Top 30 Startup Posts in June 2010

Some great content around the intersection of startups and being a Startup CTO in June this year.  This continues my series of posts:

• Top 29 Startup Posts May 2010
• Startup CTO Top 30 Posts for April
• 16 Great Startup Posts from March

There was some really great content in June.  Here are the top 30 along with a brief snippet from the post.

1. 10 Ways To Be Your Own Boss- A VC : Venture Capital and Technology, June 18, 2010

   The folks at Behance and Cool Hunting asked me to talk at their 99% Conference a couple months ago. The 99% conference is aimed at creative professionals and is focused on Edison's "99% perspiration.". And in the spirit of how to get your ideas to happen, they asked me to talk about entrepreneurship and the myriad ways you can "be your own boss."

2. 8 Questions to Ask When Interviewing at a Startup- Instigator Blog, June 18, 2010

   Job interviews are meant to be conversations. The interviewer asks some questions and the interviewee does the same. It’s never a good sign when an interviewee doesn’t have any questions. It shows a lack of interest. Recently someone asked me, “I’m thinking of taking a job offer from a startup. I’ll have to relocate.

3. 37 Startup Insights- OnStartups, June 7, 2010

   Earlier this year, I had a chance to attend SxSW. One of the highlights of my trip was a startup dinner which included Jason Fried and David Heinemeier Hansson, the founders of 37signals. At the time, they had just come out with their new book " Rework ". had downloaded a copy to my Kindle, but hadn't had a chance to read it yet. Now I have. Twice.

4. Pivoting- Chris Dixon, June 14, 2010

   My  Hunch cofounders and I frequently ask ourselves: “If we were to start over today, would we build our product the same way we had so far?&# This exercise is meant to counter a number of common cognitive biases, such as: 1. The sunk costs trap. People tend to overvalue past investments when making forward-looking investment decisions.

5. Creating Incremental Strategic Value- Ask the Angels, June 17, 2010

   We can easily overlook the level of demand pull when we are assessing strategic value. Just because a product has a patent, deep complexity and an obvious competitive advantage does not mean that it can fly by itself into the market. had two occasions recently to review products which had clear market leadership.

6. How-to learn about angel/vc term sheets- Gabriel Weinberg, June 28, 2010

   I think every startup entrepreneur (and angel investor) should have a good understanding of financing term sheets. Yes, even bootstrappers. haven't raised any money for my companies that required a term sheet (just friends & family money in my first company), and yet I still think it is important for a number of reasons. liquidation preference.

7. The Pattern-Seeking Fallacy- A Smart Bear: Startups and Marketing for Geeks, June 14, 2010

   What do these have in common? This pitcher has retired 5 of the last 7 batters.". We tried 10 AdWord variants and combination D is the clear winner.". The Bible Code predicted the Sept 11 attacks 5,000 years ago.". We sliced our Google Analytics data every which way, and these 4 patterns emerged.". Patterns in Chaos. Surprised?). Let's see why.

8. You’re Not a Real Entrepreneur- Steve Blank, June 10, 2010

   Who is an entrepreneur really? It turns out that there are four distinct types of entrepreneurial organizations; s mall businesses , scalable startups , large companies and social entrepreneurs. They all engage in entrepreneurship. Yet entrepreneurs in one class think that the others aren’t the “real” entrepreneurs. Small Business Entrepreneurship.

9. Saving time in preparing for board meetings- Fred Destin, June 11, 2010

   Some of the startup companies I work with do awesome board presentations. Stylish visualisations, tons of data. suppose it's because most of them are consumer facing businesses, but boy are they good at communicating. Personally, I don't like weighty board packs and I do not wish to inflict slide preparation upon anyone. Delegate and automate.

10. Suggestions for Angel Investors- Feld Thoughts, June 2, 2010

    I’m on an Acela train between Boston and New York (listening to Boston’s More Than A Feeling – how recursive) on my way to the TechStars Boston 2010 Investor / Demo day. It sounds like Angel Boot Camp rocked. My long time friend and co-angel investor Will Herman wrote a post titled Angel Investing that summarized some of his advice.

11. Don Norman at Business of Software 2009- Business of Software Blog, June 21, 2010

    Imagine you’re on the first slide of your powerpoint presentation and want to move to the next slide. Your remote control has two buttons. They are unmarked, but one button points up and one button points down. Which button do you press? Why you have to design products for how your customers are , and not how you want them to be. didn’t think so.

12. Simplify Your Existence in 3 Easy Steps- Feint, June 4, 2010

    My guide to cutting through the bullshit and making things simple. Why make things hard on yourself.  Over the past year, I’ve been dramatically changing the way I approach life.   To be honest I was confused.  The world felt like it was sitting on my shoulders and I was slowly being dragged down.    And then I took a stand. Productivity.

13. Parting Ways With A Founding Team Member- A VC : Venture Capital and Technology, June 11, 2010

    One of the hardest things for an entrepreneur is to part ways with a co-founder or founding team member. Those early days putting together the plan, building the product, and building the team are formative and powerful. The loyalties that develop during that time are strong and hard to break. Running a business is not an easy job. And be generous.

14. 8 Really Cool Web-Based Tools for Bloggers- Blogtrepreneur | Entrepreneur Blog, June 1, 2010

    Looking for cool applications to help you make your blog or site all it can be?  We’ve found some good ones!  From ways to make sure your site looks good no matter who’s looking at it, to protecting your privacy and your content, these tools are all easy to use and either free or very

15. From Minimally Viable To Maximally Buyable Product- OnStartups, June 21, 2010

    I’m a big fan of Eric Ries and the lean startup movement that he’s championing at Startup Lessons Learned. think many of the fundamentals behind the lean startup are things you likely have been practicing for a while. But, seeing it articulated so well and establishing a common vocabularly for us to talk about it is immensely valuable. What’s next?

16. Builders and extractors- Chris Dixon, June 19, 2010

    Tim O’Reilly poses a question every entrepreneur and investor should consider: are you creating more value for others than you capture for yourself? Google makes billions of dollars in annual profits, but generates many times that in productivity gains for other people. Most entrepreneurs are natural-born builders.

17. hacker angels- Gabriel Weinberg, June 14, 2010

    hacker angels is a new group of hackers who are also angel investors. The group currently consists of myself, Joshua Schachter , Jeff Miller and Roy Rodenstein. You can follow us all on twitter via the new hacker-angels list. You can also email us at ha@hackerangels.com. We are also looking for other hacker angels to join us.

18. Out of the cesspool and into the sewer: A/B testing trap- A Smart Bear: Startups and Marketing for Geeks, June 21, 2010

    Your A/B tests are trapped in a cesspool when they should be in the sewer.? Do you really care why A/B testing is analogous to unwanted liquids? Not yet, so I'd better get right to the point. On the rare occasion that it rains in Austin we get these deep puddles in the backyard. Water "seeks" the lowest point in the yard, but it's narrow-minded.

19. The Search For the Fountain of Youth – Innovation and Entrepreneurship in the Enterprise- Steve Blank, June 3, 2010

    It’s not the strongest of the species that survive, nor the most intelligent, but the one that is most responsive to change. Charles Darwin. Companies have a fairly predictable life cycle. They start with an innovation, search for a repeatable business model, build the infrastructure for a company, then grow by efficiently executing the model.

20. 7 Ways Nokia Can Win Again- ArcticStartup, June 18, 2010

    In the eyes of the developers and the startup community, Nokia went from hero to zero in less than 3 years. Despite its still 44% strong market share, the company is losing more and more every day to Apple and Google, both of which had no previous mobile experience. The company is about to introduce the N8 to a mostly indifferent community. Games.

21. In Defense of Multitasking- David Silverman, June 9, 2010

    HBR.org blogger Peter Bregman recently made some excellent points about the downside of multitasking — as did Matt Richtel in his New York Times article on Monday. will not deny that single-minded devotion often produces high quality. But let's remember, unitasking has a downside too — namely, what works for one person slows down others.

22. 5 Business Fundamentals I Learned the Hard Way- Tim Berry's Blog - Planning Startups Stories, June 3, 2010

    Two days ago I had the pleasure of being interviewed by John Caddell , founder of the Mistake Bank, for a podcast focusing on mistakes. That made me think about some of the things I learned that came from the business mistakes I’ve made. And despite a fancy business degree. Your employees can’t also be your friends. learned this the hard way. agree.

23. How to Proactively Protect Your Online Reputation- Startup Professionals Musings, June 12, 2010

    These days, your online Internet reputation is your reputation. Of course, having no reputation is usually better than a bad one, but don’t wait for someone else to establish a good one for you. The first step in the process is to claim your online identity. See my previous article on “ How Much Should You Pay for a Great Domain Name? Twittering.

24. Six Slides- A VC : Venture Capital and Technology, June 23, 2010

    The CEO of one of our portfolio companies is working on a fundraising deck and asked me for some tips. gave him my favorite, "keep it to six slides." 34; He ended up with thirteen which I see as a moral victory. The founder and CEO of another of our portfolio companies is wrapping up a large round and he showed me his pitch deck. Guess what?

25. No One Told Me What Being an Entrepreneur Really Means- FairSoftware's Blog, June 3, 2010

    There are lots of myths and dreams attached to starting a company. Will you be the next Steve Jobs or Mark Zuckerberg? Will you negotiate million dollars rounds of financing with cool VCs? This is what starting a company really means: e-mailing 100 strangers a day, every day. For the foreseeable future. That’s it. People you don’t know.

26. Rethinking The Laptop- Feld Thoughts, June 19, 2010

    This morning, as I was waiting for my laptop to grind through its startup process I started wondering why I had a laptop. travel a lot and had it with me in San Francisco and Los Angeles this week, but hardly used it. And, when I did, I was frustrated with how long I had to wait for it to “get started&#. By noon it had fully synched itself.

27. Competition is overrated- Chris Dixon, June 26, 2010

    Your #1 competitor starting out will always be the BACK button, nothing else. 8211; Garry Tan. Suppose you have an idea for a startup, and then do some research only to discover there are already similar products on the market. You become disheartened and wonder if you should abandon your idea. Here are some things to consider.

28. SEO in #20tweets- Gabriel Weinberg, June 13, 2010

    Recently I spoke at Dreamit Ventures on SEO. used Manu Kumar's #20tweets presentation format where I opened twenty tweets in twenty tabs and clicked them off as I went. The talk was recorded by Vijay Kailas from Numote. The point of the talk was two-fold. First, I wanted to convince the Dreamit startups (and you!) reasons to follow. buying links.

29. Taking "Fail Fast" to a whole... 'nutha... level- A Smart Bear: Startups and Marketing for Geeks, June 10, 2010

    I hate it when writers resort to dictionary definitions to make a point. The New Oxford American Dictionary defines 'authentic' as 'relating to or denoting an emotionally appropriate, significant, purposive, and responsible mode of human life.'. So true, so true, and that's the perspective you must adopt to become adroit in social media.".

30. Is Your VC Founder Friendly?- Steve Blank, June 15, 2010

    The role of a founding CEO in a startup searching for a business model is radically different than a CEO building and growing a company. Some VC’s get it, others may not. So if you’re the founder of a startup, you may want to consider who you take money from. Is Your VC Founder Friendly? How do you figure out which VC firm is best for you? 

Top 29 Startup Posts May 2010

Continuing my series of posts that I’ve been collecting that live at the intersection of Startups and being a Startup CTO:

• Startup CTO Top 30 Posts for April
• 16 Great Startup Posts from March

here are the top posts from May 2010.

1. Kathy Sierra at Business of Software 2009- Business of Software Blog, May 4, 2010

   "In the old days, getting customers was easy. You could just outspend. You could use brute force to get the word out. Now, thanks to social media, you don't have to outspend. There is a much better technique. It is to out friend. If you can just be friendly enough and get your users to party with you, the rest is really easy. Enjoyed this post?

2. "Authentic" is dead- A Smart Bear: Startups and Marketing for Geeks, May 3, 2010

   It's time to retire the following phrases. They should no longer be used, ever, in any context except derisive mocking: Fast and easy. Putting customers first. The Holy Grail of. The leading provider of. Legendary customer support. Solution. Genuine. Powerful. Secure. Simple. Innovative. Insight. Disruptive. agree! Enough! We get it! I Be specific.

3. Guide to Evaluating Startup Ideas- Tony Wright dot com, May 27, 2010

   A great developer I once worked with was kvetching at lunch one day. He’d been working at a well-funded startup for about a year and had come to terms with the fact that the startup was really a pretty dumb idea. He’d wasted a year of his life and had a pile of stock options that weren’t very interesting. Tesla is not.

4. Draw Your Ideas- A VC : Venture Capital and Technology, May 16, 2010

   I saw Jack Dorsey give this talk at The 99% Conference last month. It's a great talk. particularly like his first point, which is that you should draw out your ideas before you start coding them. The video is only 16 minutes long and it is well worth the time. saw Jack Dorsey give this talk at The 99% Conference last month. It's a great talk.

5. Why Lawyers Don’t Run Startups- Steve Blank, May 27, 2010

   Startups need to have a great lawyer, accountant, patent attorney, etc. But founders need to know how to ask for their advice and when to ignore it. Why Entrepreneurs Hate Lawyers. was having coffee with a friend who teaches at the U.C. Berkeley Boalt Law School and runs their entrepreneurship program. You Can’t Sign This Deal. It says what?!”).

6. Startup Insights From Paul English, Co-Founder of Kayak- OnStartups, May 10, 2010

   I’m just wrapping up several weeks of attending conferences across both coasts. Of the ones I have been to recently, the Nantucket Conference has been my favorite. great group of people and a small enough gathering that you can actually get to know many/most of them. Kayak is great Boston-area success story. Lots to learn from him. 1. 2. 3. 4. 5. 6.

7. Facebook is about to try to dominate display ads the way Google dominates text ads- Chris Dixon, May 15, 2010

   It is customary to divide online advertising into two categories: direct response and brand advertising. prefer instead to divide it according to the mindset of users: whether or not they are actively looking to purchase something (i.e. they have purchasing intent ).*. Through advertising or direct sales, these sites  harvest intent.

8. A FB ad targeted at one person (my wife)- Gabriel Weinberg, May 14, 2010

   The other day I gave a presentation with Steve Welch on the use of social media in politics. Steve was was walking through (live) the process of creating a Facebook ad. He started targeting the ad by location and interest, and the number of potential people he was reaching began decreasing on screen (Facebook tells you dynamically).

9. MongoDB at Etsy- Code as Craft, May 19, 2010

   Hi! Dan McKinley and Wil Stuckey from the Etsy Curation team here. We'll be your hosts for a three-part series about the use of MongoDB here at Etsy. The Curation Team. Well, half of it. Photo credit: Elizabeth Weinberg.). In the second post, John Allspaw will talk about how well MongoDB is working out operationally. The Application. Stay Tuned.

10. Bending over: How to sell to large companies- A Smart Bear: Startups and Marketing for Geeks, May 24, 2010

    This is a guest post by Steve Hanov , who blogs about programming and startups. For a micro-ISV, selling to big businesses can be more lucrative than selling to consumers. Instead of making a few dollars per sale and hoping for thousands of sales, you sell to only a few customers, and charge much higher rates. But the rates are high for a reason.

11. My Obsession With The Product- Feld Thoughts, May 3, 2010

    For some reason I’ve been doing a lot of interviews lately. In many of them I get asked similar questions, including the inevitable “what makes a great entrepreneur?” When I’m on a VC panel, I’m always amused by the answers from my co-panelists as they are usually the same set of “VC cliches” which makes it even more fun when I blurt out my answer.

12. The Yin and Yang of Product and Engineering- A VC : Venture Capital and Technology, May 22, 2010

    For a tech company, product and engineering are the heart and soul of the business. When I do a quick mental query of headcount across our entire portfolio of ~30 companies, I think at least 50% and maybe as much as 60% of the entire headcount of our portfolio is in either product or engineering. This is a great configuration for a starting team.

13. Consultants Don’t Pivot, Founders Do- Steve Blank, May 13, 2010

    Consultants can help startups leverage their limited resources.  But startups can shoot themselves in the foot when founders use consultants at the wrong time or in the wrong way.  Here’s why. Your Process Doesn’t Work. friend of mine asked me to chat with a startup he’d invested in.  They’re deep into Customer Development ,” he said.  Why?  Why? 

14. LIFT10: Workshop on Hacking Venture Capital- Fred Destin, May 7, 2010

    This morning at the excellent LIFT Conference I gave a two hour workshop on " Hacking Venture Capital " designed to give entrepreneurs a hands-on experience of (a) pitching and (b) negotiating with detailed debrief and tricks of the trade. First off the two prezis and then the case study material (i used ERPLY as inspiration).

15. While Google fights on the edges, Amazon is attacking their core- Chris Dixon, May 22, 2010

    Google is fighting battles on almost every front:  social networking, mobile operating systems, web browsers, office apps, and so on. Much of this makes sense, inasmuch as it is strategic for them to dominate or commoditize each layer that stands between human beings and online ads. 8211; are mostly a  loss leaders for Google. I know I do.

16. My angel investing strategy vs Joshua Schachter- Gabriel Weinberg, May 18, 2010

    Joshua Schacter has a great AMA thread on HN about angel investing. He shares a lot of interesting info about his strategy, and it's about as diametrically opposite to my strategy as you can get. think his strategy is essentially the Ron Conway strategy , and at his rate ("34-ish investments" in 1-2yr?), he'll be the next Ron Conway in short order.

17. VCs in seed clothing: Chris Dixon, Mark Suster, and Naval Ravikant interviewed- Venture Hacks, May 5, 2010

    I recently got on the phone for a cross-continent conference call with Chris Dixon from Founder Collective , Mark Suster from GRP Partners , and our own Naval Ravikant. The topic was VC signaling in seed rounds — and how these signals help or hurt your ability to raise money in the next round. SlideShare: VC signaling in seed rounds. Prerequisites.

18. Solving the "marketplace" business model- A Smart Bear: Startups and Marketing for Geeks, May 10, 2010

    A sizable percentage of Capital Factory startup submissions take the form of the "marketplace." In fact, 3 of the 10 selected companies from the past two years has followed this business model. Marketplace companies are notoriously difficult to start, so I'm constantly amazed that so many entrepreneurs chose this route. marketplace is born.

19. Unexpected Startup Lesson #1: Quitting the day job- Currently Obsessed, May 10, 2010

    This post is the first of a series on  “unexpected lessons&# learned through my experience as co-founder and CEO of Snapvine , a venture-backed mobile social networking service founded in 2005 and acquired by WhitePages in June of 2008. Thus, 6 months after graduation when I was contemplating leaving my job, the risks felt enormous. 

20. Why Taxing Carried Interest As Ordinary Income Is Good Policy- A VC : Venture Capital and Technology, May 29, 2010

    The House has passed a bill this past week that would change the taxation of carried interest from capital gains treatment to ordinary income treatment. The Senate has not weighed in on the debate but it is expected to do so soon. The New York Times has a story about it in today's business section. That seems like bad policy.

21. Entrepreneurial Finishing School- Steve Blank, May 10, 2010

    I usually hear the “Should I get my MBA?” question at least once a month. If you’re an entrepreneur, the glib answer is “no.”  It’s also the wrong answer. Should I Get My MBA? Last week I was having coffee with an ex engineering student of mine now on his second startup (and for a change it wasn’t a Web 2.0 What should I do?’. Where Do You Fit? MBA?

22. Klout Puts Metrics Into Social Media Management- Tim Berry's Blog - Planning Startups Stories, May 21, 2010

    I really like klout.com for three good reasons: 1.) it’s about measuring online influence and I’m big on metrics as a key element of business planning; 2.) it’s a great example of a strong startup based on need, entrepreneur Joe Fernandez building something he wanted to use, and getting VC funding; and 3.) they released a new 2.0 m pleased. What?

23. Facebook, Zynga, and buyer-supplier hold up- Chris Dixon, May 8, 2010

    The brewing fight between Facebook and Zynga is what is known in economic strategy circles as “buyer-supplier  hold up.&# The classic framework for analyzing a firm’s strategic position is Michael Porter’s Five Forces. This probably hurt Zynga’s profitability but also helped them fend off less well-capitalized rivals.

24. 50 Ways to Expose Yourself to Randomness- Ben Casnocha: The Blog, May 16, 2010

    Cal Newport's three step way to become interesting: 1. Do fewer structured activities. 2. Spend more time exploring, thinking, and exposing yourself to potentially interesting things. 3. If something catches your attention, use the abundant free time generated by rule 1 to quickly follow up. Below are 50 ideas for step 2. 1. Now. Spend 20 minutes.

25. When can startups be called successful, e.g. reddit, dropbox?- Gabriel Weinberg, May 27, 2010

    My last post on startup company failure rates engendered discussion on what constitutes success in the context of a startup company. specifically avoided this subject because it was ancillary to my point that some startup sub-groups have inherently different failure rates than others. think this comment on my last post gives this perspective well.

26. Tech Support *is* sales- A Smart Bear: Startups and Marketing for Geeks, May 17, 2010

    You probably think of "tech support" as the bottom of the food chain. Shit flows downhill" and all that. After all: Tech support deals with insane customers. Tech support answers the phone; a job even salesmen don't want. Tech support keeps angry customers at bay while having no power to effect change. Yep, that sounds lowly. Tech support is sales.

27. Unexpected Startup Lesson #2: Channel your Inner VC to Understand Startup Valuations- Currently Obsessed, May 27, 2010

    This post is the second of a series on “unexpected lessons&# learned through my experience as co-founder and CEO of Snapvine , a venture-backed mobile social networking service founded in 2005 and acquired by WhitePages in June of 2008. Valuation is an important aspect of VC deal terms, and a major determinant of your ultimate outcome. 

28. Fear Is A No-No- A VC : Venture Capital and Technology, May 20, 2010

    At the VCs Who Code panel at Google I/O yesterday, Dick Costolo asked the assembled VCs the biggest no-nos in a startup. Everyone gave excellent answers but my personal favorite came from Brad Feld who said "fear is the biggest no-no." You simply can't be tentative in a startup. You have to go for it at every chance you get.

29. No One Wins In Business Plan Competitions- Steve Blank, May 17, 2010

    Last week one of the schools I teach at invited me to judge a business plan contest. suggested that they first might want to read my post on  why business plans are a poor planning and execution tool for startups. They called back laughing and the invitation disappeared. At best I think business plan competitions are a waste of time. Now I do. Why?

Startup Founder Developer Gap

I was just interviewed by Frank Peters - Tony Karrer and the Founder-Developer Gap.  It was a lot of fun for me.  I’ve listened to Frank’s show for several years.  And I always recommend it to people involved in early stage startups.

I received a follow-up question from an early-stage startup about the Founder Developer Gap that I’ve described before and that was part of the interview with Frank.  You can follow the link above for more details, but the basic idea is that most startup founders have a pretty good understanding of the basics of what they want to do and a vision for the product.  And there are all sorts of different kinds of technical people who might help with getting that product to happen.  However, many founders are challenged to engage with developers to make it effectively happen.

Right Questions and Answers

They may or may not be asking and getting the answers to the right questions.  There are a bunch of questions in Startup Software Development – Do Your Homework Before You Develop Anything and in Startup CTO or Developer.  And figuring out answers may take a lot of work.  But often, it’s really important work to make sure you get your product right and technical strategy right.

Determine Technical and Team Strategy

Okay, now you know what you want to build.  Now there are some hard challenges around what technologies to use to balance short-term and long-term.  This is somewhat the heart of what a CTO does. 

From the technology strategy, you then look at your plan for who will do what.  You have to determine in-house vs. outside development and what parts of the problem each person will do.  This needs to fit with risk, cost, schedule, flexibility, etc.  And this somewhat determines the specific skills you will need.

Source, Interview, Engage and Manage the Team(s)

Now you know the kinds of people you need, the next steps are finding the people or companies, interviewing them, engaging them, and managing them.

This is another potential gap.  Many founders are not equipped to evaluate the capabilities of a developer.  How do you know if they will produce good code for you?  Are they producing at a reasonable rate?  Are the million little choices they are making the right choices?

I’ve talked to many unfortunate founders who have had a Founder Developer Gap and it results in a Weak Development Team.  Sometimes this is fatal for early stage companies.  You’ve spent your money and now you need to rebuild and spend that money again.  Investors are most often not willing to help you.  It’s a painful situation.

What Should You Do?

Let’s say you aren’t sure if you have a Founder Developer Gap – what should you do?

I would highly recommend considering getting a really good technical advisor early in your process.  And this is not your buddy who does programming at some company.  I’m talking about a legit CTO type person with experience building the kind of thing you are building.  There are a few different ways you might engage with this person - see Technology Roles in Startups. 

Obviously, if you already know someone and they can help you informally, that’s probably the best starting point.  If you don’t, then contact someone like me or find someone through LinkedIn and network until you get help.

This person can evaluate if you’ve asked the right questions.  They can figure out how you can go get through technical and team strategy and can probably help you source, interview, engage and manage.  Obviously, the more this person does the more you should expect to compensate them with equity and/or cash.

We are not talking about a full-time role.  Do not hire a CTO at this point.   I can almost guarantee a full-time CTO hire is wrong for you.  They will either not be senior enough or they won’t be producing code enough.  Have this advisor person help you as a part-time endeavor to figure out what you need.

This answers the question I received, but does it answer your question?

Angel Investment Criteria

I’m planning on going to a Tech Coast Angels mixer tomorrow and the topic for me is whether there is angel funding out there for startups that don’t meet classic VC models.  If there are, then who are they, what are the criteria, what does it typically look like?

By way of background for the question, there’s a great post by Bob Aholt, a Pasadena Angel: An Angel Investor’s Thoughts on Valuation.  The example he uses is:

THE RAISE
Investment    $500,000
Pre Money    $600,000
Post Money    $1,100,000

OWNERSHIP
Founders    55%
Investors    45%

EXIT
Sale Price    $5,000,000
Time    5 years

INVESTOR RATIOS
ROI    355%
Multiple    4.55x
IRR    35%
NPV @ 10%    $828,000

Admittedly that valuation and the resulting ownership causes me to wonder, but the most interesting aspect is that Bob is talking about investing in a much smaller exit, with no future investment planned.  Bob is heavily focused on ROI (and team/product).  But it seems like Bob would be a candidate.

But, this is not my experience with Angel groups.  For example, TCA’s evaluation criteria first bullet is:

A market opportunity sufficiently large to create a business that can grow to at least $50 million in annual revenues.

What if you believe you have a company that will be a profitable $10M company with obvious exits?  Can you raise $750K - $1M with no future investments planned?

My guess is that there’s potential with Bob individually, but not for TCA or Pasadena Angels collectively.  And I’m really wondering about that.  Do you need to get past the organizations to the individuals?

I’m a regular reader/listener of the Frank Peters Show that talks about Angel Investing.  In his recent post, Top 10 Ways to Win a Business Plan Competition, he says:

#4 I wanted to push this further down the list, but I just bristle at this: the revenue forecast. These are so detached from reality. My 4 plans get increasingly more incredible, ranging from $50M, $60M, $70M to $161M in year 5! This does not happen in the real world. Remember my day job, I'm past Chairman of the Tech Coast Angels and I see a lot of pitches with revenue forecasts. So get real. Your investors will be thrilled if you can get to $10M in some reasonable time frame. More likely, you'll be back for more money in less than 2 years, saying what everyone says: "it's taking longer than we thought". Investors won't believe your numbers anyway, so your over-sized hockey stick betrays your naiveté.

What’s funny about this is that the reason people put in these optimistic projections is to fit the investment criteria.  See investment criteria #1 from TCA.

And this also seems to contradict what Frank himself talks about on his show.  For example, Frank had Basil Peters, author of Early Exits, on his show back in March.  Basil tells us:

Exits are also happening much earlier than before. The largest number of exit transactions today are in the under $30-million valuation range. These exits are often completed when companies are only two or three years from startup.

I guess I’m wondering why early stage investment isn’t aiming at these kinds of investments?  Or maybe they are and I’m missing it because I’m going to TCA events?

Finding Developers is Tough Again

I’m seeing and hearing that it’s becoming tough finding good developers again, at least here in Los Angeles. On Friday, at the LA CTO Forum, I heard from a couple of CTOs having trouble finding good developers. My company, TechEmpower, recently added a few top notch developers, but it wasn’t easy to find just the right people. This is going to make the issues raised in Los Angeles Web Developers worse.

And it’s not just me, Ben Kuo just posted - Good news for developers (and jobs)

We’ve been talking with a lot (and I mean a LOT) of people who are looking for developers in Southern California (Los Angeles and beyond). One recruiter tells me it’s “like 1999″ in terms of the activity, with not only jobs aplenty, but offers and counter-offers hitting good talent.

I wouldn’t say it’s 1999 or even 2007, but it certainly has turned around.

Update from original - just saw a follow-up post by Ben Kuo - Southern California Technology Jobs Surge.

And funny enough, I wrote this post this morning and had it scheduled to come out the next morning. In between, I got an email from CJ Cenizal asking about this exact issue:

I'm growing a social gaming startup, Elevated Games (elevatedgames.com) as Founder and CEO. I'm currently looking for developers to join the founding team and when I read your post, I felt like I have been going through the exact same thing as your friend. I've Googled, gone through my network, posted to Craigslist, and approached universities, and much like your friend I am having a heck of a time finding developers in LA. It makes you want to move north!

I was wondering, what methods have you found to be successful in finding developers? I took a look at TechEmpower, and it looks like you guys are doing great! That's really exciting to see. I'm primarily looking for front end developers who are experts in AS3, and back end developers who are proficient at PHP and MySQL. Do you have anyone you could recommend to me, or any resources?

Perfect timing. I went back and revise the post. Couple of quick thoughts:

• I’m not so sure that moving north will get you better talent. I get inquiries from there a lot even with the strong bias against LA.
• I don’t have specific suggestions for people you can hire.
• My methods are pretty vanilla. I do have a little bit of an advantage having been around LA for 20 years doing development, being a former professor, having really interesting and varied projects to work on. Of course, a lot of people say the same thing.
• Seems like you might be able to source people from universities, especially for the front-end work. Depends on complexity.

Sorry, I wish I could be more help.

What Other People Say About Sourcing Developers?

In Los Angeles Web Developer, I talked about the issues with finding developers in Los Angeles based the experience that one startup founder had. The founder had tried or considered:

• Web Search – not all that useful – more design firms that development firms
• LinkedIn – searched for people, but gave up pretty quickly as it felt like a needle in a haystack.
• Freelance Sites – considered, not used, concerned about quality
• Craigslist - considered, not used, concerned about quality
• Local networking – decent luck. See Networking Events in Los Angeles and Southern California.

My fellow CTOs often discuss where/how we find good developers. Their list is fairly similar to Here’s what we hear in roughly the order of preference:

• Direct referral
• LinkedIn (both Job Postings and Searching for Talent)
• Dice.com
• Recruiters
• Developer Groups
• Craigslist

Of course, there are lots of firms that you can offshore your work. I’ll leave that for another discussion as the inquiry that I keep getting is more about local talent than offshore talent.

If you have other places you use to source developers, please let me know. I’m sure we’d all like to hear about it.

Better yet, maybe help CJ specifically. Where should he go find developers?

Seven Great Startup CTO Posts so far in May

Continuing my series of posts that I’ve been collecting that live at the intersection of Startups, Startup Development and being a Startup CTO.  Here are a couple of the other collections: 16 Great Startup Posts from March, Startup CTO Top 30 Posts for April.

Some good ones already from May:

1. "Authentic" is dead- A Smart Bear: Startups and Marketing for Geeks, May 3, 2010

   Phrases that should be retired include - “Putting customers first”

2. You Actually Did This?- Steve Blank, May 6, 2010

   Great presentations from Xobni and Dropbox on how they have gone about building their business.  Thanks Steve!

3. VCs in seed clothing: Chris Dixon, Mark Suster, and Naval Ravikant interviewed- Venture Hacks, May 5, 2010

   Great discussion around VC signaling in seed rounds — and how these signals help or hurt your ability to raise money in the next round. 

4. Software Patent Absurdity- Feld Thoughts, May 6, 2010

   Feld on the problems with software patents. “they are (a) invalid constructs, (b) totally unnecessary, and (c) a massive tax on and retardant of innovation. More and more of my VC brethren are beginning to come out publicly against them as are many extremely well respected long time software innovators.”

5. How To Communicate with your Investors between Board Meetings- Both Sides of the Table, May 1, 2010

   Good advice around board communication.

6. Not Betting on Flash, SoCal CTO, May 7, 2010
   
   Why startups should not be betting on Flash as a delivery technology.

7. SaaS Conversion: Which metrics matter?- StartupCFO, May 6, 2010

   Great look at important metrics for SaaS and the importance of churn rate.

Not Betting on Flash

On my eLearning blog, I recently predicted the Beginning of Long Slow Death of Flash. This got quite a lot of passionate response.

I view the point of this blog to provide my thoughts and perspectives as an Acting CTO mostly concerned with Startup Development to entrepreneurs and other CTOs.

The conversation around Flash is an important one for startups and CTOs. Let me explain based on a comment in the other post. Someone said:

"I am not sure I am ready to bet on the long slow death of Flash just yet."

What does it mean to "place bets" on death of Flash?

• Short Adobe stock?
• Make pronouncements in your blog?
• Argue about it?

I don't actually care that much about these things.

I do care about having to make technical choices that need to live 5+ years. I'm working on defining the technical approach for several startups right now.

We need to deliver on mobile devices in the future. Reality is that we need that now, but at least we don't need to specifically design for it for now.

Do we include Flex or Flash as a delivery technology?

No.

That's my bet. I'm not betting that Flash is dead in five years. I'm hedging by NOT betting on Flash. Instead I'm betting on HTML/JavaScript.

That's been a relatively safe bet for many years.