Wednesday, June 25, 2014

Super-Founders

When each day passes by and  a startup loaded with millions and millions in risk capital does not have an exit strategy in works, this is not good news for their investors.

I ask myself why. I think there are many founders of tech startups. They have the talent - and the luck - to take off ground. The founders success is to reach the stage when investors flock at their doors offering rounds after rounds of investment capital.

Some founders declare they made enough money, or they are pushed aside by VC firms (not the innovative VC firms).  There is no management leadership from the original founder(s). I am not saying these companies are not successful, I am not saying these companies will not make it and re-tribute investors.

But their success will be no where near the rewards the investors got from Google, Facebook, Salesforce.com, Apple, Oracle, where the founders stayed on.

These companies have super-founders. A super-founder has both the skills (1) to bootstrap the company and (2) to manage the growth creatively when an abundance of funding suddenly becomes available.

One way to this is to look at the highest rewards, higher risk portfolio of products. Super-founders are not "serial entrepreneurs". They are not startup flippers, like Vizify, who abandoned all their customers after being taken over by Yahoo!, crying all the way to the bank.


Tuesday, June 17, 2014

Romanticizing the startup in San Francisco

According to Merriam Webster to romanticize means to think about or describe something as being better or more attractive or interesting than it really is : to show, describe, or think about something in a romantic way.

The romantic love is now considered as part of a marriage. This is how George Bernard Shaw puts it:
A marriage as an institution that brings together two people "under the influence of the most violent, most insane, most delusive, and most transient of passions. They are required to swear that they will remain in that excited, abnormal, and exhausting condition continuously until death do them part."

The Romantic Startups

Startups in California are glamorous  and sexy and linked to freedom. One of  my followers on twitter logo is "I want to join a startup, or launch one. There is just too much energy in me to be part of a corporate." . Every one wants to be an entrepreneur. Many cities in the world want to become a second Silicon Valley



There is an unconditional  “startups are fabulous!” intellectualism that brainwashes the word just as Hollywood did with movies for over a century now.

Paying lawyers to incorporate,  hiring accountants and tax advisers are just not inspiring duties for most people . Starting a business was never “sexy”. before1996,  when suddenly  people started seeing “startups” as an end in themselves and a lifestyle

The darker side of the startups

 Michael Church writes in his blog:
 The best and worst companies tend to be startups. The worst ones don’t usually live long enough to become big companies, so there’s a survivorship bias that leads us to think of startups as innately superior. It’s not the case.
As you start or join an existing startup, you don't know yet what the future is, no matter what the big data machine learning gurus tell you (they don't have a clue either). But as the failure rates in a startup are hovering around 80%, your chances are far  greater to join a "bad" startup. This is how you recognize one:
  1. Many times the founders are mini-tyrants who sell themselves short. The brilliant student from a top university, once a founder,  tries to emulate Putin or the Czar if he is from Russia, or, the superior caste if he is from India, or, the royalty if he comes from Europe. Those from California want to be as obnoxious as the legend of Steve Jobs (this is a different person than Steve Jobs himself).
  2. The company offers “The vision thing”,  a pitch that is used to convince you to work for 50 percent of what you’d earn at a more established company, plus some laughable token equity offering. 
  3. If you’re taking substantial financial risk to work at the company, you’re a Founder. Expect to be treated like one. Most startups refuse.

 The Cliff

If  you live in the Valley and you take money from VC, everyone considers normal the cliff rule: 4 year vesting, 1 year cliff, for everyone. That means if you are fired  as late as 11 months and 27 days before the one year cliff, you get nothing. If you continue to work beyond first year, but you die or become disabled before the 4 year vesting,  you and your family gets nothing.

The cliff rules are applied by startups even before the VC investing. The founders have no money to pay a lawyer and the legal documents are made adhoc from templates on  large web sites. like Orrick's  Emerging Companies Tool-Kit

The result could be a laughable offer, something like : work for us with no salary, after 1 year you buy at market value shares equally divided other next 4 years. I have seen these offers around.

The incubators

Top incubators  like YCombinator offer higher initial investment. But the smaller one may offer you $15,000 to 25,000 for 6% equity. You may read How to Evaluate an Offer from a Startup Incubator, 

You get some mentoring too as part of the deal, but this is hardly any cash to employ people. It is less than a loan or a scholarship for postgraduate students. No wonder the academia is terrified to start a business. They are paid much better from research and government grants, with essentially no risk.

The employment

Startup employment is not permanent and means a lifetime pursuit for newer opportunities. Half of Europe will have  a heart attack in such an an insecure and un-cushioned employment environment.

So the rule #1 is to offer potential compensation to assure financially the future to those working in ephemeral startup companies.

There is now a time to place some sanity in this unregulated jungle, By jungle I mean those companies who are far from being a success yet. Gambling has some regulation.Why not San Francisco startup world?

The winning founders ask themselves: "What I try to do, does it make people happy?" If yes, do it. If not, think again. By happy I don't mean being complacent. I mean not feeling cheated and abused.

Both the founders and the employees of a startup end up by being - most of the time unemployable. The successful startups make most people - founders and early employees - financially independent. That is the nice story of becoming unemployable. The one less successful can not re-adapt easily to corporate jobs.

In a previous post, The illusion of employment  according to Bloomberg Businessweek, in Amazon  and Google, 50% of the employees last up to 1 year.There is no such thing as job security.

The Startup Dream

San Francisco is so far the best city to create a collective genius. The competition is open to everyone. The leadership is the natural selection of fighters,

They all put up with the traffic, $24 plus a day parking fee in places where all cars block each other, offering tiny 800 square feet apartments costing over $1 million each, with noise and garbage cans on the streets nearby.

No wonder the rest of the world wants to emulate us.

Paraphrasing George Bernard Shaw, in San Francisco we live a permanent, excited, abnormal, and exhausting condition of  "crazy" dreaming. Linda Rotterberg's  book Crazy is a Compliment is totally home in San Francisco

Friday, June 13, 2014

Selecting a Windows 7 or 8.1 - Big Bang style


Sounds like a Bing Bang Theory  episode. The advice from this colorful discussion is:

 Select Windows 7 for desktops, and use Windows 8.1 for laptops and tablets.



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