Yesterday, it started a 7:30 AM in a raining day and it went through the entire day until 8:00 PM, non-stop. That is the Entrepreneur University organized by NWEN. It was an awesome event. Third time I attend and this is by far the best Entrepreneur event that I attend every year.
Here is a quick summary of my day and some of my thoughts.
8:00 AM: Morning Keynote by Jim Sinegal, founder and CEO of Costco: It was ok. He did a lot of advertisement for Costco and talked about their history. Not a lot of value but good to know anyway.
9:00 AM: Nick Hanauer (2nd Avenue Partners): Great, great talk on what he sees as transformational value created by a company. A few people probably left that talk and decided their idea was not good enough.
10:00 AM: David Weld (SeaTab software): It was supposed to be a talk about "Listen to Your Customer". It wasn't awful, but near awful. He brought a customer to talk about him. Boo-hoo.
11:00 AM: Jon Roberts (Ignition Partners): The talk was about scaling your business. And he starts with a bomb: "Don't scale to early", then he lists 9 things that you must achieve/be doing before you decide to scale. Very good.
12:00 PM: Lunch. I sat on the table with a guy from Marchex (Ryan Burt) with the theme "Web - Search Engine Marketing". Not interesting.
12:30 PM: VC Bistro: 5 minutes to talk to a VC 1-on-1 (about 10 of them). I picked Dan Rosen, Chairman of the Alliance of Angels. Great guy, great talk.
1:00 PM: Chase Franklin, founder and CEO of QPass: It was a good talk. He explained what the went through during the dot com bust (BTW, Chase, "dot com" should be spelled like that, and not "dot.com" because then it would be "dot-dot-com" )
2:00 PM: Therese Adlhoch Smith: Talk about Marketing on the Cheap. Similar presentation from another guy last year called ("Creating a brand on a shoe-string budget"). I hope someday these people understand that "cheap" and "shoe-string" is a couple of thousands of dollars, and not $50K or more!
3:00 PM: Denny Weston (Fluke Venture Partners) on "Writing an Executive Summary". It was a good talk. I knew most of the stuff there, but I'm sure a lot of people learned a few new things.
4:00 PM: Janis Machala (Paladin Partners) and Craig Sherman (Wilson Sonsini) on "Funding Early Stage Companies". This is probably that eleventh time that I hear either Janis or Craig (or some other Angel or Lawyer) talking about the same bullet points. Boring for me, but very valuable to other people.
5:00 PM: Pete Higgins (2nd Avenue Partners) on "Ten pitfalls for Early Stage companies": Best presentation of the day. I didn't know Pete was so good at giving talks. It was entertaining, informative and had a lot of value.
6:00 PM: Cocktail. Great for networking, which leads me to...
Geir Hansen: Manager at Silicon Valley Bank. He loans money to companies and VCs. Added an option to when you are about to close a round, but need immediate cash. I'll keep that in mind.
Hans Omli: I've met Hans at the TechCrunch Party Seattle. Mike Koss had introduced us by email before. He is just starting a new company. I'll talk more later.
(Microsoft Employee Number 12345): Can't tell his name because he still works at Microsoft. I've meet people like that every year. He is thinking about quiting and starting his own company. Good for you.
Andy Sack turned off comments on his blog. Actually, he didn't, but now people need to sign in with some stupid authentication mechanism. I never, ever sign in to leave a comment. Not because I want anonymity -- I always leave my real info -- but because I hate the hassle.
Usually, people do that because they been bombed with harsh, offensive or threatening comments, which I talk on this post.
UPDATE: My criticism is about not allowing comments on blogs. As simple as that. I'm not criticizing Judy's Book or Andy Sack per se. Apparently there are quite a few people that don't like Andy and Judy's Books.
Chris was my lawyer when I established Sampa. He and I lived just about a block from each other in Redmond (that was a coincidence). He was a great guy and had a terrible car accident in May and died a few weeks later. The sadest part is that he left two kids behind. Since my son was born in January I fell horrible when something like this happens.
Nick Hanauer from Second Avenue Partners gave a great talk on what he believes are the core traits of an entrepreneur, which are:
Ability to create transformational value;
Be a social outcast.
About #2 it is pretty much a fact: Entrepreneurs are different from the risk and they usually believe in something that others cannot see.
The interesting point is #1, "Transformational Value". Nick defines value as Benefit divided by Costs. Everybody knows that. But he adds something else to the equation, factor all that by the Benefits/Cost of your competitor to see the Transformational value.
If competitor A has a product that is worth $5 and lasts 10 years, the value of that is 2 (10 / $5). If your product costs $10 and lasts 20 years with everything else being the same, your value is also 2 (20 / $10). If you divide your value by your competitors (2 / 2) you get 1, which means you didn't create any transformational value.
He thinks that Startups should be looking into 10 to 100 times more value to be worth the trouble. Yeah, I agree to a certain extent.
He is missing something...
Nick clearly defines Transformational Value, but IMHO he is missing an important aspect of when to decide to invest in a company (or start a company, which is a type of investment). The missing parameter is Risk.
If the Transformational Value (TV) is 1 or less, that is not worth the trouble at all. If the TV is between 2 and 10, it might be a worthwhile investment if the risk is near zero. That is, if you can't loose and you will create some additional value, why not?
VCs like him are more interested in high-risk high-reward deals, and that is fine. However a lot of good people watched that presentation and saw that they couldn't create (or justify) a 10x Transformation Value. Should they quit? Shouldn't they try? Maybe they will fail, and that will be a great learning opportunity, or, maybe, they will find a niche or a morphed product that will hit big.
Jonathan Roberts (a.k.a. Jon Roberts) from Ignition Partners gave a talk on how to scale your business. The first thing that he said is to not scale too early, and then he listed 9 things that should be done/achieved before starting scaling, which are:
Determine your main value-add;
Evaluate the market and determine who your customer is and what they want to buy;
Determine your competitive strategy;
Determine your positioning;
Identify the key trends you're going to exploit;
Produce the product or a proto-type of the product at minimal cost and sell it to a few customers;
Fully deploy with a handful of customers;
Acquire the next handful of customers primarily through word of mouth;
Use PR and momentum to project your product, offering, or company into the market;
Scale.
Pretty fantastic list, but the terminology applies a bit more to an Enterprise-like product, not so much for a consumer product. For example, "Fully deploy with a handful of customers" in the consumer space is more like "Fully deploy/get used by a few thousand customers".
At Sampa...
Looking at Sampa and everything that we've done or achieved so far, I say we are pretty good at understanding and developing the business. Here is a point-by-point:
Value-add: We understand our value add.
We have a broad definition of customer that we are narrowing, narrowing, narrowing.
Competitive Strategy: It is a crowded space, but we have a decent strategy here.
Positioning: Ouch. Don't touch that, it hurts. Yes, we had a "Universe" positioning, then we had a "Dot" positioning, now we have (or are working on) an "Area" positioning.
Ahhh... We know that very well. We even got a lot of press because of that.
Produce the product: Done.
Deploy to customers: Done.
WOM: We do a little bit, but we want to do it better. Viraly.
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: It was ok. He did a lot of advertisement for Costco and talked about their history. Not a lot of value but good to know anyway.
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January, 2008