unSEXY tech companies that… Just Make Money

The 1-day conference about unsexy tech companies that…Just Make Money was organized by 500Startups and hosted at an unsexy company, Microsoft, on August 9th in Mountain View.

I got an opportunity to attend after helping secure Coupons.com CEO Steven Boal to speak at the conference. Steven and I have a good long 8 year history going back to Australia/UK when he first invested in our company Couponstar Ltd and later acquired us to extend the International arm of Coupons, Inc.

The day kicked off with Jeff Lawson, CEO from Twilio speaking on Self-Service Models for Growth followed by Steven Boal, CEO, from Coupons on Disrupting unSEXY: The Tale of a $1 Billion Company that Changed an Industry. Concluding the morning session with Sexy time with PowerPoint: Hacking growth for SlideShare by Rashmi Sinha, CEO, Slideshare.

The jist of the morning talks was ~ sexy or not there is plenty of opportunity to disrupt an industry and make money. Believe and keep on pushing.

Morning session

Jeff Lawson, Twilio CEO
Jeff Lawson, Twilio CEO

Jeff Lawson, CEO of Twilio highlighted important points around doers and how to sell to them. Doers are power users. “Make a hero out of your doers” and they will live and breathe your passion. Empower them via your site by giving them:

  • a tour – what your product does,
  • pricing – does it solve their problem at a reasonable price and
  • how to get started – empower them to start playing around. Self service.

No shenanigans. Internet sheds light so they do not have to put up with shenanigans.
Finally invert the traditional sales model. First success, then transaction.

Steven Boal, CEO of Coupons.com (a 13-year-young company) gave everyone insights into an industry which coupons.com has disrupted. Coupons.com was built without taking any funding. Recently receiving a $200m infusion of capital valuing the company at $1B. Couponing is now becoming more digital than ever before. The old paper industry is fading into the distance and getting replaced by online channels. Coupons is at the forefront of digital couponing with its leading suite of digital channels like GroceryIQ, Coupons.com, Brandcaster (whitelabel solutions) et al. Frugal is the new black.

“If you think it is an overnight success… it is a long night” ~ Steven Boal

Steven Boal, Coupons.com CEO
Steven Boal, Coupons.com CEO

Rashmi Sinha, from Slideshare finished off the morning session with an interactive presentation describing their early days to growth to Microsoft acquisition. Rashmi’s message was Build, Solve problem/s THEN get Distribution. The slides from the presentation are located here.

Aaron Levie, CEO, Box.net did an onstage debate on How Box Arrived, Survived & Thrived in a Hype-Driven World with Dave McClure, Founding Partner of 500 Startups.

Wrapping up the morning session was a comical, slightly weird in a good way presentation by the CEO of MailChimp, Ben Chestnut. He bootstrapped the company without any funding whatsoever.

CEO of MailChimp, Ben Chestnut.
CEO of MailChimp, Ben Chestnut.

Ben’s 3 lessons to the hungry entrepreneurs in the room were:

  1. Stop obsessing about the competition or you will become and copy them.
  2. Fight really, really weird – creativity is just connecting things. You do well if you make it different but you kill it if you make it funny.
  3. Always. Be. Creating. (things) – encourage everyone to build fun projects on top of your API to show what is possible. No project should take longer than 2 weeks.
Mailchimp in SF
Mailchimp reminder in SF

Afternoon session

The afternoon session was made up of 2 Tracks in 2 different rooms. Track 1 was all about Product & Customer and Track 2 on Distribution & Marketing with speakers like Jive, Yammer, Zendesk, Uservoice, Kissmetrics, Cloudera, SurveyMonkey etc. I must admit I wanted to hear both tracks but it was hard when they ran in different rooms at the same time.

Mikkel Svane, CEO of Zendesk
Mikkel Svane, CEO of Zendesk

Zendesk have an Exclusive Offer for qualified startups to get Zendesk for FREE for 12 months! Start a trial now.

Some notable lessons:

“Use distribution hacks like Dropbox’s upgrade, refer, tweet for more space to reduce the cost of acquisition.” – Kissmetrics

“Before you do anything ask ‘Why’ NOT ‘No’.” – Yammer

“Features should announce themselves. Imagine a world without corporate training where no one has read a manual.” – Yammer

“Don’t anger a customer over pennies or they will try to destroy you.” – ZenDesk

“Do the math on how many $20 accounts you need to be a $100m business.” – UserVoice

Dave Goldberg, CEO of SurveyMonkey with Dave McClure
Dave Goldberg, CEO of SurveyMonkey with Dave McClure

The day concluded with presentations from the last 500Startups batch of startups like…

  • Happy Inspector – Fixing the way inspections are done. Led by thunder from down-under Jindou Lee,
  • Teamly – People management made easy. Led by Scott Allison.
  • Etc.

I got a chance to talk to many interesting people, learn about great products and service and make new friends. Through this experience I meet Aussie founders of ScriptRock, Happy Inspector and Flightfox whom are all working on exciting products & services. Aussie Aussie Aussie, Oi Oi Oi! Good to see Aussie power in Silicon Valley making a difference.

Finally, you can view all the unSEXY presentations from 500Startup’s SlideShare channel here.

There you have it. Plenty of kick ass companies disrupting their industry. The future looks exciting!

Safe journey!
~ Ernest

Startups and Equity: it’s all about being fair

Startups and Equity is often a complicated yet simple discussion that must take place before moving forward on a deal to come on board with equity in the compensation mix. It’s even harder when you are the 1st hire or a co-founder. The topic has definitely been debated a lot and there are many varying opinions online. Having been through this process before a few, I want to put this into simple so you don’t have to spend reading through every one resource and be left confused more than ever.

I will assume you are coming on board as a co-founder. Just the fact that you are at this point of the discussion with your co-founder is superb. Since this part only requires working out a “fair value” you both can be comfortable with.

Question 1 – are you both starting from ground zero?

An idea is still ground 0. If one of you have already executed an MVP then this is not ground 0.

If YES, Then Joel Spolsky’s advice nails it well. Split equity 50/50. Done.

Why?

  • Ideas are dime a dozen. It’s all about the execution of this idea. Both of you will work together to make it fly.
  • “Fairness, and the perception of fairness, is much more valuable than owning a large stake.” ~ Joel Spolsky
  • x3 the last point. I will expand on this in the next question.

If NO, then Question 2 – how much value has your co-founder already created?

There is no right or wrong here. Seriously. There is only 1 thing here. What was said above about “Fairness, and the perception of fairness”. Speak freely with your co-founder about this. Get external advice from advisors, friends, partner etc… You really need to be comfortable with whatever you finalize.

At this point you and your co-founder have to work out what is fair. For BOTH of you. There is no room for lies. Or cheating each other to gain the upper hand. This is NOT an employment contract. Successful founders are successful because they trust each other and are fair to each other. Angels / Investors invest in people. For this solid reason. Ethics are everything.

Remember that the journey ahead is long and so even if the company has already got traction you still will be adding a lot of value. What has been done to date will change. What has been done to date is the confirmation of something there which can turn into a successful business. Startup companies pivot frequently to find a business model that sticks. Most successful startups in the valley are not famous for what they started off. They are famous for their last pivot. Read FoundersatWork by JessicaLivingston (YC partner) to get a feel for this.

Start from the back

It is easiest to just start from the back. The back meaning “how much ownership do you want after 3 rounds of dilution.”. The dilution comes from rounds of investments (A, B and C). It helps if you already have a feel for the equity value you believe is fair.

A typical funding round dilutions look something like this:

Round A – 20 to 40%

Round B – 10 to 30%

Round C – 5 to 20%

A great Infographic produced by BothSidesofTheTable.com and visual.ly explains dilution in alot more detail here.

Visualizing dilution
Visualizing dilution – click to expand

Bingo. You are done!

Now start the discussion with your co-founder explaining how you got to this number. Remember, the outcome has to be that the both of you are comfortable and that it is fair.

Happy entrepreneurship!

~ Ernest

Finding a Great co-founder

Finding a Great co-founder is like lottery. And when you find one it’s like marriage. It’s what makes or breaks companies. And its not any co-founder, it’s the “right” co-founder which complements you and fills in your weak spots. You need a Great co-founder.

Many people want to do something in business. They day dream and talk it big like it’s happening. But when the time comes to crunch and the need to sacrifice their life style (change) the tune begins to change. This is why this cuts out about 90% of the want to be co-founder pool.

Google Co-founders - Larry Page & Sergey Brin
Google Co-founders - Larry Page & Sergey Brin

Finding the right co-founder is as most people say like getting into marriage. It’s not easy but doable. And you will have rough patches that you need to be able to get over and move forward. There are many discussions online on how & where to find the right co-founder. The reality of the fact is it’s probably slightly better chance then winning lottery.

Benefits of a Great co-founder

Having a great co-founder helps with being able to bounce ideas off each other, technically support each other, emotional support and give you a chance at getting into Y Combinator like incubators. Most of these incubators only accept +1 co-founders for this very good reason.

“Successful single-founder startups are so rare that they’re famous on that account.” ~ Paul Graham from Y Combinator.

From good to great co-founders
From good to great co-founders

Most of all successful businesses became successful only after pivoting due to market demands or circumstances. Just read Jessica Livingstone’s Founders at Work. Jessica covers most of the successful companies today and how they did not start off with what they are famous for today. Or take a peek at Steve Blanks’s latest book The Startup Manual where he shares his years of research that startups and enterprises are different in the fact that enterprises are executing on a proven business model while startups are finding (pivoting) to one which will hopefully stick. Hence what we see in Jessica’s book on founders success and also having a founder which has the right mindset to pivot with you when required.

Ok enough about this common knowledge. Here are 3 core lessons I learnt and believe will help you on your quest as well.

School of hard knocks

a. Cut out the business folks.

Especially those that can talk well. They are good later on but not in the initial stages when all you need to do is build a kick ass product. A kick ass product will sell itself. And if you are a true entrepreneur you will also know how to sell it and develop the product.

I also found that the business folks will have a tendency to burn money for unnecessary “business development tasks” which as I said above are not needed. Maybe it’s a way they try to justify their existence early on. The best way I believe they can justify it is by learning to be technical and add value that way. That is the only way I would have a business co-founder if he rolled his sleeves up and got into the code & supported the development efforts. Once they become more technical they will also understand (and appreciate) why certain fixes, changes or piece of work really takes hours and not fluffy minutes.

b. Cut out those that cannot deliver.

Probably the single best advice I can give you. You will be surprised how many cannot deliver.

Stay focused & keep shipping

Some people that used to be able to deliver once may not today. It is a proven fact the environment changes people. People do not change alone. Your environment dictates your actions. The rest, just get better at being an actor. (ref Zod’s 10 Axioms). Separating those that “are” in the game vs those that “say” they are in the game will save you plenty of headaches. I learnt this the painful way many times over. Even with folks that had a kickass background but just couldn’t deliver a minimum viable product.

“No Talk, All Action”

Delivery is such a key point here that I cannot stress it enough. It is what will separate you from your competitors. It is what will give you a leaders advantage. It is what separates the boys from men. Take a read of Facebook’s release engineering process. This is what makes them great. They release daily small changes and weekly major changes without disrupting the user experience. We do not like to wait in line to get served. Online or not, we expect it yesterday. Start delivering.

c. Cut out those that cannot communicate.

Working remotely or locally, communication is pivotal to success. Both from understanding each other to communicating expectations. If we cannot communicate well or even understand each other then expectations are misaligned leading to arguments, tasks not clearly assigned ending up with delivery failures or delivery of the wrong product/feature and ultimately the business collapses. The wheels get out of sync.

There are no excuses for not being able to communicate. There are many free tools out there to help with communication like meetings.ioasana, yammer, gtdfaster.comskype etc… ontop of the standard phone, email and personal meetups at popular hacker houses. Using those tools to help manage expectations (think tasks) to scrum updates is pivotal to success. If you are not over communicating then you are not delivering the right results.

Shell shocked

Shell shocked
Shell shocked - Ninja Turtles

Yes. That’s how it felt every single time I had to deal with such co-founders that sold themselves high on their skills and failed to bring something viable and worthy to the table.

A good life lesson is this. “Always take action on things. People regret inaction more than action.“. I find regret sticks around with you longer and this is more painful.

“Fear cuts deeper than swords.”
― George R. R. Martin, A Game of Thrones

It becomes even more painful when you are waiting around for someone to pickup their slack. So if you have a bad co-founder hanging around you, speak up, act on it and drop them immediately if nothing changes. Don’t look back. Most of all, as Zod Nazem said “don’t pass your garbage to your neighbor”.

Ask questions

Ask yourself these questions before committing your energy and time with a potential co-founder.

  • Have they go any examples of execution & delivery on time? Not so fast, it needs to be recent projects in current environment. Not past (historical/ancient) projects. Recall what I said above about environment & change.
  • Work together and deliver something together on time to completion – we all have small projects. Try before you buy. Don’t use hackathons as a gauge. Use something where pressure has to come from within you both. Failing this no 2nd changes. No one can recover your lost time.
  • Can they communicate well? Easy test is in how they speak/communicate something to you 1:1 and via email. Do you feel like you do not know the status of your project or understand the message?
  • Do they have expertise/domain knowledge in an area you lack? If yes work on this small project in that area to see.
  • Do a quiz to see founder valueshere’s one here. But do not count on it alone. It’s just to get your mind ticking.

I always say…

“First time shame on you; Second time shame on me!”
― Ernest Semerda

If something is a repeating pattern you need to act fast. This life lesson I was taught by a senior VP and it has proven to be valuable and rewarding time again.

Got life lessons you want to share here? Post below or shoot me a message.

Enjoy!
~ Ernest

Aussie founders in Silicon Valley

There are over 17,000 Australians living in San Francisco and the Bay Area (Silicon Valley). And some of these Aussies are making their presence felt in the Valley’s high-tech scene.Back in March 2009, when I arrived in the Valley full-time, I had no clue about the extent of the Aussie footprint here. As time ticked on and I got familiar & orientated around the tech scene the area has to offer I got fired up and inspired. I started to see what fellow Aussies were up to, the impact they were/are leaving and great opportunities this area provides.

Below is a list of these Super Aussies and the companies they are running (have run & sold) in the high-tech scene of Silicon Valley.

Founder/s Company Notes
Mike Cannon-Brookes & Scott Farquhar Atlassian Known for Jira, Confluence etc. 26K customers from 144 countries use Atlassian tools. Operates in Oz & SF.
Andrew Lacy Tapulous Acquired by Disney.
Bardia Housman & Adam Broadway Business Catalyst Acquired by Adobe. Bardia is soon to launch and soon to launch StartupHouse.
Elias Bizannes StartupBus Also runs Silicon Beach OZ & The DataPortability Project, blog and soon to launch StartupHouse.
Ryan Junee, Simon Ratner & Julian Frumar Omnisio Acquired by Google.
Ryan Junee Inporia See Omnisio above + also a mentor at 500 Startups and StartMate.
Andrew Roberts Ephox Operates in Oz, Palo Alto & Europe.
Sam Chandler NitroPDF Operates in Oz & SF.
James Nicol Fundly
Ben Keighran Chomp
Mick Johnson GasBag & Whereoscope
Lars Rasmussen Google Maps & Google Wave Recently moved from Google (Sydney) to Facebook in Silicon Valley.
Gower Smith Zoom Sytems
Leigh Jasper Acconex
Upcoming startups from my aussie mates.
Denis Mars Player.ly Currently in stealth-mode. Y-combinator alumni.
Vincent Turner PlanWise Aims to empower consumers with tools for planning and forecasting your finances. Presented at Finovate NYC.
Last updated: Sept 2011

Advance.org – Global Australians. Global Networks.

Advance.org helps create opportunities for Australians living abroad. They organise events/forums in and around San Francisco / Bay Area to help Aussies to connect together, share ideas, spark mentorship & marketing programs. More here: advance.org

Aussie incubator for Australian start-ups – The Startup House

Bardia Housman (see above ref Adobe) has purchased a 36,000 sq foot building (at 880 Harrison Street, San Francisco, CA 94107),  in the heart of San Francisco, to transform it into an incubator for Australian start-ups. It’s currently being built up but will most definitely be a kick ass place for Aussies enterprunrs. More on this project with Elias Bizannes (see above ref StartupBus) in the video below. All the best guys! Looking forward to paying a visit.

Media coverage: Recently published in the Sydney Morning Herald (SMH)

Gold diggers: Aussies strike it rich in Silicon Valley
By Asher Moses, September 15, 2011

  • Tony George from Austrade in Los Angeles helps Australian start-ups get a foothold in the US.
  • Austrade provides grants, helps entrepreneurs with research, advice about market entry, referrals to service providers such as lawyers and accountants, and most importantly hooking them up directly with potential customers.
  • Pollenizer and Startmate are helping the Australian tech start-up scene grown. But the conventional wisdom is still that start-ups needed to go to the US to raise funds and be exposed to the movers and shakers in the tech industry.

If you know of other Aussies in Silicon Valley/SF that are steaming ahead with their product/s please let me know and I will add them to this list above. Thanks!

Aussie Aussie Aussie, Oi Oi Oi!

~ Ernest

Interview with Vincent Turner – Aussie founder in Silicon Valley

November 2010 and another fellow Aussie touched down in the high tech land known as Silicon Valley. Last week I had the pleasure meeting this Aussie who arrived from Sydney, Australia. His name is Vincent Turner and he is the founder of Pisces Communication. To find out what his experience has been like so far in Silicon Valley and what his plans are, I decided to pick his brains. Here’s what happened.

Founder info

Name
Vincent Turner

Age
32

Company
Pisces Communication: http://www.piscescommunication.com.au/

What service / product does your company provide?
Qualification & Pricing Software to banks and brokers.

What role do you play?
CEO

How long have you been running / working on your product / service?
I originally founded the company in 2000 in Perth as a messaging company however evolved to software for banks in the last 5 years. We changed strategy from a platform to a services model 2 years ago and redeveloped our capability to underpin that model which has allowed us to look at new markets, hence why I am in the US now setting up our operations here (since Nov 2010).

Technology

What personal hardware are you using?
I use Apple personally, I’m sick of Windows and seeing as my work is email, word, excel and Powerpoint and Mac Office 2011 is out (and good) I have no need for Windows. Macbook 11-inch is my current laptop.

What Solution Stack is your business built on?
We have a very strong philosophy of choosing the technology that is right, not simply what we know. Our current market positioning (enterprise end users) means we have both Java & .Net in the stack. We also use GWT for our user front end. We have very little reliance on the database as we dont’ store customer data within our services. We run everything on the cloud, Amazon is our current provider. As part of our business we also work with CRM packages including Dynamics and Salesforce but do little to no development on these components. As we move more into the consumer facing aspects of the business we expect to take on Ruby on Rails, but early days on that for the moment.

What decision(s) lead you to go with that Solution Stack?
We want to have an each way bet with Java and .Net and like to provide our developers with the opportunity to know and work with both. We have customers who are running both and although our architecture is all services based, certain aspects of integration are simplified when you’re running the same stack so this was part of the thinking.

In terms of front end, GWT was the obvious choice for RIA for us when we started our redevelopment 2 years ago as the libraries were extensive and well road tested and as it is basically Java meant our guys could easily get hands on within eclipse etc. I don’t see us using GWT for our next breed of consumer facing interfaces however.

Top 3 Favourite online services you couldn’t live without?

  1. Xero.com – online accounting, with real-time bank data feeds.
    URL: http://www.xero.com/
  2. Google maps – how did we get by before this??
    URL: http://maps.google.com/
  3. Skype – I’d go sans phone if I could, but Skype need to sort their chat out something chronic.
    URL: http://www.skype.com/

Silicon Valley

What made you come to Silicon Valley?
If you’re an actor, you go to Hollywood. If you’re in IT you come to Silicon Valley.

What are 3 Top Challenges you faced upon arrival in Silicon Valley?
Probably too early for me on this but to date:

  1. Sorting out the wheat from the chaff in terms of who can help you in this city and who is just going to waste your time.
  2. Domain expertise and industry terminology for our market (lending) – hard to have meaningful conversations when you’re not sure of the right word to describe your approach.
  3. Roles & Titles – seems like everyone here is the VP of something. Makes it hard to know if you’re talking to the right person.

How about Visa or finding a place to live?
I don’t think I’m having too many issues with the visa process or finding places to live. I found a good immigration lawyer early on.. and Craigslist for accommodation before I left.

What resources did you turn to overcome these challenges?

  • google.com
  • theroadtosiliconvalley.com
  • networking events
  • australian expats

Bay Area or San Francisco to settle?
I’d love to say this decision is made but far from it. I almost think that the Bay Area & SF need to sort it out!

Eventually I will end up back in or near the city. Probably Duboce triangle area as this is so central to the Muni and I think any regular car user in this day and age needs to seriously re-evaluate.

In terms of office, this will always be a decision to be made with the team as I think it is part of the culture of the business and something that is reached by the early team members. I’d ideally live nearish work.

Which part of San Francisco?
Duboce triangle and surrounds.

Why did you make this decision?
Central to everything (in SF).

1 word of advice for our Aussie entrepreneurs wanting to come to Silicon Valley and start their own business?

The best advice I got was ‘just come here’ .. get on the ground and work it out. I had the good fortune/planning/luck to be able to continue to work for my AU business while getting out here for 3 months on a travel visa, while setting up and I think this has allowed me the time to do things properly, meet people, walk around and consider my options in a measured & balanced way.

If you’re in IT, then to date in my travels I can safely say there is not place like the bay area. The level of activity here every week is amazing and it will motivate you and empower you. Also, get on meetup and find some networking groups that suit you.

Vincent & Ernest
Vincent & Ernest

Thank you for doing this interview Vincent. And for sharing these golden nuggets of experience with the readers of The Road to Silicon Valley.

Links mentioned in this post

~ Ernest