Giving up the ghost early

There is four times as much seed capital in the venture market this year as there was 1 year ago. Because of this, it’s easier to attract seed funding than it has been in the past.

I’ve noticed a disturbing new trend and I think it’s related. Startups are “quitting” when the first year doesn’t go as planned. The founders shut the business down, and either take a job or go out and start a new company with more of that plentiful seed funding. In some cases, they just exit with an acquihire and get themselves a nice compensation package without any material return of capital to their investors.

Startups are hard. Rarely does the first year or two go exactly as planned. The hockey stick doesn’t emerge quite like you thought it would. It takes persistence and determination in almost every case, if you hope to be successful.

The thing I worry about is that the Facebook movie and tons of seed funding have made it almost too attractive to get into entrepreneurship. Founders can live for a year or two on seed capital, have some fun, and punch their lottery ticket. If things don’t take off immediately, they can simply move on to something else.

I’m not saying this is the norm or even typical. Most founders are well intentioned and in it for the long haul, of course. This is just another of the myriad problems in figuring out what’s real given the oversupply of seed capital in the market today.

If you’re thinking of starting a business, think about it as a minimum of 5 years and likely 10+ years. That’s what it’s going to take to be successful. And that’s the commitment you should make before taking money from outside investors.

 

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Separated at Birth: Techstars and Startup Weekend

Today we announced that Techstars has acquired UP Global, which includes Startup Weekend and many other fantastic events and programs. Startup Weekend is my absolute favorite global event for entrepreneurship. If you’ve never been to one, you’re really missing out. At these events (there about 1,000 per year from Boulder to Mongolia to Chile to New Zealand), entrepreneurs and the community gather to build startups in 54 hours. It’s all fueled by an incredible global network of people on a mission to inspire, educate, and empower individuals and communities through entrepreneurship.

Startup Weekend was quite literally born in my office at Techstars in 2007. During the first ever Techstars class, Andrew Hyde (an early Techstars employee) came into my office and told me about his idea for Startup Weekend. He said he had been inspired by the Techstars “startup summer” that he was witnessing, but wondered what it would be like to inspire others with something similar over the course of a weekend. My reaction was simply “go do it.” And boy, did he. Andrew organized that first Startup Weekend that same summer, right here in Boulder. All of the 10 companies in Techstars participated in the weekend and worked on something with the community called VoSnap. While that company never went anywhere, something important had happened. Many people were inspired to go do a startup of their own. Teams were formed that would last nearly a decade.  Lawyers, accountants, programmers, designers – everyone showed up to contribute. It was an adrenaline fueled weekend of pizza, coding, and learning by doing that I will never forget. The end result was an expanded community of entrepreneurs here in Boulder, many of whom I still keep in touch with today.

A few years later, Andrew had scaled Startup Weekend into a global phenomenon. Events were happening all over the world. Andrew was literally flying to and organizing each one, fueled by the passion he had for people discovering their love of entrepreneurship. Ultimately, he decided this wasn’t scalable and the business was formalized. Marc Nager, Clint Nelsen, and Franck Nouyrigat got involved and brought real structure and operating chops to the table. As CEO, Marc built Startup Weekend, and UP Global, into an important part of an emerging global startup community. Techstars remained involved informally – we hosted and attended events, promoted them, and ultimately funded many companies that emerged from these weekends through our accelerators and venture capital funds.

About six months ago, Marc and I were sitting around talking about the “journey” of an entrepreneur from discovery and love of startups through to accelerator, funding, and IPO or exit, and how this all plays into mentoring and giving back. It’s always been fairly obvious to us both that UP Global (through Startup Weekend, Startup Week, Startup Next, Startup Digest, and more) was inspiring and encouraging entrepreneurs to “get going”. Techstars was helping the ones that were building businesses by growing their networks, providing intense mentorship, attracting seed capital, and scaling up through additional funding. It suddenly felt like it was the right time to join forces because we had built such complementary portions of highway along this “entrepreneurial journey”. We looked at each other across the room and basically said “you complete me”.

While we plan to continue to grow their footprint and reach, Techstars will leave Startup Weekend and these other assets largely untouched, and they will not be branded as “Techstars.” Marc Nager will remain in charge of these programs and become our Chief of Community. Along with Marc, we are 100% committed to keeping them open, community based, and global. Effective immediately, fees previously associated with Startup Next have been eliminated – enabling more entrepreneurs to take advantage of that resource to help them prepare to scale. But don’t expect many more changes except for us to try to broaden access to what already exists.  These programs are magical as they are. We can now simply provide a “continuation” for some startups emerging from them and provide access to capital and additional network when appropriate.

I’m excited to work with Marc, Andrew, and the amazing people of UP Global to continue to work towards our combined vision of creating the world’s first truly global ecosystem for entrepreneurs to enable them to bring new technologies to market. I hope to see you soon at an upcoming event.

If you have questions or concerns about TS+UP, please reach out to me directly or visit http://www.whatsup.community/ for FAQs and more information.

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Overhead

Yesterday, I didn’t leave my house.

I was supposed to be in San Francisco for a board meeting but I was forced to cancel the trip suddenly. It left me with a rare day with only that one meeting (which I had to attend remotely) on my calendar. Otherwise, my calendar was wide open. I can’t remember that last time my calendar looked that way. I ended up doing that meeting online, and putting it on my big screen TV in my basement. It was really as good as being there. I caught every nuance because of the big display. It felt great. Obviously I missed the personal interaction with the management team, but that was really the only drawback.

I then realized that the entire rest of the day would have been spent traveling.  I would have missed bedtime stories with my son, but because I didn’t have the overhead I got to do that too. Sure, I probably would have gotten a ton of email done on the plane. Maybe a call on the way to the airport. But really, the travel was pure overhead. Leaving my house would have been overhead too. I didn’t go out to lunch either, I just ate a quick sandwich at home.

Because of the lack of overhead, it was easily the most productive day I can remember. It was pure maker time, except for that one meeting. I crushed my task lists and caught up on several very important projects. I did a couple of urgent calls (this happens daily – something is always urgent when you have a large portfolio of companies). I went to bed feeling energized and great about what I had accomplished.

My only regret was that I bothered to shower or put regular clothes on. That cost me a couple of minutes. But my wife was OK it, especially the shower. And I’m pretty sure the other board members appreciated not having to witness my pajamas.

I highly recommend you have one day in your life with zero overhead. Doing this will help you think about which of the overhead items you want to add back in and which you want to try to reduce or eliminate. You may be amazed by what you find. I sure was, and it’s leading to a few changes.

 

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A better professional network

Techstars is an amazing network of over 3,000 entrepreneurs, mentors and investors. Being part of the network is a lifelong benefit for the companies we fund. One of the most important (but often undervalued) assets a startup needs to create is a strong and supportive network around itself.

For me personally, making connections among people that can help each other is a big part of what I do. I want to put the right people together at the right times so that all of the companies I’m involved in can do incredible things.

Professional networks like LinkedIn don’t help me do this. They’re inaccurate because they don’t understand the difference between someone I met briefly at a cocktail party and someone I’ve worked with for 10 years. And they force me to manually send and accept connection requests in order to keep up with changes to my network. At the end of the day, they don’t actually understand my network or anyone else’s.

What I want a professional network to do is help me navigate my network and find the best ways to connect people. Conspire, a company we’re investors, does this well. Based on email communication patterns, it understands the strength of relationship between me and each of my contacts, along with the strengths of millions of other relationships. The result is a professional network that finds the strongest path of connections between me and any person or company.

When I need to reach out to someone, Conspire finds the best person in my personal network to make an introduction. But, more importantly, it helps my extended network know when I can help them with an introduction, or when someone else in their network is in a better position. Always knowing who to ask for help is powerful.

Conspire’s network has grown to reach more than 37 million people already. Historically, it has only been available to Gmail users. But today they are opening up access to anyone with an email account that supports the common IMAP protocol, so it now works with Outlook, Exchange, etc as well.  I’m excited to see the network grow and become an even better resource for me and everyone else.

 

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150M new reasons to be thankful at Techstars

Today, we launched our third venture fund at Techstars, now called Techstars Ventures. It’s $150M of fresh capital focused on Seed and Series A and we’re now managing $265M in total. You can read the basics of the announcement on the Techstars blog.

In the life of any business, there are moments. Moments that matter. The same has been true for Techstars, of course.

There was the moment Techstars was born, after I had a “random day” meeting with Brad Feld. Meeting him changed my life and career in profound ways, inspired me to be a better person and investor, and helped me achieve more happiness and balance in my life. Brad taught me the once mysterious ways of “giving first” that have become so ingrained in the Techstars culture today. After that random day meeting, Brad became a co-founder of Techstars along with me, Jared Polis, and David Brown.

Another moment was meeting Jason Mendelson, one of Brad’s partners at Foundry Group. I think it was a 15 minute meeting that turned into a few hours over beer. Jason became a close friend and has been hugely instrumental to the success of Techstars in innumerable ways. It’s truly humbling to stop and think about all of the things that Jason has done for me personally and for Techstars as an organization. My biggest regret is that he is not recognized enough for all he has done. I consider him a co-founder of Techstars, even if that’s not how the way back machine will necessarily tell the story. Techstars would be a shadow of what it is today, if it still existed at all, without Jason Mendelson. Ryan McIntyre and Seth Levine and really everyone at Foundry Group have been at times irrationally supportive of Techstars over the years and I cannot possibly thank them all enough. This latest fund would not exist without this tremendous support from Foundry Group, their generous introductions, and their belief that what we are doing at Techstars is important work.

These first moments in the Techstars story led to the launch of Techstars in 2007, an important moment to be sure. Soon after came the moments of meeting Nicole Glaros who would later run the Boulder Techstars program and who now works with me on this new fund. She is probably the single most important actor in the success of Techstars, although she likely today still has no clue that this is how we all feel. That is just Nicole – she’s the biggest team player I know and a humble inspiration to us all. And there was the moment I met Molly Nasky, our CFO. Both Nicole and Molly have worked tirelessly for completely unreasonable amounts of time and took enormous personal and professional risks to build Techstars from the ground up. Molly is and has always been the pulse of Techstars and I am constantly astonished at what she is able to pull off. Molly was really the first person I ever considered a partner at Techstars, long before this was ever formalized.

In 2009, there were two more moments that mattered. That was the moment when we created the first venture fund. Back then we called it Bullet Time Ventures (I was a big fan of the Matrix and that’s the only hint I’m giving you), which later evolved into Techstars Ventures. The first Limited Partners who invested in that first fund took a tremendous risk on me and on Techstars. I’m thankful that risk has been rewarded and that that opportunity has scaled to allow us to bring Techstars to the world. Another moment that year was when we started to scale Techstars by expanding it to Boston. For that I am most thankful to Bill Warner. Without Bill, Techstars would have never figured out our scalable growth model which allowed us to grow while keeping our focus on quality instead of quantity. Bill understood that Techstars was something different. Something necessary for the Boston community. I will never forget our dinners and his will to help us figure out how Techstars could impact more people. Bill helped me figure out the difference between the invention of Techstars and the intention of Techstars.

There were so many other moments early on. Andy Sack who forever became part of the very soul of Techstars. Jon Bradford who expanded our horizons internationally. Katie Rae and her incredible passion for startups in Boston. David Tisch and his tough love and push in NYC. Jason Seats and his incredible instincts as an investor. Ari Newman taking multiple career risking chances on Techstars. Walt Winshall and his endless wisdom. The list goes on forever.

A few years ago as I was contemplating the growth and potential of Techstars, Mark Solon and I were trying to figure out how to be partners. We knew we wanted to, but we hadn’t figured out exactly how it would work. We were struggling, not with the partnership but with how to define it. Then there was a moment neither of us will ever forgot. Mark’s wife, Pam, told Mark to just “get on the train”. Pam realized that the Techstars train was moving 1,000 MPH and wasn’t going to slow down to figure out exactly what seat Mark should sit in or exactly how much the ticket might cost, or frankly even where the destination might be. In that moment it was Pam’s encouragement for Mark to take that leap of faith, to work out the details later, to just jump on the train and start helping to keep it on the tracks, that triggered an amazing partnership between us that led to our ability to raise this capital and to make Techstars stronger overall.

Like Pam has for Mark, my wife has also supported me in incredible ways during a tough year of fundraising which required extra travel and additional stress. Nothing has changed me for he better like the moment I married her.

There are so many Managing Directors, Directors, Program Managers and staff at Techstars who helped us survive the growing pains so far. So many mentors and investors who have impacted so many others. So many great partners. So many great founders. I know that they are rarely looking back with pride because they are laser focused on today and the future ahead. But I urge them all to take just a moment and to reflect on their impact on so many entrepreneurs and on the very way that startups are now created around the world.

One of the biggest moments of all was recruiting my 20+ year business partner, David Brown, back to Techstars full time. While Mark and I raised this fund over the last year, David has absolutely transformed Techstars from the inside. Our culture is humming, we are a focused organization, we handle conflict much more effectively, and we communicate better. His impact has been astonishing and transformative.

Then there was that moment when our lead LP in our newest fund had the nerve to say “I’m in” with a huge check early on. That moment changed everything for this new $150M fund and gave us credibility and a head start in a crowded market. We had a secret weapon who helped us with investor relations. I could tell you who he is but he would have to kill you and me both if I did. The moment he came on board made all the difference.

There are hopefully many more moments ahead for Techstars and I know there are many I have not recounted here. Thanks to everyone who has been involved. Techstars is a community.

You know, they say building a business is about the people. When I think of the moments that matter – the moments that changed Techstars – I think of when and how I intersected with these people. It is, truly, the people. And I will never forget this as an investor.

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A Smarter Internet-of-Things

I love the concept of a smart home and have a number of monitoring devices. I have Nest for temperature control, Dropcam to keep a close eye on my front door and WeMo for my lights and outlets. But there is one thing I have noticed, they all feel like silos. These products have different apps, independent push notifications, and they all serve separate purposes. I receive so many irrelevant push notifications that I am beginning to wonder when I will miss a notification I actually care about. I won’t deny that they are cool gadgets, but they could be better.

The IoT industry has an opportunity to make products that are actually smart. There are too many notifications and devices don’t learn fast, if at all, leaving a fragmented ecosystem of products, apps, and notifications. Few devices have settings to filter notifications or set rules, and many just send alerts about everything. UX needs improvement!

Real intelligence is missing from my world of “smart things.” Notion, currently in Techstars, has a unique approach – to give me information about my home that I actually care about and only when it’s important. Notion focuses on home intelligence and just launched a Kickstarter campaign and already has $200,000 in orders as I’m writing this. The Notion team has created a multi-function sensor about the size of an Oreo that can detect light, acceleration, sound, natural frequency, orientation, temperature, water leaks, and proximity. Notion can tell you the simple things a home security system can detect, like if a door opens, a window breaks, or an alarm goes off, but it can also tell you if the temperature of a baby’s room is too hot or cold, if a pipe breaks in your basement, if a teenager is getting into your liquor cabinet or if your propane tank is low.

This is cool functionality to be sure, but what I am most excited about is that it actually learns about me over time as I accept and decline alerts. I’ll be able to set my own custom rules in the app too. I don’t need to know every single time my front door opens because it’s usually my family or anticipated visitors. I’m also looking forward to calendar, weather and other useful integrations to customize the UX for my life. All of these improvements are made possible by their single sensor and innovative data technologies.

I love home automation, but what I need are intelligent devices that are more than just gadgets. As the smart home market continues to evolve, the appetite for products that truly make you smarter about your home and your life will continue to grow and become more useful. I’m excited to watch Notion progress and can’t wait to get the sensors I ordered via Kickstarter.

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