An Entrepreneur's musings

The art of pitching and presenting

2009-10-26T07:27:00.001-07:00

I had an opportunity to hear an awesome lecture last week by Ken Zolot in 6.078. The topic of the class was pitching and presenting. Ken started with "Zolot's law of three nines". Per the law, Ken explained it takes 9 seconds for a person hearing the presentation to develop a gut feel, 90 seconds to hear an elevator pitch and 9 minutes to get the gist of the presentation.

I picked up several very useful tips:

- The well written headline must be terse yet descriptive

Example of a good headline: "Yahoo's profits triple despite sales decline"
Example of a bad headline: "Something went wrong in plane crash, experts say"

- Slides distract the audience from what the speaker is saying. To get the audience's undivided attention, blanking the screen is a good idea. The keyboard shortcut to mute the screen is "b" (blank the screen?)

- If the slides in a ppt are numbered, simply key in the page number followed by enter to jump to the slide. Not only does it make navigation easier, it conveys the impression that the speaker is an expert on the subject matter if they can jump to the right slide, without needing to scroll through and scan each slide.

- Skip the table of contents and use an executive summary instead.

- Be aware of what's on the screen during breaks and Q&A. Use this opportunity to display slides that could not be presented within the time constraints of the main presentation, and perhaps strategically nudge the conversation in the right direction.

- Anticipate questions and discuss them before they're vocalized. This makes the presenter appear knowledgeable and thoughtful, and lends extra credibility. For example: "One question you might have at this point is.... what we did to address this is..."

- Know how to say "I don't know" gracefully, and never say "it depends" which is a typical b-school response. One way to do this gracefully is to say "We haven't explored that option yet".

- Margin analysis is a great way to share information about cost advantages from multiple sources over a competitor's operations. It's much easier to absorb, and makes for easy comparison.

Rich Miner @ MIT

2009-10-13T12:59:00.000-07:00

Rich Miner of Android - Google fame spoke to us at Founder's Journey on 10/13. It was a lively discussion on the future of Android vs. other platforms, and the stakes riding on Android's success. It was followed by a Q&A session, some of which I managed to capture below:

He was asked why Google does not build cell phone handsets. He responded "Our goal has never been to monetize handsets or Android. Instead of one perfect handset, consumers will have a pretty broad set of excellent handsets. If we can achieve this, we will have succeeded." Quite a contrast to Apple which perfected one widely acclaimed handset. It's a very different mindset - one vs. many, closed to the point of being paranoid vs. fully open, seeking complete control over the user experience vs. come, build and make the experience what you will, lock in with a single carrier vs. freedom to choose your favorite carrier and handset...

When asked how does one know they're a bright entrepreneur with a compelling case, Rich's instant response was "if you don't know that about yourself, you're not going to convince anyone else of it". Well said! He then expanded on it: "We never fund ideas, we fund teams we believe in. The teams we choose to fund have a decent idea that is defensible, that they can get to market, in a reasonable amount of time".

Some other thoughts Rich shared:

- In order to build a capital efficient business, the key is to assemble the right founding team so the idea can be moved along as far as possible before money needs to be raised.

- When the business model is unknown, present an investor with different options - a systematic and realistic process for how you are going to evaluate each opportunity to zero in on the business model that's the best fit or the company.

- When deciding who to raise money from, think of geography (VCs have strong local network), and expertise within the firm.

- On the value of east/west coast start-ups for a web/IT company, it is eventually a personal decision, combined with a knowledge of how effective you can be with your own network.

The constant refrain was "Know thyself!" - whether it be self-confidence in one's capabilities and ideas, knowing the markets and industry one's trying to play in, or, knowing what it takes to assemble a winning team.

Joe Hadzima @ MIT

2009-10-07T12:33:00.000-07:00

Joe Hadzima visited us at Founder's journey on 09/30. One piece of wisdom he shared particularly intrigued me:

One reason companies fail is because they raise too much money too soon.

He explained that too much money encourages hiring mistakes - overstaffing with people with a specific skill set, which is not what is required for taking the eventual product to market. He also pointed out it causes unnecessary dilution, and distracts from the goal of selling to customers as quickly as the company can when a company is overly cushioned.

I had not thought about potential hiring mistakes as a fallout of too much money, so this was eye opening to me.

Paul English @ MIT

2009-09-23T18:08:00.000-07:00

Our speaker at Founder's journey this week is Paul English, one of the co-founders of Kayak. He started out with a brief biographical sketch.

Kayak is the 4th company founded by Paul. He was introduced to his co-founder Steve Hafner of Orbitz by Joel Cutler at General Catalyst. Steve pitched Paul over a couple of beers. Steve knew the travel business and Paul knew technology, and neither were experts in the other's domain. Paul used this to make the point that when you meet someone, if you have instincts that this would be a fun person to work with or has the skills you don't, learn to listen to that instinct and act on it!

Paul then touched upon the topic of hiring people. He mentioned that his strategy is to *always* be recruiting. He is always tuned to "who has that thing I am looking for?", and keeps an eye open always. This sounded like excellent advice to me. Self-awareness is a must, especially for entrepreneurs who need to hire to complement their strengths, and I have long since learned never to underestimate the role of serendipity in entrepreneurship. So this piece of advice really spoke to me.

When Paul hires people, he looks for 4 things:

1. Bandwidth - people who get things the first time, can handle curve balls and are intellectually intense.

2. Attitude - people who are focussed on winning, with the focus tempered by humility, a hunger for excellence and genuine curiosity.

3. Experience - people with expertise he doesn't have. They don't necessarily need to have experience with the task they are being hired for, but as long as they have the bandwidth, attitude and a complementary skill set, they will be considered.

4. LODB - Lack of Dysfunctional Behavior. When employees start at Kayak, they need to promise Paul 2 things (a) be the best in the role they sign-up for, and (b) be an energy amplifier. I loved this, and this is the second time in my life I've heard this advice.

The other person who gave me this advice 9 years ago is someone I revere as a technology guru who personifies both virtues. These people bring out the very best in the people they're around, and inspire others to try and mirror their excellence and energy amplification. Brady Keays, thank you for your excellent advice to a young engineer nearly a decade ago. It has served me very well. Thank you Paul, for reinforcing the message!

When an employee promises Paul these 2 things, Paul in return promises:
(a) he will make the person more productive than they have ever been before and (b), When they look back in 20 years, Kayak will be the best job they've ever had in terms of fun, work environment and job satisfaction.

Paul succinctly summarized the importance of LODB (Lack of Dysfunctional Behavior) when hiring: Better to make a mistake and lose a good person than make a mistake and hire a dysfunctional person. The dysfunctional person will pull down the team.

On the topic of integrating a new employee into the company, Paul shared his philosophy: "If you have a really strong group of employees, a new hire maybe shy. So for the first 30 days, our team focuses on what they can learn from the new hire first before the new employee becomes used to the group's ways".

He then talked about the red phone in Kayak's office. Per Paul's description, this is a big ugly red phone with a loud and annoying ringtone. When a customer calls kayak, one of the engineers has to answer it and is forced to directly connect with the customer. If there's a bug, it's a great incentive to fix the bug before one more customer calls with a complaint! There's nothing like connecting an engineer with his customer to produce a quality product.

Paul's final piece of advice was this: founders can fall in love with their ideas and ears can become deaf to criticism. Therefore, it's good to put out an early prototype and have it trashed, rather than trying to build a perfect product and getting it out to customers. Mark it clearly as beta, and your reputation will be intact. Do not sell a final product you are not proud to stand behind.

That capped an evening filled with multiple nuggets of wisdom.

Chris Hughes @ MIT

2009-09-17T07:14:00.000-07:00

Chris Hughes was at MIT on Monday, 09/15 addressing the "Founder's journey" class. He is the co-founder of Facebook and the brain behind the Barack Obama campaign. His visit was a hit among the students, many of whom related to him and the pressures he experienced building Facebook out of a Harvard dorm room. He was very engaging and had these great nuggets of wisdom to share:

When Chris, Dustin and Mark created Facebook, their goal was not to build the biggest website in the world. They started with brainstorming for a product they would all use themselves. He reiterated that it's about passion, a desire to build a great product, and not about the metrics or the money. He offered this advice to aspiring entrepreneurs:

- First, know what you are doing/working on. Second, make sure there's a need for it. Then, focus on it. Per Chris, the conversation inside Facebook was "How do we make sure the product is the best it can be for first, our end users, next, people who want to use our platform for marketing and advertising?"

- Don't get caught up in the formalities. He made it clear that he's not advising people to ignore the formalities (company incorporation, legal paperwork etc), but instead to understand that you will get caught up in it, and to be conscious of the fact that other, potentially more pressing matters, demand your attention.

- Value iteration and analytics. Chris provided an example from the Obama campaign: His first step was to understand what it was they were building. He was a newcomer to politics and like most of us with no political backgrounds, thought of TV related advertising when he heard "GEO TV" (it actually stands for "Get Out the Vote!"). He then set out to educate himself and started by clearing the slate and brainstorming. When he was short-staffed in the early days, he reacted by breaking up a big task (building the technology for the Obama campaign!) into the smallest possible pieces and tackling them one at a time.

For instance, the team first built the technology to publicize individual events, then the technology to publicize the events to different groups, and scaled from there. The focus was always on who's buying the product, who's using it, and how they are using it. On the donation page, the team tried several design changes such as the wording, the shape and color of the donate button etc. The iterations were rapid and repeated, until the team settled upon a version that increased the donation amount by 8%!

- Hire smartly. Chris advised hiring people who are smart, whose work and style you respect, are interested in your product, and are available to hire. He recommended going with the gut feeling whether or not a person is right for the job. If the feeling is one of indifference, his suggestion is to not hire them unless one's desperate!

- Don't let money distract you. Enough said.

Brad Feld and Shawn Broderick @ MIT

2009-09-16T12:21:00.001-07:00

Brad Feld and Shawn Broderick visited us on 09/16 Wednesday, at 6.078 Founder's Journey. Brad gave us a brief autobiographical sketch which had refreshing content - he talked also about the companies he founded, that did not succeed. Here are some highlights from his talk:

Brad is a MIT alum. who decided on Course 15 (management) pretty early. He founded his first company in 1983-84 when he, along with 4 classmates at MIT, decided to write software for Macs. They managed to raise $10,000, bought a Lisa and got a consulting contract for a company that did speech recognition. The contract was worth ~$10,000. The team spent a year on the project without making much progress. When they realized this, they shut the company down, sold the computer for $7000, and returned $7000 to their investors. This was company #0.

Through college, Brad continued to consult on the side and undertook projects such as writing software for a dentist who happened to be his fraternity brother's stepfather for $25/hour. When he was approached to write imaging software for Cephalographic analysis, he hired a fraternity brother to work for him for the summer, raised money from another friend's FIL and was in business! This was company #1.

In Spring of 1987, Brad took a business plan class and ended up writing the business plan for "Feld Technologies". Feld Technologies created semi-custom software for networked PCs. In 1988, Shawn joined Brad at this company, and they have known each other ever since. The company grew to over 20 people, was sold in 1993 and eventually became a public company. Brad worked for the acquiring company for 18 months, the first 9 running the consulting group that was built around the acquisition of Feld Technologies, then as CTO of the overall company. He eventually got bored as CTO, and realized that he wasn’t really doing that much that was substantive or important to the future of the company. At this point, he decided to move on.

In 1994, he became an angel investor. Raj Bhargava, then a student at MIT Sloan, approached him after his talk there, invited him out to lunch and impressed him with his idea. Raj showed Brad the world wide web in its avatar, back then. Brad ended up investing $25,000 for 10% of the company. The company was NetGenesis, and eventually went public in 1999. Brad went on to found 4 more companies with Raj. The rest is history.

TechStars was pitched to Brad by David Cohen, an entrepreneur who had sold a his company in Boulder, CO a couple of years ago. Both of them shared a common passion - they wanted to help companies at the pre-seed stage and go beyond the traditional angel investor role by mentoring these pre-seed start-ups. Together, they reached out to the community and got a great response. The first class graduated in 2007 and 3 of the companies have been acquired since. These acquisitions more than paid for the cost of the program. Of the 10 companies from the class of 2008, 7 companies became self-funded or raised money. In 2009, TechStars decided to launch the Boston program in addition to the Colorado program with Shawn as its head. Techstars Boston graduated its first class last week to rave reviews.

What would be awesome is to see a couple of teams from Founder's Journey graduate from TechStars class of 2010.

Robots

2009-08-12T18:32:00.000-07:00

Robotics has evolved so much in the last decade. This link landed up in my in-box courtesy someone who knows I am a certified robot-nut.

Check out these robo pics in particular:

#23: What a terrific idea! No more anorexic, unrealistic "models"... these robots are way better!

#25: Gotta admit, creeps me out. Insect-robot hybrids with the head of an insect and body of a robot?!

#28: Honda and Asimo have done it again, w00t! Thought controlled robots? How incredibly awesome is that!

#33: Stunned to see this one! Looks like Eddie is a descendant of Kismet, one of my favorite robots sitting right here in my backyard at MIT. Kismet was Dr. Cynthia Breazeal's PhD thesis at the Media lab.

Kismet's ancestors are showcased @ the MIT museum. Very exciting to see generations of robots evolve.

It would be a dream come true to commercialize one of these robots, combining my twin passions of robots and entrepreneurship.

Sources of seed funding

2009-06-10T16:02:00.000-07:00

I am blogging from the MIT Enterprise Forum sponsored talk about raising seed funding at MIT. On the panel are representatives of Techstars, Spark capital, Google ventures and a angel/serial entrepreneur. About 10 minutes in, I heard something particularly interesting:

VCs are often hesitant to come in and invest in start-ups that have received angel funding already. They would rather be first investors. I did not understand why, I intend to find out.

Moderator asked what can inexperienced entrepreneurs do to get funded. Rich Miner said good ideas will be funded and to send email to miner@google.com. Shawn (techstars) pointed out that people in Boston are reticent as far as it comes to publicizing themselves as angels or people with good ideas and encouraged people to speak up.

Moderator asked generically, what can founders do to be successful raising a seed round? Shawn (techstars) says move the duck (idea) forward. Make progress. Spark rep. advises being ambitious and contacting highly placed people for advisors. Miner (Google ventures) says to be organized and focus on fund raising. Cold call people and ask for advice. David (angel) says to have a good elevator pitch that can be delivered in less than 2 minutes.

Twitter qn: What milestones need to be hit before looking for seed investment? Answer: depends on start-up. Need to agree with investor what that is for your start-up. An interesting response from David: if you are a new entrepreneur, take what you can get. Don't push for one form vs. another, take what you get. If you, the entrepreneur, are integral to the business, investors will give you equity in later rounds to keep you. If you are good at what you do, you will get compensated properly. Save the negotiations for the second start-up when the first has been successful.

Qn: if you are an angel looking to invest the first 25 to 50 K in a company, what should you look for? Answer was a vague look at the team and essentially, go with the gut.

Qn: among panelists, who invests in what industry sector and how capital intensive would they like their investments to be?
Spark: media, technology.
Techstars: extremely capital efficient businesses. B2B, consumer Internet, SaaS plays

The UPromise Story

2009-06-07T19:15:00.001-07:00

Last week, I had the pleasure of speaking with Jeff Bussgang, co-founder, president and COO of Upromise. UPromise was acquired by Sallie Mae in 2006.

UPromise is a loyalty program where participating retailers deposit 1% of the end-consumers spending into a designated college savings account. The amount deposited can be used to pay off existing school loans or to pay for future loans. UPromise's business model was to reach out to students on college campuses, and encourage them to ask their parents to shop at participating retailers, thus saving/earning money for college. This allowed UPromise to drive business to retailers, and they were in turn paid by retailers for this.

Jeff started out by saying that when he and his co-founder Michael Bronner launched UPromise, it was around a very unique set of circumstances.

- Both he and Bronner were experienced entrepreneurs who had exited their previous ventures successfully.

- The company was launched in 2000, when the internet bubble was still intact.

- These two facts helped them raise $34 Million without having a single customer.

- Bronner had extensive contacts in the retail industry, which made it relatively very easy to get their foot in the door, and land the first few customers.

Their experience, branded VC backing, and Bronner's contacts earned them credibility with retailers and once the first few retailers signed up, it was an easier task approaching everyone else. He also mentioned a couple of other interesting points:

- When they approached retailers, they had a CMO with credibility, who had executed a similar strategy before.

- They approached retailers with a comprehensive marketing plan and a branding document.

- The typical time between first contact to contract with a retailer averaged 9 to 12 months.

I found it very interesting when Jeff commented that he was not sure he could found such a company in today's climate and be as successful. It goes to show entrepreneurship is as much about luck as it is about sweat and guts.

Dr. Paul Jacobs, CEO of Qualcomm at MIT

2009-05-16T17:00:00.000-07:00

After about 6 months of planning, 5 hours of meetings and 200 emails later, I had the pleasure of hosting Dr. Paul Jacobs, the CEO of Qualcomm on behalf of the Mobile, Media and Internet Technology (MoMIT) club at MIT. The talk titled "The future of wireless" was held at the Bartos theater in the MIT media lab and was very well received. Dr. Jacobs was incredibly down-to-earth and I had the pleasure of spending some time with him and his colleagues immediately before and after the talk. Here are the slides from the talk. I will upload the audio track when I get the green signal from Qualcomm's PR department.

Can't wait for Gobi to get here already! Mirasol and Kayak sounded pretty cool too.. look at the slides if you don't know what Gobi, Mirasol and Kayak are!

Conversation with Paul Citron, Medtronic

2009-04-27T08:30:00.001-07:00

I had the pleasure of speaking with Paul Citron who is the retired Vice President of Technology Policy and Academic Relations at Medtronic last week. I found some of Paul's comments about how to think about innovation and the innovation pipeline to be particularly insightful and relevant to our times. Though he made his comments with respect to innovation in medical devices, he made some terrific points that any innovator (and manager of innovators!) will do well to keep in mind.

Paul pointed out the importance of recognizing the mix of incremental vs. break-through innovations in a portfolio, and being mindful of how R&D dollars are effectively invested. He stressed the importance of recognizing that a larger R&D contribution does not necessarily mean that more dollars are going towards research, and that executives would do well to be aware of the actual contribution. A lot of the money is spent satisfying regulatory requirements and jumping through hoops instead of on research iteself.

He also pointed out how the lay person who is allowed to decide the fate of innovation (by being allowed to preempt FDA approvals and decisions per recently proposed bills in the congress) is often not best equipped to make the judgment. He felt strongly that the power to make such decisions must be removed from state courts and vested with the federal courts, where the people involved tend to be more sophisticated about these issues that affect science. He pointed to patent law as an example, and mentioned that there's a reason why patents can't be attacked/defended in state courts and must go only through the federal system.

Another excellent point Paul made: the scientists and researchers working on the breakthrough innovations we depend on for progress as a society are not fools - when company management/society consistently refuses to back their science in the name of minimizing risk and regulating them, they become progressively risk averse. This effectively stifles best-in-class, breakthrough innovation that we have come to rely on for progress.

In all, much food for thought for innovators, and manager of innovators.

My conversation with Dan O'Malley, CEO, PerkStreet Financial

2009-04-13T08:10:00.000-07:00

Last week, I had the pleasure of having breakfast with Dan O'Malley, the CEO of PerkStreet Financial. He had a very fascinating story to tell as a first time entrepreneur who closed his first round of funding within 6 months of starting, and an uncommon passion and willingness to walk off the edge of a cliff in order to pursue his dreams. That really resonated with me.

Dan was a senior executive at Capital One before he launched PerkStreet last year. At Capital One, he successfully introduced the decoupled debit card. A decoupled debit-card is is so-called because the cards are issued by Capital One but they are linked to checking accounts held at other banks. When he then came up with the idea of offering a debit card with rewards, there was a conflict of interest within Capital One that prevented the idea from being pursued, even though he had the backing at the highest levels inside the organization. Something Dan said at this point put things I was pondering in perspective for me:

"Regret is a powerful emotion. I did not want to regret not taking the chance and watch someone else build my product".

That is the passion a founder must feel! When he said that, something cleared in my head and I knew the choices I had to make. An entrepreneur must feel that kind of burning need to act on his vision in order to have a chance of successfully navigating the challenging, arduous path to the finish line.

Dan also said something else that really stuck in my mind. I asked him about the highs and lows of his entrepreneurial journey so far. He offered a philosophical response - it's dangerous to be swept to the peaks of happiness or be overwhelmed by setbacks, because higher the peak and lower the trough, farther the fall to the bottom. The key is to maintain a somewhat neutral steady-state, that allows you to wake up each day and roll with the challenges the day brings.

How very true! Dan said this so much better than I ever could have, and the point really struck home.

It took me forever to learn this lesson, and I am still working on trying to maintain a steady-state at all times. Some times I am more successful than others, but I suspect it's a very important lesson for me to learn and master in my journey as an entrepreneur.

Pattie Maes @ TED

2009-03-24T14:40:00.000-07:00

Dr. Pattie Maes of the MIT Media lab and her doctoral student Pranav Mistry rocked TED this year with their presentation of this game changing sixth sense technology. Check out the talk. Now, this is very cool technology, even better than the stuff in the Minority Report movie that it's being compared to. The elegance of the solution appeals to me - it's systems engineering at its best, using several interconnected subsystems to achieve the intended effect.

What stands out in my mind:

(1) It was built with off-the-shelf components, nothing fancy, costing $350. So, anyone could have built this.
(2) The "device" consists of a phone, marker caps of different colors, a camera, a projector, and a mirror. That's it.
(3) It makes sense of natural gestures.
(4) It's mobile, unlike the minority report technology.
(5) The processing power is from a regular cell phone, no extraordinary parallel processing or computing resources required
(6) Totally fabulous application for someone with a really poor memory for names like me: display person's name when you see them!

I hope to meet Pattie Maes on Thursday after her talk at the Media lab, so either shoot me an email or post a comment with any questions you may have for her.

A woman in technology that I admire..

2009-03-23T06:36:00.000-07:00

A woman in technology I admire greatly is Helen Greiner of iRobot. Helen is the co-founder of iRobot and holds a Bachelors degree in Mechanical Engineering and a Masters degree in Computer Science from MIT.

To me, she represents a unique and rare combination of technical skills and business savvy, and is a tremendous role model for women who aspire to be successful engineers and businesswomen. She gave a great speech at last year's Women of Vision awards where she won the 2008 award for innovation. The speech beautifully summarizes the challenges of becoming (and staying) a woman in engineering, and for that, I tip my hat to Helen.

2009-03-14T15:43:00.000-07:00

Dear Readers based in the US,

I would be most appreciative if you could spend 30 seconds of your time answering these two poll questions I posted on LinkedIn:

http://polls.linkedin.com/p/27232/xoocp

http://polls.linkedin.com/p/27234/eqpyt

Many thanks!

Part 2: Boston start-ups

2009-02-16T17:11:00.000-08:00

Continuing as promised:

Pongr is a mobile software start-up that provides real time price comparison for shoppers. The team includes a couple of MIT PhDs who seem to have cracked the image recognition problem. A cell phone picture of a book cover is enough to automatically launch the search engine to find the closest stores carrying the book!Very impressive. They have other very interesting offerings in the pipeline that I cannot blog about at this time unfortunately.

uLocate brings the promise of location awareness using GPS to real-world applications. Their technology enables widgets for local search, family/friend finders, maps & directions. Interestingly, it's also offered as a platform which offers easy access to GPS data enabling developers to go to market with location based applications.

Boston area start-ups

2009-01-20T16:00:00.001-08:00

Last week, I had the opportunity to visit these cool Boston area startups:

Skyhook wireless, ThingMagic, Pongr and uLocate.

The technophile in me thoroughly enjoyed it while the entrepreneur in me mostly went "Why didn't someone think of this before, it's about time!"

It was fascinating to talk with Michael Sheen and Steve Solari, the CEO and COO of Skyhook. I first heard of Skyhook when Steve Jobs mentioned them in his Macworld keynote last year, with reference to this cool technology that uses wi-fi networks to determine location. When Michael and Steve talked about how it felt to be on the receiving end of a call from Steve Jobs (who said he wanted to work with them!) I got to hear the other side of the story. Very interesting start-up story. I hope to write another post soon with the details.

ThingMagic totally grabbed my imagination. The first iteration of my first start-up was built around the dream of a RFID solution until technical challenges forced me to adapt and switch to another technology. Therefore, when I heard that the technical challenge that had prevented me from building my prototype had been overcome, it was super-exciting to say the least! Hearing Yael Maguire, co-founder and CTO of ThingMagic speak was fascinating. They've partnered with Intel to build their RFID chip and Yael's description of how they solved the challenges of full duplex communication was educational. Having designed and built a prototype for a semi-duplex communication chip, I could appreciate the technical challenges. On the business side, it was interesting (and inspiring!) to hear about yet another start-up that was bootstrapped until very recently, which is when they took in their first round of funding. When ThingMagic CEO Tom Grant (a former VC himself) talked about how they carefully thought about whether or not to accept outside funding and the criteria they used to decide to take in extra money, I found myself nodding in complete agreement. As the founder of a bootstrapped start-up, I couldn't agree more that bootstrapping is the way to go if at all possible and that taking in VC money should be the last resort, not the first, like most first-time entrepreneurs tend to think.

To be continued.

Shai Agassi @ MIT, 12.12.2008

2008-12-04T13:11:00.000-08:00

I am blogging live from Shai Agassi's talk @ MIT on December 4, 2008. The Wong auditorium is overflowing and Shai Agassi is a very engaging speaker and a great evangelist. He talks about doing the right moral thing and doing right by coming generations by ridding ourselves of oil dependence.

He offered a lot of statistics on the cost benefits. Two particularly stood out - the cost of the entire infrastructure for electric cars in Israel (when it's all complete) will be $100 billion. This is the cost of oil imports for Israel for 2 months. The cost to implement electric car stations on the freeways between the SF Bay Area and LA on all 3 of the connectors - 101, 5 and Hwy 1 is only $25 million! I am scratching my head - so why are we not doing this?!

Shai is now taking questions.

Someone asked him this question: the electricity Shai wants to power cars with is generated from coal anyway, so why the evangelizing? Agassi responds they are replacing oil, not coal, which only costs 5 cents a hour, with electric technology that costs 6 cents a hour.

Another person asked him why car manufacturers would allow him to offer the option of an exchangeable battery since this is an important source of revenue for car manufacturers? His response is his model solves the mainstream economics problem. This allows the car to be sold for $20,000 instead of $35,000 and therefore wider adoption. Interesting approach.

He was asked how his model accounts for the intermittent nature of renewable energy sources used to charge the car batteries. His response was that the grid controls how many cars can be charged at any given time, and this ensures that energy generated is optimally used. The grid also has capacity to store excess energy. Both better place and utility operators can control the grid to achieve optimal performance.

Someone asked a question that I am sure is on a lot of people's minds. He wanted to know how to join betterplace. Shai's answer was to email jodi.shah@betterplace.com, but not to expect a response right away because they have over 7000 unsolicited emails to get to!

He next got asked about the critical mass aspect of this problem. Whats' the time to payback for this infrastructure investment? Shai splits the problem into 2 parts: charge spots (parking spots with charging facilities) - every 1 of 10 spots roughly needs to be electrified before people think of this as being ubiquitous. Part 2 is the switch station. For Israel, there needs to be 250 to 300 stations. The ratio is 10x of capital expenditure for viability. He didn't quite answer the question, but interesting numbers nonetheless.

Next question was whether better place had any plans for airplanes. Answer is no, not at the moment, since it's hard to switch batteries midair!

The talk just ended to a big round of applause. It was 1 hour well spent this evening!

The entrepreneurial culture in Silicon Valley

2008-11-28T11:15:00.000-08:00

I was reading "Closing the innovation gap" by Judy Estrin and came across this gem that describes brilliantly why being an entrepreneur in Silicon Valley is different:

An acceptance of failure as a necessary stepping-stone to success is an integral part of the culture of Silicon Valley. As a partner at Kleiner Perkins, one of the Valley’s major VC firms, Kevin Compton met with industry leaders from other countries who were visiting the Valley in hopes of learning the secrets of its entrepreneurial magic. He would try to communicate the Valley gestalt with a story. “You’re getting ready for your country’s version of Thanksgiving dinner with the family. You’re 32 years old, you have kids, and you’re going to your in-laws’ for dinner,” says Compton. “After working at your version of IBM for ten years, everything was going great. But all of a sudden you left that job to go to a high-profile start-up that raised a whole bunch of money, and completely flamed out 18 months later. I would ask these guys, ‘Do you go to the family dinner?’ They would usually say no. And I would tell them that in Silicon Valley, not only do you go to dinner, but your brother-in-law comes up and gives you a high-five saying, ‘I wish I had the courage to do that.’ As a risk-taker, you got his attention. That’s in our DNA.”

Having been an entrepreneur in the valley, I can vouch for the accuracy of this assertion. I will go one step further and say my brother-in-law will likely follow up with a question about what were the biggest lessons I learned, and I will respond with here's what I am doing differently with my next start-up as a result of what I learned from my mistakes... the real failure is only when I don't pick myself up to move on and make NEW mistakes.

CSAIL @ MIT

2008-11-14T18:14:00.000-08:00

I was in geek paradise this afternoon, and reveled in it. I visited CSAIL and the coolness of the cutting edge research that's going on at building 34 (I am @ MIT after all, of course I share a love for numbers with my fellow engineers :) took my breath away. The CSAIL lab is my Mecca - I became an engineer because I wanted to build robots and intelligent machines. It was good to be in my element after a long time, and it struck me how much I missed engineering and building cool things. The last time I built something really cool was when I designed a Lego Mindstorms robot to collect the dirty coffee mugs my room mate would leave strewn around our apartment. My co-bot (coffee-robot) would collect all the dirty mugs and move them to a spot I'd marked on the kitchen floor with reflective tape. Seems like a lifetime ago.

We visited Russ Tedrake's lab and saw autonomous flying robots and little dog. Robot locomotion has come such a long way since I was in grad school in 1998. I was incredibly impressed with Little Dog's obstacle detection and circumvention mechanisms. It left me longing to pursue a PhD @ CSAIL after the MBA.. I suspect I would be very happy if I became a lifer at MIT, the place just inspires me.

How any of this relates to entrepreneurship - I wonder if there are formal channels available to commercialize the research that comes out of CSAIL. I intend to find out. Stay tuned for the answer.

MIT 100K Elevator Pitch Competition results

2008-10-25T15:54:00.000-07:00

Some good news: I placed second in the Mobile Track at the MIT 100K Elevator Pitch Competition last week with my start-up "MoJoe"! My brain was completely fried by Saturday AM thanks to the midterms that preceded the event, so the results were a pleasant surprise. Unfortunately, only the first place winner was allowed to proceed to the finals from the Mobile track and the BioTech track owing to the fewer number of contestants, so I was unable to pitch in the finals.

Looking forward to doing better at the upcoming Executive Summary Competition!

A huge shout-out and "Thank you!" to all my classmates and friends who encouraged me to pitch, and not give up!

2008-10-25T15:12:00.000-07:00

Last week, several of us at MIT Sloan had the opportunity to hear about the cool research done at MIT about founding technology based enterprises from Professor Edward Roberts, the Founder and Chair of the MIT Entrepreneurship Center. We were offered a glimpse of the results of many years of research spanning hundreds of Technology companies, and the findings were fascinating.

Successful founders had the following traits:

- They became successful over their lifetime. Genetic predisposition had nothing to do with it. In other words, successful entrepreneurs are made, not born.

- They typically have a high need to achieve, and a moderate need for power. Professor Roberts made the point that people with a high need for power do not succeed in enabling and benefiting from the talents and insights of those around them, effectively holding the organization back and sometimes driving it into the ground.

- They partner with other co-founders. When the original founder does not have sales and marketing expertise, they seek out co-founders with that expertise.

- More the number of co-founders, higher the probability of success. His research studied companies with up to four co-founders. There was not enough data points to conclude about the effectiveness of companies with five or more co-founders.

Successful start-ups shared the following traits:

- They possessed a high degree of advanced technology transfer.

- They were product oriented.

- They had strong marketing orientation and practices, always putting customers first.

- They all possessed a focused growth strategy

For the super successful companies, later stage strategies included:

- A strategic product/business focus

- Strengthened market orientation

- Overcoming new problems

- Personally avoiding fatal "founder's diseases"

One other point that struck me which Professor Roberts made was that VCs on a start-up's board have mixed interests. Their focus is the company's exit strategy. For people who want to build great companies and help entrepreneurs build these companies, this is a painful and incompatible mindset.

He left us with a lot of food for thought, and speaking for myself, very curious and excited about what else the research uncovered.

Sage advice for tough times

2008-10-21T06:07:00.000-07:00

This showed up in my inbox today. I thought it was sage advice for tough times.

Alan Patricof, founder and managing director of New York venture capital firm Greycroft Partners LLC and an éminence grisea of the U.S. investment community, sent us a statement today urging restraint in how bloggers and members of the media characterize the "contagion" roiling global financial markets.

Patricof, who also formed the private equity firm that would become buyout giant Apax Partners, specifically addresses the flurry of reports this week that Silicon Valley venture firm Sequoia Capital Partners had summoned its portfolio company executives to warn of the impact of the ongoing financial crisis. While advising emerging companies to closely monitor costs and to be realistic in their near-term growth forecasts, he also says this is "not a time to panic, cut off all investment in the future, and burrow into a dark hole." -- Alain Sherter

Following is the full text of Patricof's statement:

The comments made by the partners of Sequoia Capital at their recently held 'CEO Summit' have been widely covered by leaks to numerous bloggers. These bloggers have disseminated the details and spread the contagion of the sentiments to the public at large, unfortunately running the risk that the words become a self-fulfilling prophesy. Without challenging the comments, which expressed a heightened degree of doom and gloom for the economic prospects of young start-up companies particularly, I do think it calls for a somewhat more restrained response on the outlook and required action before throwing the baby out with the bath water. Certainly, we are going through a period of enormous economic and political uncertainty. The loss of confidence, primarily in our financial system, as a result of the excess of the past five to ten years (if not longer - we may never know how long some of the flawed
practices have been going on) is one of the leading contributors. We are also at the moment looking for leadership on the political front, and both because of very low public support for the President and because we are in the midst of a heated election for his successor, we have no real voice of authority to provide some guidance,
reassurance, and inspirational confidence that the bus has a driver who knows where he is going.

Nevertheless, aside from an over-inflated housing boom that had to collapse sooner or later and a complicated financial system that arose in part to fuel this engine, the basic economy was in reasonable shape, with GNP growth and productivity gains supporting a solid, if not vibrant outlook (I know the automotive industry is also
going through bad times but it no longer pervades the economy as once conveyed in the expression, "As GM goes, so goes the nation.")

Advances in technology are allowing companies to make goods and provide services faster and cheaper. The wireless revolution and the Internet have made the dissemination of information easier and more pervasive for the entire world and brought significant benefits to every phase of our economy. That is not going to stop, although it may temporarily slow down. In these difficult times, there will be
winners as well as losers (and the former may be fewer in number for a while).

The point is, the financial problems are being addressed, if not a bit belatedly, and some international mechanism will be found in short order for some coordinated policy that will restore order and confidence to the system.

Most young companies, with which we are specifically concerned, are financed with equity capital. That has its positives and negatives; on the one hand, debt is a very small factor in the capital structure of most small companies so loan foreclosures and the interest rate burden are not of prime concern. On the other hand, equity capital,
which is provided by private investors, requires confidence in future prospects for reaching profitability and creating a strong market value. Certainly under current conditions it is hard to engender such confidence although history has demonstrated that it is in times like these that great opportunities are created. I have always said, "The best time to invest is when the drums are beating, not when the trumpets are blaring!"

This is surely a time for companies to pay meticulous attention to detail, particularly their cost structure. It is a time to be realistic in their near-term assumptions for revenue growth and take nothing for granted. Raising additional capital to support operations is of course critical, as it is at any time, but this is particularly a time for young companies to be extra cautious in developing pragmatic assumptions of their needs and in focusing on the amount and not necessarily the cost of that capital.

This is not a time to panic, cut off all investment in the future, and burrow into a dark hole. Take a page from the packaged goods industry that the time to gain market share is during tough times when your competitors are weaker in responding. And while this may feel more directly related to portfolio companies, we as a venture industry should not retreat either. It is our strong belief that we can and will continue to make sound investments in excellent opportunities. It is as good a time as ever to start a company with sound fundamentals.

So my point is to heed the caution of the Sequoia comments but to use them only as a strong message to reexamine all cost elements and growth plans and use this opportunity to assure that you are a survivor. Find a way to use this moment to gain your greater share of the market by providing a solution that is needed by others to
improve their prospects in the difficult environment ahead. Tighten your belt and live within your means. Although the timing makes this message seem more prescient, it is a philosophy that works for successful companies at all times and at all stages; it is simply put, good business. This is not a time for heroes!

The Emerging Technology Conference 2008

2008-09-24T10:36:00.000-07:00

I have been meaning to write part 2 of the post about decision making pitfalls, another post about a presentation I attended by one of the founders of hubspot.com - unfortunately, a day only has 24 hours.

I skipped classes this morning to attend the Emerging Technologies conference at MIT this morning. I was very glad I went. The keynote by Vinod Khosla seemed to start-off on a pessimistic note. He made the point that prediction has varied widely from reality in the past with respect to things like oil prices, consumer adoption of cell phones etc. When the next slide switched to alternate energy sources, I thought I had a clue as to what was coming. I was pleasantly surprised. He went on to talk about the scope and magnitude of solutions that will be required to make a dent in the energy challenge, and how any proposed solution must be inexpensive enough to be adopted by the "Chindia" market to actually make progress. He then talked about "Black Swans", disruptive technologies capable of changing the nature of the game, and how any solution that comes along must be profitable on its own merits without requiring subsidies. He went on to talk about the criteria used by Khosla ventures to make an investment, and about the companies in his portfolio. Some of the ones he mentioned are doing incredible work, can't wait to check them out!

I also attended 2 sessions of the TR35 elevator pitches and came away very impressed, as expected. I had a chance to chat with Dr. Shafi from University of Pennsylvania afterward. His story was fascinating, and his enthusiasm infectious. I was particularly awed by how the polymer simply gets absorbed into the body once its job is done - very neat. I extended an invitation to him to participate in the MIT100K competition since he mentioned he was looking for another round of funding, and he is very interested. So MIT people reading this blog, if this is something you're interested in, drop me a line, he's looking for a MIT partner with whom to enter the competition.

The hidden traps of decision making

2008-09-10T11:35:00.001-07:00

I am reading an article from the Harvard Business Review titled "The hidden traps of decision making" for my Organizational Processes class. It provided much fodder for thought.

The first hidden trap of decision making is ANCHORING. When I read this, I couldn't help but recall my positive bias for all things made by Apple. My bias initially started from reading positive, glowing reviews about Steve Jobs and the iPod. In one case, in a friendly argument with my sister, I even passionately defended the iPod shuffle as a great MP3 player out of my desire to be consistent! Honestly though, I have to admit, it's a crappy idea. How useful is a MP3 player without a display, which will force you to listen to a random sequence of tracks? You might own it, but you can't control it, literally. But defend it, I did. I now understand I was a victim of the anchor trap. My strategy going forward, is to be aware that there exists such a trap and to stay as open minded as possible.

The second trap is STATUS QUO. I have been guilty of this so many times, that it's hard to pick just one example! I bought Cisco stock during the heydays for $65 a share. Then came the dot com bust and I watched the stock price fall steadily from $65 to the sub-$20 range, taking a big chunk of my portfolio with it. I finally sold it when it was in the teens. The reason this memory sticks with me painfully is not just the financial loss. For someone who thinks of herself as being a logical, analytical person and an engineer to boot, how can I reconcile the fact that it took me as long as it did to sell the stock? The reason I waited was because I knew I would have to do extra paperwork come tax season to report a capital loss, and I just didn't want to go to that trouble. I preferred to not disturb status quo no matter how illogical, than to take the extra 10 minutes to complete and file a schedule D IRS tax form. Now I know that kind of stupidity actually has a name.

The third trap is the SUNK COST trap. I couldn't help but smile when I read this because this time around, I was "smart" and recognized it. Just that it took too long to think of all possible alternatives and time was running out, so I resorted to the status quo trap instead! I still have the car I bought from my very first job 10 years ago. I couldn't bear to let it go for sentimental reasons. Besides, it's been a real work horse and never asked for much beyond basic maintenance in the time I've owned it. That changed 6 months ago. Last December I paid a mechanic $800 to take care of some problems. Eight months later, I was back at the mechanic's again, this time being told it's going to cost $2500 to fix the car. Fully realizing that I might be throwing good money after bad and working out conditional probabilities (I kid you not), I went ahead and had the car fixed anyway, promising myself that the next time the car needed repairs that cost more than $500, I will buy a new car. The human psyche is strange.

To be continued in the next post...