I suspect this is one of those provocative posts that gets misquoted, misaligned and misunderstood, and definitely not to be taken at face value. Still, read Avoiding Undue Diligence: My Strange Approach To Angel Investing, in which Dharmesh Shah argues against due diligence in angel investment.
Actual, fundable, serious startups in a single weekend? No. Real? Great learning experience? And worth doing? Yes.
Last Sunday night I judged nine pitches from nine groups that started from scratch just two days before, late Friday afternoon. They had some good ideas, good pictures, a prototype or two, some good video … and an entertaining event.
I’m posting this here for two audiences: angel investors and founders (including would-be and wanna-be founders) of startups.
I was one of four judges, all of us members of local angel investment groups working with the gust.com platform. In two hours we had pitches and questions and answers. Then we met for 30 minutes and chose a winner. This was in Corvallis, OR, for the Willamette Valley.
This isn’t exactly news. It was a Startup Weekend as conceived and licensed by the organization at startupweekend.org, supported by the Kauffmann Foundation, Google, Microsoft, Amazon.com, and others (my company was a sponsor of this local one). You probably already heard of it. I had, and I’d been invited to speak or judge before, but hadn’t been able to actually do it until now. The Startup Weekend organization has run 970 of these weekends in 108 countries and is doing about seven or so every month now.
It’s a good reminder about what it takes to start a business. The whole thing started Friday with a vote on the better ideas. They formed teams, worked Friday night, Saturday, and Sunday. They ended up with market validation, execution, and what seemed like a lot of progress in very little time. Several of the pitches looked like interesting prospects that could happen.
It was a lot of fun, good for the local startup community, and good for the 75 (or so) people who spent all weekend doing it.
Is the bloom off of the startups rose? Two days ago the New York Times published this story about investors getting pickier.
I think the NYTimes’ headline is slightly off from the story’s content. It’s not that much about a rocky recent past; it’s more about money being too easy in the recent past, and now, as a natural result, things get tighter because “easy” money doesn’t always mean enough of the due diligence and thought to make good deals. Read more
Years ago I came across the idea that in entrepreneurship, education and experience contribute to likelihood of success roughly like you see in the chart here. The underlying assumption is that a lot of education makes up for very little experience, and vice-versa. And this is in the context of startups, investment, and entrepreneurship.
I’ve drawn it here MBA style, with a line on two axes, pretty much the way I first saw it, with a smooth curve from one extreme to the other. It’s almost symmetrical in this drawing, and would be even more so if I had better tools (who wants to devise an equation? I just drew it.) The idea is some sort of a conceptual break-even point between the two factors. Read more
Consider this (emphasis is mine):
Ads are the Internet’s tax on users who want free apps and websites. Allmost all free apps and services have ads. Ad-supported companies are akin to the government in the sense that they are both really good at finding ways to charge you without it seemingly coming out of your pocket. Many people’s taxes are taken automatically out of their payroll, so they don’t think of that money as being theirs to begin with. Similarly, we feel like everything that we don’t directly pay money for on the Internet is free, but that is simply not true. Read more
What’s an advisor to a startup deal? Technically, advisor is one of those bucket terms that means anything and everything, depending on context. Those names and faces and backgrounds that turn up in pitches and business plans might be deep and important relationships, somebody with options or equity who is going to be helping for the long term; or meaningless fluff, somebody who agreed once to have his or her name appear, but really does nothing.
When advisors come up in a pitch, I immediately ask how advisors are compensated and what they really do.
And here’s how I feel about the answers I get:
Advice is easy to get. Help, contributions, real discussions, digging into the details, making calls, returning calls, opening doors, and getting things done, that can be really valuable.
And on both sides, investor and startup, we need to figure out what advisor really means.
I like this a lot. The executive summary:
Dropbox Co-Founder Drew Houston believes false mythologies about tech company founders do a disservice to aspiring entrepreneurs. While many people think all tech founders start with world conquering visions, says Houston, the reality is that founders learn one day at a time just like everyone else.
This less-than-two-minute video comes from Stanford’s Ecorner, its online entrepreneurship center, which is a great resource.
If you don’t see the video embedded here, you can click here to see it on the original source.
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