Caterpillar Cowboy

marksbirch:

I read the tech press not for information, but for comic relief.  In fact, they should use Comic Sans font on their blogs just to emphasize the point.  The sheer inanity of it all led me to post last month the top ten most annoying memes in the startup scene, but I clearly could have gone on.  Just in the past few weeks, we had Paul Graham going West Coast gangsta calling out the uppity NYC startup community, HP’s board channeling kindergarten, Groupon’s creative use of new math, more iPhone announcement guessing games, and people declaring the demise of Netflix and Facebook.  You see, it is all very funny, in a nerd sort of way.

So without further ado, here are twelve MORE annoying startups memes.  Something tells me I will probably have to do another list a month from now though…

• [INSERT_HERE] Is Dead – These articles only seem to proliferate in tech media circles.  It is like we are taking our pent up StarCraft frustration out into the real world where the only thing that counts is body counts, lives left, and Fitocracy points earned.  For those keeping score, the NYC Tech scene is the latest thing to be declared dead (thanks for the vote of confidence Alyson Shontell).
• Paul Graham Mythology – I get it, he is uber-successful and runs the Deathstar of startup incubators.  While Paul is free to believe his own religion, that does not mean everyone else must also bow down at his throne.  His formula for startup success is not a guarantee nor is it even proven by data (here is some real data).  It is instructive to note that plenty of startups were quite successful before the advent of incubators, and many others will continue to thrive outside of the incubator ecosystem.
• Where Da Ladies At? – Every few months there is yet another “controversy” about the woeful lack of female founders and engineers with lots of weeping and gnashing of teeth.  Yes, the ratio is troubling, but it is not going to be fixed now, or next year or the next several years.  More women will jump over to tech in due time as recent programs start generating interest in the STEM fields, but for now, let’s recognize that there already are quite a few successful women entrepreneurs and leaders in tech.
• The {SUCCESSFUL_STARTUP] of [INDUSTRY] – Every startup pitch starts off with some line that describes what they do as similar to another modestly successful startup, but for some other industry or market.  It might be convenient and catchy to go with the “it’s this for that” format, but it just obscures what most of these startups actually do.  Instead of shoehorning startups into such a limiting formula, how about just figuring out what value these startups actually provide and using plainspeak to get the point across?
• Android Lame, iPhone Awesome – If you believed developers or TechCrunch, you would think that building Android apps is the equivalent of scaling Mount Everest without oxygen tanks.  Frankly, developing for Android and iOS are simply different, and each carries its own eccentricities.  How about we get off the Apple / iPhone bandwagon and realize that real people are buying Android phones and expect high-quality apps.  Android is not only here to stay, but rapidly growing its marketshare.
• Hating On Facebook – Facebook is killing privacy.  The new Facebook timeline is scary.  Facebook doesn’t get real human interactions.  It just goes on and on, yet guess what, you are all still on Facebook.  You pay exactly nothing for the service, so do not be surprised that you get pushed around.  You are not a customer; you are a user and Facebook is laughing all the way to the bank as you upload your photos and buy more games with Facebook currency.
• Bootstrapping Is Close to Godliness – People are always saying that entrepreneurs should not take outside funding if they do not need to.  Not sure what dimension those folks live in, because pretty much every entrepreneur that I have ever met needed the money.  The only people that do not need money are independently wealthy, serial entrepreneurs or trust funders.  There is nothing noble in being dirt poor and eating ramen noodles.  If an investor is offering money on good terms and is not a jackass, take the cash, because when your startup runs out of cash, it is game over.
• Marketing Is For Products That Suck – Fred Wilson gave life to this meme and the debate continues to this day.  Let’s face it though; USV investing in your startup is pretty much a HUGE marketing coup.  While the “build it and they will come” approach might work for Fred and company, it is rarely the winning recipe for startups.  For every Facebook that got big without marketing, there are scores of others that got big using standard marketing techniques like SEO, Adwords, email lists, social media strategies, viral hooks, tradeshows and PR.
• Woe Is Me Vanity Posts – Every so often there is an article with some entrepreneur sob story of all the nice and wonderful things they sacrificed on their startup journey.  Boo hoo, you cannot eat sushi every night and afford your fancy Gramercy apartment anymore.  Here is a real story about overcoming insurmountable odds; a young boy persevered over his poor country farmer living, near death from a famine, and a lack of formal education to build a windmill from junk parts and provide his family electricity.  Now which story is actually inspiring?
• Find a Co-Founder Events – Has anyone heard of a single, successful startup that emerged from these events.  No, there has not been, and it is because such events invariably attract the lowest common denominator and feature a 20:1 ratio of business to technical folks.  Entrepreneurs that actually accomplish things find co-founders, employees and opportunities because they hustle hard and find themselves in places where the real talent hangs out.  If you are having trouble finding a co-founder, you might want to enroll yourself in Startup School instead.
• Check Out My Launchrock – I think you mean check out your Launch-not.  If you cannot hack together a basic sign-up splash page, you have bigger problems than your lack of user sign-ups.   Stop relying on these dipshit service companies and build something real.  On a similar vein, the whole “share this” to get early beta access to your site is irritating.  What incentive does anyone have to share your site or app with their friends until they actually validate that it is okay?
• Rise of the Infographic – Can we simply call them Infocrapics?  While it was interesting at first, we are now inundated with more and more infographics based on increasingly suspect data sources with specious relevancy to the topic at hand.  Even the infographic formats have become formulaic clichés.  Instead of these vanity analytic exercises, how about we go back to bar charts, real data analysis and bar charts?

If there are any others that I am missing, PLEASE leave a comment and I will make sure you get the credit you deserve for outing these much derided memes.  Only together we can clean up this wild and crazy startup scene.

#Winning

These guys are being so hospitable! Check ‘em out at coloft.com

Whenever you tell entrepreneurs and investors that you’re going after the small business market, the inevitable question is, “What is your customer acquisition strategy?” I thought I’d lay out my thoughts on this, as it relates to Postling.

Customer acquisition, which really means “How will people know you exist, and how will you convince them to care”, usually comes in four forms - sales, advertising, channel partnerships, and word of mouth. We decided that sales was completely out of the question, because we didn’t have the money or the expertise to do sales well. We’ll do some testing to see if paid ads on Google / Facebook will work for us, but I’m skeptical, especially after hearing from Drew Houston of Dropbox how poorly it performed for them.

That leaves channel partnerships (top-down) and word of mouth (bottom-up), and that’s where we’re headed. (Also, read this superb post by Mark Suster about the dangers of channel partnerships.) So how do we get word of mouth going?

That’s where Sidewalk Collective comes in. Sidewalk Collective is a monthly meetup for local business owners to teach each other how to use various technologies to improve their business. We had our first event last month in NYC and this month will be holding events in NYC + LA. (Next up, SF and Philadelphia!)

Here are the components of our strategy:

1. Peer leadership. While Postling is the official organizer of the meetup, the meetup discussions are lead by other Sidewalk Collective members. This is important; if we were to lead the discussion ourselves, it would come across as too much like a sales pitch.
2. Start with influencers. Our strategy is to reach out to the business owners who are already on Twitter / Facebook — the ones who “get it” and are role models — and ensure that they have a fantastic experience at their first event. If they leave their first event having learned a ton and are excited for the next one, they will bring their friends to the next event (who will bring their friends, too). 
3. Work with local organizations. The Chamber of Commerce is a great partner in driving awareness. Same goes for your local greenmarket, neighborhood small business associations, etc. All of these organizations are looking for valuable events to recommend to their members (in order to earn their annual dues).

What’s in it for us?

1. Permission marketing. At the end of the event, people inevitably ask, “Thanks so much for the great event… so what is Postling?” And we can tell them how they can use Postling to apply all of the great tips and strategies they just learned about using us. 
2. Customer development. We are hearing straight from our target customers’ mouths what pain points they experience, what their routines are like, and what keeps them up at night. 
3. Cultivating awesomeness (read this!). Forming real relationships with our customers and helping them be more successful leads to the kind of sticky loyalty that lower-priced copycats can’t defeat. 

If you are interested in creating a Sidewalk Collective in your city, email sarah@postling.com. If you would like to discuss a sponsorship opportunity, email josh@postling.com. Our next event is Tuesday, May 25th at 7pm in both NYC (tickets) and LA (tickets), with a free Postling workshop starting at 6pm.

Two weeks ago, we launched a new design for Postling (and many thanks to Jess and Kevin for their amazing design talent). Three weeks prior, I had written a blog post about how I raised $200k in 6 days at SXSW (including from Dave McClure in the time it took him to smoke a cigarette). I think it’s time to explain in more detail what happened and where we are going.

Postling v1.0 was a social media management tool for small businesses. It was $9/month with a 30 day free trial, and you could manage your blog / Facebook / Twitter / Flickr all in one place. We got several hundred users but not a lot of conversion into paid.

Postling v2.0 was the same thing, but expanded to allow multiple people to manage multiple brands, and targeted at enterprises. We made the single user version free, and it cost $30/month/license. We got several thousand free users and ~$1000/month in recurring revenue, but sales cycles were 4+ months, investors didn’t see anything interesting, and we were pretty inexperienced (and uninterested) in enterprise sales.

With this launch of Postling v3.0, we are getting back to our roots with small businesses but expanding the vision a bit. My goal for Postling is to be the dashboard for local businesses that brings together the best tools they need and teaches them, via community and algorithms, how to use those tools effectively, resulting in driving more people through the door. (Hat tip to Greg Battle for forcing me to write that positioning statement. It’s an incredibly helpful exercise.) 

Another way of saying this is we want to solve two problems for local (brick & mortar) businesses: What tools should I be using for my business? How do I become an expert at using them?

It should be fairly obvious why we (and investors) like this idea so much better, but I’ll count the ways: bigger market, less competition, more potential for secondary (and tertiary) products, better alignment with our experience and passion, and stronger network effects.

With this new focus, we redesigned our site, launched Sidewalk Collective in NYC (coming soon to LA, SF, and Philadelphia), and have some seriously awesome stuff in the works. I’ll be describing those in more detail over the next few posts.

GigaOm just posted about the $350,000 angel round we just raised. Here’s the inside story how we raised the money.

Back in January, we raised about $150,000 from friends & family - my mentor from DreamIt Ventures, my old Amazon VP, my parents, a friend from college, Jeremy Arnon (a bizdev guy I met at NYTM) and his twin brother, and a Wall St. banker who is the best friend of Josh (my new business development guy). We considered doing convertible debt, but ended up pricing the round. (Happy to explain that in a future post if anyone is interested).

Our excellent lawyer (Jay Rand, Manatt) put a clause in the term sheet that gave us 60 days after the close to fill out the round, which officially closed February 4th. Smart move, considering we just filled up the round today, 57 days later. 

Then, Venturehacks launched AngelList, which changed everything.

AngelList is a collection of amazing angel investors, all waiting for your brilliant idea. You fill out an application and, if you’re awesome enough, your application will be sent out to everyone on the list. You’ll then be introduced personally over email to anyone who is interested.

As reported by Venturehacks, we sent out our application once, touting our idea of “social media management for businesses”, got 8 fantastic introductions, and were ultimately funded by David Rose and Chris Yeh. The Venturehacks guys came back to us and said, “We want to send your application back out onto AngelList with the added social proof of being invested.” 

To give you some context, over the last 3 months, we followed the Customer Development methodology and went outside of the building. And we found that the social media management tools space was commoditizing quickly, with everyone concentrating on selling to a small sliver at the top (media companies, PR, agency, etc). We also met with VCs, who gave us the same feedback. So it was time to pivot.

So we pivoted (explained in the GigaOm post, but I’ll say more soon), and sent the new direction to AngelList. And this is where the craziness started.

My first phone call was with Tom McInerney, 3 hours before I was flying out to SXSW. After about a 30 minute phone call, Tom was in. He then introduced me to his friend Paige Craig, who would also be at SXSW. I met Paige in Austin, and after meeting, he told me he was in. The next day, at a Venturehacks meetup at the Four Seasons hotel, he pulled over Dave McClure. We went out to the balcony (he wanted a cigarette) and I pitched him. He was in. The following day, I spoke with Thomas Korte, who moved up our scheduled phone call a couple days once he heard Dave was investing, and he was in. I also got an email introduction via my friend Russ (founder of SeatGeek) about his investor Kal Vepuri, who was also at SXSW. Kal and I spoke on the balcony of the Austin Convention Center, and I was blown away by his intelligence and humility. So Kal was in. Finally, my friend Michael Galpert of Aviary connected me with Gary Vaynerchuk, who is a perfect investor for us given what he is passionate about (social media for businesses). David Cohen finished off our round not too long after that.

So that’s it. Through a combination of a great team (Chris & Haim founded Etsy), customer development, responding to feedback, AngelList, networking, and being able to articulate a compelling vision backed by domain expertise, I was able to raise $200k in the 6 days of SXSW! 

If you have any questions, leave a comment or email me at david.lifson@gmail.com. Thanks!

Here are my predictions for 2010:

1. Badges and game mechanics - Driven by the success of foursquare and Farmville, everyone is going to want badges and game mechanics embedded in their apps. Hell, we might do it, too. Not only do well-tuned game mechanics increase engagement, it also increases user exploration and education. Of course, it’s easy to do it badly, and the results are not pleasant (see: Digg’s leaderboard). Josh Porter has a good post on leaderboards.
2. Social media spreads deep within organizations - This is one of the bets we’re making at Postling. The idea is that representing your organization on social media sites like Twitter will spread beyond the marketing department or the corporate communications / PR department. What if your salesperson at Bergdorf Goodman or Topshop had a twitter account and could provide fashion advice or tell you about sales? What if the chef at your local gourmet restaurant shared photos on his flickr account in addition to the blog and twitter account the restaurant manager may use? What if your local car mechanic posted short videos explaining what he was fixing and how it all works while the car dealership posts news about events, sales, and recalls?
3. A brief tech bubble - I think the financial markets are going to tick up a bit (although temporarily, as consumers still have more debt than they can manage) and VCs are going to be pushing for returns since their funds have done horribly over the last decade. You’ll see some M&A and a couple IPOs (Facebook, Yelp, or Zynga, anyone?) in the rush to get liquidity before the window snaps shut. Also, some smart deals made by early stage firms like First Round and USV are going to see some sizable follow-on rounds.
4. Social media content as advertising - This one might not happen until 2011, but it’s starting with HuffPo and VentureHacks. Basically, social media content - created to educate and inform - is the next form of brand / display advertising. Banner ads don’t work, but how about blog posts or tweets? Bloggers have known that their content builds their brand reputation for years now, but I predict in 2010 we will finally see serious ad spend shifted into content creation. Next up: social media content ad networks. Postling will be there.
5. Rise of incubators and early stage funds by giant firms - In an effort to save themselves from almost certain death thanks to the sheer size of their funds ($1 Billion) coupled with the tiny amounts of capital needed to fund internet startups (< $1 million), the big funds will shrink in half and try to invest in early stage startups. Related to #3, this means it will be easier for new startups to get funding, but many won’t get the support they need because the big funds simply do not have enough time / manpower to give their full attention to each of their investments. Why? Because to satisfy their investors, they need to return a huge amount of money, and they need to invest in hundreds of early stage startups (at $500k a pop) to have a chance. Eventually the big funds will give up and either shrink down to <$200 million or turn their focus to pharma, cleantech, and other life sciences investments. 

So that’s my tech and startups predictions for 2010. What are yours? 

Let’s remember two quotes, one by Google CEO Eric Schmidt and one by Amazon founder and CEO Jeff Bezos.

Eric Schmidt: “Let’s not check the rearview mirror, or else we’ll drive off the road.”

Jeff Bezos: “A different way to organize your energies that can be very effective is to be competitor-focused. If you’re competitor-focused, you have to wait until there is a competitor doing something. Being customer-focused allows you to be more pioneering. We have found that, on the Internet, “me too” strategies seem not to work very well.” 

Yesterday, there was some ridiculous discussion about the death of RSS. It started with Steve Gillmor, moved on to Mike Arrington, continued with peHUB, and got so out of hand that Fred had to post about it. Read Fred’s post if you need more help understanding why it was a ridiculous discussion.

As a startup entrepreneur, there is definitely a lesson to be learned here: Understand who your real customers are and focus on solving their problems. Ignore the competition and ignore the tech mob. This is something we’ve taken to heart with Postling.

Obviously, Postling is a very young product. But we do have a clear understanding of who our customers are and what the problem is: Business adoption of social media is here to stay, but there is no unified interface from which to interact with all the different tools one needs. Businesses are spending too much time learning and using the ever growing number of social media tools and platforms. That time could be spent focusing on what they know best, which is growing their business.

When we launched Postling, a bunch of the comments we saw on TechCrunch, Mashable, and ReadWriteWeb were centered around “Ping.fm does this and supports all these other social networks” and “Posterous already lets me do this plus has all of these other features.” Ping.fm and Posterous are great products, but they are solving different problems for different customers. So instead of playing “feature catch-up”, we launched some unique features of our own:

• All comments left on your content are pulled into one place, regardless of if it is from your blogging platform or Twitter or Facebook or Flickr.
• You can publish status updates and photos directly to your Facebook Fan Pages.
• You can choose where you publish to, instead of ignoring community context and blasting it out everywhere.

It’s been one month since we launched Postling, and we’ve been overwhelmed by the response. We have more customers than we would have expected and have been working on various partnerships that will allow hundreds of thousands of people to benefit from using Postling. And we’ll keep listening to our customers and learning about what they need and ignoring the rest.

Disclaimer: Obviously, I am not a lawyer. It’s worth the money to pay for a great lawyer; sure, LegalZoom can get you documents on the cheap, but the real value of your lawyer is in their advice and connections. Rafer and I mentioned the ones we use yesterday. Every company is different, so what you need may be different than what we have needed.

So yesterday I spent hours poring over the multitude of legal documents we’ve received over the last few months (with more in the pipeline) and I think I’ve got everything straightened out. For people who have never started a company before but are thinking about it, I thought it might be helpful to outline all the documents we have needed.

Here are the various legal documents we have needed in the first several months of our company (YMMV):

1. Organizational Resolutions - This describes the actual formation of the company, the board of directors, the equity split, etc.
2. Bylaws - The rules that describe the various details of your company given various situations and circumstances.
3. Form of Proprietary Information Agreement - By working for the company, you agree that what you do is proprietary and should not be shared.
4. Invention Assignment Agreements, one for each founder - This assigns all of the work you do and ideas you have that are related to the company over to the company.
5. Restricted Stock Purchase Agreements, one for each founder - This outlines the equity in the company you receive, your vesting schedule, and the various rules and restrictions associated with that.
6. Equity Compensation Plan - Outlines the rules and restrictions for granting equity in its various forms: stock grants, options grants (there are two kinds), restricted stock, etc.
7. Board of Directors consent to Equity Compensation Plan - The Board needs to approve #6.
8. Shareholders consent to Equity Compensation Plan - The Shareholders also need to approve #6.
9. Form of Nonqualified Stock Option Grant - This is what you use to give non-employees (like advisors) options. You don’t want to give them straight up equity because they will have to pay taxes upon receipt. 
10. Form of Incentive Stock Option Grant - This is for granting employees options.
11. Stock Certificates that embody the stock you receive as founders.
12. You may also need Convertible Debt Notes for your earliest investors.
13. You may need Non-Disclosure Agreements, although there are lots of people who refuse to sign them (with good reason). We haven’t used one yet.
14. If you have hired a contractor to do some work for you (like design your logo), you need them to sign a Contractor Invention Assignment Agreement. It’s not sufficient that you paid them; they need to sign their work over to your company for you to actually own the IP.

In some cases, it may make sense to file a patent. Go talk to a patent attorney about that. It’s tens of thousands of dollars, but sometimes having one can be critical to your company.

You will also need to do the following (your lawyer can help you):

1. Register and file for incorporation. We are a Delaware C-Corp, but there are lots of reasons why LLC or S-Corp makes more sense at the start.
2. Qualify to do business in the state you live.
3. File for copyright on your name and codebase. You just have to paste in a 1000 lines of code, it’s easy and affordable.
4. File for trademark. You want to do this as early as possible, because the longer you hold your trademark, the more defensible it is.
5. Buy a minute book. Corporations are required to have these (and use them).

I’m new to this, so some of it may be incorrect (like I said, IANAL). Let me know if something isn’t quite right. Hopefully it’s helpful.