The Fabulous Fab - Startup Inspiration

Fab.com has been making a lot of press lately - crazy growth (1 million users in less than 6 months!), new funding with amazing investors, accomplished new hires and bold hiring statements. I'm over the deals and flash sales phenomena but I love Fab. Over on Quora, people ask questions along the lines of "How is Fab different from One Kings Lane" or "What is so special about yet another deals site?" Clearly none of them have actually used Fab. If it isn't obvious already, I am a highly satisfied and besotted Fab.com user. I thought it would be interesting to dissect their success from a consumer and also an investor perspective.

Fab attributes their uniqueness and success to three factors:

  1. A laser-like focus on design. From the design aesthetic of Fab.com’s website and mobile applications, to the products that are featured for sale, to the end-to-end customer experience, Fab.com is all about good design.
  2. Social commerce. More than 50% of Fab.com’s 1.2 million members have come from social sharing.
  3. Innovation. We build all of our own technology and we endeavor to be the world’s pioneer in integrating social and commerce features to enhance the product discovery process.

Usually company "philosophy" is gussied-up copy but the above description is actually spot on. Here's my take on what they do well:

  • Innovative product curation: RIVR (Random Intermittent Reinforcement Variable) baby. Variety and unpredictability keep you coming back for more. They feature such fun, fresh and different things everyday that you keep coming back for more. From slate cheeseboards to themed USB sticks, cheap to expensive, useful to delightful - their product universe seems endless and it's growing every day. They also experiment with the traditional daily deals format - longer term sales or "pop-up shops," for example, focusing on partnerships with other design experts (Fast Company), product themes (T-shirts and magazines) and unique takes (Modernist Holiday Decor).
  • End-to-end design aesthetic: They actually walk the talk. From their website to their quirky mobile app to their absolutely fabulous product curation and discovery process, they've designed a great product and a great company it seems. Their customer service isn't Zappos-level yet but it is getting there.
  • Focus on discovery/inspiration vs. sales: The items they sell, the way they market and their product feature choices all emphasize long term design discovery over immediate sales. Like something but don't want to buy it? Put it in your design profile -- a Pinterest meets Tumblr. E-commerce sites usually have this feature but deal sites don't because of one-off inventory. Clearly Fab doesn't want to limit itself to being a design storefront and this pays off with increased product engagement.
  • Emphasis on product quality: They limit user invitations "to maintain exceptional prices" which I think translates into maintaining product quality and profitable pricing for the sellers a.k.a. "don't pull a Groupon." Most of their deals are sold out but controlling number of viewers and items sold helps prevent cupcake horror stories, Groupon-style.
  • Listen to customers: Little details show they observe, analyze and tweak. Items that are sold out within moments of going on sale reappear later for the disappointed throngs of people who missed out (Still no Holstee Manifesto poster though!). Their product delivery has been a little sluggish and so for the holidays, they have a "Holiday Gift Guarantee" which ensures that products you order get delivered on time to sit under the Christmas tree. To set realistic customer expectations, they've sold the same product as two different items - holiday time delivery and Post X-mas Delivery.

From an investor's perspective, the combination of traction and a seasoned founding team is a double win. The fact that the "design" bandwagon stretches out to comprise the entire e-commerce universe doesn't hurt at all. And investors are also paying up for this:

"We are constantly pushing the envelope at the intersection of social + commerce + content. What you see from us today is just the start."

Fab's traction and design expertise gives it a dedicated fan base to pull more daring (and should I say, fabulous?) social commerce experiments. Given that customers already view their newsletters as a design magazine, getting into the content business officially isn't much of a stretch. If the future of the web is moving from the social graph to an interest graph, Fab could own the "design" interest graph. Which is worthwhile since "design" is nebulous enough to encompass anything well-designed while commanding a premium. Jeff Jordon, partner at Andreessen Horowitz, wrote a post listing out reasons why they invested in Fab. He lists pretty much the same reasons.

"[Fab] is as close to addicting as anything I’ve ever experienced in e-commerce."

Jeff, I have to wholeheartedly agree.

Fab's clearly-stated goal is:

"We want people to LOVE Fab and to think of Fab as the most creative and innovative force in design."

People do love Fab. Fab curates and delivers some of the most creative and innovative products in design and makes it readily accessible. Distribution combined with curation is pure gold and that makes Fab a "culturally important" and potent force in design. Not bad for a 6-month old startup.

So kudos Fab.com. When my (yet-to-be-founded) startup grows up, I want it to be just like you!

Women, Arrogance & The Next Steve Jobs

In “Who Will Be the Next Steve Jobs?” in the Wall Street Journal, Vinod Khosla, entrepreneur and venture capitalist extraordinaire, lists two key characteristics of “would-be revolutionaries” — unbridled confidence and arrogance. A recent tweet by Silicon Valley scholar Vivek Wadhwa says: “More than 50% of Silicon Valley is foreign born. Less than 5% women… A lot needs to be fixed.”

To me, these things are the two sides of the same coin.

If boundless confidence and arrogance are the prerequisites for bringing about technological change, then it’s no wonder that there are very, very few women in that hallowed circle.

Why are there so few women in tech or starting VC-backed companies? Are fewer women in math and science a thoroughly comprehensive reason? Yes, there are fewer women going into the math and sciences. But that number is far from zero. So why aren’t even a fraction of these women doing startups? And there’s the fact that there are non-technical founders who go on to do great things. So why aren’t more women thinking about starting high-growth (and thus mostly venture-backed) companies? I believe it has something to do with most important trait of entrepreneurship — self-confidence bordering on arrogance.

Entrepreneurship does require almost reckless self-confidence. When pitching my last startup, Present Bee, I was told every single day that it wouldn’t work with a thousand varying reasons every time. So to go on and not completely give up, I had to absorb the useful feedback, shrug off everything else and move on like there wasn’t a dent in my universe. In the end my startup didn’t work but it was in large part (like Paul Graham wisely points out) because my co-founders and I didn’t believe enough in Present Bee and (implicitly) in our belief to make it work to give up our other options.

If my startup is a microcosm of the larger entrepreneurship universe, that tells me that I need to wholly believe in my venture for it to go anywhere. And to do that I need to have “unbridled confidence & arrogance”. For what is a bet in an early stage company than a bet on the founders? It’s true for investors and even more intensely true for the founders themselves. Starting a company and pushing forward against the monumental odds stacked against you is basically a bet on yourself — do you truly believe that you can do the crazy things needed to make a startup work? And here’s where it gets murky for men and women entrepreneurs.

Sheryl Sandberg in her amazing TED talk on “Why we have too few women leaders” pointed out data that showed men and women have polar opposite answers for why they are successful — men attribute their success to themselves and women attribute their success to external factors. And therein, ladies and gentlemen, lies the heart of the issue.

If women believe in external success factors, then they depend on those factors to present themselves (market opportunities, mentors, peers, etc.) to start a company. But if men believe that it’s all them, they charge ahead regardless of their situation to create new startups.

The Wall Street Journal article also goes on to cite Joel Peterson, JetBlue chairman and Stanford professor, whose mentions that tech titans have to be “productive narcissists”. I don’t know a single woman of my acquaintance who I can comfortably describe as being arrogant or a “narcissist” -– productive or otherwise -– on some level. On the other hand I can think of male peers who fit that description to a T. While this personal anecdote is far from being statistically accurate, it is rather telling. So it’s not that all men sail through life having no doubts about themselves but rather that there are so few women who fit the “arrogant” description. This is in part because, as Sheryl Sandberg points out, success and likeability are positively correlated for men and negatively correlated for women. Add in the fact that women systematically underestimate their own abilities and this has HUGE ramifications on the numbers of women entrepreneurs.

There are now a plethora of articles, meetups and conferences aimed at getting more women comfortable with the idea of starting a company. While they are really important, I’m not talking about any of them here. For me, quoting Sheryl Sandberg again, it’s about “what we can do as individuals and what messages we need to tell ourselves and the women who work with and for us”. We need to be more confident, brasher and yes I’ll say it, much more arrogant about ourselves and our accomplishments.

I’m not saying that starting a company is the only noble thing you can do with your life. But the message of “unbridled confidence” is critical for someone who even has a passing interest in entrepreneurship and more importantly for the legions of young women who are smart and capable of starting companies but don’t necessarily think of this as an option in their universe of possibilities.

For the next Steve Jobs to be a woman, she needs to (in Jobs’ own words) implicitly “trust that the dots will somehow connect in [the] future” and channel that into having “the courage to follow [her] heart and intuition.”

Stay hungry, stay foolish but also go for broke!

This post originally appeared on Women 2.0 on October 11, 2011.

Angel Investing Part II: Due Diligence, Sealing the Deal & Post-Investment Relationship

This guest post originally appeared in Tech Cocktail on August 24, 2011 and is a three-part series on angel investing. Part I introduces angels and angel groups, Part II focuses on the due diligence process and the post-investment relationship, and Part III breaks down angel investing for entrepreneurs. The majority of content for these articles was gathered from a conference on angel investing hosted by Pipeline Fellowship, an organization that trains women to be angel investors and is committed to investing in women-led for-profit social ventures.  Part II: Due Diligence, Sealing the Deal and Post-Investment Relationship

The Need for Due Diligence

Angel investors need to vet the companies they want to invest in by going through a due diligence process. Due diligence can be boiled down to validating the plan, uncovering the missing pieces and defining the unknown to contain and define the risk of an investment. Having an inherent good feel for the entrepreneur and team, as well as the market, can definitely help with due diligence.

So why does due diligence need to be done? A Kauffman Foundation study on angel group returnsshowed that the returns for deals increased with the hours of due diligence invested. The mean time spent on due diligence was around 20 hours and the returns for deals with less than 20 hours of diligence was around 1.1X on average. Deals with more than 20 hours diligence had a 5.9X return and for more than 60 hours spent on diligence the return was strikingly higher – 7.1X.  The process is heavily dependent on the type of deal (industry, stage and amount), potential and/or existing investors in the deal, and industry knowledge or expertise by the angel(s), along with their individual skills.

Due Diligence Process

Angel investors and groups may not have the same amount of time to allocate for due diligence as professional venture capital (VC) firms. This is where tiered due diligence is important – where you hit the high points of the deal before diving into extensive due diligence. This approach helps make the process more efficient and effective. First do an analysis of the market opportunity and then check if it fits with your investment thesis as an angel investor or angel group. Some questions to ask include:

  • Does this meet your investment goals?
  • Are there any conflicts – portfolio or personal?
  • Can you add value? Where exactly can I add value to this company?
  • Can you work with these people?

This helps a due diligence plan to find the details you must confirm, unknowable items and the risk of not knowing them, cost of confirming and the major risk factors and deal killers. Due diligence is also a progressive process. Key issues in the plan:

  • Management
  • Market
  • Model
  • Money
  • Numbers

The process for due diligence is generally as follows:

  • Business plan review
  • Management presentation
  • Site visit(s)
  • References
  • Competitive analysis
  • Financial analysis
  • The Deal

The entrepreneurs’ credit score needs to be checked as part of the due diligence process to bring up any potential red flags. Impact investments need to be compared against mainstream products and services as a benchmark during the due diligence process.

Valuation of Early Stage Companies

The valuation depends on the company stage – seed or startup and on-going companies.

On-Going Companies

Some methods to value on-going companies are:

  • Book value (liquidation)
  • Transactional value
  • Market value:
    • Cash flows on a going forward basis to determine present value
    • Looking at comparable companies to come up with a fair valuation, which is definitely both an art and a science
    • Income value (discounted cash flow)
    • Weighted average of methods

Always ratchet down the optimistic revenue projections by entrepreneurs and based the valuation on gross revenues not EBITDA.  The supply of and demand for capital as evinced by market conditions also plays a role in the valuation of any company.

Seed/Startup Companies

The valuation of a seed stage or startup company is completely based on the anticipation of growth. Some issues to factor in valuing these type of companies are:

  • Typical investments
  • What investments to avoid
  • Ranges of fair valuations
  • Factors impacting the valuation
  • No specific formulas, as this is more of a black art and a conscientious process
  • Estimating valuation using your best judgment

Also important to look at is how initial valuation drives future capital needs and valuations. This is more of an art than a science since it is hard to accurately predict the pricing of subsequent financings and value of ultimate exit valuation. A fair seed/startup valuation will be in the range of $1 million to $3 million.

The factors that would increase the valuation of companies in this stage and their impact are:

  • Management team: 0 – 30 %
  • Size of opportunity: 0 – 25 %
  • Product or Service: 0 – 10 %
  • Sales Channels: 0 – 10 %
  • Stage of Business: 0 – 10 %
  • Size of round: 0 – 5 %
  • Need for more funding: 0 – 5 %
  • Quality of plan: 0 – 5 %

These are some average impacts that can definitely change as you appraise a particular seed stage or startup opportunity.

Return Expectations

Some expected rates of return:

Investment Type

Internal Rate of Return

5-Year Cash-on-Cash Return

Seed

60% + every year

10X +

Startup

50%

8X

Early Stage

40%

5X

Second Stage

30%

4X

Near Exit

25% every year

3X

The Kauffman Foundation provides a great valuation worksheet that lists out a weighted ranking of all the factors impacting the valuation of pre-revenue startups that you can access here: Valuing Pre-Revenue Companies

Post Investment Relationship

Roughly, angels spend 100 hours doing the deal, and then around seven years engaged on a monthly and sometimes weekly basis with the company. Hence the post-investment relationship is almost as important as the structuring and closing the deal itself. Some key parts of this relationship include:

  • Entrepreneur Engagement: Engagement specifics need to be discussed like who are the active angels? What roles will they have and for long? Will the roles be rotational?
  • Board of Directors: The roles, mechanics and issues for the board need to be hashed out post-investment.
    • Roles: Who will be representing the angels on the board – Directors or observer status? When will the angels exit the board and will there be rotating angel members? How many boards should angels serve on?
    • Mechanics: The frequency of meetings, agenda setting and follow-up need to be discussed. When the company is a seed/startup company, monthly board meetings even if informal can be helpful. Setting a communication schedule will also help.
    • Other Issues: Compensation for Directors is usually non-financial since investors don’t get options which are reserved for outside non-investors.
    • Managing in Troubled Times: Angels should also step in to help as the company’s needs change and also prepare the founder/CEO for changing roles. Having conversations with the entrepreneurs on potential transitions before the investment is made is helpful.
    • Follow-on Funding: Non-dilutive financing options should be explored in any investment that will probably need follow-on financing. When institutional investors like VCs come on board, the roles of angels need to be balanced with that of the VCs, especially on the board. Angels can help entrepreneurs pick the right angel investors in the case that another angel round is needed and also leverage their relationships with VCs for a larger institutional round.
    • Exits: Discussion of exit options as part of the due diligence process will help to ensure that the entrepreneurs and investors are on the same page as far as the long term strategy of the company is concerned

Resources

Some great resources include:

What are other resources that you, the readers, have found useful?

Pipeline Fellowship is now accepting applications in NYC and Boston — women,apply or nominate your female friends and colleagues. Follow them on Twitter at @PipelineFellows.

Angel Investing Series Part I: Who Are Angels & Angel Groups?

This guest post originally appeared in Tech Cocktail on August 23, 2011 and is a three-part series on angel investing. Part I introduces angels and angel groups, Part II focuses on the due diligence process and the post-investment relationship, and Part III breaks down angel investing for entrepreneurs.  Part I: Who Are Angels & Angel Groups?

Angel Profiles Angel investors, or angels, are usually wealthy individuals and “accredited investors” who provide capital for startup companies in exchange for convertible debt or, usually, an equity stake in the company. Angels are investing “mad money” that doesn’t change their lifestyle if spent and tend to make their own investment decisions, unlike professionally managed firms. The average net worth of angel investors tends to be greater than $1 million; there are approximately 250,000 angels in the United States.

Motivations for Angel Investing Angels sometimes tend to be former entrepreneurs who are interested in getting involved either actively or in a passive mode in the startup community. Early stage investments are high risk, and angels undertake the process because they typically look for more than just making money. Their motivations are a blend of:

  • Return on Investment
  • Staying involved
  • Giving back to the community and/or a personal connection
  • Affection for entrepreneurs (usually having been one before)

Type of Angel Investments Angel investors usually invest their money to get an equity stake but will also do convertible debt, which is becoming more popular these days. Convertible debt is a bond that has both equity and debt features, and, at the simplest, it is a debt that converts into equity in the subsequent financing round.

Comparing Angels and VCs (Venture Capitalists) Venture capitalists (VCs) definitely outpace angels in deal size when looking at individual deal comparison. Angel investors look at true early stage deals and focus on investing in the earliest stage companies. As companies grow, the capital needs tend to be too large for angels to satisfy.

Angels provide about 90% of the seed and early stage outside equity capital for startup entrepreneurs. VCs tend to do fewer early stage deals not because of poor ROI but rather because they have too much money to invest. Venture capital funds have 10 year life, and the fund needs to be exited in 10+2 years.

According to data from the National Venture Capital Association (NVCA), returns from seed investments grow exponentially after 15 years, and thus the timing of these outcomes prevents a lot of seed stage investments by VCs.

There are more angel groups than small VCs who do tend to focus on seed and early stage investing. Angels or angel groups tend to put smaller dollars in larger number of companies and are more local compared to VCs who tend to have a regional focus.

Angels invest in the majority of startup and early stage deals (about 90%) as compared to VCs. VCs typically don’t invest in early stage deals, not because of poor ROI but because they have too much money to invest. Individual deal sizes tend to be larger on the VC side compared to angel investments. VCs invest through the entire life of the company.

Here’s a comparison of the angel and VC activity in 2010:

Angel Investors Venture Capitalists
Amount invested US $20.10 billion US $21.97 billion
Number of deals 61,900 deals (apprx.) 2,750 deals (apprx.)
Investment type
Seed/Startup 31% 8%
Early/expansion 67% 24%
Later stage 2% 68%
Number of investors  ~ 265,400 people 462 active firms

Source: Angel Capital Education Foundation

Angel investors help fill the funding gap from company inception to growth capital, and, as the chart indicates, VCs are critical to the landscape. “Angels can be great participants in venture rounds, but it’s generally better to have a VC lead those deals, as they have more financial and other resources required to build the company,” says Ben Horowitz, partner at Andreessen Horowitz. However, emerging “super angels,” or micro-VCs, tend to function almost like VCs and have the ability to get investment rounds together quickly.

Angel Groups Angels join groups mainly to ease the pain of solo investing, i.e. for factors like convenience, variety, education and community. Dividing the due diligence work among multiple angels eases the pain while also providing a variety of vertical experiences. The deal flow is definitely larger in volume and of higher quality when sourced as a group.

Joining an angel group can also be motivated by a desire to learn about new trends and sectors in the marketplace and thus diversify the angel portfolio. There is also great camaraderie and networking opportunities for like-minded angels interested in expanding their local startup ecosystem.

Some common models for angel organizations are:

  • Angel Funds: Member money is pooled and deals are invested in based on the vote of the membership. They are led by a paid manager and formed as an LLC.
  • Manager-led Angel Networks: A Manager tees up deals for the members to then make individual investment decisions. The managers carry a substantial management load and get compensated through a variety of means including carried interest.
  • Member-led Angel Networks: Members take the lead on administering and managing deal flow, but they make individual investment decisions.

To prevent potential moral hazard, some angel groups have strict codes of conduct that state if a member yanks a deal out of the angel group pipeline due to personal interest then it will be the last time that the member invests with the group or is allowed to participate.

Gender Differences in Investing
The number of angel investors who are women tend to be low – in 2010 only 13% of angel investors were women. This is an issue that the Pipeline Fellowship attempts to address.

Gender differences in angel investing have existed – the perception is that women have been more comfortable with certain verticals like fashion, retail and education. Their investment structures have tended towards involve developing companies from their background and passion, like social entrepreneurship or impact investing.

“One of the major values of women in the investment arena is that we’re consumers,” says  Natalia Oberti Noguera, Founder of Pipeline Fellowship. “So with more women in the decision making process, the products and services that are going to be coming through the pipeline are simply going to be better.”

Ways to Become an Angel Investor Angel organizations have grown to become an important source of seed and startup capital to entrepreneurs all over the U.S. Investing is a learnable and discoverable process, so anyone with the disposable income to spare can become an angel investor. Angels can start investing at an individual capacity first, and if you are moving forward with multiple angel deals, you can then create a legal entity (LLC preferably) to allow for:

  • Additional layer of protection
  • Other co-investors provide return flow flexibility
  • Different voting and governance structures

Alternatively you can get involved in a local angel organization. Here is a listing of all the angel groups in the U.S. and Canada complied by the Angel Capital Education Foundation. If you would like to start an angel group, the Kauffman Foundation also has a seminal guide titled ‘A Guidebook to Developing the Right Angel Organization for Your Community.’

All angel investors should definitely look into AngelList, a great online service that acts as a matchmaker between promising startups and early stage investors. It also provides a great community for both investors and startups categorized by location, markets of interest and social proof.

More Information: The majority of content for these articles was gathered from a conference on angel investing hosted by Pipeline Fellowship, an organization that trains women to be angel investors and is committed to investing in women-led for-profit social ventures. Pipeline Fund is now accepting applications in NYC and Boston. Women: apply or nominate your female friends and colleagues. The deadline is Monday, August 29th  2011. 

Life's A Great Balancing Act

"When I am asked about career strategies, I respond that you need two things: a long-term dream and one- to two-year plan. A long-term dream allows you to work with purpose to achieve real fulfillment. A short-term plan makes sure you are learning and growing from the work you do each day. All the stuff in the middle is confusing at best and anxiety-producing at worst. When you try to plan every step, you miss opportunities."

- Sheryl Sandberg, COO Facebook

With Q1 of 2011 already drawing to a close (where does the time go?!), I've been thinking about future plans, hopes and dreams. The future needs to be fluid enough to allow for serendipity to strike and opportunities to appear but not be aimless at the same time. Striking that perfect balance is something we're all constantly striving for. Probably for the rest of our lives.

"Be sure when you step. Step with great care & tact and remember that Life's a Great Balancing Act."

- Dr. Seuss

Check out the rest of the Newsweek article here.

On Presenting

I listen to a lot of business pitches in my role of Assistant Director at Northwestern's Farley Entrepreneurship Center. We run a series of classes titled NUvention in Web, Energy & Medical Innovation where varied groups of students come together to go from idea or concept to actual product and business. The Web course pushes it the furthest because you can actually launch a web product & get significant feedback in the matter of months. After spending this past week listening to a plethora of startup pitches I found similar presenting gripes across all groups. And so I wanted to summarize some pointers that will make any pitch better:

  1. Do NOT talk to the screen. The screen may be bright & glowing but it is definitely not your audience. Neither is the empty spot at the back of the room or the floor. Your audience feels left out like they're interrupting a private conversation. So, for the love of the interwebz, please engage your audience by talking directly to them .
  2. Have one single person give the entire presentation. The narrator, if he/she is any good, should be taking the audience on a journey so handing it off to someone else irrevocably cuts the flow. You don't want the protagonist to suddenly change in the middle of the movie, so why should a presentation be any different?
  3. Less is seriously more. Don't have slides that require the consumption of half a dozen caffeinated drinks to merely read let alone understand and digest. The slides are meant to reinforce what you're saying and not act as the focal point or a crutch.
  4. Proof read your slides. Even a single typo will seriously make the audience doubt your capability. It's not the fairest thing in the world - you spent all this time and hard work turning an idea into a business and then you're being knocked for have one single typo?! Well the devil is in the details and people will extrapolate your typo (sometimes unfairly) into incompetence.
  5. Tell a story. Entertain the audience. Everyone has at least a mild dose of ADHD thanks to our excessively digital lifestyles and so having a compelling narrative that flows will only help your product/service stick better in everyone's minds.
  6. Your pitch is not a live theatrical performance. Entertain and engage the audience but don't make it a dramatic production. Make it too dramatic or funny and then your entire pitch will be reduced to mindless entertainment.
  7. Show passion and unbridled energy. Have the rest of your team seem interested. If you don't have the energy to talk about your business, how are you ever going to have the energy to run it?
  8. Don't lay out an agenda at the beginning. Investor and entrepreneur audiences will know where you're going. Let the presentation flow naturally so that one slide logically leads to another in the audience's mind. Going back to the movie analogy, the director does not tell you the story arc when he starts the movie and this holds water for business pitches as well.
  9. Talk in a normal voice just loud enough to be heard. Give your pitch in a normal decibel to make the presentation more compelling. This is not a school play where you're yelling your lines out. Talk don't yell. Yelling will make your audience wince and lower credibility.
  10. Know your audience & don't assume that they're dumb. Basing assumptions for an entire solar power plant on one third-party report when your audience has investors whose portfolio includes multiple solar investments is just asking to ripped apart after your pitch.
  11. During Q & A, answer the question that you are actually being asked. Don't give a schmucky car salesman response to genuine questions. Check with the person if your response really answered the question. Also make sure to differentiate between comments/feedback and questions.

A Guide to Holiday Gift Guides

As the co-founder of a social gift recommendation startup, Present Bee, gifting is something I take seriously. Gift giving is wonderful and magical when you give that perfect gift – but the process of getting there is downright painful. So what helps you narrow down your gift selection? Gift guides! However, it seems like there’s such an exhausting plethora of holiday gift guides scattered in every type, color, shape and personality for every conceivable friend, relative or foe out there, that you need a guide to all the holiday gift guides out there! So here’s one gift guide to rule them all.

If the person you’re buying a gift for is into…

Technology:

Food:

Art, Books & Culture:

Style, Beauty & Home:

Kids:

Social Causes:

  • Kiva Gift Card, which Oprah recently chose as a 2010 holiday favorite, can be used to lend to anyone on Kiva, the online microlending site for global entrepreneurs.
  • Vittana loans that you can make for your friends helps sponsor the education of students in Mongolia, Bolivia, Honduras, Nicaragua or Vietnam.
  • Kickstarter has some really interesting projects that can be city or category specific like this HOPE Art for Haitian refugees which you can contribute to for your friends and family.
  • Causes, the Facebook application founded by Sean Parker, has Causes Charity Gift Cards for $25 and $50 which can be allocated to any charity of the recipient’s choice.

Other/Unique:

With all these options out there, there’s absolutely no reason for you not to get the perfect gift for your loved ones. If you need more personalized input on your gift choices, check out Present Bee, where you can use your social network to make gift giving fun. ‘Tis definitely the season to make everyone jolly, so gift away!

This post originally appeared in TECH Cocktail.

Insights From The Great Lakes

This post originally appeared in TECH Cocktail. I attended the Great Lakes Entrepreneur Bash which was a panel event in Chicago that brought together successful entrepreneurs highlighted in Bob Jordan’s new book How They Did It: Billion Dollar Insights from the Heart of America. The stellar panelists included:

  • Bill Deville: Co-founder & CEO of Health Carousel, previously co-founder Health Personnel Options
  • Jim Dolan: CEO of The Dolan Company, previously was EVP of the Jordan Group Inc.
  • Tim Krauskopf: Principal at Round Lake Designs LLC, co-founder of Spyglass whose version of Mosaic became Microsoft IE
  • Chris Moffitt: Co-founded Rubicon Technology and previously co-founded Diamond Management and Technology Consultants and Technology Solutions Company
  • Vince Pettinelli: Founder of PeopleServe which was acquired by ResCare
  • Michael Polsky: Founder & CEO of Invenergy, previously founder of SkyGen Energy
  • Mark Tebbe: Co-founder & lead director of Answers.com, previously founder of Lante Corporation
  • Robert Jordan: Author and owner of two companies, RedFlash and interimCEOinterimCFO

The vision for the event was to provide the audience with the “secret sauce” of going from a solo startup founder to thousands of employees and millions in profit. As only an hour-long event, it couldn’t fully deliver on its promise, but there were some fascinating peeks into the Chicago-land tech scene and insights from its successful entrepreneurs.

1. The only way to do it is to do it your own way. From exit “numbers” to building for the long run, recurring revenue to living for the next deal and public vs. private companies, every panelist had their own unique take on the different entrepreneurial angles. Michael Polsky summed it up best when he said, “Everybody will do it their own way, you really can’t do it any other way.”

2. Love what you do, be good at it and have fun with it. If not, get out quickly. The passion and conviction leapt out from every single entrepreneur on stage. It was clear as daylight that they loved what they did. And if they weren’t having fun they didn’t hesitate to sell like Mark Tebbe with Lante Corporation. Mark then went on to co-founder Answers.com and stressed the importance of “doing what’s important to you and doing it well.” Jim Dolan waxed poetic about “the magic of inventing a future that’s more fun than yesterday.”

3. The only thing you should count on is persistence. The media generally paints out a tidy story for successful entrepreneurs that show them headed to great things the moment they start out on their own. The reality couldn’t be further away from it. More than one panelist talked about their weakest moments – Jim Dolan mentioned going into bankruptcy twice and Mark Tebbe jokingly said that he still hadn’t recovered from financial mishaps. The only thing they all agreed on unanimously was resilience. Chris Moffitt said “when there’s a tragedy, stand up, dust yourself and move on.” And move on they eventually did to bigger and brighter things. Jim Dolan hearteningly pointed out that if you do pick yourself back up, you’ll find that the people who invested in you will be willing to back you again.

4. Entrepreneurship requires a higher risk profile. The key message that all the panelists hammered home was that if you’re brave, courageous and willing to take chances, albeit calculated, then the world is yours for the taking. Chris Moffitt said that entrepreneurs should have the appetite to shake up the business even if and especially if the opportunity was within a billion dollar market. He also mentioned that things may not work out exactly how you imagine but if you’re willing to take a chance, then you can find a way to make it happen.

5. Entrepreneurs love it so much they end up being serial entrepreneurs. Bob Jordan, who moderated asked what the panelists did when they had financial market fluctuations and Chris Moffit readily quipped, “Start another company.” The fun of making a startup work seems so addictive that all the speakers went on to found multiple companies.

Other fun and insightful quotes from the event include:

  • “Making a bad sale is like building a dream home, taking your time to decorate it and then selling it. The buyer moves in and says you can keep living there but asks you to move to the basement. Then they proceed to undo all the things that made the house special in the first place.” Chris Moffitt
  • “If you celebrate your ignorance, you’ll surround yourself with people who are smarter than you are.” Vince Pettinelli
  • “If you can find a way to make money while you & your team are sleeping, that’s a great day!” Mark Tebbe
  • “Dissect your mistakes, analyze them but definitely don’t bury them.” Jim Dolan
  • “Do I wish my company had sold for more? Yeah, but I also wish I was taller and many other things.” Mark Tebbe

10 Insights From SocialDevCamp Chicago

This post originally appeared in TECH Cocktail. SocialDevCamp Chicago took place this past weekend and had so many poignant moments and key takeaways that it took a while to digest. From high profile keynotes by representatives from GrouponGoogleCheezburger Network, talks on the business and technology sides of the social web and lively, moderated unconference discussions to a weekend long hackathon – the event certainly had something for everyone. This post hones in on the most interesting takeaways for entrepreneurs, developers and web enthusiasts. Lists of trends or tips were very popular with the presenters and so in true SocialDevCamp style, here my top 10 insights from the conference:

  1. Being social is not an add-on but mission-critical. When the conference title has “social” in it, you know it’s a pretty important theme. Groupon CEO, Andrew Mason said that the company’s unparalleled growth was merely a product of its times where the social nature of the web makes companies grow faster than ever before. Social proofing with one’s network serves to test concepts and ideas and highlight for us what’s important. The “curated by friends” model is taking word-of-mouth to a whole different level. Community is breathing life into any web presence. And so whether it is augmented reality, having online-offline tie-ins, crowdsourcing deals or enriching the experiences for brand advocates, social and its myriad online manifestations are hot, hot, hot.
  2. Environment has environmentalists, women have feminists & so the web needs webinists. Chris Messina, the Open Web advocate at Google made a thoroughly entertaining and compelling argument for maintaining the integrity of the social web as it is today. The central tenets of his speech were what he termed “POP computing” and generativity, inspired by Josh Zitterman’sThe Future of the Internet & How to Stop it. The death of URLs, lean-back devices where freedom is traded in for usability, app stores with a curated non-transparent model and instant personalization are some of the things that comprise the “POP computing” phenomenon – the move to a clean and frighteningly sterile Internet. Generativity includes being flexible, adaptable, providing easy access and making it easily transferable especially to non-experts with the goal being to federate social ties more effectively. It’s easy to think of the future of the Internet as far removed from our own purview. But Messina left the audience with the powerful message that maintaining freedom, choice and innovation on an open web is ultimately our responsibility either as developers using OpenID or OAuth technologies or laymen taking the time to understand the nuances of net neutrality,
  3. Go work for Groupon – they’re funny, smart and apparently have some cash to spare. It was quite the Groupon love fest at SDC with Mason’s lunch keynote and the product team shedding some light on the Groupon way of development. Mason quipped that Groupon is representative of consumers and hence can “talk to ourselves in ways that doesn’t make us want to throw up.” When asked about his company culture, he said that he “doesn’t want to be the kind of company with passive aggressive signs on the refrigerator asking people to get their moldy stuff out” and was not afraid to “sound the stupidest…and [hence] more interesting.” For engineers, joining a company like Groupon rather than starting something on their own might be a great option, Mason said, because they probably wouldn’t see problems of a huge scale in a startup. So if you’re a polyglot excited about solving problems, being around smart people and singing to loyal customers, look up Groupon…they want you.
  4. Please KISS (Keep It Simple Stupid). Simplicity is elegant and effective and that was repeated through multiple sessions. Mason said that you really just have one and a half seconds for your users to get the value proposition and his product team, Suneel Gupta and Shinji Kuwayama echoed the same sentiment. Ben Huh of I Can Has Cheezburger? fame pointed out that while human nature has a tendency to admire complexity it rewards simplicity and that admiration and actual revenue come from two very different places. He asked the audience to focus only on what users would do if they had 40 seconds on your site.
  5. Mobile does not equate to being an extension of the web. Computer usage is plateauing while our mobile phones continue to become intricately fused into our lives, changing social behavior one habit at a time. While the mobile industry might be rewriting social norms, make sure your mobile product is not explicitly changing behaviors. The mobile platform is definitely its own entity and it makes no sense to think of it as a mere extension or adaptation of the online experience. Also, as an added benefit, thinking of a mobile experience/app forces you to prioritize features.
  6. Don’t quit playing games with your users’ hearts. Game mechanics are definitely here to stay. Users like their achievements, badges, awards earned for engaging with your product/service and the more gaming elements they interact with, the more addictive it becomes. An obvious big picture trend is the tie-in of gaming with location and loyalty programs. So, for the health of your product, don’t quit playing games.
  7. Enable all the incurable builders. The 36-hour long weekend hackathon produced some great work but even beyond the developers that participated in the challenge, the atmosphere was one aimed at enabling developers and entrepreneurs. Code sprints and other challenges initially attracted hackers by dangling prizes, but towards the end, people got a rush from being part of a team that produced something. Channeling this could benefit less tech-savvy, non-profits and help increase the technical pool as well.
  8. Features don’t cut it but experiences sure do. The Groupon product guys stressed the importance of honing in on the customer experience – keep asking what customers want, need and feel when they use your product. Mason quoted a study that said people who focus on experiences rather than products have happier lives. Long-term success stems from an emotional attachment being created with your user through engaging experiences.
  9. Move over lean, MPH (Mr. Potato Head) methodology is here. Ben Huh uses the MPH strategy when growing the Cheezburger network which has a portfolio of sites like LOL Cats and Fail Blog among others. If a significant component of your site/product is lost, it will be ugly but no one dies. Some of the key tenets of the funny yet brilliant MPH philosophy:
    • Partner with businesses that have proven structural independence like Gmail or Wordpress.
    • Make it easy to try before you buy and to get in and, easier still, to get out. If users can’t get out of something, they won’t get into it in the first place.
    • Prove before you spend anything.
    • If you spend time building something, it should be a competitive advantage. Outsource all the irrelevant stuff.
    • Ask if you can you plug in/out for a better, cheaper or faster solution.
    • Minimize the cost of failure to almost nothing because then risk becomes palatable and that ultimately ups the chances of success.
  10. Oh ye of little faith, the Chicago tech scene is definitely alive and growing. Having interesting (grown-up) startups like 37signals and Groupon in the area definitely helps create a talent pool of people who can then deploy their own business and tech prowess in startups thus fuelling the entrepreneurial ecosystem like in the Valley. An interesting upcoming startup is Nowspots, a real-time advertising technology provider for local publishers created by the Brad Flora (Windy Citizen) who won the 2010 Knight News Challenge.

7 Reasons to Start a Company While in School

Rockstar career trajectories aren’t about playing it safe. Luckily if you’re in school, starting a business might be the smartest risk-free career move you could make. While in graduate school at Northwestern, I was a student by day and the co-founder of a social gift recommendation startup,Present Bee by night.

Drawing from my experiences, here are the top 7 reasons for starting a company while you’re still in school:

  1. Access to important and influential people. Colleges are a hotbed of potential advisors. Professors in technology, marketing, law, communication, accounting and management collectively hold an incredible wealth of knowledge. More importantly, they actually enjoy helping out motivated students wanting to start companies. Not to mention that it is part of the reason they went into academia in the first place! You’ll constantly be amazed at how willing they are to tap into their expertise and deep networks to help put you and your startup on the right path.
  2. Resources, resources, resources. Free WiFi, superior computer labs, heavily discounted student software, copy and fax machines, scanners, printers, meeting rooms, conference facilities, amazing library material that you’ll have to give up your first born to afford when you leave school…need I say more? Universities are some of the most technologically connected places and almost any resource you’d need to start a business is available right in front of you at a fraction of what it costs out in the real world. You’re paying for these resources in tuition and student fees anyway, so why not take full advantage of it?
  3. Huge market research/customer/employee base you can lure with pizza. Your friends, friends of friends and even their friends all want to help you. Pick their brains on the products and services they like, get them to test your product, give you invaluable feedback and even get them to become loyal customers. Sometimes all you’d have to offer them in return is free pizza or muffins. Also, if you’re looking for help with your startup, there’s no better place to be than on a college campus. Colleges are filled with bright young people who are eager to learn & gain new experiences through [poorly-paid or mostly unpaid] internships that help them fill their resume. Look around you in your classes -– your co-founder or first employee might be sitting right next to you.
  4. Student loans are not as expensive as having a family and a mortgage. Now is the time to take financial risks with potentially large payoffs. Even if your startup fails, which it probably will, you’re young and you can move on more quickly from being broke than when you have to support kids, a spouse and recurring payments on your house. Plus ironically, having a track record of building something and managing a team in your own startup makes you more attractive to other employers should you decide not to go the startup route.
  5. Time. School has flexible timing -– you can pick your class schedule of choice every semester/quarter. You can stack all classes in two days or have them all in the evening if you want, which would then give you a lot of free time to start and run a business. Going out into the real world after graduation means your time suddenly becomes very restricted. You’re expected to spend 40 hours (or more in most cases) rooted in your office seat and will only be able to work on your startup in your spare time, which may not be much.
  6. Don’t let schooling interfere with your education. Yes, Mark Twain said that and you should definitely listen to him. Schools teach you a lot of interesting things but there’s also a host of topics that they don’t even begin to cover. Startups can definitely help you fill that gap. Some valuable lessons I’ve learned through Startup 101 –- how to get people (other than your mother) to use your product, how to work 20 hour days with people in one room and not kill each other, how to build a realistic financial model that isn’t limited to looking pretty in Excel and many other gems. Also, if you’re unsure whether you’d like to run your own company after graduation, the best way to find out is to start one while you’re in school.
  7. Entrepreneurship is sexy. When you’re asked to introduce yourself, the line “I started a company” never gets old. Enough said.

To close, let me quote Marc Andreessen, the founder of Netscape, investor, startup coach and all-round extraordinaire:

“Start your own company. If your startup fails, try another one. If that one fails, get back into a high-growth company to reset your resume and get more skills and experiences. Then start another company. Repeat as necessary until you change the world.”

Also check out a classic talk from Paul Graham, the founder of Y Combinator, on Why to Not Not Start a Startup. I’d like to hear from you student (and non-student) entrepreneurs out there –- what’s the most interesting reason you’ve started a company?