Read more about how we’re thinking and where we’re investing here.

[caption id="" align="alignright" width="300"]<a href="http://en.wikipedia.org/wiki/File:The_black_swan_taleb_cover.jpg"><img class="zemanta-img-inserted zemanta-img-configured" title="The Black Swan (Taleb book)" src="http://upload.wikimedia.org/wikipedia/en/thumb/1/17/The_black_swan_taleb_cover.jpg/300px-The_black_swan_taleb_cover.jpg" alt="The Black Swan (Taleb book)" width="300" height="300" /></a> The Black Swan[/caption] <b>"Hard work plus luck is what gets you a jet instead of just a BMW.” (<a href="http://www.bloomberg.com/apps/news?pid=nw&amp;pname=mm_0508_story1.html">Nassim Taleb</a>, <a class="zem_slink" title="The Black Swan: The Impact of the Highly Improbable" href="http://www.amazon.com/Black-Swan-Impact-Highly-Improbable/dp/1400063515%3FSubscriptionId%3D0G81C5DAZ03ZR9WH9X82%26tag%3Dzem-20%26linkCode%3Dxm2%26camp%3D2025%26creative%3D165953%26creativeASIN%3D1400063515" rel="amazon">The Black Swan</a>)<b></b> </b> Start-up success typically boils down to three elements: hard work, talent, and luck.  Yet when we dissect the successes and failures of other start-ups, we tend to focus on the hard work and talent of the team, completely disregarding the important role that luck (or the lack thereof) may have played. Luck definitely played a huge role in my career, both on a company-level as well as a personal level. In the early days of <a class="zem_slink" title="AbeBooks" href="http://www.abebooks.com/" rel="homepage">AbeBooks</a>, our company got lucky twice. Luck struck first when <a class="zem_slink" title="Barnes &amp; Noble" href="http://www.barnesandnobleinc.com/" rel="homepage">Barnes &amp; Noble</a> approached us to become a reseller of the books of our sellers.  This immediately doubled revenues of our sellers and attracted more inventory to our site. And then luck came again, when <a class="zem_slink" title="Amazon" href="http://amazon.com/" rel="homepage">Amazon</a> bought our competitor Bibliofind and folded it into the main site. This led most sellers to leave Bibliofind and join AbeBooks. I’m certain that without both of those events, AbeBooks would most likely never have become the uncontested market leader in the used books space. And while one could argue that our hard work and talent created the right environment for Barnes &amp; Noble to approach us, I have no doubt that both scenarios could just as easily played out another way…completely altering the course of events. And I also got lucky a few times on a personal level. Back in 2003, I felt like leaving AbeBooks and starting something new, but my parents convinced me to stay at the company. That proved to be the right decision, as most of the success of AbeBooks (including the ultimate exit to Amazon) came in the subsequent years and defined my career. What’s the moral of these stories? Don’t underestimate the power of luck in shaping the future of your start-up. For some this may be unnerving…after all, luck may play such an important role, yet we cannot do anything about it. However, instead of worrying about luck or fate, focus on what you can control. Aim to create the right environment for luck and its opportunities to take hold.

Generally speaking, I’m a huge fan of crowdfunding. I’m an investor in one of the major platforms, <a href="http://www.indiegogo.com/">Indiegogo</a>. Crowdfunding sites like <a title="Kickstarter" href="http://www.kickstarter.com/">Kickstarter</a> and Indiegogo are helping fill the financing void for startups that struggle to find traditional financing. For example, I <a href="https://www.versionone.vc/how-to-find-funding-for-your-hardware-startup-while-were-waiting-for-the-hardware-revolution/#comments">recently wrote</a> about crowdfunding being a viable option for hardware startups who notoriously have a tough time attracting funding from VCs. But there is a bit too much hype around crowdfunding right now. And as we know from history, too much hype doesn’t always end well. <strong>The Good: When crowdfunding works…</strong> In particular, I’m bullish on crowdfunding when it’s about passionate consumers rallying around an idea, cause, or product concept they believe in. In this case, the funders have modest expectations…either a small perk (like a t-shirt) or just the simple satisfaction of supporting a company or cause they care about and watching it grow. Take <a href="http://www.indiegogo.com/projects/jamstik-real-strings-real-frets-turn-your-ipad-into-a-real-instrument">JamStik</a> as an example. It’s a prototype mini-guitar that interacts with an iPad or iPhone. The project has currently raised $129,000 with an initial goal of $100,000 on Indiegogo. Its funding packages range from an exclusive backers t-shirt, your name on the Founder’s wall, to discounts on a JamStik or one of the earliest prototypes. Crowdfunding can also be a way for startups to finance parts purchasing and manufacturing by taking customer pre-orders. For example, <a href="https://www.tindie.com/about/">Tindie</a> fundraisers can give startups working capital to buy parts for the final assembly of their products (full disclosure: I am an investor in Tindie). <strong>The Bad: Disappointing expectations</strong> While Tindie fundraisers usually work very well in terms of meeting customer expectations, turning crowdfunding into a wide-spread platform for taking pre-orders can be risky business. The Pebble smart watch may have had one of the most publicized delivery delays, but they’re hardly alone. Statistical analysis by Professor Mollick of Wharton uncovered that 75% of all funded projects on <a class="zem_slink" title="Kickstarter" href="http://www.kickstarter.com" rel="homepage">Kickstarter</a> shipped late. When consumers start to look at a crowdfunding site as the equivalent of an online store where they can buy new toys, there will be trouble (hence the Kickstarter blog post: “<a href="http://www.kickstarter.com/blog/kickstarter-is-not-a-store">Kickstarter is not a store</a>”).  Delays in production/delivery are usually expected among investors, but even a few weeks delay can frustrate and anger this new class of ‘investor customers’ who are expecting the same smooth process as when they order something from Amazon. Their frustration ripples throughout the web, souring the entire industry. <strong>The Ugly: Crowdfunding for equity</strong> Recently, there has been a lot of talk about crowdfunding for equity. The idea here is to make it very easy for anybody to invest small amounts of money in startups through crowdfunding platforms. I personally think this is a recipe for disaster. Here is the problem: the fact is that few angel investors make good investment returns…and that’s true even for those who are lucky enough to have a huge winner in their portfolio. On average, VCs had pretty dismal returns over the past decade. And those are sophisticated investors who look at hundreds of deals and then work for years to help their portfolio companies build the best teams and execute. In short, early stage investing is hard and typically only the top tier investor with a proprietary deal flow can make great returns. It’s not the place for the average consumer to put his or her money. If the driving force behind crowdfunding platforms is to make it easier for anybody to become an angel investor and have fun tracking the progress of their project (without much expectation for a return), then crowdfunding is a welcome addition to the financing landscape. However, if we start to see people putting up large swaths of their retirement savings in the hopes of funding the next Google or Facebook, this will end in a disaster. Time will tell what happens. But unfortunately, if the future is anything like past history, the latter scenario is more likely. <h6 class="zemanta-related-title" style="font-size: 1em;">Related articles</h6> <ul class="zemanta-article-ul"> <li class="zemanta-article-ul-li"><a href="http://banklesstimes.com/2013/05/07/circleup-raises-7-5m-to-expand-its-crowdfunding-platform-to-more-consumer-companies/">CircleUp raises $7.5m to expand its crowdfunding platform to more consumer companies</a> (banklesstimes.com)</li> <li class="zemanta-article-ul-li"><a href="https://fortune.com/2013/05/07/donald-trump-gets-into-crowdfunding/">Donald Trump gets into crowdfunding</a> (finance.fortune.cnn.com)</li> </ul> &nbsp;

Few decisions can be as life-changing for founders as deciding when to sell a business. Companies get sold for a whole host of reasons: founders break up; money runs out; shareholders force a sale. And in many cases, the financial upside of a sale is just too seducing for the entrepreneurs, particularly for first-time founders. When making such a major decision, you’ll undoubtedly need to weigh many factors and most likely, some competing interests. However, I think the most compelling reason to sell is when the founders run out of ideas for how to grow the company further. Speaking from personal experience, this was the driving force behind our decision to sell <a class="zem_slink" title="AbeBooks" href="http://www.abebooks.com/" rel="homepage">AbeBooks</a> (a marketplace for used, rare, and hard-to-find books) to <a class="zem_slink" title="NASDAQ: AMZN" href="http://www.google.com/finance?q=NASDAQ:AMZN" rel="googlefinance">Amazon</a> back in 2008. At the time, AbeBooks was still a nicely growing and highly profitable business, but we didn’t know how we could turn it into a billion dollar company. At the same time, the business could provide a lot of strategic value for many players in the book business, namely Amazon. So we decided to sell. Looking back, there were several factors limiting our ability to grow, including: <ul> <li><em>Geographical markets: </em>We had internationalized to five non-English speaking countries in Europe, but felt that conquering Asia was too risky an endeavor for a relatively small company (our platform revenues were in the hundreds of millions of dollars).</li> <li><em>Vertical markets:</em> Expanding from books to other media verticals seemed unrealistic, considering both the music and movie verticals had a rapidly shrinking share of physical goods.</li> <li><em>Market expansion: </em>AbeBooks specialized in the long tail (used, rare, hard-to-find books). We saw only modest success when we tried to complete our offering by expanding into new books. Amazon’s brand recognition is just too strong among book buyers to allow competition.</li> <li><em>Acquisitions:</em> We had acquired companies both upstream (<a class="zem_slink" title="BookFinder.com" href="http://www.bookfinder.com/" rel="homepage">Bookfinder</a>, a major price comparison engine that sent up a large amount of traffic to us) and downstream (Fillz, a channel manager software that helped our sellers sell on other <a class="zem_slink" title="Marketplace" href="http://en.wikipedia.org/wiki/Marketplace" rel="wikipedia">marketplaces</a>).</li> </ul> Most importantly, we felt that we had optimized our business model to extract as much value out of the marketplace as we could. In short, we were struggling to think of ways to grow the company beyond modest increments. For some founders, external factors and financial pressures may be too strong to avoid selling. But if you have a choice, don’t think about selling your company until you run out of ideas for how to grow it. Hopefully, that time will be far down the road.

[caption id="" align="alignright" width="300"]<a href="http://en.wikipedia.org/wiki/File:Good_advice.jpg"><img class="zemanta-img-inserted zemanta-img-configured" title="Good Advice" src="http://upload.wikimedia.org/wikipedia/en/a/a3/Good_advice.jpg" alt="Good Advice" width="300" height="397" /></a> Good Advice (Photo credit: Wikipedia)[/caption] Getting good advice is critical for any entrepreneur and fortunately there’s plenty of advice to go around. Unfortunately, not all advice is worth listening to. Angel investor Allen Morgan (@allenmorgan) summed it up in a recent<a href="https://twitter.com/allenmorgan/status/291287294458077184"> Tweet</a>: “It's a power law relationship: for entrepreneurs, &gt;90% of the advice worth heeding comes from &lt;10% of the advice givers.” The reality is that entrepreneurs should not listen to the bulk of advice that comes their way. Yet, good advice from smart people can be an invaluable asset when trying to navigate your most pressing questions, from how many board members to have, to how much money to raise in Series A, or how to build a monetization strategy. The key to getting advice boils down to knowing how to filter the good from the bad. Here are four simple ways to weed out the 90% of advisors that you should ignore and focus on the best advice for your situation: <strong>1. Stick to your core values</strong><strong></strong> If you don’t have a clear vision for where you are headed as a founder or startup, it’s nearly impossible to evaluate the advice you get. I’ve seen too many people change direction with every new piece of advice they hear. Before you can really take in advice, you need to have a strong sense of your core values. Then, you can weigh each bit of advice within the framework of your own convictions. For example, the core values of Twitter’s management helped guide them through the monetization question. Countless experts and pundits were pushing them to monetize via relatively obvious examples like paid premium products or CPM ads. Yet, Twitter took the time to come up with a native monetization model that is not only much better for the user experience, but is also more scalable in the long run. Twitter would be a far different experience today had their management team jumped on the first bit of advice they heard. <strong>2. Listen to people who listen</strong><strong></strong> People who give the best advice are good listeners. They try to understand your specific situation first, rather than instantly spouting off their words of wisdom without any context. Turn to people who ask good questions and seem genuinely interested in the particulars of your question or challenge. Additionally, you should pay close attention to those individuals who refrain from giving you advice at times because they outright admit they aren’t sure or don’t have the right expertise. Such people will be far more trustworthy in future situations than those who dispense advice just for the sake of feeling important. <strong>3. Change/expand advisors as you grow</strong><strong></strong> Someone who gave you great advice last year could well be a trusted resource in the future, however you need to be cognizant that your needs change over time. Most advice givers are helpful in certain phases of the startup lifecycle, but very few are experts in every area or challenge you face. For example, a mentor who helps you navigate early-stage product questions may not necessarily be the right person to ask about HR issues as your company grows to 100 people. Again, the most trustworthy advisors will let you know right away if they feel a certain situation is out of their realm of expertise. <strong>4. The final decision is always up to you</strong><strong></strong> There is no standard process for making a good decision. In some cases, you may need to talk to ten different people and weigh each option carefully. In other cases, the right direction will hit you instantly. In most, if not all cases, you need to trust your gut. No matter how many advisors you talk to, the most important lesson to getting good advice is to never forget that you are running the show. Mentors and advisors can help you build your opinions, but they should never make decisions for you. Don’t listen to people who adamantly push for a certain direction as they most likely have their own agenda. Lastly, remember that there’s no benefit in being able to blame someone else for a poor decision which is why you should never put an advisor in the position to make the final call. You’re running the show, which means final decisions are always up to you. <h6 class="zemanta-related-title" style="font-size: 1em;">Related articles</h6> <ul class="zemanta-article-ul"> <li class="zemanta-article-ul-li"><a href="http://grasshopper.com/blog/2012/09/the-art-of-finding-a-mentor/">The Art of Finding a Mentor</a> (grasshopper.com)</li> <li class="zemanta-article-ul-li"><a href="http://www.inc.com/matthew-swyers/5-rules-for-when-to-listen-to-advice-when-not-to.html">5 Rules for When to Listen to Advice (&amp; When Not To)</a> (inc.com)</li> </ul>

[caption id="" align="alignright" width="240"]<a href="http://www.flickr.com/photos/67526850@N00/4183846205"><img class="zemanta-img-inserted zemanta-img-configured" title="Managing Business Models" src="http://farm5.static.flickr.com/4040/4183846205_5dbba9f067_m.jpg" alt="Managing Business Models" width="240" height="180" /></a> Left or right?[/caption] For many startups, there comes a time when it becomes clear that things are not going exactly as you planned. You can read the writing on the wall that you haven’t found a product-market fit, and you’ve run out of ideas on how to get there. Typically, if you don’t see signs of traction after six to nine months with a SaaS or e-commerce model, it’s time to reassess your market or model (note: a marketplace-based business often <a href="http://www.forbes.com/sites/ciocentral/2013/02/07/5-tips-for-building-a-two-sided-online-marketplace/">requires a longer time table</a>). And if it’s <a href="https://www.versionone.vc/pivoting/">time to pivot</a>, I have one piece of advice: pivot hard. Too often, I see pivoting startups try to keep too many elements of their original business. This is to be expected. After all, founders invest untold time and energy into building a product and team. It can be downright heartbreaking to feel like you’re throwing it all away. However, once you’ve decided to pivot, it’s time to forget about your existing business and have laser-like focus on the new opportunity. Don’t let history cloud your thinking about your future business. It’s time to ask yourself the following questions: <em>1. What opportunities should I be pursuing independent of all the assets (product, customers, teams) already built-up from the current business model? </em>Explore your new opportunity with a fresh set of eyes: if you were starting up today as a new founder, what would you want your new business and business model to be? <em>2. What should the new product look like independent of what’s already been built?</em> Don’t try to derive a new product based on trying to salvage your current code base. First think about what you need for your new product, then (and only then) look at what code can be reused. 3. <em>What should the future team look like? </em>Consider what roles, skills, personalities, and expertise you’ll need for the new business model. All hiring decisions should be based on the positions you’re trying to fill now, rather than trying to piece together how your current team members can fit into the new venture. 4. <em>What financing do I need to execute on the opportunity? </em>It’s critical to take a realistic look at how much you’ll need for the new opportunity, rather than thinking of what money is available. Underfunded startups can’t and won’t execute and you shouldn’t move forward if you don’t have a plan for sufficient funding and a long enough runway. Course changes happen all the time and can lead to brilliant things. But when pivoting, you need to completely separate your old and new businesses. Approach your pivot as if it were a completely new startup. Then see which pieces of your current setup (people, product, etc.) can potentially help you accelerate the new opportunity.

[caption id="" align="alignright" width="300"]<a href="http://commons.wikipedia.org/wiki/File:Samsung_Focus_and_Google_Nexus_S.jpg"><img class="zemanta-img-inserted zemanta-img-configured" title="While Apple has not listened to my complaints ..." src="http://upload.wikimedia.org/wikipedia/commons/thumb/7/76/Samsung_Focus_and_Google_Nexus_S.jpg/300px-Samsung_Focus_and_Google_Nexus_S.jpg" alt="While Apple has not listened to my complaints ..." width="300" height="225" /></a> (Photo credit: Wikipedia)[/caption] <a class="zem_slink" title="Google" href="http://google.com" rel="homepage">Google</a> recently released the results of a <a href="https://www.google.com/think/research-studies/creating-moments-that-matter.html">new study</a> on mobile search and conversions. Along with <a class="zem_slink" title="Nielsen" href="http://nielsen.com" rel="homepage">Nielsen</a>, Google analyzed over 6,000 mobile searches and the actions that came after the search. While there are quite a few interesting findings (including the fact that 55 percent of conversions occur within the first hour of the mobile search), the most significant takeaway for me is the fact that 77% of all mobile searches occur at home or at work; only 17% occur on the go (and 2% are in store). That means that more than <strong>three-fourths of all mobile searches are performed where a computer is also available</strong> to them. Survey respondents said they chose mobile over desktop search for convenience and speed. The study quoted one respondent: “<em>“It was easier on the mobile device as I didn’t have to get up [to] turn on the computer and wait for it to boot up.”</em> So, it appears that the shift to mobile that’s happening across all verticals is mainly a shift of devices, rather than the emergence of new use cases. Think back three to four years ago when we all believed that the on-the-go use case would be the main driver for mobile. Yet on-the-go and in-store behaviors haven’t fully materialized. As the Google survey shows, mobile doesn’t necessarily mean “mobile.” We’re using tablets and smartphones while on the couch, in the kitchen, etc. <strong>Take-away: re-imagine the mobile use case</strong> What does this mean for startups? For starters, every web business needs to design a great mobile experience, as users will increasingly opt for a mobile device to access websites. The mobile experience should ideally be native for the particular device type and optimized for conversions on a small screen. In my opinion, this is where many apps fall short: they optimize their conversion funnel for a web experience and make mobile users return to a desktop to complete their activity. But perhaps even more importantly, the Google survey makes it clear that major opportunities exist to build better on-the-go experiences. <a href="https://frontdeskhq.com/">Frontdesk</a> and <a href="http://getjobber.com">Jobber</a>, two portfolio companies in the vertical SaaS space, have built mobile-only solutions for managing a service business. But in many cases, we have not yet fully re-imagined the mobile-only or mobile-first experience. However, with more mobile devices being sold than computers, it’s clear that there are countless opportunities for innovative mobile use cases in both the consumer and enterprise market. I for one am looking forward to seeing the next generation of mobile businesses. <h6 class="zemanta-related-title" style="font-size: 1em;">Related articles</h6> <ul class="zemanta-article-ul"> <li class="zemanta-article-ul-li"><a href="http://www.tnooz.com/2013/03/18/news/google-study-of-mobile-search-behavior-reveals-travel-insights/">Google study of mobile search behavior reveals travel insights</a> (tnooz.com)</li> <li class="zemanta-article-ul-li"><a href="http://searchengineland.com/study-55-percent-of-mobile-search-driven-conversions-happen-in-one-hour-or-less-151432">Study: 55 Percent Of Mobile-Search Driven Conversions Happen In One Hour Or Less</a> (searchengineland.com)</li> </ul>

[caption id="" align="alignright" width="160"]<a href="http://www.flickr.com/photos/24433380@N07/6296440017"><img class="zemanta-img-inserted zemanta-img-configured" title="Toothbrush" src="http://farm7.static.flickr.com/6118/6296440017_f927570882_m.jpg" alt="Toothbrush" width="160" height="240" /></a> Photo credit: Wade Brooks[/caption] Repeat usage is one of the most important success factors for building a large, stand-alone company. It’s hard to grab people’s mindshare and create a loyal user base when people only need to use your product or service occasionally. One of the best metaphors I’ve come across to describe this reality is <a class="zem_slink" title="Google" href="http://google.com" rel="homepage">Google’s</a> “<a href="http://tech.fortune.cnn.com/2013/01/03/google-larry-page/">toothbrush test</a>” – where <a class="zem_slink" title="Larry Page" href="http://https://www.google.com/about/corporate/company/execs.html#larry" rel="homepage">Larry Page</a> insists that new products must be important enough that people will use them at least twice a day. The toothbrush test is definitely a great benchmark for any social networking site. It’s why <a class="zem_slink" title="Facebook" href="http://facebook.com" rel="homepage">Facebook</a>, <a class="zem_slink" title="Twitter" href="http://twitter.com" rel="homepage">Twitter</a>, and <a class="zem_slink" title="Pinterest" href="http://pinterest.com" rel="homepage">Pinterest</a> have done so well. And it’s also why social networks for travellers or events have struggled to really scale. For the majority of users, there’s just too much time in between trips or events when the app is completely unnecessary (except those lucky few who spend a year traveling around the world). The toothbrush test is valid for SaaS products as well. Products that are critical to the daily workflow, like business management software and collaboration tools, tend to have the lowest churn rates. Yet, both marketing automation and HR tools often struggle (unless they are addressing core functions). Commerce is certainly a different beast when it comes to this benchmark. My own rule of thumb is that customers should have a reason to visit a commerce site at least once per month. Monthly subscription services like <a href="http://www.julep.com/">Julep</a> have a natural touch point every time they send out their new products. <a href="http://www.frankandoak.com/">Frank &amp; Oak</a> has created monthly-curated product releases that create an important monthly rhythm. <strong>High repeat usage = large potential business</strong> Repeat usage is the basis to build a large business and is generally driven by two things: <ul> <li>How often people need to use the services/products your site offers</li> <li>If people remember your site in the moment they need the service/product</li> </ul> So think deeply about what kind of feature set and/or product depth and breadth you are offering in order to maximize the reasons why people visit your site (of course, you want to do this without completely diluting your brand in the process). In addition, find smart and scalable ways to remind people of your site’s offering…without crossing the line into becoming spam. If you fail to give people a reason to visit your site and remember you, users will turn to Google to find the best products and services for their current need. And this is exactly why Google’s search passes the toothbrush test so easily… P.S.: Which products you are using pass the toothbrush test?

I’ve noticed a common theme carries across most of the advice I’ve given to entrepreneurs lately, and that’s to <em>s-i-m-p-l-i-f-y</em>. For example: <strong>1. Simplify your vision. </strong>If you find yourself rambling for minutes on end, it’s time to reign in your mission statement. Nobody will remember a 2 or 3 paragraph description, but they will remember a simple statement that’s been distilled down to one powerful sentence. <strong>2. Simplify your pitch deck.</strong> Your story is so much more powerful and focused if you can keep your fundraising presentation to 6-8 slides. As <a href="http://www.avc.com/a_vc/2010/06/six-slides.html">Fred Wilson said</a>, “You can explain your business in mind numbing detail or you can inspire an investor and let them imagine. Guess what works better?” If necessary, you can include other slides as an Appendix to reference, but work on telling your story in 8 slides or less. <strong>3. Simplify your UI.</strong> <em>“A modern paradox is that it’s simpler to create complex interfaces because it’s so complex to simplify them.” (</em><em>Pär Almqvist)</em> The best interface designs are clean, simple, and get out of the user’s way. All elements are necessary and succinct. <a href="http://ux.stackexchange.com/questions/18328/whats-the-best-way-to-kill-useless-features">Taking away features can be so much harder</a> than adding features, but subtracting often creates the most value for your users. <strong>4. Simplify your metrics. </strong>There are metrics and graphs these days to tell you everything from your employees’ favorite break time snacks to how many users in Asia log-on on Tuesdays. Amidst all the detail, it’s easy to lose sight of what matters. Pare down your metrics overload to focus on the <a href="http://www.feld.com/wp/archives/2012/02/three-magic-numbers.html">three most important metrics</a> that reflect what’s going on right now in your business. <strong>5. Simplify your</strong> <strong>value proposition: </strong>You cannot be all things to all people and your company will never achieve greatness if it’s struggling to be okay in 10 different markets. Focus on your biggest opportunity - the one that offers the most differentiated value proposition and meets the largest potential market – and forget the rest. This list could go on and on, touching every aspect of your life. Yet, while we can all agree with the premise that ‘less is more,’ it’s so hard to simplify in real life. Simplifying your vision, pitch deck, UI, metrics, value prop, or anything else means taking things away. You need to make hard decisions about what to cut. It’s tough to know when to do it. It’s even tougher to know if you made the right decision. While it can be particularly difficult to emotionally let go of something you once thought was going to be instrumental to your business, the end result is very beautiful. That’s why we love Apple products. That’s why we remember <a class="zem_slink" title="Facebook" href="http://facebook.com" rel="homepage">Facebook</a>’s mission of “making the world more open and connected.” And that’s why investors get inspired by a pitch that tells a clear story in very few words. My advice…start thinking about simplifying your startup. &nbsp; Discussion on Hacker News: <a href="http://news.ycombinator.com/item?id=5319880">http://news.ycombinator.com/item?id=5319880</a> &nbsp;

<em>Guest post by </em><em>Mischa Steiner-Jovic, founder and CEO of </em><em><a href="http://www.awesense.com/">Awesense Wireless</a>. </em><em>You can follow him on </em><a href="https://twitter.com/mischajovic"><em>Twitter</em></a><em>.</em> My skin thickens every time I hear a VC say “You’re building what? Why? You’re selling to whom?” or just a flat-out “that’s not a good idea.” Stepping outside the norm often elicits strong reactions and disbelief. Of course, there are quite a few No’s that go along with those reactions too. As a first-time entrepreneur and the founder of <a href="http://www.awesense.com/">Awesense</a>, an early stage tech company focused on helping utility companies reduce inefficiencies and losses in the electrical grid, I’ve had to learn to get used to rejection. I’ve come to realize that rejection from a VC doesn’t mean you have a worthless idea; it just means that two visions of the future failed to align. If you’re having a tough time hearing “no”, here are three tips for dealing with rejection while fundraising: <strong>1. “Don’t listen to the bozos”</strong> The more I go through the fundraising process, the more I’ve come to appreciate <a class="zem_slink" title="Guy Kawasaki" href="http://www.guykawasaki.com/" rel="homepage">Guy Kawasaki’s</a> words:  “<a href="http://blog.guykawasaki.com/2006/01/hindsights.html">don’t listen to the bozos</a>.” Not much is worse than pitching an investor, whether an angel or institutional VC, and watching their eyes glaze over seven seconds in. This glazing over is then followed by comments like “your idea isn’t going to work” or “you’re going nowhere.” And all this occurs within the 30 seconds it takes to describe your business. These people are whom I call the bozos…they are individuals who have a predetermined conception of you, your market, or your product. Whether you’re making the fundraising rounds or just simply networking, you’re going to meet people like this. It’s inevitable. However, don’t worry about it and don’t let it affect you. Simply thank them for their input, ask if they know anyone who might be interested in helping your business, and move on. <strong>2. Focus on your mission</strong> When you start to feel deflated by the whole fundraising process, think about why you got started in the first place. At Awesense, our whole mission is helping increase grid efficiency through intelligent solutions and technology. Hundreds of billions of dollars of energy are lost each year due to inefficient electrical grids, and with the cost of energy always increasing, this simply can’t continue. We’re not involved in complicated Cleantech energy production; we’re choosing a different route that’s helping save a watt as opposed to making a new watt. Remember that fundraising is only part of your job as a founder. You’re also making a great product. In order to avoid burnout, focus on how you’re making a difference to your industry, community, world, etc. I truly enjoy building what we’re building, and solving the problem that we’re solving; this keeps my passion for Awesense running strong. <strong>3. Surround yourself with great people</strong> We have a great team at Awesense who are just as dedicated and excited as I am about solving problems in the electrical grid. Everyday we’re thrilling each other in some new way, and it’s pure joy knowing that everyone is committed to the mission. Simply put: it’s damn good fun and I’m really lucky to have the opportunity. Creating that culture and excitement, is a big part of my job. Finding the right people that believe in what we are doing and fit within the existing team is a must (but that’s a topic for another blog post). Ultimately, it’s about savoring each step of the journey, and appreciating the people you’re taking it with. <strong>Final thoughts</strong> Not every great idea needs to be VC funded. However, depending on your business, outside funding often delivers scale much faster than early revenue growth can. Every founder needs to take a really hard look at how they want to scale their business. VC funding can certainly help scale, but it is very expensive money. Never underestimate the time commitment involved to secure funding…and that’s time that could have been spent acquiring customers. You have to be truly committed to raising capital; as <a href="http://www.feld.com/wp/archives/tag/moveable-code">Brad Feld </a>says “Do or do not, there is no try”. There will always be a need for solutions to tough problems, and those that are able to crack tough problems have the potential to be juggernaut companies of tomorrow. Time will only tell if Awesense becomes one of those companies.

While crunching the data and reflecting on the past year, it’s clear that 2012 was busy. Version One Ventures made eleven investments, including three angel investments that rolled over into the fund. Here are some of the more interesting details to share about our activity in 2012: <ul> <li>Version One invested more than $2.5M in 2012</li> <li>Our focus centered around three investment areas: e-commerce (<a href="http://www.frankandoak.com/">Frank &amp; Oak</a>, <a href="http://www.julep.com/">Julep</a>, <a href="http://instacanv.as/">Instacanvas</a>), SaaS (<a href="http://getjobber.com/">Jobber</a>, <a href="https://www.tophatmonocle.com/">Top Hat Monocle</a>), and marketplaces/platforms (<a href="https://tindie.com/">tindie</a>, <a href="https://grouptalent.com">GroupTalent</a>, <a href="http://www.clarity.com/">Clarity</a>) – with a relatively equal split across all three areas</li> <li>Investments were roughly 50% B2C, 50% B2B - this was the highest share for B2B investments since I started (angel) investing 6 years ago</li> <li>2/3 of 2012 investments were seed deals and 1/3 were Series A</li> <li>Version One companies were a 50/50 split between the U.S. and Canada… with startups in the Bay area, Edmonton, Los Angeles, Montreal, New York, Portland, Seattle, Toronto, and Vancouver.</li> </ul> &nbsp; <strong>Announcing Version One’s final close</strong> In addition to wrapping up 2012, I’m happy to announce the final close of the Version One Ventures fund with $19 million in committed capital. Our original target was $10M, so I’m extremely grateful at the confidence our investors placed in the fund. In addition, I’m particularly excited that this final close includes an institutional investor, the <a href="http://www.bdc.ca/EN/Pages/home.aspx#.UQ1BFJjyHQk">Business Development Bank of Canada</a> (BDC) - their announcement can be found <a href="http://www.bdc.ca/EN/solutions/venture_capital/newsroom/Pages/PressReleaseDetail.aspx?PressReleaseId=461">here</a>. Moving forward, we’re continuing our focus on e-commerce, SaaS, and marketplace opportunities in the Seed or Series A stages. It is still early times for the web and we’re excited to work with great entrepreneurs looking to change their industry or the world.

There’s a talent drain facing the tech industry today. We frequently hear about companies that can’t find enough skilled developers and positions are left unfilled for months. That’s why I’m particularly excited to announce <a class="zem_slink" title="Version One Ltd" href="http://www.versionone.co.uk" rel="homepage">Version One</a>’s investment in <a href="https://grouptalent.com">GroupTalent</a>, a talent-as-a-service platform that focuses on hard-to-fill software design and development roles. GroupTalent matches companies with technical team members on demand. A hiring or project manager can fill a highly-technical role within 48 hours…which can make a huge difference to a company struggling to meet a product milestone or ramp up quickly. GroupTalent offers a pool of more than 4,000 curated developers and designers and already has a loyal following of early customers including Timbuk2, Crowdstrike, and 1-800-Junk. Version One led the seed round alongside our friends at Founders’ Co-op. <a class="zem_slink" title="Menlo Ventures" href="http://www.menloventures.com/" rel="homepage">Menlo Ventures</a> and angel investors also participated. This is an exciting investment because GroupTalent offers a unique marketplace solution that capitalizes on two key trends. First, more and more highly talented technical people are monetizing their talents outside of the traditional full-time career track. And second, companies need quicker and more efficient access to technical talent in order to keep up with the pace of innovation. Tomorrow’s economy is going to be fueled by a more fluid and often project-based workforce. GroupTalent’s platform helps make this contract economy work for both the talent and hiring companies. &nbsp;

It’s inevitable that any startup will lack expertise in some key areas needed to grow their business. The question is: should you hire and bring that expertise in-house or outsource it? Just last week, two startups reached out to get advice on this hire vs. outsource dilemma. The first startup, a vertical SaaS company, wondered if they should bring someone on board to run their paid search marketing campaigns or outsource it to an agency. The second startup was struggling to find good mobile developers and debated outsourcing their mobile app development to an agency. My advice to these companies, as well as any other startup facing a similar situation, is: <em>never, ever outsource something that is core to your business.</em> Outsourcing a core function may give you a short-term uplift, but it also means you fail to build the expertise within your company. If you want to build a sustainable competitive advantage, you simply can’t outsource your core functions to another who may not be as invested in your success. In other words, you can’t build a great company on an outside agency’s stuff. <ul> <li>For most startups, the core areas to build in house include: product design, product development, marketing, sales, PR, and customer service.</li> </ul> <ul> <li>Look to outsource the things that don’t create a competitive advantage, such as: legal, accounting, hosting, and analytics.</li> </ul> While those are general rules to follow, there are always a few exceptions. For example… 1. Initially outsourcing a position can help you create good leads for hiring someone full time. For example, you may initially contract your marketing to an independent contractor as a test run, and then bring him or her onboard if it proves to be a good fit. If you do go this route, make sure the contractor you’re hiring is open to becoming a full-time employee down the road. 2. Outsourcing core functionality can also be wise when you have a very specific need and the outsourced hire has the expertise to solve the problem and/or offers greater capacity to execute. For example, startups will want to outsource PR help for a launch or other large one-time event. Building expertise internally is often the tougher road to take but will pay off in the long run. Focus on developing your core functions in house and leverage outside help for everything else.

Since CBInsights released its <a href="http://www.cbinsights.com/blog/trends/seed-investing-report">report</a> in December, conversations have accelerated about the pending “Series A Crunch.” With headlines declaring that more than 1,000 seeded startups will soon be orphaned, it’s only natural that startups are concerned about the future funding landscape. While experts may differ on the implications or severity of the Series A Crunch, the numbers provided by CBInsights are straightforward. Seed financing grew from 89 fundings in Q1 2009 to more than 500 in Q3 2012. However, Series A fundings have remained fairly stable over this time. That means there are a lot more seeded startups out there: an excess demand for a limited supply of Series A financings. I recently had lunch with an entrepreneur who asked what he should do. As I’m assuming this is a common question heard in huddled discussions in offices from San Francisco to Boston, here’s my advice on how to navigate today’s financing waters: <strong>If you haven’t raised your seed round yet…</strong> If you’re looking to raise your seed round, aim for more money than you had originally planned. Traditionally, I’ve <a href="https://www.versionone.vc/how-much-capital-should-you-raise/">advised</a> startups to raise enough money to sustain them for 18 months. However, you should lengthen your runway in anticipation of having a harder time closing a Series A round. Startups should now be looking for seed funding to last them 24-36 months. For example, a startup of mine just raised a $3 million seed round. In addition to looking for a large seed round, startups may need to put more thought into who’s funding them. For starters, it’s important to avoid party rounds in this kind of environment. Not having a lead investor in your seed round can make it tougher to pull together a bridge round or follow-on financing down the road, since no single investor feels in charge or vested in your success. Do your homework on potential investors. You’ll increase your chances of getting funded beyond the seed round if you take money from VCs that are known to be patient investors and have enough funds reserved for follow-on investments. As an example, Version One has more than 50% of its funds reserved for follow-on financing. <strong>If you have raised your seed round and are trying to raise a Series A round in the next 6-12 months</strong> If you fall into this category, you should know that plenty of companies are raising Series A funds. However, you’ll most likely see more competition over the next year. Your first step should be an honest assessment of your company’s chances to get Series A financing. Ask for brutally honest feedback from your seed round investors, advisors, and any other investors you know and trust. The Series A Crunch has been compared to Darwinian natural selection, thinning out the weaker startups. In this environment, the startups that will struggle the most to get Series A financing will either: a) Not have enough traction b) Not have the right team c) Not have a large enough market So, if you find yourself falling into one of the three categories above, what can you do? Your chances will be rather limited to close a Series A deal – as a result, you need to get creative: 1. <em>Lengthen your runway by cutting your burn rate:</em> You’ll need to give yourself enough time to get to profitability or get traction in the market. Take a close look at your burn rate and determine where you can make cuts. Do you need to cut salaries or head count and start sharing office space? 2. <em>Look for alternative sources of capital: </em>VCs are not the only game in town and it is possible to fund your company without them. For example, look for strategic investors or another angel round. I even heard of one startup who successfully raised money from its suppliers. <strong>Final thoughts</strong> With more companies seeking Series A financing this year, it’s time to get smart. It may go without saying but the more runway you have, the greater your opportunity to gain traction and attract funds. Don’t be discouraged by talk of the Series A Crunch, but be realistic about your situation and plan accordingly. <h6 class="zemanta-related-title" style="font-size: 1em;">Related articles</h6> <ul class="zemanta-article-ul"> <li class="zemanta-article-ul-li"><a href="https://www.versionone.vc/how-much-capital-should-you-raise/">How much capital should you raise?</a> (version1v.wpengine.com)</li> <li class="zemanta-article-ul-li"><a href="http://www.startupmuse.com/2012/12/is-there-a-series-a-crunch/">Is there a Series A Crunch?</a> (startupmuse.com)</li> <li class="zemanta-article-ul-li"><a href="http://pandodaily.com/2012/11/28/the-series-a-crunch-is-hitting-now-have-we-even-noticed/">The Series A crunch is hitting now. Have we even noticed?</a> (pandodaily.com)</li> </ul>

&nbsp; [caption id="" align="alignright" width="300"]<a href="http://en.wikipedia.org/wiki/File:Summify-founders.png"><img class="zemanta-img-inserted zemanta-img-configured" title="Mircea Pa?oi and Cristian Strat, founders of S..." src="http://upload.wikimedia.org/wikipedia/en/thumb/a/a6/Summify-founders.png/300px-Summify-founders.png" alt="Mircea Pa?oi and Cristian Strat, founders of S..." width="300" height="150" /></a> Mircea Pa?oi and Cristian Strat, founders of Summify (Photo credit: Wikipedia)[/caption] <a href="https://www.versionone.vc/startup-visa-canada-launched-today-your-support-is-needed/">Two years ago</a>, Danny Robinson, Maura Rodgers and myself started to lobby for a <a href="http://www.startupvisa.ca">Startup Visa Canada</a> that would make it easier for foreign (tech) entrepreneurs to start their company in Canada.  The initiative was inspired by the immigration struggles of the talented <a title="Summify" href="http://summify.com/">Summify</a> team. In 2010, <a href="https://twitter.com/cgst">Cristian</a> and <a href="https://twitter.com/mirceap">Mircea</a> arrived in Vancouver from Romania to start a new company. This talented pair had a big idea, strong endorsements, and venture-capital backing from top tier investors like <a class="zem_slink" title="Accel Partners" href="http://www.accel.com" rel="homepage">Accel</a>. However, rather than focusing on their startup, they faced a frustrating collection of bureaucratic red tape and immigration status uncertainty. We were hardly extending a friendly invitation to these talented entrepreneurs. So I was extremely pleased about the opportunity to attend the public launch of Startup Visa Canada in Toronto by Minister <a title="Jason Kenney" href="http://www.jasonkenney.com/">Jason Kenney</a> today. The general idea behind Startup Visa is that foreign entrepreneurs get fast-tracked for immigration if they have an investment commitment from a Canadian venture capital firm or angel investor. This program is sure to raise Canada’s profile within the global technology community, sending a signal to the best and brightest that we’re open for business. In addition, Startup Visa will create good Canadian jobs. This success was only possible because of the support of many people – from the whole <a href="http://startupvisa.ca/pages/startup-visa-team">Startup Visa Canada team</a> to countless individuals and organizations including the <a href="http://www.cvca.ca/">CVCA</a>, who is an official partner in the new government initiative. Startup ecosystems are competing globally for the best and brightest people – I am excited that the Canadian ecosystems are now in a much better position to attract the next generation of tech entrepreneurs to this country. &nbsp; <h6 class="zemanta-related-title" style="font-size: 1em;">Related articles</h6> <ul class="zemanta-article-ul"> <li class="zemanta-article-ul-li"><a href="http://www.feld.com/wp/archives/2012/12/startup-visa-one-step-forward-one-step-back.html">Startup Visa - One Step Forward, One Step Back</a> (feld.com)</li> <li class="zemanta-article-ul-li"><a href="https://fortune.com/2012/11/28/startups-will-gain-from-gops-immigration-pain/">Startups will gain from GOP's immigration pain</a> (finance.fortune.cnn.com)</li> <li class="zemanta-article-ul-li"><a href="http://www.pehub.com/181406/the-economics-immigration/">The Economics of Immigration</a> (pehub.com)</li> </ul>

One of the biggest questions facing any entrepreneur is how much capital to raise for their startup. It’s a delicate question…one that can have a significant impact on the fate of any startup. Raise too much and you’re diluting your ownership; raise too little and your company will have trouble gaining traction or making it to the next month. While every investor tends to offer different advice on the topic, most will agree that there’s no magic number that applies to all startups and situations. There are multiple factors you need to consider, including what you’re trying to launch.  A SaaS startup with immediate monetization options usually needs to raise way less capital than an advertising-driven business that can generally only monetize once it reaches a certain scale. Yet while there’s no magic equation, here are three things to consider when trying to determine how much capital to raise: <strong>1. Raise enough to sustain your company for at least 18 months</strong> If you have the option to do so, raise enough capital for a minimum of 18 months. Fundraising takes an enormous amount of time and energy, from meeting with potential investors to honing your presentation. With a small round, you’ll end up thinking more about future funding than developing your product. Many new founders think that because they’ve secured their seed round, it will be easy to find investors for the next round, and the next… However, a startup needs to demonstrate significant progress between funding rounds. By raising enough funds to give your business 18 months of runway, you can spend a whole year building your product and reaching milestones before it’s time to get back to fundraising. <strong>2. Target between 15-25% dilution per round</strong> I typically recommend that founders put more emphasis on the quality of investors (i.e. how can they help your business grow) and how quickly you can close a funding round (so you can get back to work), rather than focusing solely on dilution levels. However,  you still want to target a reasonable amount of dilution as a goal and 15-25% per round is usually a good benchmark. <strong>3. Keep funding to a minimum until you have found a product-market fit</strong> Early rounds are particularly expensive, because company valuation is low. For this reason, you should try to raise as little as possible until you find a product-market fit. Once you can show traction, with scalable marketing and sales channels, you can get vastly superior valuations. Until then, try to keep your funding to the minimum of what you need. <strong>Final thoughts</strong> Unless you’re able to bootstrap your startup until you reach profitability, you’ll need to raise money at some point in your company’s lifecycle. Deciding on the right amount of funding is a tricky question with no single right answer. However, keep in mind that the majority of failed startups end up closing their doors because they run out of money. Take the money, but do it wisely. <h6 class="zemanta-related-title" style="font-size: 1em;"></h6> <h6 class="zemanta-related-title" style="font-size: 1em;">Related articles</h6> <ul class="zemanta-article-ul"> <li class="zemanta-article-ul-li"><a href="http://startupnorth.ca/2013/01/08/fundraising-valuation-and-accretive-milestones/">Fundraising, Valuation and Accretive Milestones</a> (startupnorth.ca)</li> </ul>

I recently gave a <a href="http://www.techvibes.com/blog/financial-strategies-for-lean-startups-from-superangel-boris-wertz-2012-06-13">talk on lean financing</a> and thought I would share the presentation here on the blog as well. Lean financing is a powerful way to limit dilution for founders but one has to be careful to not miss out on growth opportunities. Sometimes founders are too focused on keeping a big piece of a small pie while they could have had a smaller piece of a huge pie. https://www.versionone.vc/wp-content/uploads/2012/07/Lean-Financing_June-20122.pdf &nbsp;

All membership organizations I am involved in face the same challenges: how to deliver value to and engage their members, how increase revenues to invest back into their organization and how to do all this on a shoestring budget. Technology can help solve these problems for the millions of associations out there and I am happy to announce an investment in one of the leaders in this space. SilkStart provides membership organizations with a simple SaaS solution that provides a one-stop shop for everything from membership management to event ticketing to social networking features. The product is already used by some leading membership organizations, including the Vancouver Board of Trade, US Asian American Chamber of Commerce in Washington DC, VANTEC and DigiBC, and has received extremely good feed-back in the marketplace.

We have not truly celebrated entrepreneurs since the generation of Henry Ford and Thomas Edison – entrepreneurs got respect, awards, sometimes biographies but never the attention of top athletes or celebrities. Steve Jobs has changed this – he became a mass media phenomenon with a deep impact beyond the technology circles. I hope that many thousands of kids and teenagers from around the world now have a new role model and got inspired to become entrepreneurs trying to change the world. This might be Steve Jobs’ greatest legacy. RIP.

The products of start-ups sometimes evolve so quickly that the communication of those changes falls behind – websites suddenly appear outdated and stale compared to the real story. This is how I felt when I looked at the w media ventures site a few weeks ago and decided that it was about time for a relaunch. w media had changed in quite a few ways over the past couple of years and the website was still telling a different story:

Gary Mason had a great article in the Globe and Mail yesterday analyzing the performance of some of the BC government organizations charged to drive forward the tech sector in this province. And this paragraph probably sums it up best: