The Startup Playbook

Techstars is the worldwide network that helps entrepreneurs succeed. So, when Techstars mentors, investors, and friends Rajat Bhargava and Will Herman told me that they were writing a book to help guide founders on their startup journey, I was immediately excited. I’ve known Raj and Will for a number of years now and they are great entrepreneurs and also great mentors at Techstars. Their experience and wisdom can help many of our companies and extend the reach of the entrepreneurial ecosystem. I particularly like their approach which is a founder-to-founder discussion. Founders need more data points from other founders!

If you are a founder, part of a startup team, or thinking about starting a company, grab a copy of The Startup Playbook. I think you’ll be happy you did.

 

The post The Startup Playbook appeared first on Hi, I'm David G. Cohen.

One Last Talk in Boulder

A friend of mine is putting on a really interesting event called One Last Talk in Boulder on March 3, 2018. It’s called One Last Talk. All profits go to the non-profit Believe in Youth.

From the One Last Talk web site: “Imagine standing on a stage, and delivering your One Last Talk to the world in 15 mins. In these talks speakers have previously shared the core of their greatest triumphs, their greatest failures, and what are the building blocks of what has created the essence of their leadership style. In short, their stories give us a glimpse into who they really are, why they do what they do and how they want to change the world. One Last Talk is a potent mix of raw courage and pure inspiration. It is the perfect arena to explore the nuances of the modern day human experience. It is the place

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The pessimist in the room

In my startup investing, inside portfolio companies at the highest leadership and board levels, I always want to make sure that a pessimist has a seat at the table. I want a table full of optimists, but I also want at least one respected pessimist sitting there.  That pessimist should carry a general lack of confidence in humans to behave logically or ethically. They should also have seen many shit-shows in their lives. You don’t want someone who is just irrationally afraid that the sky is falling, but you do want someone always thinking about the downside case.

As it turns out, often that pessimist is the CFO or the General Counsel. These tend to work well as long as they are respected and have a voice. Without a pessimist in the room, with a seat at the table where the big discussions happen, there is no balance.

The

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FaceID vs TouchID

Regarding the iPhone X vs previous models, so far I prefer TouchID to FaceID.

TouchID is something I learned to forget about. I trained multiple fingers on it, so even if the phone was lying flat on a desk and not facing me face, my finger successfully unlocked the phone without me thinking about it at all.  Now, in that flat on the table position, my phone requires my code because my face is not within view. That takes a lot longer.

I like everything else about the iPhone X, especially the batter life and better use of screen real estate. The absolute best new feature is wireless charging (not new to Android, but new it iPhone), but you can also get that on the iPhone 8.

FaceID works great when your face is in view.  It’s every bit as convenient as TouchID 90% of the time, but

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Integrity

Saw this post from Techstars co-founder David Cohen and thought I’d explore it a little more deeply.  David talks about the moment of integrity.  Your life leads up to that moment.  Sometimes your family values it and so it’s deeply ingrained in you.  Sometimes it doesn’t.

Integrity is messy because even though there is a Webster’s definition, the human interpretation is pretty variable.

When I went to the US Air Force Academy I dropped off my bags and I toed a white line.  An upper-class cadet taught me how to stand at attention.  Then he backed up and uttered these words.  “From this moment on you will say five statements.”

  • Yes Sir/Ma’am
  • No Sir/Ma’am
  • Sir/Ma’am may I make a statement?
  • Sir/Ma’am, may I ask a question?
  • No excuse Sir/Ma’am

Here is a blog post by a West Point cadet on their similar ritual. Continue reading "Integrity"

The moment of integrity

I was on a panel at FounderCon last week with Noah Pittard from Cooley and Service Provider Capital. Something Noah said on that panel was so insightful that it really stuck with me. Someone asked about the types of founders we want to invest in and the types of people we want to surround ourselves with, and the conversation meandered until we were talking about the concept of integrity.

People do stupid things all the time. They make bad decisions. It’s just a part of life. But a bad decision is not an indicator of integrity. How you handle yourself after you make a bad decision is a much better measure of integrity.

The part that really stuck with me was when Noah talked about the moment that inevitably occurs where you first have to answer the question “what happened?”. Those with high integrity quickly take responsibility, disclose uncomfortable

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Assume good intent

There’s a phrase that I’ve been using more and more with startups that I’m working with closely. That phrase is “assume good intent.”  I first heard this phrase in my office at Techstars and i’ve found it useful, so I wanted to share it.

In any team or customer dynamic, if you start off assuming good intent, life is easier and good stuff happens. On the other hand, if you assume bad intent, life is hard.

I’ll give you an example to illustrate. Let’s say that you receive an email from a customer that says “The new feature in your software sucks. It’s costing me a ton of wasted time and energy.” Your initial reaction to this email likely represents your default mode and the intent you assume. When we assume bad intent, it sounds like this customer is trying to tear us down, to criticize us, or

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How to fail gracefully

Of course nobody wants their startup to fail, but the fact is that it happens and it’s a completely normal part of company building. Investors understand this and realize that failure is often a part of the process. If your company has failed, make sure you go out of your way to let all of your investors know what’s going on. At Techstars, part of our Code of Conduct is to communicate with your investors at least every six months. Even if the news is bad, it’s important to keep the lines of communication open. Your investors have poured time, money and energy into your company, so they’ll appreciate your transparency—and be more likely to work with you again in the future. Ideally you’ll let them know how it’s going well before you let the know you’ve failed, as they might be able to help. Many companies that aren’t working
Continue reading "How to fail gracefully"

How to fail gracefully

Of course nobody wants their startup to fail, but the fact is that it happens and it’s a completely normal part of company building. Investors understand this and realize that failure is often a part of the process. If your company has failed, make sure you go out of your way to let all of your investors know what’s going on. At Techstars, part of our Code of Conduct is to communicate with your investors at least every six months. Even if the news is bad, it’s important to keep the lines of communication open. Your investors have poured time, money and energy into your company, so they’ll appreciate your transparency—and be more likely to work with you again in the future. Ideally you’ll let them know how it’s going well before you let the know you’ve failed, as they might be able to help. Many companies that aren’t working
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True Blue by Eliot Peper


These are troubling times, not just for the United States, but for the world. To be sure, there has been tremendous progress over the last 50 years with regard to human rights and equility. But today the remaining factions that support racism, hate, sexism, and other-ism have grown more vocal, more frustrated, more visible, and more extreme. Those who persist with their misguided attempts to categorize and repress people based on nothing more than the circumstances that they are born into have many lessons to learn and many opportunities for personal growth. I had been thinking about this in the days after the election of Donald Trump as POTUS. In that moment, I was thinking about aliens someday descending on our little planet. They’d surely see a bunch of humans in a variety of shapes and sizes. But would they even seen things like black and white? Gay and straight?
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Sexual harassment: where there’s smoke there’s usually fire

It’s an unfortunate fact in our industry that people (mostly women) still regularly deal with harassment and assault in the workplace. Not only is this tragic for the individuals involved, but it is also driving talented women away from what is often a male-dominated tech and startup culture. Adding to the problem is that the victims often become the accused, and find themselves under scrutiny. But as this interesting study demonstrates, false allegations are rare. In an analysis of ten years of reported cases, the results indicate that the prevalence of false allegations is between 2 and 10 percent. In other words, where there’s smoke, there’s usually fire—90 percent or more of the time. So how do we address this? According to the Bureau of Labor Statistics, 70% of employers provide sexual harassment training and 98% of companies have sexual harassment policies. However, this enlightening article, Why We Fail to Report Sexual Harassment,
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Some Recommended Reading for Investors

There’s a lot of advice out there for new (and experienced) investors, and it can be hard to sift through it all to find the best stuff. So when I find something particularly helpful, I like to pass it along. Paige Craig, a founder and managing partner of Arena Ventures, has some excellent blog posts in which he shares his own experiences in a really honest and transparent way. His stories and advice have some incredibly useful insights for both investors and entrepreneurs. Paige is also an experienced angel investor who has invested in over 110 startups, including AngelList, Twitter, Wish and Zenpayroll. These two posts from Paige are both fantastic. Thanks, Paige! Airbnb, My $1 Billion Lesson The 4 Ways Investors Find Great Startups

The negative space of your words

We see quite a few pitches at Techstars. And we also therefore are involved in many Q&A sessions afterwards.  In one recent session, I noticed lots of what I call “negative space” so I wanted to down some thoughts. When answering questions, especially in a group or public setting, you can show mastery by answering questions quickly and succinctly. Anticipate the normal questions and practice your answers. Make sure they’re short and clear answers. Also, train yourself to avoid phrases like “To be honest,” or “That is a great question.” Both of these create negative space. If you start your response with “To be honest,” it gives the impression that you’re not usually honest, but in this case, you decided to tell the truth. “That’s a great question” seems innocuous enough, but it implies that the other questions were not as good. (And if you say it after every question, it
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I’m loving Soundwall

It’s art. It’s a speaker. It’s a conversation piece. With Soundwall you can stream music to an interactive flat-panel speaker that also happens to be a beautiful piece of artwork. It’s really cool to have art that surprises people, and everyone always wants to talk about it. The sound is incredible thanks to Distributed Mode Loading technology, and you can choose from a wide variety of artwork, or even create your own custom design. Soundwall is being used in places like hotels, event spaces and hospitals. In addition to the Nova, which is aluminum artwork, they have now introduced a new, smaller product called Solstice, made from a canvas-quality magnetic material. With Solstice you can also get additional prints to switch up the artwork whenever you want. Solstice pricing starts at $499, but right now they’re offering an introductory special price of $399 as they launch the new product.
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Simplify

Remember factoring out from math class, where you had to simplify an equation by finding the common factors? Startups often start out as a fairly simple equation. But over time, as your organization grows, it becomes more complex. As you scale, your business model gets complex. It creeps in naturally. You know what’s complex in your business. As you scale, focus on simplifying those things. Once in a while, you have to stop and factor out. Take the equation of your business and figure out how you can simplify it.  Complexity can be a killer. Where can you factor out complexity as you scale? One example is in your contracts. Try to keep them as standard as possible. You’ll have more leverage as you scale than you had when you did your first few agreements. By standardizing, you’ll remove complexity that someone has to remember, track, report, and comply with
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The Business Blockchain: the future of authenticity and trust on the web

I recently read The Business Blockchain by William Mougayar, which provides a really strong description of the practical applications of this important new technology. This goes way beyond bitcoin. William anticipates a future with thousands, possibly millions, of blockchains that will enable frictionless value exchange and disrupt traditional business models.

He defines blockchains as “new technology layers that rewire the internet and threaten to sidestep older legacy constructs and centrally served businesses.” A blockchain injects trust into the network.

A couple years ago, William and I wrote an article about the trust web, in which we explained how the transfer of authority and trust to a decentralized network enables the continual recording of transactions on a public “block,” creating a unique “chain” known as the blockchain.

The Business Blockchain further explains what the blockchain is and how it works, and goes into depth about the blockchain’s multiple layers. He

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How Microsoft, Uber, Twitter, and Google came to Boulder

A thriving startup community provides a boost to the greater community in lots of ways. It encourages innovation and investment, attracts creative, entrepreneurial people, and generates a certain energy– making the entire city a more desirable place to live.

Additionally, when local startups are acquired by big companies, and those companies hire more people in the area, the result is more jobs, which boosts the local economy in a lot of new ways.

A great example of how big companies get here is Sketchup, a startup that my partner Mark Solon invested in back when it was a tiny company. Google acquired Sketchup in 2006 (yep, I was blogging about Colorado startups way back then), and we’ve had the footprint of Google’s presence in Boulder ever since then. Bolstered by the addition of around 1,500 jobs in Boulder, over the years that acquisition has significantly contributed to Boulder’s

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How much should a growing SaaS business burn?

As an investor, I’m often asked what sort of burn rate is appropriate for a growing company. This question seems to come up right after a Series A raise when the startup feels flush with cash, has some level of product/market fit, and is wondering how much and how fast to try to grow.

For SaaS companies in this situation, my rule of thumb for burn guidance is to have a one year ratio of net burn to net new MRR. In other words, if you are growing through $30K of net new MRR, I’d be comfortable as an investor with you burning $360K a month (30,000 x 12 = 360,000). Your $30K of net new MRR pays back this months burn over the next year. Of course it also matters how much cash on hand and runway you have and it matters that you’re still seeing other healthy metrics

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Metrics for Startup Success

What is the right startup success metric? I was recently asked why we celebrate fundraising amounts as opposed to other meaningful metrics, such as revenue, recurring customers or staff size. To be perfectly honest, it’s a struggle to find intermediate metrics for startup success. In our industry, funding is used often as a measure of success, but this is by no means a perfect metric. Just because you raise money doesn’t mean you should celebrate. Securing funding doesn’t automatically mean your company is going to be successful. Think Color or Quirky. If we measure success by fundraising, then these were huge successes. But clearly they were not actually successful. There are other meaningful metrics to consider, such as impact, number of employees, amount of revenue or number of customers. All of these are reasonable intermediary proxies, and we take them as signals of success, which is the best gauge we
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Don’t Make Yourself Indispensable

When you’re first starting a company, you’re right there in the thick of it, all the time. During that heavy lifting phase, you naturally have to throw yourself into getting your startup off the ground and figuring things out. But it can’t go on like that forever. Obviously your own personal health would take a hit, but it’s also a sign of poor health for your company if it relies on your presence in order to exist. So once you’re a little farther along—after you have things figured out and have a good market fit—as the CEO you need to start thinking about working ON the business instead of IN the business. You should be able to go away for a month or two and still have your business run just fine without you there. Now, that doesn’t mean you should run away to Cuba for six weeks right off the
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