Observations^3
August 10th, 2008 • Conferences + Events, Entrepreneurship + Startups, Rants, Venture Capital
Unless you’ve been living under a rock (or aren’t a part of the Atlanta startup community), you’ve already read Jeff Haynie’s post on what instigated their move. I heard Jeff’s side of the story previously so this wasn’t a surprise to me. Lance just posted a somewhat line by line response to Jeff as well. As you can imagine, I agree and disagree with a random set of stuff within both posts. So here is my two cents based on my view and experience with these issues.
Support from Organizations & Investors
Lance mentioned that there has been a call by some folks demanding support for local events by investors and thinks it is misguided. I agree to some extent. Demanding that angels and venture capitalists sponsor a co-working space is ridiculous (another initiative that may launch by me and/or others - if you’re interested, you need to be on Twitter and get involved in the conversation). It would be nice to have their participation but there isn’t a clear line of sight between involvement and some type of investment or liquidity event. Perhaps it makes sense for investors to come by the space and hang out. Will it happen? Who knows and honestly, I don’t care.
Remember that east coast investors, in general, are more concerned about their bottom line than in giving back, relationships, or anything else. Think west coast investors aren’t any different? Well, a bunch of them were the ones that launched the Entrepreneurs Foundation so yeah, I’d say at least some of them are different. Note that we have a local chapter of the Entrepreneurs Foundation that I highly recommend entrepreneurs get involved with early. If you want details of how it works and why you should be involved, come find me and I’ll be happy to explain how the program makes a ton of sense.
That said, the point from Jeff wasn’t about co-working space but about events - Startup Riot, Open Coffee, SoCon, BarCamp, Capital Lounge, etc. If you look at the long list of events being done by entrepreneurs (that would be all of those events), most are not sponsored by any startup focused organization (investment or otherwise). Why should they be? Well, if folks are interested in getting to know individuals who are trying to accomplish something great - these events are the place to do that. And when you attend these events, you shouldn’t just stand around and talk to the people you already know. No, if you attend you should go and be open and willing to meet new people and try to help them. I’ll come back to that in a minute.
True an event like BarCamp may be a little too random for investors to sponsor but Startup Riot and SoCon are not. I’d mention Capital Lounge but Scott Burkett and Michael Blake have gone all out and secured investors as sponsors. Maybe that points to my inability so let’s look at that…
Startup Riot Mini-Case Study
I’ll offer my own event - Startup Riot - as a mini-case study. Among the sponsors for Startup Riot 2008 were two startups - one local and one from the west coast. Also, a law firm, a wealth management firm, and a benefits provider sponsored. It would seem like I didn’t ask any investors or local startup organizations to sponsor. Well, in fact I did - local investors and organizations and many others were approached as possible sponsors. None stepped up (some never even bothered responding back to me but that’s par for the course with some of these folks). Although they didn’t sponsor, a lot of these folks did show up for the event. I’m happy about that because the point of the event was to make valuable connections.
So compare my sponsors to those of a highly produced event like Venture Atlanta ($500/person). I count nine, yes nine, venture capital firms sponsoring that event. Again, my count for Startup Riot was a big fat goose egg. I also count organizations that I approached to sponsor Startup Riot who declined. So clearly, these folks aren’t reluctant to sponsor events - just events that aren’t highly produced and don’t have a golf outing as a part of the agenda (for the record, I don’t play golf - never have, probably never will so don’t bother asking). Okay, Venture Atlanta doesn’t (apparently) have a golf outing as a part of the agenda, but you get the drift.
Also, note that sponsorship for Venture Atlanta is WAY more than what I asked for. Using their sponsorship levels Venture Atlanta has raised at least $170k in sponsorships. Startup Riot was about 1/20th of the sponsorship dollars although Startup Riot did run at a loss (yes, people have been asking me about this lately and yes, it was a loss but I’m still committed to doing it again). Perhaps I could induce investors to “sponsor” by charging them way more than $50/person. But the point of Startup Riot isn’t to make insane money for me. Although it would be nice to break even.
So what can you attribute this back to? For me, it’s being risk averse. Some of these folks that I previously approached for Startup Riot who declined have now said “we’d love to be involved next time around”. Oh really? What has changed so much since just a few months ago when I first approached you? Is it that you now see how big the event was? Is it now that you realize the event was worthwhile for attendees? Is it that you realize that there is and was no risk in being attached to the event? Yeah, it’s all of those. The risk of being involved is now mitigated because the results are in - 250 people showed up for the event, presentations ran at or under time, people met other people they didn’t know, and people have been asking for a repeat of the event. Do you see any parallels between the funding situation locally and getting sponsors for Startup Riot?
Who You Know or Meritocracy
Okay, if you don’t think Atlanta and the Southeast is about who you know, more than what you know, I’m sorry - you’re crazy. Jeff mentioned the dress code issue between here and the west coast. I was planning to do a blog post just on this one issue but I’ll wrap it up here.
Erik Peterson has a comment on Lance’s blog post that sums up the issue nicely:
The difference between Valley merit and Atlanta merit is that Atlanta merit, performing is revenue, while Valley merit is the idea and the beta.
Dead on. Again, I’ll use Omnisio as an example - seed funded by Y-Combinator and then acquired within 6 months to the tune of $15 million. First time founders with no revenue model that I could see. Risk averse capital isn’t going to fund that deal. Yet it still created a lot of value for both the investors and founders. Of course, some people think that Boston wants to be like Atlanta but we all know that’s idiotic. This deal was funded by a Boston based organization which has done some phenomenal deals. No such organization exists (yet) in Atlanta.
UPDATE: The blog post re: Boston wants to be Atlanta has been removed but you can still find it here. Unfortunately some good comments weren’t cached and I didn’t save a copy. I have now though.
But there is a grass is always greener issue here too. Even if you’re in the valley, it isn’t like people just find you through the ether because they know you’re doing great things. No, you’ve got to network and get out there to find those good connections. You may create the world’s greatest widget but if you’re the only one who knows about it, it isn’t going to get funded - doesn’t matter if you’re in the Valley or in Atlanta. It just happens that there are a lot more good connections out west than there are here. So it seems like there is more required networking to do here than out west. In reality, there are a lot more people competing for those connections and introductions out west. So instead of having a hard time figuring out who to talk to, you have a harder time getting them to listen. We have the opposite problem here - no one to listen in the first place. Those that will listen, only listen to people referred by a select few channels. And if you do get referred through, they still might not be smart enough to figure out what you do.
In the end though, you need to do both things well - create something good and have the charisma to sell it to customers and potential investors. I can speak volumes about this from personal experience. When I started down the path to launching Digital Envoy, I was the stereotypical engineer. I was overly cautious and undersold our capabilities initially. In meetings I talked about 100 ms transaction times for data a lookups. When I left the company, we had achieved better than .03 ms transaction times. The point being, no customer cared when we talked about 100 ms transaction times. That changed dramatically at .03 ms transaction times. But do you know of any investor that cares to understand the system and service impact of doing 100 ms versus .03 ms transaction times? There aren’t any. That’s my point. As a developer/engineer/visionary, you need to realize that you’re really an entrepreneur and you have multiple constituencies that you need to speak to. If you can’t do this yet, develop this ability FAST because it will lead to your failure. If you can’t develop this ability, find someone else to be CEO and then go and focus on the bits and bytes.
Along these same lines though, this inclination to get all gussied up (yes, I said gussied) for events is really counter to any basis of a meritocracy. When you meet me in person, you should be judging me based on who I am, what I can do, and what I say and not based on what I dress like. Lately I’ve defaulted to going to events in jeans unless there are dignitaries at the event (note: investors are not dignitaries). I’d suggest all entrepreneurs start doing the same thing. Honestly, if an investor isn’t going to give you money based on the way you look or dress, do you really want them involved in your company? They would have such a narrow view of the world that any advice they give you will likely be completely wrong. Until this approach is embraced by local entrepreneurs though, it’ll be easy for you to find me at local events - I’ll be the tall guy wearing jeans talking to anyone and everyone who wants to talk to me.
What Needs To Happen Now
So that leads me to the final part of this post. We’ve talked a lot about money and how it isn’t available and what the reasons are and woe is me, what shall we do. Some people take that to mean that we’re always complaining about stuff. Actually, this is what entrepreneurs do. We don’t sit around and pat each other on the back for things going great. No, we look at what is going wrong and try to fix those things. You don’t start companies to keep perpetuating the status quo. You start companies to take advantage of an opportunity because something has gone wrong in the market. Anyone who doesn’t understand that clearly doesn’t understand what entrepreneurs are about.
But, I can’t magically make money appear. I’ve got some ideas to get some money flowing but first I need your help. So this is what I propose. We complain about entrepreneurs who have “made it” but who aren’t giving back. You know what? Screw ‘em. They don’t need our help and so I don’t need their help and neither do you. If any of these folks wants to get involved and help other folks out, we’ll welcome them with open arms. But until that time we should stop worrying about how to get them “engaged” with the community. We have better things to spend our time and energy on.
If you have been complaining about these people (I’m in this camp), that means you need to start doing what you’re saying they aren’t doing - giving back time to other entrepreneurs. And I don’t mean just the folks who are at organizations and have the ability to do this or the people who have exited companies. EVERY SINGLE ONE OF YOU needs to give some time to your fellow entrepreneurs. I don’t care if you’re just launching your company or if you’ve had a 9 figure exit you need to start giving back starting NOW.
Maybe you’re a RoR hotshot. Or you’re a marketing whiz. Or you know every single angel and VC this side of the Mississippi. Commit to give some amount of time EVERY MONTH to another entrepreneur. Ideally it’ll be at least an hour a month. Even better would be an hour a week. Find an entrepreneur that you don’t already know or haven’t already helped and use your skill to help that entrepreneur. With your hour you may want to help with writing some code, or write a marketing plan, or make a ton of introductions. Whatever it is - spend an hour with another entrepreneur and do some pro bono work.
If you can’t find an entrepreneur to help, contact me and I’ll find you someone (or maybe an event to work on). Or even better, come to an Open Coffee and find someone to help on your own. If you’re on the receiving end of help from another entrepreneur, it’s then your responsibility to 1) make the same commitment to help other entrepreneurs and 2) find someone to help the entrepreneur that just helped you (assuming that you can’t help them in their business).
So in essence, I’m asking for at least 12 hours a year of pro bono startup work from each of you. But this isn’t just listening and giving advice at an Open Coffee. No, what I’m asking for is real heavy lifting in someone else’s company. There won’t be a consulting fee or an equity stake for you in the company. You’re going to do this to help out and make a stronger startup community which will, in the end, make Atlanta a better place for all of us to launch companies.
So that’s my proposal. Start helping out each other. And as I hear that you’ve been doing this, I’m going to be more willing to help you out too. But if I hear that all you’re doing is getting help and not providing any help, word will get around and you’ll quickly be frozen out of the community.
So what do you want to do - work to make things better or keep bitching about how things stink?
24 Responses (Add Your Comment)
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I’ve been getting pretty frustrated with the response the past couple of days, and came to pretty much the same conclusion. Investors and others know there’s a problem, but whenever anyone tells them so, they deny, deny, deny. That doesn’t help anybody. Obviously the investor crowd is too stubborn to play ball. So we have to buck up and do it ourselves. I’ve got no problem with that. It’s their own loss.
So I decided that I’d just say ’screw it’ and put my head down like I’ve been doing the past 6 months. In another 6, maybe I’d be able to help out a little bit more. I might have the cash to help sponsor a co-working space.
Maybe we should formalize this into a monthly event? Have 4 hours or so where everyone gets together to work- except you can’t work on your own stuff. We don’t even really need a space- Octane or Starbucks would suffice.
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Eric, the “screw everyone else except myself” community is what we have now and it doesn’t help anyone. True, if we all spend 100% of our time on our own stuff we will see some progress, but wouldn’t you rather take a break every once in awhile, help others and learn something at the same time?
There are benefits to helping others where the lessons can be used on your own stuff. Right now I’m doing SEO consulting for a client to help pay for my bills and as a result of doing some research for them, I’ve actually learned to narrow the focus on my own campaign instead of my old way.
The point I’m trying to make is by doing whatever you can to help, even if it’s just consulting for free for someone else an hour a month, may help you directly or indirectly. The ability to contribute to the community isn’t completely dependent on how thick your wallet is.
Heck, I’ll throw it out there now: if anyone would like to sit down and have me advise your site on your SEO or PPC campaigns, I’ll be happy to do it. If you like to brainstorm, I’ve been told I’m pretty good at coming up with useful and cool site features too.
As for myself, I will need some help with a Facebook app and some Twitter development in a couple of weeks so if anyone is willing to answer a couple of questions over email, that would really help me save hours of time for a couple of small projects I have in mind.
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@Sanjay:
Great and awesome post! I found myself nodding my head and going “uh-huh” at every paragraph. I also felt really good at the end because, as you know, I’ve been busting butt for the past 1.5 years doing exactly what you ask for by organizing Atlanta Web Entrepreneurs every month. And I want to do a lot more, maybe some things will change soon that will let me… And you will be helping me with AWE this month too, so thanks!When I started VBxtras in 1994 I had the same feeling of “screw investment, I’ll just make it happen.” And I did and it went gangbusters. We made some mistakes starting in 2000 after our lack of capitalization caught up with us, but we had a 6 year run with hockeystick growth! Wish I had known a good CFO back then, but that’s water under the bridge.
And in my participation around the co-working idea, lots of what I want to see happen is to foster a community where we can help each other out on an ad-hoc and a daily basis. I think we can create a culture where we can seat those SSJ investors on the sidelines and we can just all go to town creating lots of value where the SSJs only participation is to watch other’s make money. And if they SSJs ever decide to rethink their approach we could let them join the party too but not until. OTOH we plan to talk f2f about all that soon, don’t we? :)
P.S. As for your comment to @Wei about people struggling to help others, I can say with much experience that the most benefits I have gotten for myself have been when I have helped others, so YES! We’ve got great local talent and a great ethos outside the SSJ community; let’s pool it together and make things happen!
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@Wei you already know I’ve offered Twitter help…
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@Sanjay,
I agree wholeheartedly with your post. I think that the various skills and talents that gathered at startup weekend serve as a good starting point.My suggestion to the community is to somehow formalize a group similar to the group created out of last years startup weekend. I don’t think many people participated in “The Weekend” to get rich, but rather for the camaraderie and relationships. The original group grew apart because the too many cooks problem. If we can somehow organize that group based on individual expertise and talents, working on solutions to each others problems, I think we could create a cohesive group that would provide value to the community at whole.
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Sanjay
As always your passion adds that certain something to your posts.
I’ll suggest one step further - would you be willing to host on your site a community vehicle where people who are mentoring entrepreneurs and discuss what they are doing and whom they are helping? It might help small businesses by way of cross pollenation. For example, I’m a terrific spreadsheet jockey (I say it loud and say it proud!) but the last code I wrote was for a LOGO class in 8th grade, and getting some tech help would enable me to better serve the poor soul who chooses to follow my guidance.
Such a vehicle may also be a place folks who would like to mentor might be able to connect with those who need mentoring. One lesson I’ve learned through StartupLounge is that the investor community is willing to get engaged, but the vehicles to do so have not really been there.
Thoughts?
– mike
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ASW 2 is coming soon. New & improved format. Bring your current project and pitch it or start with a new one. Could have 10 or more projects moving forward over the weekend of November 7.
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@Wei, @Sanjay. Of course, when I meant “put my head down for another 6 months” it wasn’t an all-or-nothing thing in regards to help- just cash. I’d be glad to help out anybody as soon as I get back from vacation (I promised myself I’d keep TextMate closed the whole time).
I said “Investors and others” as a broad brush on purpose. I think everyone knows where everyone stands based on their comments (or lack thereof). I was using it to refer the same group that you guys use “SSJ” for.
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I’d be happy to offer technical assistance on a variety of “hot” programming subjects, like Ruby on Rails, Flash/Flex/Actionscript/MXML, video on the web, and scaling with Amazon’s various cloud services (S3, EC2, SQS, FPS…)
We already give away a lot of time trying to help build the community each month, but i agree with Sanjay here: we can always do more.
The other 800-lb gorilla in this room is the possibility of an Atlanta coworking space, which i have to say i believe would put this “help each other” initiative on steroids…
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Per Mike’s comment, we’ve been thinking of setting up a simple forum for Atlanta Entrepreneurs to solicit help and feedback and respond to same. Glad to offer up the space and hosting. Let me know if there’s a real interest here.
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One thing I think we are missing is that, while we have been talking about mentoring and creating new entrepreneurs out of Tech, Emory, etc, we have not (that I’m aware of) been talking about creating new technology investors. There are large pockets of wealth in this state that could be very interested in picking up a piece of the Atlanta technology scene if they knew how, had some help, and had access to the deal flow.
Two questions:
1) How many of you have tried to look for seed round investors in Columbus, Athens, Chattanooga, or Savannah?
2) How many of you who are looking for money would be interested in an organized “on the road” version of what Startup Riot did?
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I’ll happily help others with online marketing including SEO, Paid Search, market research and market testing. Our motto is fail fast and cheaply. We can help you do the same. I can’t express to you the importance of understanding your market’s responsiveness before you enter.
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To Michael’s point but in a different area, our state is woeful in the area of encouraging capital to be invested here. I know Stephen Fleming has been single-handedly trying to change this but I have got to believe something else can be done. We spend alot of time throughout the Southeast and we are trailing other states by years in this area. For example, check out http://www.eflorida.com/PressDetail.aspx?id=6100 for what Florida is doing or
http://www.state.ar.us/adfa/Venture%20Capital%20Description.htm for what Arkansas does. We have the most viable group of entrepreneurs and the least amount of support on a state-level. -
I’ll just keep my comments to the facts I know.
First, Startup Riot did have organizational sponsorship. The Atlanta CEO Council actually paid $1000 to sponsor the event (proactively I might add). I think our logo is still on the website.
Secondly, Venture Atlanta is priced at $500 because the event is targeted towards VC’s and being run like a business - one that will sustain itself for the long run. It has full-time staff and because the scale of the event (including, screening companies, arranging food/bev, handling speakers like Scott McNealy of Sun Microsystems) the day-to-day needs of organizing the event requires more time than a purely volunteer team can typically commit. In fact, the entire conference was FREE to both the VC’s and presenting companies (which will always be the case) until the conference started becoming bigger and more time consuming. I know this because I and several others have worked on the event in our volunteer time since we started it.
Lastly, we (Atlanta CEO Council) made investments over the last seven years (i.e. ION Venture Forum) in building the foundation of what Venture Atlanta is now , so we understand the P&L of running these events pretty well in addition to understanding that it takes time to build credibility for an event.
P.S. All the local and out of town VC’s we asked for support did sponsor the event.
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Great post Sanjay and something I was actually thinking about recently.
Count me in for offering up my time. I’m well versed in Java, Ruby on Rails, JavaScript/AJAX, etc. Basically, if you need help with something technical, I can likely help.
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For all us “work nights and weekends on our crazy idea” types, time is all we have, but there’s never enough of it.
I suppose I could give an hour here and there, but honestly, would an hour’s worth of programming time really help anyone? I’m a pretty fast web developer (RoR, mainly), but it’s hard for me to imagine that I could do anything useful with only one hour per week. I guess I could fix some small bug in your website that your brother’s neighbor’s nephew left you high-and-dry with ;)
Still, I’d kill for an hour of time from a skilled designer or marketer. Just long enough for them to say, “You’re doing it all wrong and here’s why…”
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Russell Jurney August 12, 2008at 11:31 pm
An hour of your time on something you’re an expert at is worth 12 hours of my time if I am a noob.
There’s currently a gang of 5 centered in Midtown where members help each other with various things once a week. Although we’re not writing code for each other just yet, some of the pro bono consulting and networking does help. It’s also a great way make the commitment and have an organized way of managing it.
I would recommend others to start forming groups with trusted peers at first and network out from there. Soon enough, we’ll have enough of these clusters and hopefully do something more organized on a larger scale.