave the stage, ensuring that they didn't have time to contemplate how their Rolodex might be helpful.

Products are exciting and fun. Too exciting and fun. Whether you're speaking to your team, investors, or customers, you'll need to be selective about when you let your product attend meetings...because it will always get all of the attention.

This post originally appeared on Inc.com

Hiring People I Like

  Posse

When I left my last job and set out to build Kohort, I laid out a few personal goals. One of them was simply to always work with people that I like and that I hoped would like each other. When you get to pick the team you can prioritize things like that.

When I started hiring I wondered if this approach was too self-indulgent.  I now believe, that it's the cornerstone of building a great culture through your founding team.  

While focusing on hiring people you like doesn't mean that you ignore talent, skill-set and beyond, it does mean that once you find the *right* person for the job making sure they're a fit with the culture is worthwhile.  

Good culture = happier team.  Happier team = more productivity, easier recruiting and a more fun work environment for everyone (including me).

So far so good. I really love our team. They’re all people I hope to stay friends with. Our recent trip to SXSW really confirmed this.  Living with other people is hard. Habits and ticks typically becoming annoying quickly. But that didn’t happen. We worked hard and found ourselves laughing morning, afternoon and night.

I only hope that we have a reason to travel with the rest of the team next time. Laughing that hard is good for the soul.

Don't Let Expenses Snowball

SnowballMy mom used to say: 'The things you own end up owning you.' While there's probably a psychological argument buried in there somewhere, there are some tactical implications of this phrase.

When you buy something, you're also stuck protecting, maintaining, and supporting that product or service. You become its caretaker. And taking care of things, of course, costs more money.

  • If you buy a new car, you'll need to get it insured…and washed. 
  • Your new clothes need tailoring and then dry cleaning. 
  • Your AC unit needs maintenance. 
  • Your dog needs to see the vet.

Expenses snowball. One expense begets another. The true cost of one object is often far greater than the initial price tag would lead you to believe.

This is an important thing to understand before a founder opens up his or her checkbook to buy something for the company. While getting a new TV for the conference room seems to balance in your checkbook, you must also factor in the cost of installation, the complementary speakers, monthly cable fees, and maintenance. The full cost of ownership might not fit into a bootstrapper's budget.

This concept applies nearly everywhere in a company. It even applies to people. If you hire a new employee, his or her salary isn't the real cost to the company. You must also factor in employment taxes, benefits, office space, and equipment, to name a few.

The trick to managing expenses while bootstrapping in the early days of a start-up is to always look around corners. Before you turn a new direction and make a purchase, peek—and think through—what's in store.

This post originally appeared on Inc.com.

Why Entrepreneur Communities Matter

Sxswpostcard2I just landed back from my trip to SXSW. It was a lot of fun but it was also inspiring. The energy & passion to drive change bubbled up from every street corner, dive bar and seat in conference.

The highlight of the trip for me was the panel that I participated in. The topic was “Creating Entrepreneurship Communities In Your City”. The panelists were all rockstars who have had a major impact on our startup ecosystem.

  • Paige Craig has become the godfather of Silicon Beach,  
  • Nick Seguin operates like a community puppet master from the perch of the Kauffman Foundation,  
  • Andrew Yang is transforming college grads into entrepreneurs through Venture For America,  
  • Marc Nager is infusing innovation support groups through StartupWeekend’s massive program,  
  • Jeff Slobotski has breathed more life into the Omaha region, 
  • Brad Feld (who couldn’t make it) has helped transform Colorado, and  
  • Shane Reiser and I are on a mission to bring startup communities to every university and region in the world.

While most panels hypnotize audiences into yawning, this panel had soul.

The question that got me thinking the most was “what makes a community successful?” The usual responses come to mind – capital, educated talent, etc. The missing piece that bubbled up from the conversation is the community itself.

Communities not only give entrepreneurs the ability to access resources and find teammates, but also provide the alleviation of fear. Starting a company is scary. It can be terrifying to leave the safety of a steady paycheck, especially when your friends and family think you’re throwing away a career and jeopardizing the wellbeing of your family.

This is where community can provide a dose of sanity. Meeting with other sane people who have chosen the startup path and hearing their words of encouragement can accelerate the rate with which new founders will fall from the branches of your local corporations and into your startup ecosystem.

Entrepreneurs are people - and for anyone straying from the herd alone can be overwhelming.  As a result, creating a community that simply allows would-be-entrepreneurs to join a different herd (rather than go solo) is one of the major keys to bringing startupland to your hometown.  

Simply put - get people together.

Surprise: 5 Startup Expenses You Shouldn't Forget

Shocked
I had a whiz-bang financial model when I set out to ramp up Kohort, the social media start-up I co-founded. But even the best formatting and niftiest Excel tricks won't overcome the wrong inputs in your expense line.

Here are the top five expenses you could easily forget to plan for:

  1. Benefits & Employee Taxes: If you haven't made payroll before you might not know that the government charges you for employing people. The taxes vary by state and city, but be ready to pay above and beyond salaries. In addition, if you offer your team benefits, which you'll likely need to do in order to be competitive in the labor market, that'll add to the bill.

  2. Office Brokers & Equipment: When you get your first office (which might take a while, even after a seed round), the building will typically pay the broker fee. There are some instances, however, in which the building won't pay it and you'll need to. You can probably avoid this fee by asking brokers about it upfront, but you ought to set aside a little money for it if you're planning to get an office during the horizon of your budget. The other thing to consider is office "fitup" costs—furniture, electrical wiring, Internet installations, cleaning, and appliances. You might end up paying for these in addition to monthly rent…and it can easily exceed tens of thousands of dollars.

  3. Property & Casualty Insurance: Another line item that blindsides most entrepreneurs is insurance. There's insurance to cover you if your programming code doesn't work, insurance to protect your board members from lawsuits, and life insurance on "key" employees (founders). Insurance can add up. In the early days of the company, you could be looking at a $10,000 to $15,000 annual insurance bill.

  4. Trademarks & Domains: While most of us budget for legal fees tied to corporate formation, partnership agreements, and investments, there is a sneaky set of expenses that lurk around the corner if you're building a consumer-facing company. If you have a brand you'll want to protect, you'll need to file for a trademark, which can quickly run you a few thousand dollars, even on the cheap. Furthermore, you might find yourself needing to gobble up all of the domain extensions relating to your brand to ensure that there isn't a gambling site being operated offshore on your URL. If you rack up all of the offshore domains you might add $3,000 to $5,000 per year.

  5. Software Services: You and your team will need to use services to build your company. One company will need to host your website, another party will charge you to provide an email service, and if you have developers they'll need to license development software. While these expenses usually won't break the budget, they typically scale with your team. An incremental hire could cost more than you think.

 This post originally appeared on Inc.com.

 

 

 

Away For SXSW...

...back next week.

 

Building Bridges to MBAs & Speaking @ NYU

Digging TunnelsI was invited in to speak to a swarm of NYU Stern MBAs yesterday.  The stadium seating positioned lots of eyes to stare down at the topic at hand - how to get a job in VC.  You can pick up most of my thoughts about this on this page of my blog.  

While the conversation that ensued after the talk was engaging, what was more important to me is that I left inspired by the young leaders in our midst.  Brian Shimmerlik invited me to speak and he introduced me to a half dozen other student leaders while I was there.  These folks and many others have taken up the mantle to lay bricks of infrastructure that make our ecosystem stronger.

What's so important about these efforts in MBA programs is that the pathways to VC and entrepreneurship often exist outside of the structured MBA experience.  While being a student is a license to meet anyone and the network that MBA programs can provide is invaluable, would-be startupers and VCs will find most job opportunities the old-fashioned way - by pounding the pavement on their own.  

The challenge for most MBA students that aren't familiar with the space is that looking outside of the structured recruiting channels in the program isn't easy.  It requires, doing different activities than your peers, navigating your way into events that are pushed on you and a significant amount of initiative.  When you're overwhelmed with options WITHIN the MBA program it's difficult to contemplate pursuing activities OUTSIDE the program.

The folks at the EEX club at Stern, the NYUVC and others are doing just that - bringing in more speakers & building more programs to create better channels outside of the school.  I know the same thing is happening at Columbia and I can only assume that it is happening elsewhere.  It's energizing to see.

Startupland is semi-underground, hiding in budget office spaces and corralling at non-descript dive bars.  But don't be deterred.  While we probably won't have time to come to you, if you come to us you'll likely be met with open arms.

 

Kohort Has A New Office

It's been an exciting few weeks for the Kohort team.  We just scooped up a new space on 20th & Broadway and are now getting settled in.

Bright colors, comfy couches and "sturdy" IKEA desks now adorn the space.

Here are some pics from the move.

 

The Sun-Couch

IMG_0130

Benji "The Couch Model" Markoff

IMG_0126

Acrobat Painter

IMG_0191

Tech Block - It's Real, Beware

BlindEver tried to teach your grandma to use a computer? I did.

While she eventually figured it out, there was a period in which she was too scared to learn. She was afraid to click on buttons and links because she was afraid she would break something. When made properly, software isn't easily broken by amateur users, but it took her awhile to understand that and realize that there were no digital egg shells on the floor.

Once she realized she could explore a website without getting in trouble she started tinkering. And, as she played with the site more she programmed her brain to understand how to navigate it. She learned how to learn.

This is an important phenomenon to understand—I call the inability to do this "tech block". Tech block is a mental barrier that prevents people from understanding how to use technology typically because they're afraid to tinker.

What might surprise some founders is that while many might assume that this phenomenon is unique to people who didn't grow up with computers, there are droves of younger folks who are computer literate but who suffer from TechBlock. They cower from new websites. They're afraid to test, explore, and learn. As a result, they use outdated tools and decide to be an old dog disgruntled by new tricks.

As you can imagine having a person with tech block on the team of a tech startup doesn't bode well. They'll struggle to understand how to use the company's hot new product and won't proactively tinker with it to overcome the knowledge gap. Since people who build tech products rarely have tech block, you're more likely to uncover tech block lurking around your sales or business development team. The people who are speaking to your customers may not understand what they're selling. Terrifying.

When tech founders are hiring, knowing about this syndrome is a big deal. You'll need to test for tech block in the interview process. This is done rather easily by asking people if they use the latest social media toys. Typically if they're anywhere near the cutting edge they're capable of self-teaching. If they're not using social media, you may want to ask them to give you feedback on some other hot new products after the interview.

If you're not running a tech startup, be careful not to assume that tech block won't affect your company. Having people on your team who can identify and understand new tools can help your company operate faster, cheaper, smarter. Folks with tech block probably won't be suggesting new tools and solutions to your old problems.

While tech block may not bring your company to its knees, it may take some spring out of its step. Be warned and beware.

This post originally appeared on Inc.com.

Hot SXSW Panel: Building Entrepreneurship Communities

I'm heading down to SXSWi this year and I'm pleased to be sitting on panel organized by Kohort's Shane Reiser.

The panel is called “How to Build Entrepreneurship Communities” and will include my friends Brad Feld, Paige Craig, Nick Seguin, Mark Nager, and Andrew Yang.

If you have a good question that you want Shane to ask me or the other panelists, put it in the comments or tweet it to @kohort Here are the details for the panel:

What: How to Build Entrepreneurship Communities
Where: Hilton Austin Downtown, Salon D (500 East 4th Street)
When: Sunday, March 11th 3:30 PM- 4:30 PM CDT RSVP and see who else is going on Plancast here.