A very worthwhile read on marketing for start ups http://www.forbes.com/sites/85broads/2011/10/17/marketing-musts-for-start-ups/
A VC in Vacationland
Seeking the next gen supply chain technology breakthroughs
recent posts
- The Role of Generative AI in Supply Chain Investment Strategies
- AI’s Impact on Supply Chain Investment Strategies
- The ‘New Normal’ is now the ‘No Normal’ in Supply Chains
- SRR—Sustainability, Resilience, Risk Management: The Latest Supply Chain Buzzwords & Investment Opportunities
- 3PLs–Investing in the Next Generation of Outsourced Supply Chain Solutions
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Image via WikipediaAccoring to a recent article in the Napa Valley Register, the U.S. wine industry estimates that Americans purchase more than 300 million cases of wine annually, but what happens to all those empty wine bottles? With the EPA-estimated national recycling rate for wine bottles at only 30 percent, a new company in northern Calif. wants to go beyond recycling and promote reuse – by washing old wine bottles and selling them back to wineries.
Opening for business in March 2011, Wine Bottle Renew collects empty bottles from winery tasting rooms, as well as bottles that would otherwise be discarded from manufacturers, such as overstock or extra bottles. The company does not accept bottles from consumers for reuse – a common practice in many European countries. For Wine Bottle Renew to add post-consumer wine bottles to their inventory, the national wine industry would need to standardize its bottles into a set number of types, as they do in Europe, says Bill Dodd, a partner in the company and Napa County supervisor. Though that may not happen in the near future, Dodd sees the potential for bottle standardization and reuse regionally, such as on the West Coast or in California.
While Wine Bottle Renew might not be collecting wine bottles from your curbside recycling bin any time soon, Dodd says that there is a steady supply of pre-consumer glass that the company is saving from the landfill and reusing. And the environmental benefits of reuse are impressive, according to the company’s statistics. “Sixty percent of wine’s carbon footprint comes just from making the bottle,” he says. “We reduce [a company’s glass manufacturing carbon footprint] by 95 percent.” It’s not just the production of the bottles that uses resources and emits pollution – it’s also the transportation of the heavy material. Bottles for California wines may travel from another state or Mexico or as far away as China, Dodd says.
Can Wine Bottle Renew compete with these manufacturers of new wine bottles? The company thinks so. Not only are wineries interested in the green marketing edge that Renew bottles can bring, Dodd says, but the reused bottles are actually 10-40 percent cheaper than new bottles. “It’s a win-win. Our bottles are environmentally sound and economically sound,” Dodd says. Glass markets have not always been so amenable to bottle reuse. Back in the 1990s, a few companies attempted to get into the bottle washing business, but couldn’t compete with the low price of virgin glass at the time. The companies eventually failed, facing other challenges like a lack of technology to de-label wine bottles – problems for which Wine Bottle Renew has found solutions, the company says.
The company says its bottles are as clean as new ones, after going through a series of wash and rinse cycles for sterilization – a process approved by the California Department of Health Services. In fact, Wine Bottle Renew says its bottles are cleaner than new, since their bottles are washed immediately before shipment to a winery. It is not uncommon for new wine bottles to be stored for a some time before shipment, collecting dirt and dust, Dodd says. And it was actually a new, but dirty bottle contaminating his homemade wine that inspired home winemaker and company founder Bruce Stevens to look for other sources of wine bottles and research the European bottle washing and refilling system. In its fourth month of business, Wine Bottle Renew has as many as 300,000 cases of bottles at their washing facility at any time, Dodd says. The company sells reused bottles to 100 wineries and only hopes to increase its customers in the coming months.
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Image via CrunchBaseAccording to a recent article in Venture Beat, just a decade ago, if you wanted to invest in a startup you had to know someone. A lawyer, an accountant, a friend of friend would give you a referral to a company looking to raise money, or they’d invite you to invest with them. That’s how you got in the door.
You had to have a lot of money to play – often $50,000 or more. And the startups you’d see were from your geographical region. That traditional scenario left a lot of interested angel investors sitting on the sidelines.
Today, it’s a lot easier to become an angel investor, due to crowd funding, micro lending and investment sites like MicroVenture Marketplace Inc., which is opening doors to those looking to invest $1,000 to $10,000 or more.
The way to win at angel investing, of course, is to invest in the right startups. To get there, you need:
1) Good deal flow from which to spot potential winners.
2) The ability to invest in multiple deals so you gain experience.
3) A knack for spotting companies, and more importantly people, who will succeed.Getting good deal flow is often the stumbling block for the average person looking to get started in angel investing. And it’s one of the reasons Bill Clark founded MicroVentures. He wanted to begin investing, but didn’t have access to good deals.
Like many others thinking about making angel investments, Clark wanted to invest smaller sums in more companies, allowing him to spread out his risk and also increase his changes of picking a winner. And he wanted access to great companies outside of the Austin area, which is his hometown.
More than 500 investors have joined MicroVentures since Clark launched the investment service seven months ago. The service matches companies seeking money with investors looking to invest anywhere from $1,000 to $10,000 or more.
MicroVenture helps investors learn about companies they may never have heard of, and to invest smaller sums, which is virtually unheard of with traditional investing.
MicroVentures also helps with the initial due diligence process by filtering start-ups and then providing documents to help investors conduct their own due diligence to help them make a final decision.
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Image via WikipediaIs it really worth reading a book on Warren Buffett's management style written by his daughter-in-law? The short answer is yes. Warren Buffett's Management Secrets is short, to the point and useful. Much of what drives Buffett's business success is common sense and the discipline to follow that common sense. Many of us fail in either one or both of those attributes at times in our own entrepreneurial or investing processes. So it is good to pick this book up periodically to remind oneself of how to stay on the straight and narrow path to success.
Warren's management style is presented in five related segments, all interacting to create a valuable road map that any entrepreneur can and should follow (with a few additions from Dave):
- Pick the Right Business (and Business Model)–I see many good ideas from entrepreneurs that lack a solid money making business model. You need the right economics in any business to ensure long term sustainability and most important, high market valuations.
- Delegate Authority (and Choose the Best Employees)–There is no way a founder can "run" an entire business, but that's what many try and do. Getting the right team in place, making sure they are correctly motivated and resourced and delegating responsibility to make it happen are what I look for in an entrepreneur. Good companies fail every day due to poor hiring and poor delegation decisions.
- Find a Manager with the Right Qualities–Warren looks for integrity, intelligence and a passion for the business when choosing companies to purchase or new leaders for his current companies. The recent David Sokol debacle around insider trading in Berkshire Hathaway shows the importance of questioning all hires about their ethics, especially if they end up quitting and going to work for a competitor.
- Motivate Your Workforce–Warren has adapted and improved on Dale Carnegie's methods for motivating people. These tools have been somewhat forgotten today in the world of new age management, but hold many useful lessons that can help establish a positive and well-motivated work force. You cannot be successful without having others believe in what your are doing with benefit them as much as it will benefit you.
- Focusing on Key Managerial Axioms–The book ends by dwelling on around ten key managerial axioms that Warren lives by. For example, learning from your mistakes instead of ignoring the potential lessons and moving on, or banking on the tried and true, or the dangers of borrowed money, etc. These are worth incorporating into daily business management, not only for the entrepreneur but also for his fellow travelers.
The book has much deeper insights than I have presented here. I found myself agreeing with many of his insights and thinking about how I would look at business differently as a result. You can read the book on a short plane trip.
Five Stars***** rating from Dave.
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Image via WikipediaGuy Kawasaki has had some brilliant insights into making start ups successful. The best one is from 2006 and was originally published in his Blog. Here is the short version:
"If only I could get paid for answering the question, “How can I get people to evangelize my product?” I would be able to stop working and play hockey every day. Alas, there is no way to get paid for this information, so I give it to you for free.
The short answer is called “Guy’s Golden Touch.” You might think this means, “Whatever Guy touches turns to gold.” If only this were true. The actual definition is, “Whatever is gold, Guy touches.”
Bookmark this: The key to evangelism is a great product. It is easy, almost unavoidable, to catalyze evangelism for a great product. It is hard, almost impossible, to catalyze evangelism for crap. (Evangelism, after all, comes from the Greek word for “bringing the good news,” not “the crappy news.”)
This is a duhism if I’ve ever heard one: “I guess we should create a great product.” Duh! As opposed to a crappy one? The salient question, however, becomes, “What are the characteristics of a great product?” Here is the answer.
Think: DICEE
- Deep. A great product is deep. It doesn’t run out of features and functionality after a few weeks of use. Its creators have anticipated what you’ll need once you come up to speed. As your demands get more sophisticated, you discover that you don’t need a different product.
- Indulgent. A great product is a luxury. It makes you feel special when you buy it. It’s not the least common denominator, cheapest solution in sight. It’s not necessarily flashy in a Ferrari kind of way, but deep down inside you know you’ve rewarded yourself when you buy a great product.
- Complete. A great product is more than a physical thing. Documentation counts. Customer service counts. Tech support counts. Consultants, OEMS, third-party developers, and VARS count. Blogs about it counts. A great product has a great total user experience—sometimes despite the company that produces it.
- Elegant. A great product has an elegant user interface. Things work the way you’d think they would. A great product doesn’t fight you—it enhances you. (For all of Microsoft’s great success this is why it’s hard to name a Microsoft product that you’d call “great.”) I could make the point that if you want to see if a company’s products are elegant, you need only look at its chairman’s presentations.
- Emotive. A great product incites you to action. It is so deep, indulgent, complete, and elegant that it compels you to tell other people about it. You’re not necessarily an employee or shareholder of the company that produces it. You’re bringing the good news to help others, not yourself.
If you want a smashing example of DICEE product, you need not look any further than iPod. Deep: thousands of songs, podcasts, and recently video plus third-party add-ons that have added functionality Apple never anticipated. Indulgent: yes, you could buy a cheaper MP3 player, but that’s not the point, is it? Complete: total integration with online buying, Apple’s support (other than a battery or two), and online support by independent web sites. Elegant: One wheel does it all, right? Emotive: How did you first find out about it?
So if you want raging, inexorable thunderlizard evangelists for your product, make sure it’s DICEE."
So, entrepeneurs, go out and touch some gold today….at $1500/ounce.
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Image via CrunchBaseOkta, co-founded by Salesforce veteran Todd McKinnon, has raised $11 million in funding across seed and Series A rounds, with Andreessen Horowitz as lead investor.
According to Xconomy, Okta is targeted medium-sized businesses running multiple third-party cloud applications — think Salesforce, Google Apps or even Twitter and Facebook. The service provides a centralized dashboard giving IT departments an easier way to deploy and manage cloud applications, manage seats and access reporting. For end users at organizations, Okta is a breath of fresh air as it allows for single sign-on across all supported applications; one might even call Okta a Facebook Connect for the enterprise.
“The center of gravity is shifting outside the firewall,” McKinnon said in describing why IT departments need a new network to tie these third-party services together. Okta’s application network comes with built-in integration for hundreds of applications. Supported applications run the gamut and include obvious business picks like Outlook, Salesforce and WebEx, as well as consumer applications a la Box, Drop.io and Dropbox.
Andreessen Horowitz partner and Okta board member Ben Horowitz believes the first-mover startup has the potential to own the enterprise cloud application management category, a category he sees growing rapidly in significance. “Every app category is going to be rewritten in the cloud,” Horowitz said at a recent Okta-hosted press event.
Okta already has a growing set of clients. Eric Wilson, VP of Operations at FusionStorm, couldn’t speak more highly of the service. Wilson talks most highly of Okta’s people sync technology, which allows FusionStorm to maintain an accurate employee database and seamlessly add and remove users across all Okta-managed applications. Other early customers include LiveOps, Pandora and AMAG Pharmaceuticals.
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I am asked this question all the time by entrepreneurs trying to save a few bucks by not using a lawyer to set up their company and/or accept a first round of funding. My advise is to get a good start up lawyer (I use Gunderson et. al, and there are many others out there) who is willing to defer most payments until you get a substantial round of funding. This will avoid lots of potential problems later, which could cost you even more in fees to resolve.
Here are some other reasons from a recent Xconomy article, posted on 11 April 2011:
(Scott Edward Walker is the founder and CEO of Walker Corporate Law Group, PLLC, a law firm specializing in the representation of entrepreneurs. He submitted this column to VentureBeat.)
A reader asks: We’ve gotten commitments for a seed investment of $600,000, and the lead investor advised us that to save time and money on legal fees we should use the Series Seed documents, which he said are just fill-in-the-blank forms, with no negotiations. Have you heard of the Series Seed documents and, if so, do you think this makes sense?
Answer: The so-called “Series Seed” documents are a stripped-down set of preferred stock financing documents, which were designed for seed investments by Silicon Valley lawyer Ted Wang (with an assist from venture capital firm Andreessen Horowitz). The goal, as Ted notes on the site, was to “[create] a simple set of documents for early stage investment.”
The problem Ted was attempting to address was how to get shares of preferred stock into the hands of investors in a seed investment without having to draft and negotiate a full-blown set of Series A documents, with all the bells and whistles (and associated legal fees of $50,000+). In short, Ted has solved this problem – and for this I tip my hat off to him. Moreover, a number of investors have been quite vocal in their support of the Series Seed documents and have begun utilizing them, particularly in Silicon Valley.
But the issue, of course, is whether the documents are fair from the entrepreneur’s perspective. If entrepreneurs are going to be required to simply sign form financing documents with no negotiations, they obviously must be comfortable with what they are signing. So let’s examine the terms of the Series Seed documents.
The good news – The good news for entrepreneurs is that the number of documents (and pages) for a preferred stock financing have been reduced dramatically, including the removal, among other things, of anti-dilution provisions, registration rights and a legal opinion. Preferred Stock financings are thus much quicker and cheaper.
The liquidation preference is also 1X non-participating, which is very pro-entrepreneur (see my post here for an explanation). Additionally, the company’s obligation to reimburse the investors’ lawyers is a flat fee of $10,000.
The bad news. The bad news is that, unlike in connection with the issuance of convertible notes, the founders must give-up certain control rights to the investors, including a Board seat and veto rights with respect to certain corporate actions pursuant to protective provisions. For a $600,000 seed investment, this may not make sense and is the fundamental problem with using fill-in-the-blank forms.
Other issues include the four-year vesting requirement and the 30-day no-shop provision (which some VC’s, like Fred Wilson, do not require).
The bottom line is that if you are a “hot” startup with strong negotiating leverage, you’re better off issuing convertible notes to avoid these issues and to kick the valuation issue down the road to the Series A round.
The pendulum has recently swung dramatically in the entrepreneurs favor (particularly in Silicon Valley), and most of the hot start-ups are issuing convertible notes in seed rounds, not equity. For example, in January of this year, Yuri Milner and SV Angel announced that their Start Fund would offer all Y Combinator companies $150K in convertible notes.
The Series Seed documents may be a good starting point. However, agreeing to close on a set of form documents without negotiation may not be in your best interest — particularly if you have a hot start-up.
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Image via WikipediaStreetline Inc., a San Francisco-based developer of smart parking solutions, has raised $15 million in Series B funding. Fontinalis Partners and RockPort Capital Partners co-led the round, and were joined by return backer Sutter Hill Ventures.
In my previous post on the company, my idea that the solution could be extended to make urban truck deliveries more efficient by indicating which loading zones were open near a delivery site has yet to make the product offerings. Hopefully it is under consideration, as companies lie FedEx and UPS would pay well for such an offering.
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Image via CrunchBaseUrbanites, who yearn for instant gratification of all wants, from gum to a gourmet dinner, love services who promise to delivery just about anything available locally in about a hour. Urbanfetch, a now defunct start up in New York and London at the turn of the century, burned through $70 million and numerous employee dreams trying to make such a service happen, as did Webvan in a more spectacular manner (although Amazon now owns what's left of the business and is apparently making money).
Now we have shutl giving a similar model a go in London. The offering is actually an on-line delivery platform that aggregates transportation carriers so they can deliver from a retailer to a customer in an hour. Hummingbird Ventures and some angels recently invested $1 million in the start up. shutl's web site lists numerous retailers, including Argos, Huggles and Oasis as clients for the service. They also have real-time customer feedback on the homepage, a brave act for a small company.
shutl's founder, Tom Allason, was also the founder of a London courier service, eCourier, so the new service has its routes in a successful urban delivery operation (and competitor).
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Image via CrunchBaseThanks to Dharmesh Shah, a serial software entrepreneur and the founder and CTO of HubSpot for these insights:
"If you have time to read one document on the topic of startup culture, you should read through the NetFlix “culture deck”. If you have time for two, read through the NetFlix deck twice — it’s that good. It is so good, in fact, that I’m surprised when I come across entrepreneurs that haven’t seen the deck yet. These are people that read all sorts of great material on the web to help their startups.
So, as a public service, I’m sharing with you the best presentation on startup culture I’ve ever seen (including one we’ve created ourselves at HubSpot).
Insights From The NetFlix Startup Culture Presentation
These are just some of the points that jumped out at me. I’m sure you’ll have your favorite parts too.
1. Comes right out and says who the “freedoms and responsibilities” applies to: In their case, salaried employees only.
2. Lots of companies have nice sounding values, but real values are defined by who gets rewarded and who gets let go.
3. You can articulate what you are, and are not trying to do.
4. You can separate what must be done well now, and what can be improved later.
5. You treat people with respect, independent of their status.
6. You accomplish amazing amounts of important work.
7. You focus on great results, rather than process.
8. You have a bias-to-action and avoid “analysis paralysis”
9. You create new ideas that prove useful.
10. You find the time to simplify so you can stay nimble.
11. You are quick to admit mistakes.
12. We’re a team, not a family.
13. A great workplace is stunning colleagues.
14. You behave like an owner of the company.
15. Prevent irrevocable disaster.
16. “There’s no clothing policy at NetFlix, but no one has come work to naked lately.”
17. Act in the company’s best interests.
18. Flexibility is more important than efficiency in the long term.
19. The best managers focus on context rather than control.
20. Titles are not very helpful.
21. Compensation should be about external market value, not internal parity.
22. In some groups, there may not be enough growth opportunity for everyone.
23. Individuals should manage their career paths — not the company."
There is no "Easy Button" one can buy at Staples to infuse culture into a company. Some say it just happens. That reminds me of the Yogi Berra "If you don't know where you are going, you'll get there" quote. Culture is something serious to work on is any size company. You may not initially need a hundred page Powerpoint on the subject, but it should be a frequent topic of conversation at team and management meetings.
A VC in Vacationland 
