You want to start a company. Now what?


This post is by Tomasz Tunguz from Tomasz Tunguz


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Last week, a close friend, who is a product manager/designer, told me he’s starting a company. He asked me where I thought the biggest opportunity lay given his skills and his passions. He’s incredibly capable and driven, but he hasn’t yet found the right place to apply his energy. My friend is in search of a problem to solve. He’s in the right place. After all:

“The essence of a startup lies in the process of discovering a problem shared by many people and trying to solve it.”.

So how does a founder discover these problems? Research. I suggested to him that he should pretend to be a sociologist, study the way that employees of medium sized companies work. Which software they use, which processes they perform, how they collaborate. Most people love to share their gripes, frustrations and pains with a receptive listener.

Aggregating this feedback over a Continue reading “You want to start a company. Now what?”

Gigabytes under management


This post is by Tomasz Tunguz from Tomasz Tunguz


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When I walk into a bank today, I might deposit my cash in exchange for some interest rate. The interest rate is my cut of the profits the bank made on my deposit through their trading and lending activities. The more assets under management, the more money a bank can make on its own account. Like banks, web companies are in the business of maximizing gigabytes of user data under management.

Gigabytes under management


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




When I walk into a bank today, I might deposit my cash in exchange for some interest rate. The interest rate is my cut of the profits the bank made on my deposit through their trading and lending activities. The more assets under management, the more money a bank can make on its own account.

Like banks, web companies are in the business of maximizing gigabytes of user data under management.

When I use Google products like Gmail, Google Search, Android and Android applications, Google Chrome for browsing, Google Plus for social networking, Google TV, YouTube, clicking on Google Ads, I’m “depositing” my data with Google.

Google uses this panoply of data across their user base to generate tens of billions in revenue from advertising at 30% EBITDA margins. The profits of the advertising business subsidize all of their free products I mentioned above. Said in the reverse, all these Continue reading “Gigabytes under management”

Demo to term sheet in 3 hours


This post is by Tomasz Tunguz from Tomasz Tunguz


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I met the Electric Imp team in April. I had bumped into one of their engineers at a party and he pinged me a few weeks later to say he was working for a startup and the company was raising. The company came in to the office on a Monday at noon. Hugo, the founder, Electric Imp demoed their product to me. Ten minutes in, I stopped the pitch meeting, pulled 3 partners from their Monday partner meeting, and issued a term sheet that afternoon.

Through Growth, Crowdfunding Continues Its Search For Identity


This post is by Christine Herron from Christine.net


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Thanks to the success of platforms such as Kickstarter and IndieGoGo, crowdfunding has become mainstream. Even among the trailblazers here at CrowdConf 2012, however, it’s still a controversial topic. The impending passage of the JOBS Act has highlighted many practical implementation challenges. What can crowdfunding be used for? Who benefits? How does it work? Competing – sometimes conflicting – crowdfunding models not only deliver different benefits, but also have different challenges. The stakes are high: as the space becomes more defined, and standards more firmly established, the opportunity for disruption is massive. Fundraisers: Realizing Ideas vs. Building Businesses Most traditionally venture-backed entrepreneurs that use crowdfunding are only using it for a portion of their round (say, 20%) as vs. the…

Through Growth, Crowdfunding Continues Its Search For Identity


This post is by Christine Herron from Christine.net


Click here to view on the original site: Original Post




Collection-of-crowdfunding-company-logosThanks to the success of platforms such as Kickstarter and IndieGoGo, crowdfunding has become mainstream. Even among the trailblazers here at CrowdConf 2012, however, it's still a controversial topic.

The impending passage of the JOBS Act has highlighted many practical implementation challenges. What can crowdfunding be used for? Who benefits? How does it work? Competing – sometimes conflicting – crowdfunding models not only deliver different benefits, but also have different challenges. The stakes are high: as the space becomes more defined, and standards more firmly established, the opportunity for disruption is massive.

Fundraisers: Realizing Ideas vs. Building Businesses

Most traditionally venture-backed entrepreneurs that use crowdfunding are only using it for a portion of their round (say, 20%) as vs. the whole round. Slava Rubin (IndieGoGo) adds color to this by noting that money isn't the primary reason to use a crowdfunding platform: "When you do a

Continue reading “Through Growth, Crowdfunding Continues Its Search For Identity”

Through Growth, Crowdfunding Continues Its Search For Identity


This post is by Christine Herron from


Click here to view on the original site: Original Post




Collection-of-crowdfunding-company-logosThanks to the success of platforms such as Kickstarter and IndieGoGo, crowdfunding has become mainstream. Even among the trailblazers here at CrowdConf 2012, however, it's still a controversial topic.

The impending passage of the JOBS Act has highlighted many practical implementation challenges. What can crowdfunding be used for? Who benefits? How does it work? Competing – sometimes conflicting – crowdfunding models not only deliver different benefits, but also have different challenges. The stakes are high: as the space becomes more defined, and standards more firmly established, the opportunity for disruption is massive.

Fundraisers: Realizing Ideas vs. Building Businesses

Most traditionally venture-backed entrepreneurs that use crowdfunding are only using it for a portion of their round (say, 20%) as vs. the whole round. Slava Rubin (IndieGoGo) adds color to this by noting that money isn't the primary reason to use a crowdfunding platform: "When you do a

Continue reading “Through Growth, Crowdfunding Continues Its Search For Identity”

Through Growth, Crowdfunding Continues Its Search For Identity


This post is by Christine Herron from Christine.net


Click here to view on the original site: Original Post




Collection-of-crowdfunding-company-logosThanks to the success of platforms such as Kickstarter and IndieGoGo, crowdfunding has become mainstream. Even among the trailblazers here at CrowdConf 2012, however, it's still a controversial topic.

The impending passage of the JOBS Act has highlighted many practical implementation challenges. What can crowdfunding be used for? Who benefits? How does it work? Competing – sometimes conflicting – crowdfunding models not only deliver different benefits, but also have different challenges. The stakes are high: as the space becomes more defined, and standards more firmly established, the opportunity for disruption is massive.

Fundraisers: Realizing Ideas vs. Building Businesses

Most traditionally venture-backed entrepreneurs that use crowdfunding are only using it for a portion of their round (say, 20%) as vs. the whole round. Slava Rubin (IndieGoGo) adds color to this by noting that money isn't the primary reason to use a crowdfunding platform: "When you do a crowdfunding campaign, you get to gauge demand, test marketing and iterate cheaply, gain exposure you couldn't otherwise, and obtain data. Campaigns take you from a transaction to a relationship. People will pay margin to build ongoing relationships."

Dawn Lepore (Prosper) noted that entrepreneurs (the everyday, non venture-backed kind) make up a substantial portion of Prosper's users. For them, Prosper is an alternative to banks – the average Prosper user receives funds within six days of filling out an application. 

Independent creators, on the other hand, may funnel their entire fundraising effort through a single campaign. According to Becca Plofker (Idea.me), many creators don't consider themselves entrepreneurs – they just want tools and support to bring their ideas to life. 

Funders: Passionate Patrons vs. Day Traders

On one extreme, the passionate funder of an indie album doesn't expect a fiscal reward for his/her support. They're creating the change they want to see in the world (crowdfunding can be applied to public good), or enjoying being part of a cultural experience.

At the other extreme, you see equity funders, who expect a fiscal return. Equity funders not only use platforms because they deliver access to opportunities, but also because through a crowdfunding platform, the small investor can (usually) obtain the same terms that more sophisticated investors agree to. These small investors can get a taste of the high-risk, high-reward investing that existing angels take part in, or they can invest in a local mom-and-pop.

Skeptic Naval Ravikant (AngelList) puts a sharper point on small investors entering the private market:  "Only 1/N angel-backed companies will make money in the private market…there will be lawsuits." That said, it remains to be seen what expectations the market will have for equity crowdfunding. As private asset marketplaces democratize fundraising beyond Silicon Valley tech companies, the "restaurant investor" model may be closest. Restaurant investors enjoy the perks of being an investor, and may be able to get some financial returns; but they also realize that not all restaurants make it, and easy liquidity (a la public markets)

Continue reading “Through Growth, Crowdfunding Continues Its Search For Identity”

Demo to term sheet in 3 hours


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




I met the Electric Imp team in April. I had bumped into one of their engineers at a party and he pinged me a few weeks later to say he was working for a startup and the company was raising. The company came in to the office on a Monday at noon.

Hugo, the founder, Electric Imp demoed their product to me. Ten minutes in, I stopped the pitch meeting, pulled 3 partners from their Monday partner meeting, and issued a term sheet that afternoon. The demo was just that compelling.

Electric Imp’s demo had three key parts:

  1. A simple and clear story line, that the audience related to, describing how a user might use their product to solve a problem and improve their lives.
  2. A beautiful product that inspires. Though the software was raw, the hardware and software worked together flawlessly and everyone in the room had a clear Continue reading “Demo to term sheet in 3 hours”

Start With The Problem


This post is by larrycheng from Thinking About Thinking


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After hearing dozens of company pitches over the last week or so, I noticed a common theme with how CEOs told the story of their business.  They typically expended great energy explaining what their company’s product or service does.  They will talk about features and functionality that no other player in the market has.  Where appropriate, they will dive into a demo to show exactly how their product is such a game changer.  While this is important, in some respects, I think it is putting the cart before the horse.

Personally speaking, I think a good story for a business starts with the problem that is being solved.  It’s hard to fall in love with a product, if you don’t believe it solves a big problem.  A problem worth solving is one that is a high priority issue for the one experiencing it.  It is a problem that is experienced to a similarly high degree, by a large and common constituency.  It is also a problem that people are willing to pay, and sometimes pay substantially, to resolve.

In every company pitch, the CEO will try to tell me what the company does.  But, you may be surprised that in many pitches, the CEO may neglect to really spend time articulating the problem their company solves.  Sometimes when I ask very directly what problem it is that they solve, the response will be a description of product functionality, not in fact a problem.  This to me is a telltale sign that the company was started to create functionality, not necessarily to solve an important problem.

If we were ever to get into due diligence on a company, we will likely spend as much time validating the magnitude and priority of the problem the company solves as we do on the merits of the product.  If we love your product, but are unconvinced on the problem it solves – we are unlikely to get across the finish line on an investment.  The reality is a company can control how a product evolves and develops.  But, the problem is what it is – so choosing the right problem to solve is critical for the ultimate success of any business.

So my simple advice is that when you tell the story of your business, start with the problem.  If you convince people of the problem your company is trying to solve, you have laid the foundation for them to love what your company does.

Filed under: Founder-Owned Businesses, Growth Equity, Philosophy

Great products turn motivation into capability


This post is by Tomasz Tunguz from Tomasz Tunguz


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Examining a user’s motivations at the entry point of every major feature in a product and matching the product to this motivation is key to building a great product users love.
BJ Fogg’s Behavior Model Theory is a succinct summary of this idea in a formula:
Motivation + Trigger + Ability = Behavior
This model says that a user will perform a behavior when given the means, the motive, and the opportunity.

Great products turn motivation into capability


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




Examining a user’s motivations at the entry point of every major feature in a product and matching the product to this motivation is key to building a great product users love.

BJ Fogg’s Behavior Model Theory is a succinct summary of this idea in a formula:

Motivation + Trigger + Ability = Behavior

This model says that a user will perform a behavior when given the means, the motive, and the opportunity. The user brings motivation, but it’s the responsibility of the product to trigger a behavior and offer an intuitive experience to complete it.

Users’ motivation varies. In ecommerce, sometimes users are very motivated: I need to buy a last minute gift for my wedding anniversary. Sometimes users are lackadaisical: I’m just browsing.

But, the most effective products match a user’s changing motivation to the friction of the task. For example, Amazon asks customers to fill out credit card

Continue reading “Great products turn motivation into capability”

Introducing Colorado Entrepreneurial By Nature


This post is by seth levine from VC Adventure


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When it comes to the question of nature vs. nurture for entrepreneurs it’s clear that both are important. While great entrepreneurs are born with at least the seed of that entrepreneurial spirit, it takes some encouraging – as well as plenty of guidance, help and support – to see that seed blossom. I’ve had the great fortune to experience the evolution and transformation of Colorado into a community that I believe is one of the most supportive of entrepreneurs anywhere in the country. In fact, Colorado has always had an entrepreneurial spirit – from before its founding as a state as a frontier territory supporting prospectors and pioneers, through its history of ranching, the oil and gas boom, as a hub for telecommunications start-ups, to its leadership in LOHAS businesses and the burgeoning green-tech field, to Internet and related technologies. Surrounding these business trends has been a Rocky Mountain lifestyle that has attracted entrepreneurs to our state since the 1800’s. These factors, combined with a support structure and philosophy of paying it forward, has turned Colorado into one of the best places in the country to start a business.

Today we’re launching Colorado Entreprenurial by Nature – a grass roots campaign created by a handful of entrepreneurs in our community to show support of that ecosystem. The goal is simple. We’re giving members of our community an easy way of showing their pride in the entrepreneurial community we’re building in our state. We hope that this will help us both encourage entrepreneurship in our community and attract new entrepreneurs to come to Colorado to start their businesses.

Joining is easy. Head to the Colorado Entrepreneurial by Nature website and download the badge (it comes in a number of different colors and sizes). Display it proudly on your company or personal website. We’ve made some stickers up as well which you can fly proudly on your laptop/car/bike/etc. They’ll be showing up around Denver and Boulder at a handful of coffee shops and other places where entrepreneurs congregate.

If you feel the way I do about Colorado – about living here and working here to support entrepreneurship – I hope you’ll join me in the movement.

No startup is an island: the three ecosystems startups should develop


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




It’s tempting to burrow within a garage or basement or apartment to develop a product for several months and emerge from the darkness with a new shiny product. But the launch will likely fall flat. Products must be launched into ecosystems, in particular, into receptive ecosystems. In my view, there are three types of ecosystems that startups should cultivate. These ecosystems provide distribution leverage – that’s what makes them so powerful and so essential at the start of a company.

Why Startups Need Marketing


This post is by christine's brain from christine's brain


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At yesterday’s Startup School, Pinterest co-founder and CEO Ben Silbermann talked about how the secret behind Pinterest’s growth was marketing, not engineering. In the early days at only 3,000 users, they started holding local meetups w/ Pinterest users (largely women) and engaging w/ bloggers to spread the word. Even when you hear him talk about the company, it’s clear that engineering – while important – does not call all the shots. Marketing and design have equal seats at the table. 

No matter what the startup is, marketing’s mission is the same — to tell the world about the product. However, the similarities end there. How you tell your target customers about your product and why it’s valuable couldn’t be more different from company to company. This is why marketing is so often misunderstood. Ask 5 different people what marketing does and you’ll get 5 different answers. However, if you keep that core mission in mind, it’ll be much easier to set marketing goals for your company.

In order to tell the world about your product, there are many important ingredients. Marketing’s responsibilities are as follows:

  • Positioning the product. Easier said than done, but it’s a critical exercise that every startup should go through. Take Foodspotting. In the early days, they ran the risk of being known as the product for “people who like to take pictures of their food.” However, they worked hard to position themselves as a “visual food discovery guide.. And that is what stuck. 
  • Defining the target customer. To properly position your product, you need to understand and define your target customer. Understand what makes them tick, spending time w/ them regularly, and acting as their voice. (Arguably every stakeholder in the company should be doing this, not just marketing) Products can often have more than 1 target customer segment, but usually you shouldn’t exceed 3, and there is always a pecking order. (One type of customer will ultimately be more valuable than another)
  • Representing the customer voice in the product roadmap. Too often I see product decisions being made without incorporating marketing – at both small and big companies. Marketing can have an impact on key product and business decisions by representing the voice of the customer. Also, in order to properly market a product, marketing MUST understand the ins and outs of the product and how it works. To do so without that knowledge only makes your marketing weaker and less authentic.
  • Developing the company’s brand. The key to branding is identifying your core values/attributes and building a compelling narrative. Brands are powerful because of the emotional connection. How will your brand make your customers feel? It starts with the founders. Continue reading “Why Startups Need Marketing”

No startup is an island: the three ecosystems startups should develop


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




It’s tempting to burrow within a garage or basement or apartment to develop a product for several months and emerge from the darkness with a new shiny product. But the launch will likely fall flat.

Products must be launched into ecosystems, in particular, into receptive ecosystems. In my view, there are three types of ecosystems that startups should cultivate. These ecosystems provide distribution leverage – that’s what makes them so powerful and so essential at the start of a company.

1. Customer/User Community

Users provide product feedback, build word of mouth distribution, write reviews, become reference customers and form the basis of online support communities. Often, these communities are worth their weight in gold.

2. Platforms

The most platforms are app stores (iOS, Android and Facebook) which provide access to hundreds of millions of users. But relationship with these platforms don’t start and stop at the developer terms of service. Continue reading “No startup is an island: the three ecosystems startups should develop”

500 Startups Batch 5: Behind The Scenes


This post is by christine tsai. from christine tsai.


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The 5th installment of the 500 Startups Accelerator program kicked off a couple weeks ago. Since then, a lot has already happened – kickoff festivities, 1:1 metrics reviews with each company, and a field trip to visit Google’s HQ.

Blogging is like exercise. It’s critical to focus on building a strong brand that customers connect with, and a strong culture, even when it’s just the founders, and generating content (e.g. a blog) is key. Going through the 500 Accelerator is such a huge investment for these companies, especially for those who traveled halfway across the world to be here. Several companies have vowed to document their experience @ 500 on their company or personal blogs (some have already done so).

In the same spirit, I will do the same – publish weekly posts on what goes into running the 500 Accelerator program. Lessons learned, observations, my own humble advice Continue reading “500 Startups Batch 5: Behind The Scenes”

500 Startups Batch 5: Behind The Scenes


This post is by christine's brain from christine's brain


Click here to view on the original site: Original Post




The 5th installment of the 500 Startups Accelerator program kicked off a couple weeks ago. Since then, a lot has already happened – kickoff festivities, 1:1 metrics reviews with each company, and a field trip to visit Google’s HQ.

Blogging is like exercise. It’s critical to focus on building a strong brand that customers connect with, and a strong culture, even when it’s just the founders, and generating content (e.g. a blog) is key. Going through the 500 Accelerator is such a huge investment for these companies, especially for those who traveled halfway across the world to be here. Several companies have vowed to document their experience @ 500 on their company or personal blogs (some have already done so).

In the same spirit, I will do the same – publish weekly posts on what goes into running the 500 Accelerator program. Lessons learned, observations, my own humble advice on making an accelerator program successful and having a significant (positive) impact on the ‘bottom line’ for each company – more customers, revenue, growth, capital.

Each company coming into the accelerator program has a set of goals and milestones they plan to achieve by the end of the program. They often revolve around growth, revenue, hiring, and fundraising. In the same vein, I’d like to share a few high level goals for ourselves:

  • Enable companies to hit or exceed their milestones by giving strong mentorship, resources, 1:1 time, etc. 
  • Improve our own intelligence of each company to make more data-driven, informed decisions for follow-on investments.
  • Deepen engagement w/ 500 Mentors – actively communicate ways to participate, invite them to accelerator events and more.
  • Improve Demo Days to have maximum (positive) impact for the companies.

One last thing to note – this was the first accelerator batch where we utilized an open application process. While the majority of the companies came through referrals, we decided to experiment with an open application process using AngelList’s platform to fill the remaining spots in the program. We were blown away by the number of applications – and strong ones, at that. It was definitely an experiment, and we learned a lot from it. We brought in a few strong companies that I am certain we would never have found otherwise. 

We’ll be announcing this batch in a couple weeks. Stay tuned to meet them all.

Culture is the biggest growth driver for social services


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




Every social service aims to achieve massive growth and deep engagement. But if forced to choose just one of these attributes, I would pick engagement every time. An active user base implies product/user fit for a social service. Aside from the core functionality of social services, which is a solved problem (profiles, messaging, feed), the essence of a social startup is culture – the values of the community, the mores, the manners of interaction.

Culture is the biggest growth driver for social services


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




Every social service aims to achieve massive growth and deep engagement. But if forced to choose just one of these attributes, I would pick engagement every time. An active user base implies product/user fit for a social service.

Aside from the core functionality of social services, which is a solved problem (profiles, messaging, feed), the essence of a social startup is culture – the values of the community, the mores, the manners of interaction. The right culture attracts users, encourages participation and drives growth.

For proof, look at Reddit’s growth to 2B page views and the clear values they promote for their community. The same is true for Pinterest. Did you know Pinterest has Pin Etiquette?

Successful online cultures replicate the behaviors of offline groups (from political groups to book clubs) which communicate a clear purpose for organizing members, defined norms for interacting, and effective tools for solving their members’

Screen Shot 2012-10-18 at 7.46.50 AM.png

Continue reading “Culture is the biggest growth driver for social services”